Economic Collapse Preparedness

It appears to me that we are verging on a pretty severe economic collapse. Never in the history of the world has the entire world used a single fiat currency as their reserve. Never in the history of the world has a fiat currency not been printed into inflationary worthlessness. As I have posted earlier, there is no option for the US Government/Federal Reserve but to either default outright or to default by currency debasement. Given that last year the Fed began running out of buyers of its debt at an interest rate that is sustainable for them (~0%)... collapse of the US bond market and correspondingly the value of the dollar will happen within the next few years.

I would like to use this thread as a discussion of how we should prepare for such an economic collapse. Below are some thoughts of mine. I think we should try to separate preparedness into two scenarios: 1. Dollar collapse: dollar becomes worthless, but orderly respect for ownership of property continues. 2. Civilization collapse: existing governments lose control and property rights are no longer respected.

Dollar Collapse (USDC):
- Bonds would become worthless. Existing debts would be wiped clean. Money market is already not worthwhile.
- What would happen to the US stock market?
- Would people prefer stocks over commodities such as gold & silver? In what time frame might we return to a gold/silver standard?
- What would happen to the US real estate market? Would people tend to want to move to cities or farms? To what extent would people want to move in together vs move into larger homes?
- What would be the best things to invest in given an upcoming collapse of the value of the dollar?

Civilization Collapse (CivC):
- In chaos, possession of guns & ammo (self defense capability) is more valuable than any property that was once protected by the state, including land, buildings, food/equipment stores, water resources, and gold/commodities.
- Having a network of friends nearby that one could rely on could significantly improve chances of survival/success.
- After an initial stage of mass murder and starvation as existing food supply networks crumble, states and ownership would be vastly reorganized.
Questions:
Where is the best places one could live now if expecting CivC?
Where is should one go once CivC begins?
What other ways can we prepare for CivC?

==================

One thing I'd like to bring to all of your attention: The GLD gold index fund is not actually backed by gold. Instead it is backed by corrupt banks who claim that they are hold gold for GLD. Given that all of these corrupt businesses will be wiped out when the dollar crashes, I'd assume that given a collapse of the dollar, all you might ever expect to get from GLD is worthless dollars.

On my strategy:
- I've heard many suggest buying and living on farm land far from cities. This sounds like a good investment, although in the short term its better for me to live in a city and work there (I'm a software engineer). Potentially I could look into working remotely.
- I could definitely by more guns and ammo, I'm a little short there.
- I just moved to Dallas, TX, and I need to increase relations with the locals!

Post 1

Monday, May 28, 2012 - 12:10pm

When is this collapse going to happen?

Post 2

Monday, May 28, 2012 - 12:44pm

Brandon,

There is no way the federal government can pay off its existing debt through taxation, it only has inflationary default or outright default as options. If more people were like me, they would realize this and have no interest in holding USD/Treasuries. Hence the collapse of the dollar would have already happened. I have no idea when the vast majority of fools around the world will realize that USD and Treasuries are not safe havens. Many continue to hold and buy them.

I think it will happen soon, particularly because I think the world has become saturated with USD/Treasuries. In the past when the Federal Government issued more Tresuries, the world/private market actually purchased them. In 2011 through QE2, the Fed purchased a significant portion of issued Treasuries. Basically this means that people no longer think that Treasuries are worthwhile, and the Fed is paying off the Government's debts directly with inflation. QE2 was an inflationary default. This is a new thing... AFAIK the Federal Reserve has never before purchased a significant portion of issues Treasuries. Since newly issued Treasuries are now being purchased by the Fed instead of by private investors & foreign banks, you can see that the demand for dollars has already dropped, and that future increase in money supply will not be covered by increased savings of dollars, but instead result in the drop in value of the dollar.

Some say that the Government is trying to make things look like they are improving at least until the elections in November 2012. After they get their corrupt politicians elected, they can reduce market manipulations, allow the public to see more of the truth of how big of a mess the Federal Government is in, and then the collapse will come.

So ~ November 2012 is my best prediction. It could happen before if something triggers worldwide panic of mistrust in fiat. It could happen much later if somehow the mob of sheep around the world somehow continue to believe that inflation is at 2.3 percent even when their purchasing power really drops by 20% each year. The dollar has maintained a significant portion of its value through all living generations of people. People still for some reason value the dollar. I have no idea when general public sentiment will change. Maybe when prices of food double or triple?

Post 3

Monday, May 28, 2012 - 12:47pm

Welcome to Texas, Dean.

I just got here myself in January of this year (preceded by Mike Marotta, who got here first). There's a country song sung by either Waylong Jennings, Hank Williams, Jr., or Willie Nelson (I forget which) entitled: "All my Ex's live in Texas", but there may be a new song out soon after the aforementioned US armageddon: "All surviving Objectivists live in Texas". Now, it doesn't quite roll off of the tongue as well as the first song, but we live in a postmodern era where things don't need to flow right (see contemporary rap music, for details). As far as guns go, I'm almost as new to the arena as you are. Even still, here's what I found on the matter:

A 'Glock 17' 9mm handgun holds 17 bullets, in case you miss with the first dozen or so shots. I once heard an interview with a cop who said that everyone misses the target in pistol fights (because no man has the kind of calm control you would need in order to be accurate in those kinds of situations). If you are going to have to miss -- and, according to that cop, you are going to have to miss -- then it might pay to have some extra bullets in the clip.

A 'Mossberg 500 (or a 590)' combat shotgun holds up to 9 shells and is safer to have and more effective to use (at close range) than a handgun.

A scoped, semi-automatic 'AR-15', with up to a 100-round capacity magazine, and mounted on a 360-degree swivel, would provide the needed range to successfully defend a farm house up on a hill.

These 3 weapons would be all you'd need to survive in post-apocalyptic America. If more than 100 'sniper' shots from the AR-15 were ever required in order to stifle the transgressors assaulting your farm house, then simply switch to the Mossberg and literally mow-down the front two-thirds of the advancing hooligans. After 9 shots of the Mossberg has thinned-out the crowd, you can finish off anyone still standing (and not running away in unforeseen terror) with the 17 shots inside your Glock 17. That's 125 reasons (without even having to re-load) for people not to mess with you.

Happy Memorial Day.

:-)

Ed

(Edited by Ed Thompson on 5/28, 1:27pm)

Post 4

Monday, May 28, 2012 - 1:19pm

Edited:
My link for the 3 hour interview, below, was apparently wrong.
It should be http://www.c-span.org/Events/Author-Mark-Steyn-on-Book-TV39s-In-Depth/10737427839-1/

An interview Feb. 5 with Mark Steyn was re-played on C-SPAN2 Book TV today. It's 2 hours and 56 minutes long, but well worth the effort. His new book, After America, Get Ready for Armageddon, details the possible mechanisms of collapse. I haven't yet read the book so I don't know if he has any recommendations on how to cope.

Excerpt from a review:

Optimistic About America�s Future?
Don�t Be.

In his giant New York Times bestseller, America Alone: The End of the World as We Know It, Mark Steyn predicted collapse for the rest of the Western World. Now, he adds, America has caught up with Europe on the great rush to self-destruction.

It�s not just our looming financial collapse; it�s not just a culture that seems on a fast track to perdition, full of hapless, indulgent, childish people who think government has the answer for every problem; it�s not just America�s potential eclipse as a world power because of the drunken sailor policymaking in Washington�no, it�s all this and more that spells one word for America: Armageddon.

What will a world without American leadership look like? It won�t be pretty�not for you and not for your children. America�s decline won�t be gradual, like an aging Europe sipping espresso at a caf� until extinction (and the odd Greek or Islamist riot). No, America�s decline will be a wrenching affair marked by violence and possibly secession.

With his trademark wit, Steyn delivers the depressing news with raw and unblinking honesty�but also with the touch of vaudeville stand-up and soft shoe that makes him the most entertaining, yet profound, columnist on the planet. And as an immigrant with nowhere else to go, he offers his own prescription for winning America back from the feckless and arrogant liberal establishment that has done its level best to suffocate the world�s last best hope in a miasma of debt, decay, and debility. You will not read a more important�or more alarming, or even funnier�book all year than After America.

(Edited by Sam Erica on 5/28, 3:48pm)

(Edited by Sam Erica on 5/28, 3:50pm)

(Edited by Sam Erica on 5/28, 4:02pm)

Post 5

Monday, May 28, 2012 - 1:24pm

Ed:

A scoped, semi-automatic 'AR-15', with up to a 100-round capacity magazine, and mounted on a 360-degree swivel, would provide the needed range to successfully defend a farm house up on a hill.

Come to think of it, Mark Steyn said something about going to New Zealand and buying farmland "with a defensible perimeter." :-)

Sam

Post 6

Tuesday, May 29, 2012 - 10:00pm

If you are convinced that the end is coming in just a few months, then the best way to beat the government reserve bankers at their own inflation game is to borrow tons of dollars from them to buy physical items that will get you through the collapse you see coming. Put all of your guns, ammo, and MREs on a credit card. Refinance your house to the max, take all the cash and buy supplies. If, by your calculations, the actual inflation rate is 20% per year compounded, then any loan you can take at 19% or lower is actually profit!

Remember the apex of the housing bubble? The prevailing wisdom was that it was safe to take out a huge mortgage, even if you couldn't afford it, because your real estate was bound to gain value so fast that you could always sell it for a fat profit. Today you can be sure that the value of the dollars you borrow will diminish in value so fast that any loan will be easy to repay. When the day comes that you need a grocery cart full of dollars to buy a loaf of bread, coming up with half of million of them to pay off your mortgage won't be too tough at all. Just sell a couple boxes of the .223 ammo from your AR-15. Better yet, have a spare AR-15 available for sale.

If you're in debt, then inflation is your best friend.

Post 7

Friday, June 1, 2012 - 5:04am

So what has held off the perception of widespread inflation until now?

1] Slow boil.
2] Weak demand in depressed economies.
3] Strategic redefinitions of 'inflation.'
4] Capital pooled in inefficient cul de sacs of DC cronyism.

The monetarists are wrong in both directions. You don't treat a cold by giving someone a fever, and vice versa. The alternate floggers/prodders of something they call 'the economy' are exactly like someone with only a heater and an air conditioner trying to regulate 'the' temperature in the United States; complaints are guaranteed from either Florida or Alaska. What 'the' temperature? An aggregate average temperature?

They've thrown so much water into the barely circulating pipes that it is sloshing over the sides of some tanks and splashing on the floor. Occasionally, a turbine or two runs only downhill for as long as the unpumped water drains. But risk takers are not focused up with their own skin in the game and pulling on pump handles. Value is not being created, just consumed, and as a result, there is no engine driving circulation in the pipes. this means that all of our policies are not building beast, only carving carcass; running only downhill in this universe.

The fact that there is not widespread classic inflation in this scenario is evidence of how deep this recession is; it is not only a recession, it is a depression, and our focus on GDP needs to be re-thought. Would not mild inflation in flat on their ass economies show up as weak growth in GDP? What is GDP scored in? Dollars. And with endlessly creative license to redefine inflation, inflation adjusted GDP is a too irresistible opportunity for cheerleading propaganda and even with that...

...1.9% growth in GDP is not growth in the economies. It is the water sloshing out of the tanks and running downhill. There is no beast breathing life, the engines of our economies are stalled, precisely because of America's attempt to become the latest centrally planned command and control 'the economy' being run from afar by alternate easy prodders/floggers of those who some think can't do anything but run uphill no matter what risk shedding nonsense the tribe attempts.

The lack of widespread inflation under these circumstances -- the utter failure of the Keynesian abusers to 'jumpstart' anything -- is a glaring indictment of the whole concept of easy floggers/prodders trying to run 'the' Economy.

The tribe and all of its experts have and always had the wrong model of our economies; isn't that crystal clear by now, and if not now, then how much lower must the nation sink to its knees before it is obvious?

regards,
Fred

Post 8

Friday, June 1, 2012 - 4:53pm

Very well said, Fred!

Post 9

Friday, June 1, 2012 - 7:40pm

...1.9% growth in GDP is not growth in the economies.

Shyoot, our population grows by just over 1.0% each year, so that pretty much amounts to a per-capita-GDP flatline.

Ed

Newsflash: All of the 2012 gains in the DOW have just now been eradicated.

(Edited by Ed Thompson on 6/01, 7:45pm)

Post 10

Wednesday, June 13, 2012 - 2:28am

Hello everybody, and thank you in advance for all replies.

Could someone please explain in simple terms to whom United States owes $14.000.000.000.000?

Thank you,
Gav

Post 11

Wednesday, June 13, 2012 - 3:46pm

To bondholders - individual and institutional investors in the US and abroad. Since the debt is so large, this is a very diverse collection. Some of these are people and institutions that owned Greek bonds a month or two ago.

Post 12

Wednesday, June 13, 2012 - 6:14pm

14.3T USD treasuries in ~June 2011 broken down by owner ( http://cnsnews.com/news/article/fed-passes-china-top-owner-us-debt):

4.69: social security and other wealth redistributive by force government institutions
9.65: publically tradable

Publically tradable:
4.45: stupid* foreign governments (china:1.1, japan:0.9)
1.33: corrupt federal reserve (monopoly on USD money making, legally not a government institution)
3.87: stupid* people and stupid* banks

*Stupid because of imminent collapse of value of USD due to unavoidable Federal Government debt default.

Post 13

Friday, June 15, 2012 - 9:02am

Hello again, thank you.
What means 'Federal Government debt default'? US holds greek bonds?

Thanks,
Gav

Post 14

Friday, June 15, 2012 - 12:57pm

Debt default means failure by the borrower to keep up payments on the debt.

Post 15

Friday, June 15, 2012 - 11:28pm

Thank you Peter. What does it mean then, the Federal Government debt default? Is it avoidable?

Post 16

Monday, June 18, 2012 - 11:28am

Here is an interesting list of US Debt holders.

http://www.cnbc.com/id/29880401?slide=1

The #1 holder of US Debt, by far, is the SS Trust Fund, far bigger than even China. When we add Medicare, the total is about $3T dollars, by far the single largest element.

We can default on the debt...by defaulting on the SS and Medicare 'assets' held by the government as US Debt.

Private pension funds hold just under 1T$.

An interesting consequence of SS and Medicare being the largest willing debt holder is, 'no more.' Both programs have inverted, have now gone begging to US Treasury. We not only need to stress the US Treasury by making good on now beggar SS/Medicare, but at the very same time, must replace the #1(by far)willing holder of US debt-- 3 times larger than China.

That is some financially engineered accomplishment. I hope our kids figure this out, and see what a great job our government has done managing 15% of middle class payroll for the entire working years of the boomers(many of whose private pensions are also subject to default by US Debt.)

Leaving what -should have been- a demographically driven era of surplus(when the boomers were in the peak of their earnings and tax paying years), our government 'the economy runners' are handing over a broke busted credit card and a drawer full of IOUs to payoff.

The reason for this is transparent; during the boomer's surplus tax paying years, our government could not resist its profligate ways and spent not only the demographic surplus, but borrowed from the future as well.

That doubly de-invested future is here; big government profligate spending has undeniably screwed the pooch, big time.

We are now counting on the following in order to 'compete' in the world; our C.F. isn't quite as bad as Europe's C.F.

Post 17

Monday, June 18, 2012 - 1:09pm

Here is an interesting list of US Debt holders.
http://www.cnbc.com/id/29880401?slide=1

Thanks, Fred. To save time:
1. Social Security Trust Funds: $2.67 trillion
2. U.S. Federal Reserve: $1.659 trillion
3. China: $1.169 trillion
4. Savings Bonds & Other Investors: $1.102 trillion
5. Japan: $1.083 trillion
6. Pension Funds: $903.4 billion
7. Mutual Funds: $797.9 billion
8. State and Local Governments: $444.6 billion
9. Medicare Trust Funds: $324.57 billion
10. Depository Institutions: $286.3 billion
11. Oil Exporters: $254.5 billion
12. Insurance Companies: $253.7 billion
13. Brazil: $237.4 billion
14. Caribbean Banking Centers: $224.8 billion
15. Taiwan: $184.4 billion

Post 18

Monday, June 18, 2012 - 5:07pm

I thought the Saudis held $1 trillion of our debt.

I got that "factoid" from a Michael Moore movie, probably Fahrenheit 911. Maybe it isn't that they hold a trillion dollars in debt, per se, but own a trillion dollars of our annual GDP (owning companies that produce a significant fraction of our GDP). Of course, there is always the off-chance possibility that Michael Moore was deliberately mischaracterizing something here.

:-)

Ed

(Edited by Ed Thompson on 6/18, 5:09pm)

Post 19

Wednesday, June 20, 2012 - 4:37pm