What the Ruling Class is doing with your money
One evidence of a Ruling Class taking over a country is when the rulers go against the wishes of the people who have elected them.
Roughly 90% of Americans rejected the $700,000,000,000.00 ($700B) TARP bailout plan, but the Ruling Class pushed it through anyway.
We rejected the $40B bailout of AIG and trading partner Goldman Sachs – which subsequently grew to a $180B bailout – but the Ruling Class hid what they were doing and illegally used taxpayer monies to perform the bailout anyway. (The guy in charge of this one? Current Treasury Secretary Geithner. Nice.)
We the people also rejected a government take over of GM and Chrysler, but the Ruling Class went ahead and used billions of our dollars to do it anyway, paying preferred creditors pennies on the dollar, and transferred huge proportions of the newly formed companies into the hands of the United Auto Workers union. Yet another Chicago-style cronyism move by the current administration.
If this isn’t going against the will of the people, I don’t know what is. This is government taking power into its own hands and doing what it wants against the will of the people, making huge transfers of wealth and often – like Geithner – feathering his own bed in the process. I don’t know what you call this type of government, but it is not a democratic republic.
Can the US Government actually run a program without bankrupting it?
- Social Security ($17,500,000,000,000.00 underfunded; $17.5 trillion);
- Medicare Part A ($36,700,000,000,000.00 underfunded; $36.7 trillion);
- Medicare Part B ($37,000,000,000,000.00 underfunded; $37 trillion);
- Medicare Part D ($15,600,000,000,000 underfunded; $15.6 trillion),
- Government and military pensions ($2,000,000,000,000 underfunded; $2 trillion)
And we are going to let this same Government run Healthcare? Even the Office of Management and Budget is reporting that the United States government will experience massive, non-stop deficits for the next 70 (SEVENTY) years, requiring the issuance of tens of trillions of dollars of additional debt. The OMB does not project even one year of surplus during the entire seventy year budget period. Link HERE. (And don’t even get me started that these budget numbers are already including $646 Billion in tax revenues from 2012 to 2019 from Cap & Trade, which hasn’t even been passed yet!) Has your elected official talked to you about that? You don’t have to answer.
What is our Government’s response? Print more dollars. The US government has announced that during the fiscal years from 2010 through 2019, it will create an additional $9,000,000,000,000.00 ($9 trillion) in deficits, an amount that is almost certain to be understated by trillions given the country’s current economic trajectory. The government assumes that this vast additional deficit will be funded by others, such as the Chinese, as it is a statistical fact that the United States will be incapable of funding it. Link HERE.
What does this mean to you and me? That our wealth (if we have any) is being destroyed. Create enough dollars and they won’t be worth anything. It’s a simple truth: too much of something makes it worthless. The more our government creates money to cover their RECORD SPENDING, the less valuable your salary is, the less valuable your savings are, etc. Our government is bankrupting us through this spending policy. I know we sometimes think the United States is a blessed country and more immune to these problems than other nations, but let’s not be naive enough to think that somehow supply and demand doesn’t apply here! And that the value of our dollars won’t be adversely affected by the Government printing trillions and trillions more of them!
What can we do? Make a plan to protect yourself and your family. Don’t hold your assets only in dollars. Diversify into other things (land, gold, etc.) Even the Wall Street Journal is saying it’s a good idea to stockpile food. Link HERE.
And let’s get these big spenders out of Washington. I’m not talking Democrats vs. Republicans. Vote people into the House of Representatives that will work to put an end to this spending. The House is the easiest access we have to the Federal Machine. Find people you can support that will work to stop this spending madness. It won’t be easy to stand up to the current machine that is playing party politics as hard as anyone has in recent memory, but we might as well try while our dollars are still worth something.
Honestly, though, I’m not sure what kind of difference we can make at the Federal level until there is a massive reset (huge depression, market collapse, currency devaluation or failure, etc.) but this doesn’t mean we shouldn’t try. We can, however, make a difference at the local level. When our Federal government’s spending policies finally make it impossible to be the “be-all, end-all” throughout America — which it never should be trying to do — we will still need to make life work where we live. Getting involved at the local level will make a huge difference in how our communities adapt and move forward.
What are your thoughts? What are other ways we can prepare for the inevitable problems facing the dollar due to government monetary policy?
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ENERGEIA 
This remindes me a little risk so I will attack Kamchatka with 500.
I think learning and practicing how and when to plant and grow food is a worthy pursuit under any conditions and a potential necessity under future conditions.
That’s funny Todd…and Butch, you are so right. I think we had our best garden in a long time last year, but it was no where near enough to feed our family for very long. We need to branch out and grow a few more things this year.
Mike, we do have tradeplans psetod on the SST Owner’s Club website. The best thing to do is to trade the pairs with the best movement, range and lowest spread costs. It’s pretty easy to see if you look at some daily charts and then intraday charts. But when you make low spread costs a necessary criteria, the list gets pretty small. EURUSD, GBPUSD, EURJPY.. Maybe a few others but those are the three best over a long period of time. In fact, if you’re day trading, why not keep it simple and focus on just the EURUSD? The SST FX just nailed down +1000 pips during the US session this past month but the Euro Session had some nice movement too.
Another great article, Eric. Thank you.
I was hoping that there would have been more comments in response to your question about what we can do about preparing ourselves and our families for the impending destruction of wealth and other fallout. This has kind of been the top question on my mind for at least the past few months. I’d love to buy some farm property, but that’s above my current wealth level. Eliminating debt is a good use for extra money, but sometimes I almost wish I had more debt. Nothing performs in an inflationary environment like debt. When I was on my mission in Russia I saw the effects of massive inflation. The Ruble had been 1:1 with the dollar. When I arrived, it was 1,300 and when I left 2 years later, it was 10,000. I even saw 100% inflation in 1 day. People who had a whole life’s savings in the bank were left with the equivalent of a week’s wages. On the other hand, people with mortgages on their homes paid them off with a week’s wages. I think anyone would rather have been a debtor than a saver in that situation. Still, I am uncomfortable being beholden to anyone. One cannot be free and in debt. Gold is the traditional store of wealth, but I am not really comfortable with it either. I don’t like the high commissions that are required to actually hold gold, and I don’t have confidence that our government would not confiscate gold as they have done in the past. Food makes perfect sense and I feel like I have that mostly taken care of. We live pretty inexpensively, so it has not been hard for us to set aside a couple of year’s worth of living expenses in cash. That used to provide a sense of security, but as we continue to accelerate inflationary policies, holding cash makes less sense. What are some of the other ideas out there as stores of wealth that are either semi-liquid or which produce a stream of value and yet are secure against man-made calamity?
Thanks Sam. True. Savers lose in inflation, debtors win. That’s one ugly part about it – bad economic decisions appear to be rewarded, and economic sense gets turned on its head during inflation.
Personally, I’m not concerned about the gov’t trying to confiscate my gold. They have no way of knowing what gold is being held by the general population. I think of gold – not as a way to pay for things – but as a store of value (like you said) in case something really bad happens. What if China decides to dump the dollar, our gov’t keeps printing more, and inflation spins out of control? I don’t know all the ramifications, but if the dollar becomes worthless or re-valued, with gold you still have a different store of value that could help your family start over.
Even if you have a relatively small plot of land for farming – you can produce your own food and support your family. I’m not sure what size is minimum, but I have met some Georgic folks that are trying to see how much they can live off the land completely. I’ll have to ask them what they have found. If it gets to the point where the dollar is completely worthless, like after WWI when Germans were taking money in wheelbarrows to the market to buy food, at least you will be able to survive. And that might be #1 in a crisis.
Plus, I’ll see if we can get this post linked to some other discussion groups that can help provide other opinions as well regarding your last question about producing value that is secure against calamity.
Sam –
I suggest you continue to think about storing ‘wealth’ (or labor, as it were) in a variety of ways that will be useful to you if things stay ‘normal’, and will help you in a barter or sale situation if things don’t.
I’m about to bring up a couple of unpopular points, but there are historical reasons for considering what I’m about to say. Most of the people in this nation are grass-eaters: what members of the armed forces (and others) call “sheep” or “sheeple”. These people expect someone else to be responsible for their well-being – particularly as it relates to self-defense. There isn’t much to argue about here, but I can refer you to the ‘Comments’ section of the Daily Kos wherein parents (?) state that they’d rather watch their kid get killed than be “reduced” to carrying a gun for self-defense. Uh-huh. If things go pear-shaped, it won’t be the police that are watching your food supplies. Those people will do what they’ve always done: wait for orders. And after they show up, they’ll fill out the requisite paperwork.
My first politically incorrect store of labor is ammunition. If you are a gear-whore, you will buy guns. If you mean to barter, sell, protect yourself and others, or outfit a local community/family group, you will buy ammunition. Ammo has kicked the crap out of the S&P over the last 10 years, and I think it is ahead of gold, too. Five years ago a person could by .308 mil-surp ammo for $167/1000 rounds – delivered. Today that is $500 BEFORE shipping. This is not post-election hysteria, either: those prices were double again, easily. Imagine for a minute how much a person could get for that ammo if there were a REAL emergency…
My second politically incorrect suggestion is rifles. Not handguns. Hand a guy a rifle and a box of ammo and you have made him king of his area – for a while at least. This is a worst-case scenario I’ll admit. Well-publicized Worst Case Scenarios have happened in the United States on several occasions in my short life-time: Ruby Ridge, Waco, Los Angeles (twice), New Orleans, Virginia Tech. There have been others that are less well-known. If you don’t have a rifle, other people decide your fate. If you have a rifle – and know how to use it – you have something to add to the discussion. More than one or two, as you will probably be needing to get help and offer help. Plus you can ALWAYS sell a rifle. Always.
Third = water. If you live in the desert, or if your water comes via electrical pump (including municipal pumps), you need to work on this like your life depends on it. It does. I have a lot of water. More importantly, I have the ability to make a LOT of water potable – in a variety of ways. Bleach (unscented) goes bad in exactly two years: it is “half-power” at one year, and worthless at two. Rotate. One gallon can make 3,800 gallons of water clean enough to drink. Filter first, treat, aerate, use. Big barter and charity item. Filters (big = volume, small = portable) are important. Chemicals (iodine, etc.) lose potency AND don’t kill everything. Water isn’t that good a store of labor, but the tools to make water potable are: big pots, five gallon cans of kerosene or propane and the stoves to go with them, ceramic filters, 55 gallon water-safe drums, water run-off collection systems in your yard, etc.
Fourth is food. You sound like you’ve got it nailed. Might want to consider barter items and quantities.
Fifth politically incorrect item is ‘Vices’: tobacco and alcohol are your friends. Cartons of cigarettes are bartered the world around for things like: clothes, soap, food, water, batteries, and ice. Plastic pints of whiskey, vodka, or Everclear are great, and they double (especially the everclear) as medical items
Sixth politically incorrect store of labor is fuel. Propane. Diesel. Kerosene. If you spent $10,000 on diesel right now, I guarantee you could sell it next year if you had to. Propane? Same. Gasoline doesn’t store very well, but your vehicles may run on it – you have to choose. I’d be storing for cooking, heating, and electricity generation – not vehicle running. Unless that vehicle was a tractor and I had a good farm operation.
Seventh non-PC store of labor: quality hand tools and farm supplies. Ever tried to fix a leak in your own roof? If you don’t have the proper stuff (plastic sheeting at the very least) your house is screwed. Try fixing anything else without nails, screws, etc.? Ever cut lumber without electricity? How about making a fence for your new little goat without fence posts and fencing materials?
Eighth and final non-PC store: medical & hygiene supplies. You’ll need them anyway. If you buy tons (you should), you won’t be able to sell them if everything stays ‘normal’. You can donate and write them off. But if there is a problem, you won’t have enough. Strong barter item.
This sounds like I’m talking about the end of the world. I’m not. If your market-pegged financial vehicles are getting you 7% (they’re not), and inflation is going above that, I’m talking about normal financial decisions. Commodity trading if you like – only you are taking delivery on your contracts – no premium. I also believe that there will be a STRONG buy on some of these items going forward, and I like them better than playing in a fixed game where the Fed injects false liquidity into the market and the gov’t tells everybody that: a) the bond market isn’t failing (ha!), and that there are ‘green shoots’ everywhere in the economy (how’s that treating you?). Finally, if “Globalization” is really all that’s happening in the economy, Americans should get used to the idea that as the playing-field levels, our standard of living is GOING DOWN. So gardens, tools, barter, food storage, and self-protection of these assets is going to be the NORM. Even if we aren’t talking about a 2012/TEOTWAWKI melt-down.
Gold? You can’t eat it, and only very well-off people (I don’t mean rich, I mean well-fed, rural, land-holding farmers in Germany post WWII) trade for gold in bad times. Everyone else wants the same three things as everyone else: Food, Shelter, and Security. Nothing else matters. Gold (maybe) can get you food/water. Widows in Germany traded gold jewelry worth hundreds of dollars for eggs in 1945 Germany. Bad trade? Maybe. It appears that gold was a store of labor that was easily exploited by people in better positions. And it was the only thing those women had.
Cash? Great for a short-term solution. People will take cash for a few days; right up until they don’t believe the government will get the lights back on. In an inflationary cycle, I’d be buying fence wire and posts with ALL my cash.
Last contribution is a long list made by a friend of mine who spent six years outside the wire in Afghanistan. He lives in hurricane country. This is his list of the 100 most-likely-to-disappear when things get tough. After 6 years of “post-apocalyptic” living (at least by American standards), he said that if he got to choose his lot in life in the event of a crash (long-term or short-term) he would be the guy who has two things: ice and laundry soap. Something to think about. The list:
1. Generators
2. Water Filters/Purifiers
3. Portable Toilets
4. Seasoned Firewood
5. Lamp Oil, Wicks, Lamps
6. Coleman Fuel. Impossible to stockpile too much
7. Guns, Ammunition, Pepper Spray, Knives, Clubs, Bats & Slingshots
8. Hand-can openers, & hand egg beaters, whisks
9. Honey/Syrups/white, brown sugar
10. Rice, Beans, Wheat
11. Vegetable Oil
12. Charcoal, Lighter Fluid
13. Water Containers
14. Propane Cylinders
15. Survival Guide Book
16. Mantles: Aladdin, Coleman, etc.
17. Baby Supplies: Diapers/formula. ointments/aspirin, etc.
18. Washboards, Mop Bucket w/wringer (for Laundry)
19. Cookstoves (Propane, Coleman & Kerosene)
20. Vitamins
21. Propane Cylinder Handle-Holder (Urgent)
22. Feminine Hygiene/Haircare/Skin products
23. Thermal underwear (Tops & Bottoms)
24. Bow saws, axes and hatchets, Wedges (also, honing oil)
25. Aluminum Foil Reg. & Heavy Duty (Great Cooking and Barter Item)
26. Gasoline Containers (Plastic & Metal)
27. Garbage Bags (Impossible To Have Too Many)
28. Toilet Paper, Kleenex, Paper Towels
29. Milk – Powdered & Condensed (Shake Liquid every 3 to 4 months)
30. Garden Seeds (Non-Hybrid) (A MUST)
31. Clothes pins/line/hangers (A MUST)
32. Coleman’s Pump Repair Kit
33. Tuna Fish (in oil)
34. Fire Extinguishers (or..large box of Baking Soda in every room)
35. First aid kits
36. Batteries (all sizes…buy furthest-out for Expiration Dates)
37. Garlic, spices & vinegar, baking supplies
38. Big Dogs (and plenty of dog food)
39. Flour, yeast & salt
40. Matches. {“Strike Anywhere” preferred.) Boxed, wooden matches will go first
41. Writing paper/pads/pencils, solar calculators
42. Insulated ice chests (good for keeping items from freezing in Wintertime)
43. Workboots, belts, Levis & durable shirts
44. Flashlights/LIGHTSTICKS & torches, “No. 76 Dietz” Lanterns
45. Journals, Diaries & Scrapbooks (jot down ideas, feelings, experiences
46. Garbage cans Plastic (great for storage, water, transporting – with wheels)
47. Men’s Hygiene: Shampoo, Toothbrush/paste, Mouthwash/floss, nail clippers
48. Cast iron cookware (sturdy, efficient)
49. Fishing supplies/tools
50. Mosquito coils/repellent, sprays/creams
51. Duct Tape
52. Tarps/stakes/twine/nails/rope/spikes
53. Candles
54. Laundry Detergent (liquid)
55. Backpacks, Duffel Bags
56. Garden tools & supplies
57. Scissors, fabrics & sewing supplies
58. Canned Fruits, Veggies, Soups, stews, etc.
59. Bleach (plain, NOT scented: 4 to 6% sodium hypochlorite)
60. Canning supplies, (Jars/lids/wax)
61. Knives & Sharpening tools: files, stones, steel
62. Bicycles…Tires/tubes/pumps/chains, etc.
63. Sleeping Bags & blankets/pillows/mats
64. Carbon Monoxide Alarm (battery powered)
65. Board Games, Cards, Dice
66. D-con Rat poison, MOUSE PRUFE II, Roach Killer
67. Mousetraps, Ant traps & cockroach magnets
68. Paper plates/cups/utensils (stock up, folks)
69. Baby wipes, oils, waterless & Antibacterial soap (saves a lot of water)
70. Rain gear, rubberized boots, etc.
71. Shaving supplies (razors & creams, talc, after shave)
72. Hand pumps & siphons (for water and for fuels)
73. Soysauce, vinegar, bullions/gravy/soupbase
74. Reading glasses
75. Chocolate/Cocoa/Tang/Punch (water enhancers)
76. “Survival-in-a-Can”
77. Woolen clothing, scarves/ear-muffs/mittens
78. Boy Scout Handbook, / also Leaders Catalog
79. Roll-on Window Insulation Kit (MANCO)
80. Graham crackers, saltines, pretzels, Trail mix/Jerky
81. Popcorn, Peanut Butter, Nuts
82. Socks, Underwear, T-shirts, etc. (extras)
83. Lumber (all types)
84. Wagons & carts (for transport to and from)
85. Cots & Inflatable mattress’s
86. Gloves: Work/warming/gardening, etc.
87. Lantern Hangers
88. Screen Patches, glue, nails, screws,, nuts & bolts
89. Teas
90. Coffee
91. Cigarettes
92. Wine/Liquors (for bribes, medicinal, etc,)
93. Paraffin wax
94. Glue, nails, nuts, bolts, screws, etc.
95. Chewing gum/candies
96. Atomizers (for cooling/bathing)
97. Hats & cotton neckerchiefs
98. Livestock
99. EyeglassesDental health items
100. Razor-wire
Can you imagine a better store of wealth than the ability to make electricity when no one else can? You can make ice, you can make power tools charge, you can heat water.
If the economy stays normal, your generator is worth everything you paid for it. The diesel or propane is too.
Better than rolling the dice with the 401K in my book.
Wow good points Jeff, and thanks – that is quite a list. It certainly has me thinking…
Canning supplies a good store of labor? The ability to make food that most other people can’t? Won’t let you down in the short term either. Can you sell it? Yes, people have been saying the world is ending for years, and people are still buying canning jars on ebay today.
I’m certainly not going to add much detail to what Jeff already said. But I will say that a time-horizon is important to make part of your calculations. For example… if I’m looking out 3 years, I have a different expectation of where life is going to be than if I look out 10, 20, or more years. Hence, how I position my resources is different…and hopefully strategic based on my plans for future need/access.
An overly simplistic example is ammunition prices in the last 2 years. SKYROCKETING in early 2009…and now back to ‘kinda’ normal levels (still higher than several years ago). Sure…I bought some in 2009 ‘just in case.’ But I was willing to wait out the frenzy a little bit and now I can be a bit more patient to find my right price.
At some point in the future ‘goods’ may be king. But judiciously applying your own time horizon for decision making will be critical.
Also, if wheat will be more valuable than gold…then I’m going to take this as investment advice. 🙂
Yeah, that’s a very good point Greg. The concept of wheat being more valuable than gold as investment advice is great thinking.