We're Screwed! (Rioting in the streets and devolution to a bartering system)

Fairfield County Weekly ^ | 12/ | Phil Maymin

[FromLori]

Do you believe everything the government tells you? Economist and statistician John Williams sure doesn't. Williams, who has consulted for individuals and Fortune 500 companies, now uncovers the truth behind the U.S. government's economic numbers on his Web site at ShadowStats.com. Williams says, over the last several decades, the feds have been infusing their data with optimistic biases to make the economy seem far rosier than it really is. His site reruns the numbers using the original methodology. What he found was not good.

Maymin: So we are technically bankrupt?

Williams: Yes, and when countries are in that state, what they usually do is rev up the printing presses and print the money they need to meet their obligations. And that creates inflation, hyperinflation, and makes the currency worthless.

Obama says America will go bankrupt if Congress doesn't pass the health care bill.

Well, it's going to go bankrupt if they do pass the health care bill, too, but at least he's thinking about it. He talks about it publicly, which is one thing prior administrations refused to do. Give him credit for that. But what he's setting up with this health care system will just accelerate the process.

Where are we right now?

In terms of the GDP, we are about halfway to depression level. If you look at retail sales, industrial production, we are already well into depressionary. If you look at things such as the housing industry, the new orders for durable goods we are in Great Depression territory. If we have hyperinflation, which I see coming not too far down the road, that would be so disruptive to our system that it would result in the cessation of many levels of normal economic commerce, and that would throw us into a great depression, and one worse than was seen in the 1930s.

What kind of hyperinflation are we talking about?

I am talking something like you saw with the Weimar Republic of the 1930s. There the currency became worthless enough that people used it actually as toilet paper or wallpaper. You could go to a fine restaurant and have an expensive dinner and order an expensive bottle of wine. The next morning that empty bottle of wine is worth more as scrap glass than it had been the night before filled with expensive wine.

We just saw an extreme example in Zimbabwe. ... Probably the most extreme hyperinflation that anyone has ever seen. At the same time, you still had a functioning, albeit troubled, Zimbabwe economy. How could that be? They had a workable backup system of a black market in U.S. dollars. We don't have a backup system of anything. Our system, with its heavy dependence on electronic currency, in a hyperinflation would not do well. It would probably cease to function very quickly. You could have disruptions in supply chains to food stores. The economy would devolve into something like a barter system until they came up with a replacement global currency.

What can we do to avoid hyperinflation? What if we just shut down the Fed or something like that?

We can't. The actions have already been taken to put us in it. It's beyond control. The government does put out financial statements usually in December using generally accepted accounting principles, where unfunded liabilities like Medicare and Social Security are included in the same way as corporations account for their employee pension liabilities. And in 2008, for example, the one-year deficit was $5.1 trillion dollars. And that's instead of the $450 billion, plus or minus, that was officially reported.

Wow.

These numbers are beyond containment. Even the 2008 numbers, you can take 100 percent of people's income and corporate profit and you'd still be in deficit. There's no way you can raise enough money in taxes.

What about spending?

If you eliminated all federal expenditures except for Medicare and Social Security, you'd still be in deficit. You have to slash Social Security and Medicare. But I don't see any political will to rein in the costs the way they have to be reined in. There's just no way it can be contained. The total federal debt and net present value of the unfunded liabilities right now totals about $75 trillion. That's five times the level of GDP.

What can we, the people, do to stop the government from, you know, taking all our money?

We should have acted 20 years ago. There's not much you can do at this point to prevent the eventual debasement of the dollar. This involves both sides of the political spectrum. It's not limited to the Republicans or the Democrats. They've both been very active in setting this up.

What can individuals do?

The only thing individuals can do now is look to protect themselves. I wish I could see a way, but shy of severe slashing of the social programs that is so politically reprehensible and would create such problems and social unrest, I don't see that as a practical solution.

If you're a young 20- or 25-year-old guy or gal, would you move to another country? What would you do?

We still have a great country. We're going through a period of economic pain. It's happened before. This is the kind of thing that's taken us decades to get into and it will take us decades to get out. Although the hyperinflation is going to be limited largely to the U.S., the economic downturn will affect things globally. I can't tell you how things will go with a hyperinflationary Great Depression, which is where I see things going.

It's the type of thing that will tend to lead to significant political change. People tend to vote their pocketbooks. You could have the rise of a third party. You could even have rioting in the streets. I'm not formally predicting that — anyone can run these different scenarios. For the individual, what you need to do, from an investment standpoint, look to preserve your wealth and assets. Don't worry about the day-to-day fluctuations in the markets. What I'm talking about here is over the long haul...

[Gold is] going to be highly volatile, as will the dollar, over the near term, but longer term, physical gold I would look at as a primary hedge for preserving the purchasing power of your wealth and assets. Maybe some physical silver. Get some assets outside the U.S. dollar. I might even look to move some assets physically outside the United States. The key here is to look at a longer range survival package, battening down the hatches, and preserving your wealth and assets during a very difficult time. Once you're through that, you'll have some extraordinary investment opportunities, and I can't tell you what it's going to be like on the other side of this crisis.

[parsifal]

I agree. Our vision of government and our vision of what this country is all about need to change. We have to get back to the basics all across the spectrum of our activities.

parsy, who thinks the next several years will be interesting

[Thermalseeker]

I'm past the talking part

Yeah, me too. I've been planting fruit and nut trees, berry bushes, and grape vines, a little more every year for the past several years, adding to what was already here when I bought my farm. I've been growing and preserving most of our food for at least seven or eight years now. My ponds are stocked. My "girls" give us more eggs than we can eat. Most of the rest I buy from local farmers. I've gotten everything I own paid for. Along the way I've developed several streams of income with farming being the primary source now. I'm also banking with the "Bank of Mason" more with each passing day. Still need to work on a bit more on my lead investments, but otherwise we are about as prepared as we can be.

[GOPsterinMA]

That’s fantastic! The cost may be high today, but with things going the way they are, the investment made will have been well worth it.

[wally_bert]

I am glad I can drive a tractor, fix a computer, work on older vehicles, run a dozer/loader (with a little refresher time), and a few other things to survive.

[Thermalseeker]

The cost may be high today...

Yeah, but I enjoy it. Keeps me fit, too. I grew up on a farm and both my parents were young adults during the Depression. I've had their stories and methods drilled into my head from early childhood. The funny part is neither my brother or my sister paid any attention. Neither one of them has remotely done anything to prepare themselves. I sometimes wonder if we are even related.....

[Turbo Pig]

Filter it to remove sediment & then put in 1 drop of chlorine bleach per cup of water. If you boil the water to purify it, transfer it back and forth between two bottles to re-aerate it - tastes better that way.

I was just reading up on how to make a still that would purify water. Add a couple of steps to the processes, and you can distill other things, as well that would be good in a barter economy. Cheers!

[jacquej]

It depends on what kind of installation you have in your existing well. Our well has spacers or something to keep stuff from fraying, and we couldn’t put a hand pump on it because of that.

We drilled a second well this summer, and have a hand pump on it. A well driller, preferably the one who installed your existing well will tell you if you can put a hand pump on it.

[SCalGal]

The funny part is neither my brother or my sister paid any attention. Neither one of them has remotely done anything to prepare themselves. I sometimes wonder if we are even related.....

I am reasonably certain that my brother and I are not related, even though there is an odd family resemblance...

[alicewonders]

As much as I hate to see the coming hardships we are most certainly going to have to endure, I think it may be the best thing to happen to us in the sense that Americans will be forced to decide what their real priorities are going to be. A barter society will take us back to a simpler way of living & I think that is a good thing.

Beer, wine & distilled spirits will always be in demand - not a bad idea to learn how to make them.

[1951Boomer]

For those who have a few minutes, I think you’ll find the following testimony extremely riveting:

http://www.religion-online.org/showarticle.asp?title=1309

[BenKenobi]

“NAFTA. All the free trade b*llsh*t which sent jobs overseas. Big over-focus on the rich and big business to the detriment of the country as a whole. Deregulation of Wall Street. etc.”

Wow, Commies thrive here as well. Lets shut down world trade. Worked great for Hoover.

[grumpygresh]

See last chapters of Atlas Shrugged.

[El Gato]

The Great Society has killed the United States.

More like the New Deal, plus the Great Society, the War on Poverty, etc, etc.

[rollin]

I hate to burst your bubble but things happened worse than that. Many of my relatives lived in Germany during that time and have related the situation in great detail in letters which we still have.

[parsifal]

Well then, let’s make you happy and do the opposite. Let’s keep on supporting the workers in China, while Americans live in tents.

There! Now you happy?

parsy, who is trying to be congenial during the Holidays

[El Gato]

Can you install a hand pump on a well? My well’s pump is underground and when the power fails, I have no water

Your grandmother or great grandmother likely had one. A really deep well could be a problem. You can pull water only so high, but you can always push it up. Here's a website which states that their "deep" hand pump can manage 200'. That's down to the water level, not to the bottom of the well. Their shallow pump is only good to 25'.

Bison Hand Water Pumps

This is the "Deep" model, which can be used with a submersible pump still present.

Cost's 1,655.00, although that includes only 64 feet of pipe and lift rod.So your cost would depend on how deep you need to go.

[investigateworld]

I think every German from that era has a story about finding an old gold tooth or gold cuff link then eating very well for a couple of months from the proceeds of the sale.

No, I'm not a 'goldbug', just heard lots of stories.

[GOPsterinMA]

That’s great that you deeded your parents’ advice! The oldtimers knew what to do - they needed to for survival.

RE: siblings - I hear you on that one. My sister has gone over to the “Dark Side” and doesn’t appear to ever be coming back.

Like I tell Mom, “Oh, well!” You can lead the horse to the water...

[DTogo]

Lead, brass, and copper. Precious metals of the future.

[Clay Moore]

“Hyperinflation happens but not that fast.”

Zimbabwe’s prices were doubling each day at the end. You were paid twice a day so you could immediately go buy whatever you could find or afford before your currency devalued any more.