Posted on 01/15/2021 10:20:17 AM PST by SeekAndFind
Dear Chuck,
Is America heading towards an economic collapse? If so, how do I prepare?
Worried Boomer
Dear Worried Boomer,
My view is we are headed towards another economic crisis with a low risk of an actual economic and/or currency collapse. In either scenario, there are ways to be prepared.
Economic Crisis vs. Collapse
An economic crisis is different from a collapse. America has worked through several in my lifetime: ‘70s stagflation, ‘81 recession, ‘89 savings and loan crisis, post-9/11 recession, ‘08 great financial crisis, and the 2020 coronavirus crisis we are in now. A collapse is brought on by a complex set of factors that must merge simultaneously but at its very core is a devastating interruption in economic output and/or a loss of confidence in a currency.
In an article for Investopedia, Sean Ross explains, “The root of any collapse stems from a lack of faith in the stability or usefulness of money to serve as an effective store of value or medium of exchange. As soon as users stop believing that a currency is useful, that currency is in trouble.”
The advantage America has is that no other nation has the vast diversification of economic output nor presents a viable alternative to the stability of the U.S. dollar….yet.
The two warning signs of a possible collapse are (1) high unemployment and (2) runaway inflation. Essentially, this is when there are not enough jobs for the economy to grow and too much worthless money being pumped into the economy.
Reasons the Dollar Could Collapse
1. High inflation combined with high debt. In 2008, the Fed printed trillions of dollars. In 2020, they printed more trillions. In The Counter-Revolution in Monetary Theory, Milton Friedman writes, “Printing more money, without a corresponding increase in the overall output value of the economy, necessarily decreases the currency’s value, with prices rising in response.”
2. Destabilizing events: think wars, pandemics, cyberattacks, terrorist attacks, uncontrolled printing; lack of confidence in the Federal Reserve, the President, or government at large.
3. Loss of confidence in the U.S. dollar. If foreign countries drop the U.S. dollar it could trigger a recession. Should China and Japan – who own the majority of our $6 trillion debt – drop their holdings, it could usher in a worldwide reset. This could usher in a digital alternative.
What Would Happen?
Panic would ensue because it would happen quickly. Demand for the dollar would drop dramatically along with U.S. Treasuries. Interest rates would increase. Hyperinflation would occur as investors would turn to other currencies. The dollar would decrease in value and prices would jump.
A collapse would be cataclysmic in the damage and disruption it would cause to not only our lives but to the rest of the world. Imagine how your life might be affected if banks and ATMs suddenly closed, you had no access to credit, there were limited supplies of groceries, gasoline, and other essentials, paired with an increase in civil unrest and crime. These scenarios would impact the postal service, transportation, education, health care, etc. Survival in this kind of environment for any length of time would be difficult.
We have many contemporary examples to learn from with varying degrees of damage: Germany, Argentina, Iceland, and Zimbabwe have all suffered a currency collapse. Of course, none of those nations have the size and stature of the U.S. dollar so a similar event in this country seems unimaginable, but it is not impossible.
How to Prepare?
1. Diversify your investments and income sources.
Solomon commented on this back in ancient times. In Ecclesiastes 11:2 he advises us to diversify into seven or eight differing assets while in Ecclesiastes 11:6 we are advised to have multiple sources of income.
Ask yourself if your career provides an essential service. If not, consider changing or getting certified in areas that would give you greater job security. This is important to remember when preparing your children for their future.
2. Get out of debt.
The Bible warns us repeatedly to avoid enslavement and compares debt to being like a slave. You can weather a crisis or a collapse with less stress and greater flexibility without debt.
3. Consider investing in hard assets or commodities.
Gold and Bitcoin represent an alternative to the U.S. dollar. When fear or volatility begins to rise, the price of these alternatives also rises. But these are not the only options to hedge against a crisis or collapse. Real estate, equipment, commodities, and precious metals are also favorable investments during a time of turbulence. There is not one single option that will always protect you; that is why diversification is essential.
Seat Belts, Not Parachutes
Brad McMillan at Forbes believes doomsayers are coming out of the woodwork. He says, “Volatility in a currency’s value does not mean the currency will collapse any more than a drop in Amazon’s share price means the company is going away.” In July, he said we would see a collapse coming long before it happens but did not believe it was coming soon.
I want the body of Christ to be prepared if and when a crisis/collapse occurs. In my new book,7 Gray Swans, Trends that Threaten Our Financial Future, I discuss the economic trends that concern me and the present challenges we face such as Universal Basic Income, Modern Monetary Theory, and a cashless society, among others.
Taking precautions now is like wearing a seatbelt in a fast-moving car or airplane. It makes sense. However, I do not believe it is time to look for the parachute!
Chuck Bentley is CEO of Crown Financial Ministries, the largest Christian financial ministry in the world, founded by the late Larry Burkett. He is the host of a daily radio broadcast, My MoneyLife, featured on more than 1,000 Christian Music and Talk stations in the U.S., and author of his most recent book, Money Problems, Marriage Solutions
Calm down. Trump is going to finish getting rid of the Fed and putting us back on the gold standard. All those hysteria is a waste of emotion. Biden is not going to be president.
Guy from Argentina during 90s currency collapse (Ferfal blog) often wrote about the problems in the country. Hard to defend 24/7. Lots of home invasion stories.
He finally moved to Spain.
Can a drunk drink himself sober?
Try them! Think outside the box!
I had my car engine overhauled and paid for it with some old gold coins. They’d have been refused by any cashier at Walmart but a company owner usually has a more far-seeing view of such things.
It’s becoming slightly less rare now, but I’m hearing more about goods being offered for services. If the economy really crashes such trading will come back. After all, isn’t that what you’re alluding to when you suggest stockpiling stuff you don’t use?
I talked with a man several weeks ago who works as a local paramedic. He told me he had about twenty boxes of tampons stored away to plug bullet-holes if/when TSHTF. I think THAT can be considered “outside the box!”
Did you see my prepper posting :? :
“Cashless currency coming, Fedcoin. Total control.”
Enough to make you shiver,
and pee your pants !
tik
metmom :" And don't forget salt. "
Iodized Salt for table consumption.
Kosher salt -for cooking - rough, large crystals easier to control the amount used.
"Pickling Salt" - has a higher sodium content than table and other salts.
And don't forget "oils" - for cooking, frying, calorie content, etc..
Each has a separate smoking and high temperature range according to source of the oil.
Cooking oil stocks have risen recently in price, almost 20% ; but they will never be as reasonably priced / cheap as they are now (inflation) !
That’s a relief!
After converting it to gold, silver or lead!
Yup! And all that “currency” is “transferrable” in so many ways!
They thrived cuz they bought cheap assets from those who bankrupted from failing to pay their debt!
If you plan to buy seeds this year, buy them sooner rather than later. Seed companies are running out of stock left and right. Baker Creek has had to take down their website twice this year, just to give their warehouse a chance to catch up!
Even if you don’t end up needing to rely on your garden for survival, gardening is a skill that needs practice! Learn the ins and outs now, before you need to.
There is a weekly FReeper gardening thread, if anyone needs advice. Or even if you just want to brag, we like garden pictures :)
Utter nonsense! The item of exchange can be anything! Whatever the “market” in your area accepts! Water, DIRT, leaves, bullets, metal, AU, AG, food, meat, TP, etc.!!
No way in hell would I part with any ammo or water or any other critical essential in a SHTF scenario over gold.
I really don’t know what is so difficult to understand about SOCIETAL AND ECONOMIC COLLAPSE. You cannot eat good, it cannot quench your thirst, fuel your vehicle, treat your wounds or anything remotely resembling survival. Gold would not even be worth fighting over in such a scenario.
And to all those who say “gold has never been worth nothing,” guess what?
There is a first time for everything.
Might be kinda late to start.
Buy rural land, fence it in and get some meat animals. I’ve got Kiko goats. They’re the lowest maintenance meat breed. Plan on getting some Kunekune pigs, the only true pasture pig that can live on grass, weeds, forbes and of course acorns.
Start a big garden.
Have a water source that doesn’t require electricity. TX and Hawaii both put out rainwater harvesting guides.
A pressure canner and lots of jars. Tattler reusable jar lids. A rocket stove custom fit to the canner. Rocket stove water heater. A smoker. A wood fired grill. Wood stove. A few years worth of wood for everything.
Passive solar house.
A vehicle that gets 30 mpg but big enough to fit a lot of stuff like a small station wagon like a Subaru.
Some dual purpose breed of chickens. Buff Orpington hens have a habit of going broody. I have one hen that will sit on the eggs if I don’t get out there to get them for a few days and there’s a dozen or so. I got the chickens by incubating some eggs the neighbor sold me for a buck each because that’s his price when selling eating eggs to people.
A small solar panel setup is nice to have. Just enough for LED lights, RV water pump(we don’t have a well yet), charging gadgets, cordless phone, run a tablet or laptop, wringer washer during the middle of the day when the sun is shining.
Hand powered power tools like a crack drill. Bow saw with lots of extra blades.
I have a sub compact tractor that’s mechanical injection and I’m pretty sure it would run on bio diesel. Haven’t looked into making that stuff yet. It sips fuel anyway. I might go through 20 gallons a year using it quite a bit. I don’t have to mow with it anymore now that I have the goats.
If you’re going to pull money out, don’t bury it. Buy stuff that you can barter with. Nails for instance. Anything that has to do with the above stuff.
Then there’s long term food storage(good for bartering too) but that a subject all it’s own. Plenty of info out there. 5 gallon buckets, mylar food grade bags to fit, something to seal the bags, clothes iron works, bag sealers are better and O2 absorbers. Rice and beans, salt and sugar. Wheat kernels and a grinder. Learn to make sourdough and keep your starter going forever. Yeast doesn’t last. Yeast-less bread sucks but works. Indian flat bread for instance.
Compost?
Instead of burying I rather stick my money in my bra, safe and sound. =)
PRAY!
I actually stock up on Crisco as I find it lasts longer without going rancid. However, I need to continue to restock some areas of the pantry. Thanks for the pings.
Crisco - for emergency purposes only, I hope.
Indeed. Oils go rancid too quickly in long term storeage. IMO.
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