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Showing posts with label coming food crisis. Show all posts
Showing posts with label coming food crisis. Show all posts

Saturday, March 15, 2014

15 Reasons Why Your Food Prices Are About To Start Soaring

This article came from Michael Snyder of The Economic Collapse blog, posted on Zero Hedge, and highlights to end to not only stock food but to become food self-sufficient. Growing and harvesting your own food - that may mean greenhouse throughout the year. It may mean being in a community where livestock are prevalent and the ability to barter for meat on the hoof; trade produce for other food items, etc. The other point is to try and make yourself recession or depression proof. Consider having some level of gold and silver on hand. Items for barter are good too. Cash on hand for when the banks or ATM's run dry or have "holidays" or withdrawal restrictions....all things to consider.

Did you know that the U.S. state that produces the most vegetables is going through the worst drought it has ever experienced and that the size of the total U.S. cattle herd is now the smallest that it has been since 1951? Just the other day, a CBS News article boldly declared that "food prices soar as incomes stand still", but the truth is that this is only just the beginning. If the drought that has been devastating farmers and ranchers out west continues, we are going to see prices for meat, fruits and vegetables soar into the stratosphere. Already, the federal government has declared portions of 11 states to be "disaster areas", and California farmers are going to leave half a million acres sitting idle this year because of the extremely dry conditions.

Sadly, experts are telling us that things are probably going to get worse before they get better (if they ever do). As you will read about below, one expert recently told National Geographic that throughout history it has been quite common for that region of North America to experience severe droughts that last for decades. In fact, one drought actually lasted for about 200 years. So there is the possibility that the drought that has begun in the state of California may not end during your entire lifetime.

This drought has gotten so bad that it is starting to get national attention. Barack Obama visited the Fresno region on Friday, and he declared that "this is going to be a very challenging situation this year, and frankly, the trend lines are such where it's going to be a challenging situation for some time to come."

According to NBC News, businesses across the region are shutting down, large numbers of workers are leaving to search for other work, and things are already so bad that it "calls to mind the Dust Bowl of the 1930s"... In the state's Central Valley — where nearly 40 percent of all jobs are tied to agriculture production and related processing — the pain has already trickled down. Businesses across a wide swath of the region have shuttered, casting countless workers adrift in a downturn that calls to mind the Dust Bowl of the 1930s.

If you will recall, there have been warnings that Dust Bowl conditions were going to return to the western half of the country for quite some time.

Now the mainstream media is finally starting to catch up.

And of course these extremely dry conditions are going to severely affect food prices. The following are 15 reasons why your food bill is going to start soaring.....

#1 2013 was the driest year on record for the state of California, and 2014 has been exceptionally dry so far as well.

#2 According to the U.S. Drought Monitor, 91.6 percent of the entire state of California is experiencing "severe to exceptional drought" even as you read this article.

#3 According to CNBC, it is being projected that California farmers are going to let half a million acres of farmland sit idle this year because of the crippling drought.

#4 Celeste Cantu, the general manager for the Santa Ana Watershed Project Authority, says that this drought could have a "cataclysmic" impact on food prices...

Given that California is one of the largest agricultural regions in the world, the effects of any drought, never mind one that could last for centuries, are huge. About 80 percent of California's freshwater supply is used for agriculture. The cost of fruits and vegetables could soar, says Cantu. "There will be cataclysmic impacts."

#5 Mike Wade, the executive director of the California Farm Water Coalition, recently explained which crops he believes will be hit the hardest...
Hardest hit would be such annual row crops as tomatoes, broccoli, lettuce, cantaloupes, garlic, peppers and corn. Wade said consumers can also expect higher prices and reduced selection at grocery stores, particularly for products such as almonds, raisins, walnuts and olives.

#6 As I discussed in a previous article, the rest of the nation is extremely dependent on the fruits and vegetables grown in California. Just consider the following statistics regarding what percentage of our produce is grown in the state...
-99 percent of the artichokes
-44 percent of asparagus
-two-thirds of carrots
-half of bell peppers
-89 percent of cauliflower
-94 percent of broccoli
-95 percent of celery
-90 percent of the leaf lettuce
-83 percent of Romaine lettuce
-83 percent of fresh spinach
-a third of the fresh tomatoes
-86 percent of lemons
-90 percent of avocados
-84 percent of peaches
-88 percent of fresh strawberries
-97 percent of fresh plums

#7 Of course it isn't just agriculture which will be affected by this drought. Just consider this chilling statement by Tim Quinn, the executive director of the Association of California Water Agencies...
"There are places in California that if we don’t do something about it, tens of thousands of people could turn on their water faucets and nothing would come out."

#8 The Sierra Nevada snowpack is only about 15 percent of what it normally is. As the New York Times recently explained, this is going to be absolutely devastating for Californians when the warmer months arrive...
Experts offer dire warnings. The current drought has already eclipsed previous water crises, like the one in 1977, which a meteorologist friend, translating into language we understand as historians, likened to the “Great Depression” of droughts. Most Californians depend on the Sierra Nevada for their water supply, but the snowpack there was just 15 percent of normal in early February.

#9 The underground aquifers that so many California farmers depend upon are being drained at a staggering rate...
Pumping from aquifers is so intense that the ground in parts of the valley is sinking about a foot a year. Once aquifers compress, they can never fill with water again.
It’s no surprise Tom Willey wakes every morning with a lump in his throat. When we ask which farmers will survive the summer, he responds quite simply: those who dig the deepest and pump the hardest.

#10 According to an expert interviewed by National Geographic, the current drought in the state of California could potentially last for 200 years or more as some mega-droughts in the region have done in the past...
California is experiencing its worst drought since record-keeping began in the mid 19th century, and scientists say this may be just the beginning. B. Lynn Ingram, a paleoclimatologist at the University of California at Berkeley, thinks that California needs to brace itself for a megadrought—one that could last for 200 years or more.

#11 Much of the western U.S. has been exceedingly dry for an extended period of time, and this is hurting huge numbers of farmers and ranchers all the way from Texas to the west coast...
The western United States has been in a drought that has been building for more than a decade, according to climatologist Bill Patzert of NASA’s Jet Propulsion Laboratory.
“Ranchers in the West are selling off their livestock," Patzert said. "Farmers all over the Southwest, from Texas to Oregon, are fallowing in their fields because of a lack of water. For farmers and ranchers, this is a painful drought.”

#12 The size of the U.S. cattle herd has been shrinking for seven years in a row, and it is now the smallest that it has been since 1951. But our population has more than doubled since then.

#13 Extremely unusual weather patterns are playing havoc with crops all over the planet right now. The following is an excerpt from a recent article by Lizzie Bennett...
Peru, Venezuela, and Bolivia have experienced rainfall heavy enough to flood fields and rot crops where they stand. Volcanic eruptions in Ecuador are also creating problems due to cattle ingesting ash with their feed leading to a slow and painful death.

Parts of Australia have been in drought for years affecting cattle and agricultural production.

Rice production in China has been affected by record low temperatures.

Large parts of the UK are underwater, and much of that water is sea water which is poisoning the soil. So wet is the UK that groundwater is so high it is actually coming out of the ground and adding to the water from rivers and the sea. With the official assessment being that groundwater flooding will continue until MAY, and that’s if it doesn’t rain again between now and then. The River Thames is 65 feet higher than normal in some areas, flooding town after town as it heads to the sea.

#14 As food prices rise, our incomes are staying about the same. The following is from a CBS News article entitled "Food prices soar as incomes stand still"...
While the government says prices are up 6.4 percent since 2011, chicken is up 18.4 percent, ground beef is up 16.8 percent and bacon has skyrocketed up 22.8 percent, making it a holiday when it's on sale.

#15 As I have written about previously, median household income has fallen for five years in a row. So average Americans are going to have to make their food budgets stretch more than they ever have before as this drought drags on.
If the drought does continue to get worse, small agricultural towns all over California are going to die off.

For instance, consider what is already happening to the little town of Mendota.......
The farms in and around Mendota are dying of thirst. The signs are everywhere. Orchards with trees lying on their sides, as if shot. Former farm fields given over to tumbleweeds. Land and cattle for sale, cheap. Large numbers of agricultural workers continue to hang on, hoping that somehow there will be enough work for them. But as Evelyn Nieves recently observed, panic is starting to set in...

Off-season, by mid-February, idled workers are clearly anxious. Farmworkers and everyone else who waits out the winter for work (truckers, diesel providers, packing suppliers and the like) are nearing the end of the savings they squirrel away during the season. The season starts again in March, April at the latest, but no one knows who will get work when the season begins, or how much.

People are scared, panicked even. I did not write this article so that you would panic. Yes, incredibly hard times are coming. If you will recall, the 1930s were also a time when the United States experienced extraordinarily dry weather conditions and a tremendous amount of financial turmoil. We could very well be entering a similar time period.

Worrying about this drought is not going to change anything. Instead of worrying, we should all be doing what we can to store some things up while food is still relatively cheap. Our grandparents and our great-grandparents that lived during the days of the Great Depression knew the wisdom of having a well-stocked food pantry, and it would be wise to follow their examples. Please share this article with as many people as you can. The United States has never faced anything like this during most of our lifetimes. We need to shake people out of their "normalcy bias" and get them to understand that big changes are coming.

Monday, July 22, 2013

U.S. Military Prepares for Global Unrest Amid Climate Fears

Op-Editorial piece featured on-line, written by Marlene Cimons of Climate Nexus for LiveScience, and brought to my attention by a reader who stated that "if the military is planning on contingencies missions for global warning chaos, surely they have to be planning contingencies for economic collapse, martial law, etc, etc." Well, James you are right about the military having contingency plans for about everything. These are called OPLANS. Doesn't mean the military wants to execute these plans, just being prepared.


Though Earth's shifting climate evokes many images, civil unrest usually isn't one of them. Yet, a warming planet could have a profound impact on national security, both in the United States and abroad. This time, the threat isn't from terrorism or a single enemy, but from natural disasters occurring on an unprecedented scale.

Acts of nature fueled by a warming climate — for example, floods and prolonged drought — may lead to disrupted migration, food and water shortages, and other public health crises — which, in turn, could prompt civil and political instability. Those impacts would pose a particularly profound threat for people in countries with fragile governments, including key U.S. strategic interests.

This threat has Pentagon officials worried enough to speak out and to invest in research to better understand the relationships among conflict, socioeconomic conditions and climate. The U.S. Department of Defense (DOD) plans to use the data to predict future threats and develop ways to cope with them.

Under its highly selective Minerva social-science program, the DOD has awarded researchers at the University of Maryland a three-year, $1.9 million grant to develop models that will help policymakers anticipate what could happen to societies under a range of potential climate-change scenarios.

"It's likely that physical and economic disruptions resulting from climate change could heighten tensions in sensitive areas of the world," said Elisabeth Gilmore, an assistant professor at the University of Maryland's school of public policy and the study's lead researcher. "The environmental changes from climate change can have important effects on our well-being and security. We need to better understand these interactions."

Her team plans to use statistical models and case studies to identify the best predictors of climate-related conflict, and then use the data and a novel simulation method to generate forecasts of conflict over a range of socioeconomic and climate-change scenarios. Finally, the project will identify a range of military and policy interventions that could reduce the occurrence of climate-related civil conflict.

The Pentagon has been concerned about the national security implications of climate change for quite some time, and military officials have continued to speak out about them.

For example, Navy Adm. Samuel J. Locklear III, who leads the U.S. Pacific Command, repeatedly has warned of the national security dangers of climate change. In fact, earlier this year, he said global warming was "the most likely thing ... [to] cripple the security environment, probably more likely than the other scenarios we all often talk about."

In 2007, CNA, a Pentagon-funded think tank that conducts in-depth research and analysis, released a report from a panel of retired senior military officers and national security experts who predicted that extreme weather events prompted by climate shifts could disrupt the U.S. way of life and cause already weak governments to fall, particularly in many Asian, African and Middle Eastern nations where marginal living standards already exist.

Moreover, the report warned that the United States may find itself drawn into these situations to help provide stability before conditions worsen, before they are exploited by extremists or after a conflict has begun. Even stable governments, like the United States' and those of nations in Europe, could be pressured to take in large numbers of immigrants and refugees as drought increases and food production dwindles in Latin America and Africa, the report added.

Some researchers have suggested that framing climate change as a threat to national security and public health, rather than to the environment, might make the issue more relevant and meaningful to many conservative Americans and others who tend to deny or dismiss it. But, surprisingly, recent research published in Climatic Change by Teresa Myers of George Mason University and her colleagues indicated that such seems to make those individuals angry.

The researchers weren't sure why this approach elicited an angry response, but they wonder whether the climate-change deniers resented an attempt to connect national security — an issue they care about — with climate change, an issue they tend to dismiss. Or, they may have been upset with the researchers for presenting claims about global warming and national security they did not think were authentic or credible.

Instead, perhaps the doubters should read the words of retired U.S. Gen. Gordon R. Sullivan, chairman of CNA's military advisory board and the U.S. Army's former chief of staff. He seems to believe that enough scientific evidence of climate change's impact exists to be sobering — and that it deserves the U.S. government's attention.

"We seem to be standing by —and, frankly, asking — for perfectness in science,"' Sullivan wrote in the 2007 CNA report. "People are saying they want to be convinced, perfectly. They want to know the climate-science projections with 100 percent certainty. Well, we know a great deal, and even with that, there is still uncertainty. But the trend line is very clear. We never have 100 percent certainty. We never have it. If you wait until you have 100 percent certainty, something bad is going to happen on the battlefield. That's something we know. You have to act with incomplete information. You have to act based on the trend line. You have to act on your intuition sometimes."

Sunday, June 30, 2013

Four Collapse Scenarios

A long but very good read from James Corbett, called Four Economic Collapse Scenarios (and How to Prepare for Them) :

Without a doubt one of the most frequently asked questions I hear from my readers and listeners is: “So when do you think the economic collapse will happen?” That question has a number of related follow ups, of course. Like: “When the collapse comes, what will I need to have?” and “Will my 401k be there when I retire?” and “How much of my money should be in x?” where x is alternately stocks, bonds, real estate, commodities, alternative currencies, survival goods, or, most often, precious metals. Given that I have talked repeatedly and at great length about the mathematical certainty of the coming collapse, these types of questions are hardly surprising. I can certainly relate to the people who are motivated to ask about the collapse and how to prepare for it. After all, when you strip away all of the distractions from the market (the daily dips and spikes in individual stocks or indices, the movements in the dollar and the yen and the euro, the latest manufacturing data or doctored unemployment numbers or bond yield figures), what else is there really to concentrate on but the end point we all know is coming?

And we do know that it's coming. We all learn the simplest law of the universe before we're even old enough to read and write: whatever goes up must come down. So too is the simplest law of economics equally self-evident: illusory wealth will eventually disappear. And there is enough illusory wealth floating around the economy now to choke a camel. There's the $86 trillion (at least) in unfunded liabilities that the U.S. government is committed to over the next 75 years, a chain of debt slavery that is put around the noose of every boy and girl in America (and those yet to be born) from the very moment of their birth. Or the quadrillion dollar derivatives bubble that has been blown by the jackals of finance capitalism, a bubble that is so large, and the popping of which would be so utterly devestating (picture a thousand financial nuclear bombs exploding simultaneously across the globe and you might start to comprehend the danger), that they have now been officially declared above the law by no less than the Attorney General himself, lest their prosecution sets off the economic time bomb.

And there's the fact that the monetary system itself requires almost every single new dollar entering the economy to be born in the form of debt paid back to the banksters themselves. Such a system cannot continue indefinitely. So I can understand if people are surprised that my usual answer to their questions about the collapse is that there's no way to predict when such a collapse will take place or even what form it will take. There are literally millions of variables at play in the collapse scenario equation, and many of them depend not just on the underlying reality of the situation (the actual unemployment figure, for instance) but on the market's perception of that reality (the manipulated numbers given out by the Burea of Labor Statistics). In my experience, this is surprising to many people because they tend to believe there is only one possible form that an economic collapse might take place, and many believe that it will certainly take place within the next year or two. But this is not necessarily so. In order to widen our perspective on that nebulous “economic collapse” term, why don't we take a look at just a few of the possible ways that a collapse might happen, and the ways that people can prepare for each of them individually.

Scenario 1: A Complete Systemic Collapse

This is the so-called Mad Max scenario and its by far the most common one that comes to mind when they hear the phrase “economic collapse.” Essentially, it involves a complete breakdown in economic transactions leading to a total dissolution of society. There are different ways that this could come about.


UrbanMan's Comments:"Bail-in is confiscating investor's funds to prop up the institution - like Cyprus.

The news renews worries over sovereign debt that causes sudden spikes in bond yields across the board, crashing Spain and Greece's ability to finance their debt. The ECB reacts by firing Draghi's bazooka, but it's too little too late to save the Euro. The contagion reaches the States where major investment banks with exposures in both Japan and Europe suddenly find their derivatives trades unwinding as counter-parties go bankrupt. The Fed tries an emergency injection of liquidity, but the markets tank anyway, wiping out billions in equity wealth and further panicking the markets. The central banks of the world attempt a coordinated stimulus to boost the markets, but by this time too many banks have gone under. Customers at banks around the world find they can't withdraw money from their accounts or make payments from them. The FDIC and its counterparts across the globe can't back up all of the obligations, and financial markets buckle completely. The economy as we know it has ceased to function.

Now obviously this scenario would not exactly unfold “overnight,” but we can imagine how it could all happen with surprising rapidity once the ball started rolling. As much as it sounds like something out of a Hollywood disaster flick, it's not outside of the realm of possibility; after all, this is essentially the type of nightmare scenario that Paulson, Bernanke, the Wall Street bigwigs and the banksters on the Federal Reserve board of governors threatened congress with in the wake of the Lehman Bros collapse. At the very least the threat of such a collapse helped sell the $700 billion bailout (that later ran into the tens of trillions) to the public.

At the same time, I hope the reader can see that this is by no means the only way our current system might break down. After all, it relies on the complete and simultaneous meltdown of every failsafe and circuit-breaker in every market around the globe. It also posits that the market will have woken up to the central banks' phony baloney funny money tricks and fail to respond to the big proclamations and promises of the printing press, unlike every other stage of this crisis.

Even from the market realist position of someone who understands that the entire monetary system is a house of cards built out of illusion by the banksters, can we really believe that this is the scenario they want to bring about? The complete overnight collapse of civilization? The reduction of the population to roving bands of criminals and vigilantes? Do they really want to rule over a wasteland? I think ot.

So, a total overnight collapse scenario: Possible? Certainly. Inevitable? Certainly not. But if this is a possibility, what can be done to prepare for it? As you might have guessed, this is the scenario that the doomsday preppers have envisioned and that they will be best positioned to survive. If the entire system falls apart at once (banking, credit, money markets, bonds, stock market) then people are essentially left with whatever they physically have in their possession or what they're able to acquire. Many people have a few days' worth of food on hand in case of some sort of natural disaster, but how many are prepared for months or even years of living without electricity, without running water, without the ability to buy food at a supermarket? I'll leave this as a rhetorical question.

What's more, while cash, stocks and bonds all become worthless in such a situation, it's by no means guaranteed that traditional stores of value like gold and other precious metals would fare any better. Given how detached modern western society has become from hard money, how likely is it that you'll find other people who even understand the value of your precious metals, let alone be willing or able to transact with them? No, in this system the only things that will be guaranteed to still be valuable are land and whatever is sitting on it. This is why people are often encouraged to have an acre or two of land out in the countryside somewhere, well away from any urban population centers. Of course, all of that land and whatever food, water, and supplies you might have on it will be worthless if it is looted and pilfered by the desperate members of the public who suddenly find themselves unable to cope. In that regard, some guns and other items of self-defense might turn out to be your most valuable possessions overall.

This is what it boils down to for the total collapse scenario: guns, land, grub, shelter. The idea of “protecting your wealth” is almost meaningless in this case, as the sole purpose would be to protect your life.

But, luckily for all of us, as I mentioned earlier this is not the only (or even the most likely) scenario. So how else could an economic collapse play out?

UrbanMan's Comments: In my opinion, this scenario is likely to happen. Having cash on hand, gold and silver would allow you to purchase last minute items without worrying about the bank holidays and such. Cash will devalue fast then it will be a gold-silver-barter type market. Communications should still work - be prepared to field calls from people not in your group but nonetheless know you have prepped for something like this. This is the type of scenario that no matter how much food, gold, silver, survival supllies and firearms/ammunition you have on hand - if you do not have a secure location and/or a team to protect each other you will be at risk. If you are one of the suburban dwellers then you better start building your local community of mutually supporting neighbors fast if you haven't done it yet.

Scenario 2: A hyperinflationary death spiral

This is the possibility that hard money proponents have been touting for years; namely, that the constant pumping in of Federal Reserve QE funny money into the system would spark a bout of hyperinflation. Think Weimar Republic and wheelbarrows full of money to buy a loaf of bread. So how could this play out?

The bond bubble pops. It was bound to happen eventually, but one day for some reason (no one is quite sure why) the markets fail to listen to Chairmen Ben and the Federal Reserve crew's latest pronouncement about easing, or the lack of easing, or the possibility of continuing easing, or the probability that easing might end some day in the future, or the likelihood that an end of easing won't come unless it does, or some such thing. Bond prices drop. Interest rates rise. They turn up the printing press in order to buy more bonds, but they suddenly can't print fast enough to keep the rates down. The new money floods the markets, but the economy doesn't grow. Suddenly the US (and, in short order, the rest of the world) is awash in dollars and has nothing to buy with them.

People discover the real value of Federal Reserve Notes: they burn well in the winter. In the meantime, they discover that it's hard to stuff enough $100 bills in a wheelbarrow to buy a billion dollar loaf of bread.

This is another popular conception of what a crash would look like. On the surface it makes total sense. The Fed has more than tripled the monetary base since the 2007 crisis and their sure hasn't been a tripling of economic activity in that time. From Econ 101 we know that an expanding money supply in the face of a stagnant economy means inflation. But we're not seeing inflation anywhere near the figures we should be...not even the real statistics (i.e. John Williams' statistics) show inflation reflective of such a rapid expansion of the monetary base. So where is all the money going? At the moment, it's going into bonds. The Fed is currently engaged in two easing programs, one of which is purchasing long-term Treasuries to the tune of $45 billion a month. For those keeping track at home, that means the (privately owned) central bank of the US is outright monetizing half a trillion dollars of government debt a year in one purchasing program alone. This is part of what Andrew Haldane (the euphemisticallyentitled “Director of Financial Stability” at the Bank of England) calls the biggest bond bubble in history. If you don't know what that means but you don't like the sound of it, don't worry; you're on the right track. Essentially it means that if and when the central banks of the world take their foot off the printing press gas (or even hint that they are going to do so), yields are going to start rising. Essentially, governments will have to pay more to finance their debts. Given that the entire Eurozone crisis is focused on the sovereign debt crisis and the knife-edge balance that is going on right now to stop bond yields from spinning out of control, the idea that the central bank gravy train could come to an end is a scary thought indeed for bond markets.

Long story short: if the central banks ever find that simply printing more dollars doesn't keep those rates low, the bond bubble could pop and yields could go through the roof, requiring more and more money to be pumped in to try to keep things in check. Theoretically, this could be your hyperinflationary kick-off...

So how can you position yourself for this scenario? Well, bonds are obviously not a good place to be if the bubble should pop. And it obviously wouldn't be good to have your life savings in cash stuffed under your mattress (or your bank) in a hyperinflationary wheelbarrow-full-of-paper-to-buy-a-postage-stamp scenario. If cash becomes toilet paper, there goes your life savings. But counter- intuitively, stocks are not necessarily a bad place to be during a hyperinflationary bout. In fact, various examples of hyperinflation from history, including Weimar Germany, showed that stocks can actually fare fairly well. A JP Morgan analysis indicates that the value of the Weimar stock market tripled in value (in US dollar terms) during Germany's hyperinflationary scare. Commodities are a fairly safe bet, as their prices will tend to track the inflation. But the hyperinflationary scenario is really the goldbug's heaven. If the dollar circles the drain this will be the prudent gold investor's chance to have the ultimate last laugh as gold prices go through the roof (measured in fiat, of course).

But some argue that the hyperinflation scenario isn't going to happen. They point out that the velocity of money (the measure of how quickly money is actually moving through the economy) is at its lowest value in over half a century. This means that whatever is happening to the money supply right now, it's not adding to inflation. After all, the Fed could print a trillion dollars a day, but if they just buried the money in the ground it would have no inflationary effect at all. So some are arguing that despite all the money printing that's going on, it's not a hyperinflationary nightmare that people have to watch out for.

UrbanMan's Comments:  The almost 50 million Americans who rely on the Government for a check to keep from going hungry would soon be joined by tens of million more Americans who buying power would not be enough to sustain their life routine and indeed may not be allow for the purchasing of simple essentials.   

Scenario 3: The deflationary depression

This is a much less popular view among the economic realists who see the collapse coming, but no less of a potential nightmare if you're not positioned accordingly. And there is no question about whether such a scenario could come true. It already did. Just ask your grandparents.

Things continue pretty much as they are now. The governments run their printing presses, but that money doesn't make its way into the economy. Banks continue to park their reserves in central bank vaults rather than loan them out. People don't want to take out loans, anyway, as they struggle to dig their way out of all-time record household debt burdens. Economic activity continues contracting, retail sales continue dropping, people pinch their pennies and when they see the economy slowing down they start pinching even tighter. Businesses scale back, and layoffs start to add up until even the government bean counters can't hide it. The majority of the population is on food stamps, and less and less economic activity actually relies on increasingly scarce dollars. Instead, government handouts and/or private charity becomes the new currency. The 21st century equivalent of the Dirty Thirties is upon us.

If the hyperinflationary scenario seems intuitive at first glance, this one has to be counter-intuitive. After all, central banks are flooding the world in easy money. How can this possibly lead to a more scarce (and more valuable) dollar? Of course, the other half of the equation is what the public is doing, and for the last few years we've been in an overall deleveraging cycle as people struggle to pay down their debts. In the first quarter of this year household debt fell to 2006 levels.

But in an economy where money is debt, the extinguishing of debt is the extinguishing of money. Less debt, less money in circulation. The government can continue to inflate its bond bubble all day long (and feed into a new housing bubble while they're at it), but it's ultimately the banks and the people that decide if the economy is going to expand or contract...and the more people deleverage and the less they spend, the more the economy will contract.

So if we do enter a deflationary depression, who are the winners and losers? Well, unsurprisingly this is just about the mirror image of the hyperinflationary scenario. Goldbugs would be the big losers at first, as dollars become more scarce and thus rise in value, so would precious metals decline in value. But as the effects of the depression kick in and people struggle to meet debt obligations, currencies could collapse and precious metals could once again be a hedge of last resort. Stocks would plunge as businesses downsize and revenues dive. There would be an upside on bonds, but given that we're already in a bond bubble there isn't very much to that upside. Cash could actually be a safe place to have your money in a deflationary depression, assuming you're not holding one of the currencies that collapses.

This is a nightmare scenario for the average person as people struggle to find work and people hoard dollars rather than spend them into the economy, creating the vicious cycle of contraction. Hyperinflationists argue this is virtually impossible because central banks can always print as much money as they want to make sure the economy never ceases up completely, but deflationists argue that monetizing government debt (which central banks are “good” at) is a different kettle of fish from monetizing household and business debt, which runs into the tens of trillions. Essentially they argue that there's a point at which even central banks would blink at the prospect of straight-up monetizing all of that debt, and if so the deflation cycle kicks in. And we all know that the only way out of the Dirty Thirties was World War II...

Scenario Four: Expect the unexpected

Life's funny sometimes. You can spend all your time wargaming out every possible scenario and carefully thinking about the logical consequences of different events...but it still doesn't mean you'll be prepared for what actually happens. Imagine where you thought your life was going to be like in 2013 back in 2003. It probably didn't look anything like where you really are. Sometimes you just never know what will happen.

By some miracle, a researcher discovers an abundant source of clean, virtually limitless energy. Cold fusion or zero point energy or some such thing. By another miracle, they don't suffer an unfortunate “accident” before they can share their discovery with the world. The world economy is transformed overnight. All of that part of the economy that is geared toward finding, extracting and producing energy collapses. Limitless free energy transforms nations, enabling even the poorest countries access to technologies that their infrastructure could never have supported before. With free energy, humanity outgrows wars for resource control and squabbles over patches of land or lines on a map and begins to fulfill humanity's real destiny of populating the stars. A new era of human existence begins.

Alright, that is a fanciful scenario to say the least, but hopefully it gets the point across. Some random, completely unexpected event can come along and utterly change the course of human history. Or smaller game-changers can, at the very least, throw off calculations completely. Dire forecasts of dwindling oil and gas reserves in the past decade, for example, have been utterly thrown off by fracking and the shale gas revolution and the tar sands and other things that were not part of the old equations. Similarly, what if 3D Printing lives up to its promise and revolutionizes manufacturing as we know it? If 3D Printers become the norm and become adept at manufacturing useful everyday items, the transformation of the economy at large would be almost incalculable. So what could we expect for different investment classes in such a scenario?

Well, we couldn't expect anything, of course. That's the very point. If some game changer arrives that could transform or even abolish entire sectors, there is no way to prepare for such a thing. In effect, it's luck of the draw whether cash, stocks, bonds, land, precious metals or commodities would surge, plummet or be rendered irrelevant.

UrbanMan's Comments: Many possibilities in the realm of what we don't expect or what may be too dire to consider,...civil war along racial, economical or political lines,...nuclear attack, non-nuclaer WMD attack by terrorists, Pandemic,.....but after all, that's what we are preparing for,...whatever happens.

Conclusions

In conclusion, it's always good to keep in mind that there is more than one way to skin a cat and there's more than one way for an economy to collapse. If we end up in a Mad Max scenario that would look quite different to a deflationary depression, even if certain factors look similar in both cases.

This is the very reason why any investment advisor (of which I am not one) will tell you to diversify your portfolio. You never want all of your eggs in one basket because if you bet the farm on the stock market and stocks plunge, you've lost it all. What percentages you want to invest in what asset classes will depend on all sorts of variables, of course, from how much you have to invest, to your risk appetite, to what future economic scenario you think is most likely. For the ultimate in stability, Libertarian writer Harry Browne advocated a portfolio consisting of 25% long term bonds, 25% cash, 25% stocks and 25% gold. That way, there is not a single one of these collapse scenarios where you would lose it all. The downside, of course, is that there is no scenario where you win across the board, either.

Such a strategy may or may not be for you, but regardless of what you choose, be sure to think carefully about what you are looking for and what you think is the most likely collapse scenario.

UrbanMan's Comments: My portfolio - 50% Planning and team building; 10% stored food; 10% gold, silver and barter items; 10% survival firearms and ammunition; 10% equipment and material; 10% sustainable water sources......okay, okay,..my percentages are off,...I'm just trying to make a point that survivalibility of 401K and other investments are NOT the tip of the spear in your collapse and survival planning.   

Wednesday, June 19, 2013

Poverty - A Catalyst for Collapse

The Real Numbers: Half Of America In Poverty — And It’s Creeping Toward 75%

I don't know about the 75%, but those in poverty increase everyday and the only remedy being applied is government handouts which not only cannot continue unabated but at some point may stop abruptly. Make up your own mind from this article from Liberty Crier.com

Where does that leave you and your family? In the majority of population in poverty looking vainly for a way to survive? Are you one of the 1% who are prepared to last a period of time in a "no food" available environment? If so, how long? 30 days? 6 months? Two years? Are you and your family going to be victims of those without? - and make no mistake about it - those without will do anything to sustain themselves - wouldn't you?

Anyway, the article from Liberty Crier:

The Census Bureau has reported that one out of six Americans lives in poverty. A shocking figure. But it’s actually much worse. Inequality is spreading like a shadowy disease through our country, infecting more and more households, and leaving a shrinking number of financially secure families to maintain the charade of prosperity.

1. Almost half of Americans had NO assets in 2009

Analysis of Economic Policy Institute data shows that Mitt Romney’s famous 47 percent, the alleged ‘takers,’ have taken nothing. Their debt exceeded their assets in 2009.

2. It’s Even Worse 3 Years Later

Since the recession, the disparities have continued to grow. An OECD report states that “inequality has increased by more over the past three years to the end of 2010 than in the previous twelve,” with the U.S. experiencing one of the widest gaps among OECD countries. The 30-year decline in wages has worsened since the recession, as low-wage jobs have replaced formerly secure middle-income positions.

3. Based on wage figures, over half of Americans are now IN poverty.

According to IRS data, the average household in the bottom 50% brings in about $18,000 per year. That’s less than the poverty line for a family of three ($19,000) or a family of four ($23,000).

Census income figures are about 25% higher, because they include unemployment compensation, workers’ compensation, Social Security, Supplemental Security Income, public assistance, veterans’ payments, and various other monetary sources. Based on this supplemental income, the average household in the bottom 50% brings in about $25,000, which is just above the $23,000 poverty line for a family of four.

Even the Census Bureau recognizes that its own figures under-represent the number of people in poverty. Its Supplemental Poverty Measure increases, by 50%, the number of Americans who earn between one-half and two times the poverty threshold.

4. Based on household expense totals, poverty is creeping into the top half of America.

A family in the top half, making $60,000 per year, will have their income reduced by a total tax bill of about $15,000 ($3,000 for federal income tax and $12,000 for payroll, state, and local taxes. The Bureau of Labor Statistics and the Census Bureau agree that food, housing, and transportation expenses will deduct another $30,000, and that total household expenditures will be about $50,000. That leaves nothing.

Nothing, that is, except debt. The median debt level rose to $75,600 in 2009, while the median family net worth, according to the Federal Reserve, dropped from $126,400 in 2007 to $77,300 in

5. Putting it in Perspective

Inequality is at its ugliest for the hungriest people. While food support was being targeted for cuts, just 20 rich Americans made as much from their 2012 investments as the entire 2012 SNAP (food assistance) budget, which serves 47 million people.

And as Congress continues to cut life-sustaining programs, its members should note that their 400 friends on the Forbes list made more from their stock market gains last year than the total amount of the food, housing, and education budgets combined.

Arguments about poverty won't end. Neither should our efforts to uncover the awful truth.

Monday, August 15, 2011

Food Shortage Already Here

UrbanSurvivalSkills.com has already written several posts about the coming food shortage, both in this Country and Worldwide. With the droughts, natural disasters, economic condition and high taxes/expenses this Country's ability to feed itself is rapidly declining. On the plus side, never before has hobby farming where regular people and even urban dwellers start their own gardens been so prevalent. Not only is a worthwhile skills, but the satisfaction you get from harvesting your own vegetables and having them for dinner just makes it all the more worthwhile.

A reader sent me this article entitled What Produce Drought Isn't Killing, People Are Stealing: Killing Drought in Arkansas

By Ron Klinefelter, owner of Spring Valley Organic Growers, 10 August 2011:

This is now our 77th consecutive day (Aug. 7) of this heat and drought. Temperatures all week were over 100. One day it was 104, one it was 107! We also broke 2 new all time heat records this week….108, and 112, and of course, no rain.

Several more things bit the dust this week. One, a patch of a beautiful heirloom grinding corn, that usually produces 2 ears, many a foot long. Even with every other day watering, they just couldn’t produce even one ear, and are now just curling up and dying.

Attention…..NO SEED for next year!

I was walking in one of the gardens yesterday, and the big elderberry bushes have so dried up that their big dinner plate sized clusters of fruit, which have just sat there green for weeks, instead of ripening, have begun to mummify, like they had been placed in a dehydrator. Also, the armadillo damage is so great now that they are ravaging whole beds. In the morning, it looks like a roto-tiller has gone thru there.

I have natural food stores calling me, asking for any produce, especially tomatoes. When I was in one of them last week, they were selling organic tomatoes FROM MEXICO! In talking to the manager/produce buyer of Prairie Markets last week, she told me that virtually everyone had “given up”, and there wasn’t even a viable farmers market in town now.

One more little problem. I was talking to someone in an adjoining county that was fortunate to get SOME rain. They had a pretty good bunch of tomatoes that they had been letting ripen on the vine. They were going to pick them one evening, but it was just too miserably hot. They decided to wait until morning to pick them for canning, when it was a little “cooler”. This is a relative term, as it is well after dark.9:00p.m., and it’s still 92 degrees. When they went out to pick them the next morning, someone(s) had snuck in, in the night and stolen EVERY SINGLE TOMATO! Not a one was left!

I have so much water and time invested in the gardens now, that I don’t hardly dare to stop now, but even if it were to start raining for days now, there probably wouldn’t be time enough before frost to bring another crop off. This will most likely be my last year of commercial growing. I am a vanishing species.

Seeing what I see, and reading what I’m reading from all around the country (and world), I find it almost impossible to believe that food shortages and possibly famine are not dead ahead. One would be a fool to not be putting up food like crazy, while you can get it. To NOT be doing that, I believe, is a very dangerous and foolhardy move – act now!

Read it yourself here: Produce Killing Drought