Posted on 03/27/2010 6:45:03 AM PDT by OKSooner
Here's a question to open up conversation today:
What happens when an economy collapses?
Okay, hyperinflation causes money to no longer be worth even the paper it's printed on.
There have to be a whole lottapeople in on this scam.
“And for food as much dry and canned food as possible?”
To a point. The problem with food is that it is hard to store...gets real boring if you want to cycle through it (i.e., eat it), takes up a lot room, can get bugs...etc.
I keep a couple of hundred pounds of rice, but not much over a month of other supplies...if we run out of food in this country, I might just take myself out. But I don’t see that happening...it’s MUCH MORE LIKELY that we will get price controls (as people scream to DO SOMETHING), and then the shortages which are assured. It’s really a matter of comfort level...do you want to wait in a 2-hour line to buy soap, when you could have purchased 5-years worth for next to nothing (which is really what it costs now), just before the crash?? If there are food lines, so be it...I could stand to lose a few pounds anyway.
Finally, it doesn’t hurt to come up with a plan for water collection and purification, as that often goes bye-bye in bad days, and you have to wait for trucks to show up. Here in hurricane country I’ve done that anyway.
There are 1.3 billion people living in China. 1.2 billion of them live in poverty.
“I get really aggravated talking to the clueless who think that Obama care is a good thing and that government provided health is not only morally justified but also affordable if the rich just pay more taxes.
They have no clue about the detonation that is going to occur because of the debt levels and our inability to meet our obligations.”
It is like talking to spoiled children. They display no understanding of cause and effect, nor do they have any appreciation of how unique this country is.
“
I know there’s at least one case study from South America.
We all know of a certain example from Europe back before the war.
“
Oil up the wheel on your wheel-barrows.
You’ll need them to cart enough devalued US dollars to buy a loaf of bread.
(I’m sure that you “OKSooner” are already aware of that historical example.)
I fear that if Obama/Reid/Pelosi enact their Five-Year-Plan by Nov. 2, 2010,
the USA will be the country that starts WWIII, out of failed economics
and hurt national pride.
A good possibility.
In the past few days as Health Care Reform passed, people have used the term "crossing the Rubicon". Imagine what will happen if Gen. Petraeus decides to marshall his forces and bring them home, to go to war against the BATF?
Now, THAT is crossing the big, wide Rubicon.
Housing Market Recovery: On the Same Schedule as Godot
[snip]
"Gradually, people are coming to see houses in a new light. Soon, they’ll see them as money-pits…as expensive follies…and as a pain in the neck. Instead of being proud to have a McMansion…they’ll be embarrassed…like having a car with tail fins in 1985…or wearing a mullet in 2010."
"Not only that, it will also be seen as a big waste of money. As the Great Correction continues, unemployment will remain at high levels…savings will increase…and people will want to cut expenses. Among other things, they’ll want smaller, cheaper houses. They’ll want to dump their suburban castles and walk away from their country palaces."
Houses will be losers.
People get hungry...bad chit happens.
Rules to survive...self-relaince, self-sustainability.
Don’t get hungry, don’t be in a place where hungry people can find you.
Sounds simple but that really drives home the point on what YOU need to do.
“
But what really happens? What happens to people?
I know there’s at least one case study from South America.
“
I am GUESSING you are referring to Argentina, full of natural resources,
but with a First Lady (Mrs. Peron) that emptied the national treasure
of gold in a few years, then was abused by the return of Senor Peron.
If I were King, I’d say to look at Chile (despite the earthquakes
and tsunamis). As a place that ended the rule of a socialist(Allende) and
despite military rule, found it’s way to relative prosperity when
they called in “The Chicago Boys” (in the spirit of Milton Friedman).
It was not always a pretty exercise.
But it might prove a valuable example of what the USA may have to
march through in the next couple of decades.
My opinion above is well above my pay-grade!!! And hence may not
make any sense when analyzed by real economists, historians, etc.
It is ironic to note that “The Chicago Boys” (economists from
The U. of Chicago) saved Chile, but the other “Chicago Boys”
(Obama, Rahm Emanuel, etc.) may be the gang that brings down the USA.
We are likely to see some real crazy stuff like that happen.
Just utterly amazing how fast “they” are moving now.
A flame thrower? AKA a torch!
From the point of view of one's personal economics, the trick is to be aware, to the extent possible, when deflation is ending, and severe inflation is about to begin. Good luck with that. I'm hedging my bets -- very light in equities (what I do hold is weighted toward energy and gold miners, plus gold and silver ETFs), heavier in corporate bonds (no financials!), and cash/near-cash (CDs, money market funds). I intend to increase my gold ETF holdings, maybe some physical gold as well (in a safe deposit box, not at home), and will probably get out of equities entirely soon.
More important than financial assets, however, is the very real possibility of civil unrest as the situation worsens. I suggest:
• Move as far away from major urban areas as you can. It's a big help, of course, if your job isn't in a big city; this advice is easier to follow if you're an entrepreneur, or retired.
• Non-perishable food and wine, securely stored -- and a can opener and a corkscrew, lol. Plenty of Scotch, too, but that's just me.
• An alarm system, a dog, and firearms.
•Water from your own well, so as not to be dependent upon government water supply, and to protect yourself from eco-terrorism (poisoning of the water supply).
• Propane for heat and hot water. A big propane tank, 1000+ gallons, always kept more than half full. Natural gas lines can be cut; have your energy on your own land.
• A propane-fired emergency generator, capable of, at a minimum, running your well pump, refrigerator, freezer, TV/radio, and emergency lighting in the event of a prolonged power outage.
In countries where the average Joe, or poor, are lacking access to banking, microfinance and “community savings groups” are helping people manage money and gain access to funds. Does anyone think we might see a increasing shift to create similar models in the US as a response to economic collapse/failure of our current banking system? For example, I have heard NYC cab drivers participate in a microfinance group. The Amish community is also an example of a group that “banks” their assets together.
I have an explanation. They are using the TARP money to control the markets. It's magical money creating smoke and mirrors for the masses. The desire of people to get the money lost in '08 back will keep suckers going for risk. That's why they have been so reluctant to explain how the money is being "spent."
Thanks for the information. I see in my crystal ball another crash cominng our way...
As with anything else, an economic collapse happens at a national and international level. However, to a great extent, the consequences of an economic collapse can be mitigated at a State and local level, with some wisdom and prior planning.
To start with, at the individual level, there will be very high unemployment, which means that many people will not be able to afford rent and food. Fortunately, right now, there is an abundance of housing, which can be taken by States over unpaid taxes, and distributed to families made homeless.
The angle for this is that the unemployed can stay in the home for free, until they are employed, and then pay rent to the State, for which they get much more than the value of the rent in home equity, going towards home ownership.
And even at their height of the Great Depression, America had an overabundance of food. Right now, 42 US States grow wheat, for example. Most States are close to self sufficient in their food production, or can trade with other States for specialty foods.
This brings up the subject of currency. The US dollar might radically inflate, or deflate, or oddly enough, both, making it very unstable. But municipalities and States can get around this by issuing “scrip”, as an alternative currency:
http://en.wikipedia.org/wiki/Scrip
Scrip was widely used during the Great Depression, and was of great help to those cities that issued it. It is still in use in a few places in the US. It keeps government and markets operating, and is a tightly controlled currency, so it is very stable. Today, it might even be printed on plain paper, with an encrypted 2D Matrix bar code on the back, read with a simple hand scanner.
Scrip would also concentrate US dollars with the issuer, so they could buy products not made in the State, like pharmaceuticals, in bulk, at lower cost.
Most imported products would no longer be available. So if there is going to be a crisis, it would be wise to stock up on imported goods. From that point, if America wanted it, America would have to make it themselves. And this means rebuilding American manufacturing, which is the starting point to economic recovery.
Other things to look out for at the individual level are “bank holidays”, in which any electronic money that you have in the bank is frozen. During the GD, some of these lasted from 3-300 days. So it would be a very good idea to have some “mattress money” at home in a safe place.
If you plan to stockpile food, be sure to carefully label it according to expiration date, with a “First In, First Out” inventory system, and rotate food more frequently consumed.
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