Tag Archives: money

Financial collapse

(Survival Manual/1. Disaster/Financial Collapse)

The great play

‘The Coming Liquidity Tsunami Into Something Real’
14 May 2011, Gold Eagle editorial, by Mark J Lundeen
<http://www.gold-eagle.com/editorials_08/lundeen051411.html> and <Mlundeen2@Comcast.net>
“I was once told, by someone who’s name I’ve long since forgotten, that the ancient Greeks once pondered death from a scientific perspective: One day Pericles was manning the walls of Athens against the Spartans. The next day a plague came and Pericles was gone, though his now room-temperature body was still in Athens.

Question: what changed?

Maybe warming his now cold body would cause Pericles to return; and then again, maybe not! But who can say until we try?

If I were to write a script for a play, using the Peloponnesian War as a motif of the current financial situation, the US financial system would certainly be Pericles: glorious and powerful one day, and somewhat else the next.

If asked, I’m sure the academics from our Ivy-League schools of social sciences would demand to play the part of the old Greek philosophers. But I see them more as the vectors of “policy” that has pulled our poor hero down to his lamentable state. That leaves us with what to do with the politicians?

Well no one would ever mistake these corrupt, baby-kissing sycophants for Greek philosophers! So, I guess the politicians will have to play the part of the vectors of “policy” and I’ll let Doctor Bernanke dress up like Socrates.

In the opening scene, Pericles lays still on a marble slab, at room temperature, when Doctor Bernanke orders members of the AMA (Athenian Medical Association) to warm poor Pericles’ human remains to that of the living. He steps back into the gloom of the Parthenon, as a Greek choir (played by the financial media) then lets loose a mournful chant, 3 times:
“Woe unto Athens! Though the philosophers have warmed worthy Pericles until his toes smoke, still neither does he move nor speak!”

A brilliant spot light cuts through the gloom of the scene, highlighting the noble presence of Socrates (played by Doctor Bernanke) as he brings the Greek Choir to silence with a sweep of his arm, and proclaims to the audience (played by everyone who still believes their pension fund and social security will be worth something ten years from now):
“Pericles needs not move nor speak to serve Athens well. A pulse he needs not. As long as the wise men of “policy” can maintain his body temperature above that of the marble slab on which he rests, all will be well!”
The spot light fades to black, the curtain closes, and all educated and respectable people are happy with the performance, and will continue to be until dear Pericles begins to reek more than “policy” predicted. This is as good a way of understanding the current state of the debt markets as any you’ll  see on TV or in the papers. Think of structured finance, using derivatives in the hundreds-of-trillions, as “policy’s” method of giving trillions of dollars in dead assets the appearance of being alive, though a closer inspection shows they are merely warm and motionless.

The secondary market in American mortgages stopped trading several years ago, so for what purpose are these dubious derivatives still serving? I suspect someday we will discover that this is the “policy makers” chosen method to enable trillions of dollars of worthless mortgage assets held by large banks, to continue generating income for the financial system.
[Image above right: Pericles,  495-429BC]

The show goes on
Derivatives are simply another form of margin, the nemesis which caused the last great market crash. This time though it’s “different enough from the last time so no one realizes what is happening.” Use this analogy: “…it is like the floor show in a seedy nightclub. A sequence of girls trots on the scene, first a collection of Apaches, then some ballerinas, then cowgirls and so forth. Only after a while does the bemused spectator realize that, in all cases, they were the same girls in slightly different costumes.” In other words, “the so-called hedge fund actually is an excuse for a margin account.”
Pasted from <http://www.usagold.com/derivativeschapman.html>
.

Act 1:  We go broke

 It Is Now Mathematically Impossible To Pay Off The U.S. National Debt
4  Feb 2010, The Economic Collapse
<http://theeconomiccollapseblog.com/archives/it-is-now-mathematically-impossible-to-pay-off-the-u-s-national-debt>
A lot of people are very upset about the rapidly increasing U.S. national debt these days and they are demanding a solution. What they don’t realize is that there simply is not a solution under the current U.S. financial system. It is now mathematically impossible for the U.S. government to pay off the U.S. national debt. You see, the truth is that the U.S. government now owes more dollars than actually exist. If the U.S. government went out today and took every single penny from every single American bank, business and taxpayer, they still would not be able to pay off the national debt. And if they did that, obviously American society would stop functioning because nobody would have any money to buy or sell anything.

And the U.S. government would still be massively in debt. So why doesn’t the U.S. government just fire up the printing presses and print a bunch of money to pay off the debt?  Well, for one very simple reason. That is not the way our system works.
You see, for more dollars to enter the system, the U.S. government has to go into more debt.
The U.S. government does not issue U.S. currency – the Federal Reserve does.

The Federal Reserve is a private bank owned and operated for profit by a very powerful group of elite international bankers. If you will pull a dollar bill out and take a look at it, you will notice that it says “Federal Reserve Note” at the top. It belongs to the Federal Reserve.

The U.S. government cannot simply go out and create new money whenever it wants under our current system. Instead, it must get it from the Federal Reserve. So, when the U.S. government needs to  borrow more money (which happens a lot these days) it goes over to the Federal Reserve and asks them for some more green pieces of paper called Federal Reserve Notes.

The Federal Reserve swaps these green pieces of paper for pink pieces of paper called U.S. Treasury bonds. The Federal Reserve either sells these U.S. Treasury bonds or they keep the bonds  for themselves (which happens a lot these days).

So that is how the U.S. government gets more green pieces of paper called “U.S. dollars” to put into circulation. But by doing so, they get themselves into even more debt which they will owe even more interest on. Every time the U.S. government does this, the national debt gets even bigger and the interest on that debt gets even bigger.
Are you starting to get the picture?

[Image at left: $1 trillion in $1 bills would fill the interior of the Empire State building.
The current $14.3 trillion debt (May 2011) would fill a 3/4 mile high block, 50% higher than the green block shown in  the picture at left.
Consider this: One hundred dollars in one dollar bills, pressed down, measures about ½ of an inch. One million, 100 dollar bills, measures four feet in height. One billion 100 dollar bills is 4,000 feet high, almost three Sears Tower buildings tall.
$1 trillion $100 dollar bills measures 789 miles, or one hundred and forty four Mt. Everests stacked on top of each other. Our national debt is more than 14 times THAT… ]

As you read this, the U.S. national debt is approximately 12 trillion dollars, although it is going up so rapidly that it is really hard to pin down an exact figure. So how much money actually exists in the United States today? Well, there are several ways to measure this.

The “M0” money supply is the total of all physical bills and currency, plus the money on hand in bank vaults and all of the deposits those banks have at reserve banks. As of mid-2009, the Federal Reserve said that this amount was about 908 billion dollars.

The “M1” money supply includes all of the currency in the “M0” money supply, along with all of the money held in checking accounts and other checkable accounts at banks, as well as all money contained in travelers’ checks. According to the Federal Reserve, this totaled approximately 1.7 trillion dollars in December 2009, but not all of this money actually “exists” as we will see in a moment.

The “M2” money supply includes everything in the “M1” money supply plus most other savings accounts, money market accounts, retail money market mutual funds, and small denomination time deposits (certificates of deposit of under $100,000). According to the Federal Reserve, this totaled approximately 8.5 trillion dollars in December 2009, but once again, not all of this money actually “exists” as we will see in a moment.

The “M3” money supply includes everything in the “M2” money supply plus all other CDs (large time deposits and institutional money market mutual fund balances), deposits of Eurodollars and repurchase agreements. The Federal Reserve does not keep track of M3 anymore, but according to ShadowStats.com it is currently somewhere in the neighborhood of 14 trillion dollars. But again, not all of this “money” actually “exists” either.
So why doesn’t it exist?
It is because our financial system is based on something called fractional reserve banking.

When you go over to your local bank and deposit $100, they do not keep your $100 in the bank.
Instead, they keep only a small fraction of your money there at the bank and they lend out the rest to someone else. Then, if that person deposits the money that was just borrowed at the same bank, that bank can loan out most of that money once again. In this way, the amount of “money” quickly gets multiplied. But in reality, only $100 actually exists. The system works because we do not all run down to the bank and demand all of our money at the same time. [All going at the same time  is what a ‘bank run’ is]

According to the New York Federal Reserve Bank, fractional reserve banking can be explained this way….”If the reserve requirement is 10%, for example, a bank that receives a $100 deposit may lend out $90 of that deposit. If the borrower then writes a check to someone who deposits the $90, the bank receiving that deposit can lend out $81. As the process continues, the banking system can expand the initial deposit of $100 into a maximum of $1,000 of money ($100+$90+81+$72.90+…=$1,000).”
So much of the “money” out there today is basically made up out of thin air.
In fact, most banks have no reserve requirements at all on savings deposits, CDsand certain kinds of money market accounts. Primarily, reserve requirements apply only to “transactions deposits” – essentially checking accounts.

The truth is that banks are freer today to dramatically “multiply” the amounts deposited with them than ever before. But all of this “multiplied” money is only on paper – it doesn’t actually exist.
The point is that the broadest measures of the money supply (M2 and M3) vastly overstate how much “real money” actually exists in the system.

So if the U.S. government went out today and demanded every single dollar from all banks, businesses and individuals in the United States it would not be able to collect 14 trillion dollars (M3) or even 8.5 trillion dollars (M2) because those amounts are based on fractional reserve banking.

So the bottom line is this….
1)  If all money owned by all American banks, businesses and individuals was gathered up today and sent to the U.S. government, there would not be enough to pay off the U.S. national debt.
2)  The only way to create more money is to go into even more debt which makes the problem even worse.
You see, this is what the whole Federal Reserve System was designed to do. It was designed to slowly drain the massive wealth of the American people and transfer it to the elite international bankers.

It is a game that is designed so that the U.S. government cannot win. As soon as they create more money by borrowing it, the U.S. government owes more than what was created because of interest.
If you owe more money than ever was created you can never pay it back. hat means perpetual debt for as long as the system exists.
It is a system designed to force the U.S. government into ever-increasing amounts of debt because there is no escape.
We could solve this problem by shutting down the Federal Reserve and restoring the power to issue U.S. currency to the U.S. Congress (which is what the U.S. Constitution calls for). But the politicians in Washington D.C. are not about to do that. So unless you are willing to fundamentally change the current system, you might as well quit complaining about the U.S. national debt because it is now mathematically impossible to pay it off.
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Act 2:  They go broke

What happens when Greece defaults?
25 May 2011, The Telegraph, By Andrew Lilico
http://blogs.telegraph.co.uk/finance/andrewlilico/100010332/what-happens-when-greece-defaults/
It is when, not if. Financial markets merely aren’t sure whether it’ll be tomorrow, a month’s time, a year’s time, or two years’ time (it won’t be longer than that). Given that the ECB has played the “final card” it employed to force a bailout upon the Irish – threatening to bankrupt the country’s banking sector – presumably we will now see either another Greek bailout or default within days.

What happens when Greece defaults. Here are a few things:
•  Every bank in Greece will instantly go insolvent.
•  The Greek government will nationalize every bank in Greece.
•  The Greek government will forbid withdrawals from Greek banks.
•  the Greek government will declare a curfew, perhaps even general martial law.
•  Greece will redenominate all its debts into “New Drachmas” or whatever it calls the new currency (this is a classic ploy of countries defaulting)
•  The New Drachma will devalue by some 30-70 per cent (probably around 50 per cent, though perhaps more), effectively defaulting on 50 per cent or more of all Greek euro-denominated debts.
•  The Irish will, within a few days, walk away from the debts of its banking system.
•  The Portuguese government will wait to see whether there is chaos in Greece before deciding whether to default in turn.
•  A number of French and German banks will make sufficient losses that they no longer meet regulatory capital adequacy requirements.
•  The European Central Bank will become insolvent, given its very high exposure to Greek government debt, and to Greek banking sector and Irish banking sector debt.
•  The French and German governments will meet to decide whether (a) to recapitalize the ECB, or (b) to allow the ECB to print money to restore its solvency. (Because the ECB has relatively little foreign currency-denominated exposure, it could in principle print its way out, but this is forbidden by its founding charter. On the other hand, the EU Treaty explicitly, and in terms, forbids the form of bailouts used for Greece, Portugal and Ireland, but a little thing like their being blatantly illegal hasn’t prevented that from happening, so it’s not intrinsically obvious that its being illegal for the ECB to print its way out will prove much of a hurdle.)
•  They will recapitalize, and recapitalize their own banks, but declare an end to all bailouts.
•  There will be carnage in the market for Spanish banking sector bonds, as bondholders anticipate imposed debt-equity swaps.
•  This assumption will prove justified, as the Spaniards choose to over-ride the structure of current bond contracts in the Spanish banking sector, recapitalizing a number of banks via debt-equity swaps.
•  Bondholders will take the Spanish Banking Sector to the European Court of Human Rights (and probably other courts, also), claiming violations of property rights. These cases won’t be heard for years. By the time they are finally heard, no-one will care.
•  Attention will turn to the British banks.

Then we shall see…

Ilargi:
What I think is important is to connect the dots here. Greece is but a two-bit player relatively speaking, but the effects of a default in Athens, and the haircuts it would force upon financial institutions (and dare we even consider pensions funds?!), would -make that will- be felt across the world. For one thing, it would substantially weaken banks and economies pretty much around the globe. Just Greece alone.

It all comes back all the time to the dreaded mark-to-market theme. The last thing anyone wants is to let anyone else know what the paper they’re holding is truly worth. But it will be done.
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Act 3: All go broke

Derivatives: The Quadrillion Dollar Financial Casino Completely Dominated By The Big International Banks
<http://theeconomiccollapseblog.com/archives/derivatives-the-quadrillion-dollar-financial-casino-completely-dominated-by-the-big-international-banks>

“If you took an opinion poll and asked Americans what they considered the biggest threat to the world economy to be, how many of them do you think would give “derivatives” as an answer? But the truth is that derivatives were at the heart of the financial crisis of 2007 and 2008, and whenever the next
financial crisis happens derivatives will undoubtedly play a huge role once again. So exactly what are “derivatives”?
Well, derivatives are basically financial instruments whose value depends upon or is derived from the price of something else. A derivative has no underlying value of its own. It is essentially a side bet.
Today, the world financial system has been turned into a giant casino where bets are made on just about anything you can possibly imagine, and the major Wall Street banks make a ton of money from it. The system is largely unregulated (the new “Wall Street reform” law will only change this slightly) and it is totally dominated by the big international banks.

Nobody knows for certain how large the worldwide derivatives market is, but most estimates usually put the notional value of the worldwide derivatives market somewhere over a quadrillion dollars.
If that is accurate, that means that the worldwide derivatives market is 20 times larger than the GDP of the entire world. It is hard to even conceive of 1,000,000,000,000,000 dollars.
Counting at one dollar per second, it would take you 32 million years to count to one quadrillion.

So who controls this unbelievably gigantic financial casino? Would it surprise you to learn that it is the big international banks that control it? The New York Times has just published an article entitled A Secretive Banking Elite Rules Trading in Derivatives. Shockingly, the most important newspaper in the United States has exposed the steel-fisted control that the big Wall Street banks exert over the trading of derivatives. Just consider the following excerpt from the article….

“On the third Wednesday of every month, the nine members of an elite Wall Street society gather in Midtown Manhattan. The men share a common goal: to protect the interests of big banks in the vast market for derivatives, one of the most profitable — and controversial — fields in finance. They also share a common secret: The details of their meetings, even their identities, have been strictly confidential.”

Does that sound shady or what?
In fact, it wouldn’t be stretching things to say that these meetings sound very much like a “conspiracy”. The New York Times even named several of the Wall Street banks involved: JPMorgan Chase, Goldman Sachs, Morgan Stanley, Bank of America and Citigroup. Why does it seem like all financial roads eventually lead back to these monolithic financial institutions?

The highly touted “Wall Street reform” law that was recently passed will implement some very small changes in how derivatives are traded, but these giant Wall Street banks are pushing back hard against even those very small changes as the article in The New York Times noted….

“The revenue these dealers make on derivatives is very large and so the incentive they have to protect those revenues is extremely large,” said Darrell Duffie, a professor at the Graduate School of Business at Stanford University, who studied the derivatives market earlier this year with Federal Reserve researchers. “It will be hard for the dealers to keep their market share if everybody who can prove their creditworthiness is allowed into the clearinghouses. So they are making arguments that others shouldn’t be allowed in.”

So why should we be so concerned about all of this?
Well, because the truth is that derivatives could end up crashing the entire global financial system.

In fact, the danger that we face from derivatives is so great that Warren Buffet once referred to them as “financial weapons of mass destruction”.

In a previous article, I described how derivatives played a central role in almost collapsing insurance giant AIG during the recent financial crisis….

Most Americans don’t realize it, but derivatives played a major role in the financial crisis of 2007 and 2008. Do you remember how AIG was constantly in the news for a while there? Well, they weren’t in financial trouble because they had written a bunch of bad insurance policies. What had happened is that a subsidiary of AIG had lost more than $18 billion on Credit Default Swaps (derivatives) it had written, and additional losses from derivatives were on the way which could have caused the complete collapse of the insurance giant. So the U.S. government stepped in and bailed them out – all at U.S. taxpayer expense of course.

As the recent debate over Wall Street reform demonstrated, the sad reality is that the U.S. Congress is never going to step in and seriously regulate derivatives. That means that a quadrillion dollar derivatives bubble is going to perpetually hang over the U.S. economy until the day that it inevitably bursts. Once it does, there will not be enough money in the entire world to fix it.

Meanwhile, the big international banks will continue to run the largest casino that the world has ever seen. Trillions of dollars will continue to spin around at an increasingly dizzying pace until the day when a disruption to the global economy comes along that is serious enough to crash the entire thing.

The worldwide derivatives market is based primarily on credit and it is approximately ten times larger than it was back in the late 90s. There has never been anything quite like it in the history of the world.

So what in the world is going to happen when this thing implodes? Are U.S. taxpayers going to be expected to pick up the pieces once again? Is the Federal Reserve just going to zap tens of trillions or hundreds of trillions of dollars into existence to bail everyone out?

If you want one sign to watch for that will indicate when an economic collapse is really starting to happen, then watch the derivatives market. When derivatives implode it will be time to duck and cover. A really bad derivatives crash would essentially be similar to dropping a nuke on the entire global financial system. Let us hope that it does not happen any time soon, but let us also be ready for when it does.”
.

Act 4:  The citizens speak


The Depression Of 2011?: 23 Economic Warning Signs From Financial Authorities All Over The Globe
28 May 2010, Daily Markets.com, by Michael Snyder
<http://www.dailymarkets.com/economy/2010/05/28/depression-in-2011-23-economic-warning-signs-from-financial-authorities-all-over-the-world/&gt;

“Could the world economy be headed for a depression in 2011? As inconceivable as that may seem to a lot of people, the truth is that top economists and governmental authorities all over the globe say that the economic warning signs are there and that we need to start paying attention to them. The two primary ingredients for a depression are debt and fear, and the reality is that we have both of them in abundance in the financial world today. In response to the global financial meltdown of 2007 and 2008, governments around the world spent unprecedented amounts of money and got into a ton of debt. All of that spending did help bail out the global banking system, but now that an increasing number of governments around the world are in need of bailouts themselves, what is going to happen? We have already seen the fear that is generated when one small little nation like Greece even hints at defaulting. When it becomes apparent that quite a few governments around the globe cannot handle their debt burdens, what kind of shockwave is that going to send through financial markets?

The truth is that we are facing the greatest sovereign debt crisis in modern history. There is no way out of this financial mess that does not include a significant amount of economic pain.

When you add mountains of debt to paralyzing fear to strict austerity measures, what do you get?
What you get is deflationary pressure and financial markets that seize up.

Some of the top financial authorities in the world are warning us that unless something substantial is done, that is exactly what we are going to be seeing as 2010 turns into 2011.

Of course some governments around the world could try to put these economic problems off for a while by printing and borrowing even more money, but we all know by now that only makes the long-term problems even worse.

For now, however, it seems as though most governments are opting for the austerity measures that the IMF seems determined to cram down the throats of everyone. So what will austerity measures mean for the global economy? Think “stimulus” in reverse.
Yes, things are going to get messy. It looks like there is going to be a great deal of economic fear and a great deal of economic pain in 2011 and the years beyond that.

So are we headed for “the depression of 2011”?
Well, let’s hear what some of the top financial experts in the world have to say….
1)  Economist Nouriel Roubini:
“We are still in the middle of this crisis and there is more trouble ahead of us, even if there is a recovery. During the great depression the economy contracted between 1929 and 1933, there was the beginning of a recovery, but then a second recession from 1937 to 1939. If you don’t address the issues, you risk having a double-dip recession and one which is at least as severe as the first
one.”
2)  Bank of England Governor Mervyn King:
“Dealing with a banking crisis was difficult enough, but at least there were public-sector balance sheets on to which the problems could be moved. Once you move into sovereign debt, there is no answer; there’s no backstop.”
3)  German Chancellor Angela Merkel:
“The current crisis facing the euro is the biggest test Europe has faced for decades, even since the Treaty of Rome was signed in 1957.”
4)  Paul Donovan, the Senior Economist at UBS:
“Now people are questioning if the euro will even exist in three years.”
5)  Michael Pento, Chief Economist at Delta Global Advisors:
“The crisis in Greece is going to spread to Spain and it’s going to be very difficult to deal with. They are bailing out debt with more debt and it isn’t sustainable. It’s a wonderful scenario for gold.”
6)  LEAP/E2020:
“LEAP/E2020 believes that the global systemic crisis will experience a new tipping point from Spring 2010. Indeed, at that time, the public finances of the major Western countries are going to become unmanageable, as it will simultaneously become clear that new support measures for the economy are needed because of the failure of the various stimuli in 2009, and that the size of budget deficits preclude any significant new expenditures.”
7)  Telegraph Columnist Edmund Conway:
“Whatever yardstick you care to choose – share-price moves, the rates at which banks lend to each other, measures of volatility – we are now in a similar position to 2008.”
8)  Peter Morici, an Economics Professor at the University of Maryland:
“The next financial tsunami is emerging and will ripple to America.”
9)  Bob Chapman of the International Forecaster:
“The green shoots of recovery have now turned into poison ivy. The abyss has again been filled with more debt and more fiat currency. In the process the Fed and now the ECB have lost all credibility.”
10)  Telegraph Columnist Ambrose Evans-Pritchard:
“The M3 money supply in the United States is contracting at an accelerating rate that now matches the average decline seen from 1929 to 1933, despite near zero interest rates and the biggest fiscal blitz in history.”
11) Professor Tim Congdon from International Monetary Research: “The plunge in M3 has no precedent since the Great Depression. The dominant reason for this is that regulators across the world are pressing banks to raise capital asset ratios and to shrink their risk assets. This is why the US is not recovering properly.”
12)  Reuters Columnist  Iliana Jonas:
“The default rate for commercial mortgages held by banks in the first quarter hit its highest level since at least 1992 and is expected to surpass that by year-end and peak in 2011, according to a study by Real Capital Analytics.”
13)  Paul Krugman, a Nobel Prize-winning Economist:
“It’s not hard to see Japan-style deflation emerging if the economy stays weak.”
14)  Stan Humphries, Chief Economist for Zillow.com:
“Anyone expecting a robust rebound in the housing market … will be sorely disappointed.”
15)  Fox News:
“As the national debt clock ticked past the ignominious $13 trillion mark overnight, Congress
pressed to pass a host of supplemental spending bills.”
16)  Bloomberg:
“The U.S. government’s Aaa bond rating will come under pressure in the future unless additional measures are taken to reduce projected record budget deficits, according to Moody’s Investors Service Inc.”
17)  Peter Schiff:
“When creditors ultimately decide to curtail loans to America, U.S. interest rates will finally  spike, and we will be confronted with even more difficult choices than those now facing Greece. Given the short maturity of our national debt, a jump in short-term rates would either result in default or massive austerity. If we choose neither, and opt to print money instead, the run-a-way inflation that will ensue will produce an even greater austerity than the one our leaders lacked the courage to impose. Those who believe rates will never rise as long as the Fed remains accommodative, or that inflation will not flare up as long as unemployment remains high, are just as foolish as those who assured us that the mortgage market was sound because national real estate prices could never
fall.”
18)   The National League of Cities
“City budget shortfalls will become more severe over the next two years as tax collections catch up with economic conditions. These will inevitably result in new rounds of layoffs, service cuts, and canceled projects and contracts.”
19)  Dan Domenech, Executive Director of the American Association of School Administrators:
“Faced with continued budgetary constraints, school leaders across the nation are forced to
consider an unprecedented level of layoffs that would negatively impact economic recovery and deal a devastating blow to public education.”
20)  Mike Whitney:
“Without another boost of stimulus, the economy will lapse back into recession sometime by the end of 2010.”
21) Kevin Giddis, Managing Director of Fixed Income at Morgan Keegan:
“There is big money making big bets that at a minimum we we’ll have a recession if not a depression that could last for years.”
22)  John P. Hussman, Ph.D.:
“In my estimation, there is still close to an 80% probability (Bayes’ Rule) that a second market plunge and economic downturn will unfold during the coming year. This is not certainty, but the evidence that we’ve observed in the equity market, labor market, and credit markets to-date is simply much more consistent with the recent advance being a component of a more drawn-out and painful deleveraging cycle.”
23)    Richard Russell, the Famous Author of the Dow Theory Letters:
Do your friends a favor. Tell them to “batten down the hatches” because there’s a HARD RAIN coming. Tell them to get out of debt and sell anything they can sell (and don’t need) in order to get liquid. Tell them that Richard Russell says that by the end of this year they won’t recognize the country. They’ll retort, “How the dickens does Russell know — who told him?” Tell them the
stock market told him.”

Other words of wisdom and woe…
1)  Jean-Claude Juncker,  Chairman of the Eurozone finance ministers and the currency union’s key spokesmen, 7 May 2011: “When it becomes serious, you have to lie”.
2)  George Orwell: “During times of universal deceit, telling the truth becomes a revolutionary act”
3)  Mark Twain: “There are three types of lies: Lies, Damned Lies, and Statistics.”

≈ Intermission ≈ 

 

Why The U.S. Economy Is Not Recovering
21 May 2011, Economic Crisis Writings, by Dick Kazan
http://economiccrisiswritings.blogspot.com/2011/05/why-us-economy-is-not-recovering.html
“20 million people unemployed, underemployed or no longer counted because they have been unemployed too long.
Falling home prices with no bottom in sight and foreclosures and notices of default mounting, as half of all home sales are now foreclosures or short sales in which owners lose their equity and lenders forgive some of the mortgage amount.

This is today’s American economy. Add to that young people also having trouble finding jobs including recent college graduates. And many people are defaulting on their credit cards, student loans and other financing. This is not what economists and pundits predicted. Why is this happening? What’s gone wrong? The answer is simple: 

1)  We are now a military industrial economy.
Coast to coast we produce weapons of mass destruction and delivery systems, including jet fighters, and for the 1st time in our history, we are now fighting perpetual wars. Before World War II, we had about 14 military bases and today we have well over a thousand all over the world. We spend as much on our military as the rest of the planet combined spends on theirs, and all of what we spend is at tax payers expense. It is draining the life out of our economy.
2)  Including its military expenses, and its refusal to tax the people to pay for it, the U.S. brings in only 59 cents for every dollar it spends. This in itself is a formula for financial disaster.
3)  Our finances are so dire, we are willing to slash our Medicare, Medicaid, Educational System (our children’s future) and Social Security (whose funds are now mostly a government IOU) and police and
fire protection in order to support our military industrial complex. Why?
Because they are a massive source of jobs. “Defense” is the one part of our economy that is booming [which includes Homeland Security].
4)  Wall Street and the stock markets are doing well because giant companies have shipped much of their manufacturing overseas and their profits are up. And stocks trade on profits, not on American jobs.
5)  Speaking of being up, gas prices are up as are food prices, clothing prices, doctor and hospital prices, college tuition and the cost of most everything else, as inflation is beginning to take hold. This
is a result of the Fed’s stimulus plans in which they print and circulate large sums of money in the vain hope we can spend our way out of this mess.

No my friend, we cannot solve a debt crisis by spending our way out of it. We will have to confront our problems and solve them, starting with ending our three wars. Then we must slash our military spending, which will bring hardship but hardship is coming anyway as we are going broke. Clearly the two political party monopoly under the control of lobbyists is failing us and it is long past time we
Americans raised our voices and got involved. This was a great nation and it can be great again. We must restore it for ourselves, for our children and for the world.

≈ The show resumes ≈

Act 5:  Consulting the Oracle

Predicting date of economic collapse (TSHTF)
2 Feb 2010, Gold Eagle editorial,  by Ray Elliott
<http://www.gold-eagle.com/editorials_08/elliott020210.html>
“The event that many would like advance warning on is economic collapse. It is an event that most informed economists say is inevitable due to U.S. deficits that are too large to be paid back. Yet, those of us that must work and pay our bills cannot stop what we are doing and dig a hole to hide in every time a new event happens that appears to be the beginning of the Economic Collapse.

We must first make assumptions on what Economic Collapse is. History tells us. All paper money falls into one of two categories, those that have failed and those that are going to fail. They failed in the past (including United States currency) in a spiral of constantly losing value. The federal government continually increases the obligations that it must pay for.
Buyers of federal debt slowly back away from buying long term debt and later will not purchase even short term debt. The government begins buying its own debt by issuing new paper money. As more paper money is issued it loses more and more of its value. When the public becomes aware that the issuance of paper money is out of control, and that holding it weeks or days will result in a loss of
value, they attempt to convert the paper money that they have into assets that retains some value. To do this, they have to remove any cash they have from banks and other institutions and convert it to something else. What ensues is a run on the banks.

When will this happen? We have some clues because of the process that will take place prior to
the event.

The Main Stream Media (MSM) generally is in favor of big government spending and supports the
socialistic policies of the Obama administration. The problem with socialism is that eventually you run out of other people’s money.  At the point that MSM begins to see the hazards of the uncontrolled printing of money, the beginning of the end is near. Then the Main Stream Media will begin to report the REAL MONEY CRISIS. For those that ask, “When will the SHTF?” That is when.

The events that follow this are events that you will not want to be a part of.
•  Long lines will appear at banks for those trying to get their money out while it still has some value.
•  Paper money will be issued in greater and greater denominations.
•  Food and other necessities of life will skyrocket in price.
•  Soon a bank holiday will be declared while the government attempts to control the panic.
•  Rules will be enforced that restrict how much money may be withdrawn at a time.
•  Attempts will be made to “freeze” food prices.
•  Payment for all goods and services will be turned upside down.
•  Everything will rapidly increase in price. Soon, the paper money you have will not buy the things that you need. At some point, $1,000 will not buy a pair of shoes.

The events that follow this are also predictable because they have happened before.
•  Gold and silver become extremely valuable. Pre 1965 silver coins (they still have some silver in them) will become a known standard of value that is accepted by those that still have something to sell.
•  The barter system for goods and services will return.
•  People that want to eat will grow gardens.
•  Most people who have had life savings in 401Ks will be poor again.
•  The winners are the ones that have planned in advance and the ones that still have outstanding loans or mortgages. The mortgages will no longer have any value. Homeowners will be able to send a million dollar note to a mortgage holder and tell them to keep the change. The change will not buy a loaf of bread.
•  Large cities will become dangerous places to be.
•  Those that plan ahead can avoid the most severe aspects of this scenario. It is up to each individual to plan ahead early enough to survive. A following article will outline some suggested courses of actions that any individual can implement.

.

Act 6:  The Public makes sacrifice

Personal Actions You Should Take Before the TSHTF!
Ray Elliott
<http://www.silverbearcafe.com/private/03.11/actions.html>
“In a previous article I discussed when the financial collapse will occur. This report will review some steps each individual should take in advance of the difficult days that are coming. Before going into the details, it is important for you to judge the necessity of following these steps. If you follow them and no collapse occurs, you have lost very little. If you follow them and the collapse occurs, these steps may save your life. If this discussion seems unreal, think about how unreal the world will be when the U.S. cannot pay its bills. Treasury Notes are no longer being purchased by China or Japan. Both are now selling (just like PIMCO). The Fed’s printing press is becoming the sole buyer.

Think about what your days are going to be like when paper money has no value. People that depend on government jobs, Social Security, food stamps, welfare, retirement checks or unemployment checks will no longer receive them. As the system winds down, some checks may be mailed, however; they will have little or no purchasing power. A new method of exchange will begin taking place.

Money in 401K’s will be gone. Money in banks will be worthless. Some people will benefit from the
collapse. Some that have mortgages will find that they now own the property, but no longer have a burdensome loan payment. Larger and larger denomination currency bills will drive out smaller denominations. You will be able to wipe out your mortgage by simply sending your mortgage company a million dollar bill and tell them to keep the change. The change will not buy a loaf of bread. The
banks know this and are making very few loans while foreclosing on others before TSHTF.

Silver coins (pre 1965 have silver in them) will be valuable for purchasing necessities. Gold coins will have great value, but will not be useful for small purchases. One or two ounces of gold may purchase a
home. Other basic necessities will be used for bartering to acquire goods that you need. In Russia, after 1989 or in Argentina, in the late 90’s, liquor was used as money to acquire goods. Producing alcohol requires having a small, home still (for distilling alcohol). Food items that you have stored or produce from your garden, sometimes gets too old for consumption (such as potatoes) and can be converted into alcohol with a still. Alcohol can be used for trading, for powering your generator or even fueling your vehicle. In post World War II Germany (during the German Occupation), poverty was widespread. A pack of cigarettes would purchase several hours of labor. Five gallons of gasoline was
worth a week’s supply of food. These days, medicines will be in demand (even outdated ones). Storing a quantity of aspirin will be useful for trading. Salt will also be used for money (as it was thousands of years ago).

Many have reviewed the need for storing sufficient food supplies. The amount depends on you and how many you need to sustain. Canned goods can be kept for two or more years. Rice and pasta in large bags can be kept in plastic storage boxes in a cool location. A water source and a method of sterilizing water are essential. Water disinfectants cost about one half cent per quart of water. Having a small garden will help feed your family. Storing good quality seeds is essential.

Finding a safe place for your family is more difficult to solve. Large population centers will not be safe. Those that have not prepared will begin taking from those that have prepared. Law and order will be sporadic because few in law enforcement will be paid. You should keep your survival supplies in or near the vehicle you plan on using when you leave. Getting out of town before TSHTF will be much easier than trying to leave later. Quickly relocating to a small town in a farming community will be much safer than remaining in a suburban home near a large city. Visit a small community near you now and set up a safe haven. See if you can arrange a garden and/or camping site. Small rural towns have lots for sale that can be acquired for very little. A small deposit can secure an option to purchase a lot in a small town that will give you a place to park your vehicle (a small motor home would be ideal) and a place for a garden. One quarter acre is more than you will need. Be careful about locating in a more remote location because it can be dangerous. In Argentina, roving bands of thieves routinely raided remote ranches and homes, inflicting both financial and physical harm. A small community is safer and may have an organized defense.

Last, but certainly not least is personal defense. Weapons are required. They can be used for both hunting and defense. Using the same caliber for both hand guns and long guns will save on the types
of ammunition needed to be stored. Nine millimeter is a good choice. A shotgun is both a good hunting weapon and a defense weapon. A 22 rifle is a good weapon to harvest small game for your family. A compound bow also serves both purposes. Having a plan of action when strangers appear is a necessity. In the meantime, you may ask yourself, can you defend your current home? Do you have a safe room? Do you have a guard dog? Do you have a warning system? Do you have friends nearby that would help you? How do you contact them?

As I stated in the beginning, you may never need to use any of these tactics. I pray that you do not. However; if and when TSHTF, you and your family will have a far better chance to survive than those that do not prepare.”

.

Act 7:  and with the Ides of March, the winds blew cold…

The Coming U.S. Depression of 2011/2012: Full of  homelessness, hunger, street  and the emergence of a 3rd party
7 Feb 2011, PBT Consulting
<http://tommytoy.typepad.com/tommy-toy-pbt-consultin/2011/02/the-coming-us-depression-of-20112012-full-of-homelessness-hunger-street-violence-and-the-emergence-o.html&gt;

“The man who predicted the 1987 stock market crash and the fall of the Soviet Union is now forecasting a revolution in America, food riots and tax rebellions – all within four years, while cautioning that putting food on the table will be a more pressing concern than buying Christmas gifts by 2012.

Gerald Celente, the CEO of Trends Research Institute, is publisher of the Trends Journal which forecasts and analyzes business, socioeconomic, political, and other trends, and is renowned for his accuracy in predicting future world and economic events which can send a chill down your spine.

Celente says that by 2012 America will become an underdeveloped nation, that there will be a revolution marked by food riots, squatter rebellions, tax revolts and job marches, and that holidays will be more about obtaining food, not gifts.

“We’re going to see the end of the retail Christmas… we’re going to see a fundamental shift take place… putting food on the table is going to be more important than putting gifts under the Christmas tree,” said Celente, adding that the situation would be “worse than the great depression.”

“America’s going to go through a transition the likes of which no one is prepared for,”said Celente, noting that people’s refusal to acknowledge that America was even in a recession highlights how big a problem denial is in being ready for the true scale of the crisis.

Celente, who successfully predicted the 1997 Asian Currency Crisis, the sub-prime mortgage collapse and the massive devaluation of the U.S. dollar, told UPI in November last year that the following year would be known as “The Panic of 2008,” adding that “giants (would) tumble to their deaths,” which is exactly what we have witnessed with the collapse of Lehman Brothers, Bear Stearns and others.

He also said that the dollar would eventually be devalued by as much as 90 per cent. The consequence of  what we have seen unfold this year would lead to a lowering in living standards, Celente predicted a year ago, which is also being borne out by plummeting retail sales figures.

[Movie image above: Bartertown where futureworld power structures fought over ‘pig shit- methane energy’; a time and condition which brought about roving, mobile gangs that killed and plundered their way across  the land.   This is the view of ‘collapse’ at the grass roots, an image from the movies.]

The prospect of revolution was a concept echoed by a British Ministry of Defense report last year, which predicted that within 30 years, the growing gap between the super-rich and the middle class, along with an urban underclass threatening social order would mean, “The world’s middle classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest,” and that, “The middle classes could become a revolutionary class.”

In a separate recent interview, Celente went further on the subject of revolution in America.There will be a revolution in this country,” he said. “It’s not going to come yet, but it’s going to come down the line and we ‘re going to see a third party and this was the catalyst for it: the takeover of Washington, D.C., in broad daylight by Wall Street in this bloodless coup. And it will happen as conditions continue to worsen.”
Internet image: This is how marginal people are affected – before the ‘main event’ unfolds; its what we see at the grass roots, this is reality.]

“The first thing to do is organize with tax revolts. That’s going to be the big one because people can’t afford to pay more school tax, property tax, any kind of tax. You’re going to start seeing those kinds of protests start to develop.”
“It’s going to be very bleak. Very sad. And there is going to be a lot of homeless, the likes of which we have never seen before. Tent cities are already sprouting up around the country and we’re going to see many more.”
“We’re going to start seeing huge areas of vacant real estate and squatters living in them as well. It’s going to be a picture the likes of which Americans are not going to be used to.
It’s going to come as a shock and with it, there’s going to be a lot of crime. And the crime is going to be a lot worse than it was before because in the last 1929 Depression, people’s minds weren’t wrecked on all these modern drugs, over-the-counter drugs, or crystal meth or whatever it might be..

So, you have a huge underclass of very desperate people with their minds chemically blown beyond anybody’s comprehension.
Above left, territorial boss ‘Humongous’ from movies. Right: territorial bosses- the Council on Foreign Relations.
Below left, citizen Mad Max, just struggling to stay alive from the movies. Below right, a suburban family with short term survival supplies. Reality.

The George Washington blog has compiled a list of quotes attesting to Celente’s accuracy as a trend
forecaster.
•  “When CNN wants to know about the Top Trends, we ask Gerald Celente.” – CNN Headline News
•  “Gerald Celente has a knack for getting the zeitgeist right.” – USA Today
•  “There’s not a better trend forecaster than Gerald Celente. The man knows what he’s talking about.” – CNBC
•  “Those who take their predictions seriously …consider. Gerald Celente and the Trends Research Institute.” – The Wall Street Journal
•  “Gerald Celente is always ahead of the curve on trends and uncannily on the mark … he’s one of the most accurate forecasters around.” – The Atlanta Journal-Constitution
•  “Mr. Celente tracks the world’s social, economic and business trends for corporate clients.” – The New York Times
•  “Mr. Celente is a very intelligent guy. We are able to learn about trends from an authority.” – 48 Hours, CBS News
•  “Gerald Celente has a solid track record. He has predicted everything from the 1987 stock market crash and the demise of the Soviet Union to green marketing and corporate downsizing.” – The Detroit New
•  “Gerald Celente forecast the 1987 stock market crash, ‘green marketing,’ and the boom in gourmet coffees.” – Chicago Tribune
•  “The Trends Research Institute is the Standard and Poor’s of Popular Culture.” – The Los Angeles Times
•  “If Nostradamus were alive today, he’d have a hard time keeping up with Gerald Celente.” – New York Post
So there you have it – hardly a nut job conspiracy theorist blowhard now is he? The price of not heeding his warnings will be far greater than the cost of preparing for the future now. Storable food and
gold are two good places to make a start.”

≈≈≈  ≈  ≈≈≈
While the future seldom unfolds the way we imagine, it may come in a  flavor that is not surprising. We may not know the exact height a tide may rise to on the beach, but we can certainly tell the direction the water is flowing; similarly, without seeing the wind, we can feel its pressure and see its effects. Even within a decade, the U.S.A may not experience literal secession as predicted by the Russian professor, but several regions may suffer patchy, severe economic depression, areas within other regions  may become wracked by moderate scale social/racial upheaval requiring federal military support…
.

“Dark clouds gather on the global horizon, the wind direction is changin’.
 Flashing light in the darkening sky, promise storms gale soon rising ”.
5-29-2011 Mr. Larry]

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Filed under Survival Manual, __1. Disaster

Bartering your supplies

(Survival Manual/2. Social Issues/Bartering your supplies)

A.  When the supply line is broken
Bartering is an effective way to get goods and services and basically cut out the middle man. In really hard times, we would be looking to increase these exchanges and find ways to get things done, to feed, clothe and whatever else would be needed- without spending cash.
In a “worst case” economic situation or extreme hyperinflation, bartering goods and services could become an essential family survival strategy.  Having pre-stocked  raw material and manufactured goods that would become scarce will put you in a position to barter for those things you need and don’t have.

•  Crisis Duration
During a short-term crisis that isolates people from goods & services, bartering will probably be done with cash for goods or by simple exchanges of food items.  If you are sure the crisis will be short-lived you can consider providing goods at very low barter cost to assist those in great need.  This will create a tremendous amount of local good will for you during and after the crisis.
Long duration crisis will be evident by a collapse of the national economy that affects production, storage and transportation of goods.  Consider the various natural phases of a long-term crisis when deciding what skills to learn and what goods to pre-stock in preparation.  What will become scarce?
What will people need during each phase?  What goods should be held back for the next phases? What essential material can be refurbished and repaired using low-tech methods and tools?  What geographic specific goods and services will be needed?  As an evaluation example: there will not be much survival demand for a wood stove fabrication capability in Southern Florida.

•  Value of Goods
The value of your trade goods will be determined by essential need and perceived scarcity.  The value of goods will also change over the duration of the crisis as needs, conditions and availability change.
•  Early Phases
Early on there will be some goods that disappear quickly, some will be essential while others will soon become the new luxury items.  When was the last time you considered a bar of soap a luxury or even a necessity that you had to ration?  As bartering becomes more prevalent after the big crunch, you will have to be able to decide, what to barter and when.

•  Alternate Options
When some goods will become scarce or not available, there may be viable alternatives to replace them.  When toilet paper disappears, newspaper will be in demand.  Homemade soap will soon replace dwindling stock of mass-produced soap – homemade disinfectant soap will be the most valuable.  With no electrical power, being able to make candles and candle lanterns can be a money-making skill. As time passes, there will be less and less pre-crisis manufactured consumable goods. Tools and other non-consumables will break and wear out.
.

B.  Top 12 Barter Goods for WTSHTF
1.  Water Purification Supplies – Does this really need an explanation?
2.  Prescription Medications – Yes, this is a difficult one to stock up on, but if you come across them in the post-apocalyptic world – SNAG ‘EM. What do you think you could trade a bottle of nitro pills for with someone who has a heart condition? If you require prescription medications I would strongly advise you consult with your physician about obtaining a few month’s extra supplies.
3.  Fuel – We’re talking all types: gas, diesel, propane, firewood, etc. Can you have too much? No, so you’ll likely keep it for yourself, but if you DID need something that you hadn’t already acquired, fuel will be a great commodity for bartering.
4.  Guns –Yes, they’re expensive, but there are MANY people out there who are averse to owning a gun, but once TEOTWAWKI hits, their minds will quickly change. They’re expensive, yes, but to someone that’s unarmed, a single-shot shotgun and a box of shells will be worth its weight in gold.
5.  Ammo– America is the most heavily armed nation in the world, but I seriously question how many people actually maintain an adequate supply of ammunition for those guns. Think about it, how many people do you know that go out and buy a few boxes of shells before hunting season starts?  They don’t have an adequate supply should SHTF. You can have all the guns in the world, but if you can’t load them with bullets – they’re useless. Stock up on common calibers (.22, 9mm, .45, .223, 12 gauge and .308) and you’ll find yourself in high demand with people who need rounds. Now, the flip side of this is do you really want to give away ammunition that might be used against you? You’ll have to decide this depending on the exact SHTF circumstances.
6.  Survival Books – Books with good information will be huge. They’re EMP-proof and don’t require electricity to run (unlike the pc you’re using). I advise you to at least print and save the pages of this Survival Manual.
7.  Batteries – Stock as many as you can use while rotating stock and staying within the recommended life span. A better idea is to stock a few crank radios and flashlights.
8.  Soap, Bleach and Cleaning Agents – Your local grocery store won’t be open. These items are critical for maintaining health and hygiene.
9.  Cast Iron Cookware – People that run out of fuel will be cooking over an open fire – situations that call for cast iron. Settlers used it for a reason.
10.  Survival Seeds – This would be for the pro-longed SHTF situation. Their value will be infinite.
11.  Garden and Hand Tools – Those left alive will suddenly become gardeners and carpenters, whether they like it or not.
12.  Canning Supplies – How will people survive the non-growing season without these?

Some items I’d like to cover that are not included above:
•   Silver and Gold Coins – A lot of people advocate purchasing these for bartering purposes, but their value is entirely dependent on the situation. If you’re lost in the desert for 14 days, would you rather have a gallon of water or 4 bars of gold? Precisely my point. When the cataclysm hits people WILL NOT look for silver and gold coins, they’ll be looking for the items mentioned above.
•   Booze – Yes, alcoholics will do flips and twists for it when they run dry, but what will your typical alcoholic have to offer in trade? Think about it. While I would appreciate a stiff shot of Jack Daniels post-Doomsday, I wouldn’t waste my time stocking up on it for bartering purposes. That being said, if you do drink, and you have a pantry stocked with food, it’d certainly be worthwhile to add the booze of your choice to the shelves and rotate stock. Remember: Shop in your pantry for dinner, shop at the store for your pantry.
•   Toilet Paper –Don’t waste valuable storage space to stock amounts much beyond your typical household needs.
.

C.  Internet Blog respondents list what they feel would be important barter items.
Blogger 1:  My wife and I have been talking about things you can not go a day without. 1. toilet paper, 2. hand and bath soap, 3. tooth paste and brush. That is just a beginning. I think the next time we go to the BOL [bug out location] We will have to stock up on these items. I’m thinking a case or half case of each.

Blogger 2:  -Ammo  -Pedialyte  -Canned Goats Milk of Baby Formula -Dried Beans and Rice. This is a big no brainer, because you can have so many portions in such a small area of storage. But it could also be a form of currency if neighbors or others are starving. Start a little black market with dried goods. Only carry small amounts so if your life is threatened -Pain Relievers, and other medicines. I think a small stockpile of medicines is a MUST have if not just for personal use, but for the ability to make amazing personal benefit from it -Fire wood  -Shoes or Boots.

Blogger 3:  I was thinking of the following items: Sweeteners (sugar, honey, molasses, etc…), BIC lighters, vegetable  seeds, OTC medicines, duct tape.

Blogger 4:  In a crisis of months duration, with supply disruptions many people would probably desire the simple things that remind them of being human and civil that currently take for granted.
– I believe toiletries, especially soap, will be highly desirable. When I go shopping, I especially like buying extra tooth-brushes/paste, mineral oil, alcohol (isopropyl), hydrogen-peroxide.
– Coffee. Bean or ground.

Blogger 5:  I like batteries as a barter item. A few common types, but mostly the expensive lithium-ion variety. NiCd, NiMH, Alkaline and old-style carbon-Zn batteries all only have a shelf life of a few years. Lithium batteries last 10 yrs or more. Solar battery chargers are another interesting item, although they’re a little big (charging batteries could be an interesting service to provide). Flashlights, too, esp. the modern compact extra-bright variety. – it wouldn’t hurt to have a few hundred to a thousand candles stashed away, if there is an EMP candles will be in great demand. Matches might also be good.

Blogger 6:  Bathroom products such as soap, shampoo, toothpaste, shaving cream, deodorant would be good for trade. Toilet paper will be high up there too. All cheap stuff to get today and last a long time. I can’t help but think that keeping an extra bicycle or two around would be worth their weight in gold.

Blogger 7:  90% silver is popular with the SHTF crowd. Makes good barter material. Can’t trade a K’rand for a bag of apples. But a 90% dime will be worth about $7.25 if silver goes to $100.  So make sure your PM is in small denominations if you intend to barter with it. My ‘survival mentor’ says…”to prepare for the unthinkable one must first think the unthinkable”.

Blogger 8: I would have to go with salt, that’s right plain old salt. I’ve spent a decent amount of time in areas with no/or sporadic electrical services, and have witnessed people getting around this by using salt to preserve extra food, and it takes A LOT of salt. Sugar would be a hot item as well.

Blogger 9: Here is a list of worthy additions to a “barter list”:
Seeds: general garden  Bottled water  Food of any kind – especially those in cans and jars, in small quantities
Alcohol  Matches  Candles
Batteries: primarily AA, AAA, 9 volt  Flashlights  Blankets
Radio  Condoms  First aid kits
Soap Tooth brush  Toothpaste
Water containers  Water filters or any kind  Propane
Mess kits/cookware  Tools of any kind – especially those most common (hammers, saws, hand drills, screwdrivers, etc.)  Nails and screws
Toilet paper  Aluminum foil  Rope/cord/string
Small notebooks, wooden pencils/ink pens Clothes pins
Fishing line and hooks/lures  Bug spray/insect repellent  Duct tape
Tarps  Bleach  First aid kits & supplies
Knives & sharpening stones/supplies  Ammunition (be careful with this one)  Razors for shaving
Clothing of  any kind – especially socks/underwear  Work gloves  Coffee/Tea/Flavored drink mixes
SPAM – I know its in the food category– great barter  item  Cigarettes/Cigars  Gardening tools
Canning jars and supplies  Fire starting supplies – including fire-steels, magnesium, etc.  Spices
Something else to consider – bartering does not always have to involve some-”thing”. In many cases skills can be bartered as well. If you know how to get a garden going and another person can repair a roof – just do a swap and work things out. Maybe someone has some fuel that they will give you if you can fix their vehicle. After TSHTF the bartering of materials and skills may very well become the only method of commerce – as money may be worthless.
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D.  Top Post-Collapse Barter Items And Trade Skills
June 10th, 2011, Alt Market, Brandon Smith
Pasted from: http://www.shtfplan.com/emergency-preparedness/top-post-collapse-barter-items-and-trade-skills_06102011

The concept of private barter and alternative economies has been so far removed from our daily existence here in America that the very idea of participating in commerce without the use of dollars or without the inclusion of corporate chains seems almost outlandish to many people. However, the fact remains that up until very recently (perhaps the last three to four decades) barter and independent trade was commonplace in this country. Without it, many families could not have survived.
Whether we like it or not, such economic methods will be making a return very soon, especially in the face of a plunging dollar, inflating wholesale prices, erratic investment markets, and unsustainable national debts. It is inevitable; financial collapse of the mainstream system ALWAYS leads to secondary markets and individual barter. We can wait until we are already in the midst of collapse and weighted with desperation before we take action to better our circumstances, or, we can prepare now for what we already know is coming.

 In today’s “modern” globalist economy, we have relied upon centralized and highly manipulated trade, forced interdependency, senseless and undisciplined consumption, endless debt creation, welfare addiction, and the erosion of quality, as a means to sustain a system that ultimately is DESIGNED to erode our freedoms not to mention our ability to effectively take care of ourselves. We have been infantized by our financial environment. In the near future, those who wish to live beyond a meager staple of government handouts (if any are even given) will be required to make a 180 degree reversal from their current lifestyle of dependency and immediate gratification towards one of self-sufficiency, personal entrepreneurship, quality trade, and a mindset of necessity, rather than unfounded excess.
This means that each and every one of us will not only be driven to form barter networks outside the designated confines of the mainstream, we will have to become active producers within those networks. Each and every one of us will need to discover practical goods and skills that will be in high demand regardless of economic conditions. Being that our society has all but forgotten how this kind of trade works, let’s examine a short list of items as well as proficiencies that are sure to be highly sought after as the collapse progresses…

Top Priority Goods
To be sure, this list is a summary of items that will have high value during and after a breakdown scenario. I welcome readers to post their own ideas for trade goods below this article. The following is merely a framework which you can use to get started, and was compiled using actual accounts of post collapse trade from the Great Depression, to Bosnia, to Argentina, to Greece, etc. These are items and skills that people were literally begging for after financial catastrophe occurred in numerous separate events.
Water Filtration: Stock up on water filters. Learn how water filtration works. Even make your own water filters using cloth, activated charcoal, and colloidal silver. Everyone will want to trade with you if you have extra filtration on hand. During economic breakdowns, especially in countries like Argentina, and Bosnia, which had more modern, city based populations, the first thing to disappear was clean water. Always. In some cases, the tap water still runs, but is filled with impurities, and needs to be boiled. Boiling does not remove bad tastes or smells, however, and clean filtered water will be in demand.

Seeds: Non-GMO seeds are a currency unto themselves. They can last for years if stored properly, and everyone will want them, even if they don’t have land to plant them. Get enough for yourself, and then purchase twice as much for trade.

Fresh Produce: Ever heard of scurvy? Probably. Ever had scurvy? Probably not. Believe me, you don’t want to have it. Your body essentially begins to fall apart slowly, and the result is an ugly boil and sore filled complexion, the loss of teeth and hair, and the eventual failure of internal organs. Don’t think you can live on beef jerky and canned beans for months on end. You need fresh vegetables and fruits, and the vitamins they supply. Anyone with a well-managed garden and a few fruit trees is going to do very well in barter. Vitamin supplements would also be a practical investment.

Long Shelf Life Foods: This one should be obvious, but you may be surprised how many preppers, even though aware of the danger in the economy, do not have ample stored foods.The rationalizations abound, but usually, you are dealing with a person who has a heavy hunting background, and believes he will be able to procure whatever food he wants whenever he wants with his trusty bolt-action rifle and a few hours in the woods. Don’t fall into this foolish trap. Thousands if not millions of other hungry, destitute people will likely have the same idea, combing the forest for deer, only running into (and perhaps shooting at) each other. In every single account of modern economic collapse I have read, the people involved kick themselves brutally for not stocking more food that didn’t require refrigeration. Even those that were moderately prepared stated that they wished they had stored twice as much as they did.
Sealed food kits would be highly valued trade items, as long as they contained necessities like grains (wheat or rice store well), salt (the human body will not function without salt), honey or maple syrup (the body needs sugars), and powdered milk, peanut butter, or any other foods with fat content (the body needs fats). Prepackaged freeze-dried foods are more expensive to stock, but they are, of course, easy to trade.

Food Producing Animals: Chickens are great for eating, but they also produce eggs. Cows and Goats can be slaughtered, but they also produce milk. Sheep can be easily herded towards your dinner plate, but they also produce wool. Rabbits make a good stew, but they also produce lots of other rabbits. In terms of barter, these animals will be life savers, as well as a solid source of trade income. Dual purpose livestock are really where it’s at for those who have even an acre of land, and many of them (except cattle) tend to feed themselves easily if left to wander your property. You can trade eggs, milk, wool, etc, that they produce. Not to mention, fetch serious value for trading the animal itself.

Solar Power: Solar power is so overlooked by most barter organizations and survivalists in general that it’s astonishing. If every home in America had at least two large solar panels on the roof, I would not be half as worried about collapse as I am today. My suspicion is that many ‘preppers’ believe that after a breakdown, we will all return to some kind of Agrarian pre-electric age where everything is lit with oil lamps. This is silly. If I have my LED lamp with rechargeable batteries, I’m certainly not going to rely on less effective burning lamps that depend on a finite fuel supply. And, I’m certainly not going to give up the advantages of night vision, radio communications, or refrigeration if I can help it. The key is to ensure that you have a continuous means of diverting electricity to these goods. This already exists in the form of solar power.
Depending on your budget, you can purchase solar panels that can be folded and carried with you for charging batteries, or, you can purchase entire arrays and battery banks that run your whole house. Those without electricity WILL want electricity, and solar is an excellent barter item. Wind generators, as well as water driven generators (as used often in Bosnia) are also a consideration. People that have the knowledge to set up these systems for others will not have trouble finding trading partners.

Firewood: Even with solar power, home heating will become a major concern for every household during and after a breakdown. If you can avoid running your battery bank out on inefficient space heaters, you will. The best way to do this is with a wood stove, or a fireplace. Those without any electricity will scour their immediate areas for loose wood, then move on to chopping down random trees for fuel. This is one of the few instances, ironically, that those in urban environments would have an advantage, being that dry wood for burning is literally everywhere in the city. During the Great Depression, families would often sneak into abandoned homes and apartment buildings to dismantle sticks of furniture, or even the walls, to use as firewood.
A small, well insulated home can be heated with as little as two cords of wood every winter. Larger drafty homes require as much as twenty cords per winter. A “cord’ of wood is a stack of split timber around four feet wide, four feet high, and eight feet long. This wood is “aged”, or dried for at least a year after being cut, so that it burns cleaner, and creates much more heat than freshly felled timber. When the general public begins to rediscover the need for aged cord wood, those with timberland will have a prized commodity on their hands for barter.
A disciplined cutting routine would be essential. Only cutting enough timber (of the right maturity) to create a decent supply while not erasing the whole forest for a single year of profit. Those traders with the correct knowledge will do very well in a barter economy.

Gasoline And Oil: This is a tough one, because its hard to predict how much petroleum the U.S. will be able to import or produce on its own during a collapse, and its very difficult to store for long periods of time. If you hear news that the wars in the Middle East have expanded even further, or that OPEC is decoupling from the dollar, you might want to run to the nearest station and fill as many storage cans as possible, along with a little bit of added ‘gas saver’ which helps keep it stable longer. Initially, people will be dueling to the death for gas and oil. I have little doubt. After the price hits $15, $30, $60 a gallon due to hyperinflation, and a little time passes, I think people will begin finding ways to live without it, or they will reduce its use to emergency tasks.
Desire for gas will always be there, especially in agricultural areas where one tractor could help sow the seeds that feed an entire town. But beyond storage, I would suggest learning ways to distill your own corn ethanol and alcohol based fuels. This is where the real barter potential is.

Silver And Gold: I placed precious metals in the middle of this list for a reason. Concerns in a collapse situation will be varied, and the manner in which a derailment progresses will also determine the order of needs in a barter community. In a Mad Max scenario where there is little to no community, or the construction of any semblance of economy is impossible; sure, gold and silver will not be very high on most people’s lists. Has this ever happened in recorded history? No. Gold and silver have remained common currencies for thousands of years despite any catastrophe. This is why I have to laugh at those people who undercut precious metals or claim that because you “can’t eat them” they will not be important. In Argentina, in the midst of complete meltdown and monetary chaos, when people were shooting each other in the streets for food on a daily basis, gold and silver became king, and still are.
Barter networks that have formed in Argentina love to trade for anything made out of gold or silver, because precious metals are the only tangible form of currency in existence there. Being able to trade goods is fantastic, but sometimes, you may not have what another person wants.Do you go out to find someone who does, trade with them, then, try to find the guy who turned you down? No. If you have any meaningful localized commerce in place, then you should also have a common medium of exchange, and precious metals are the only thing that safely fits the mold, because they cannot be artificially reproduced or fabricated. Their rarity and their longevity make them the perfect method of common trade. Even if the worst of the worst occurs, rebuilding will result in the immediate resurgence of trade, and the immediate need of a new currency. Gold and silver will come back, as it always has, and always will. Every potential barter network should be including gold, silver, and maybe copper, on its list of accepted alternative currencies, and the values of said metals should be weighed by the inherent supply and demand of the community. The “official” market value ( which is very manipulated) should only be used as a loose guide.

Firearms And Ammo: Another obvious one. The problem is, the selection of calibers is so varied within the U.S. that stocking anything that will be needed by everyone is very difficult. The only recourse is to stick with common military calibers, such as 9mm, 40 S&W, 45 ACP, .223, 7.62 by 39, 7.62 by 51 (.308), 12 gauge, .410, and 20 gauge shotgun shells, and the ever pervasive .22. Stocking these calibers will result in a much greater chance of trade.
I can think of no instance of societal disintegration that did not lead to horrible violence. In places where firearms are outlawed, the carnage is always much worse. Criminals easily get their hands on weapons, while law-abiding citizens are left defenseless. Governments take liberties with the people, while the populace cowers. Accounts of torture, rape, murder, and genocide, are abundant in the face of hard economic times. EVERYONE should be armed, and as reality sets in, even those who clamored to outlaw guns will be clamoring to get one.
Of course, laws today very strictly regulate our ability to barter firearms, but post collapse, no one will care much.
Ammo reloading will be a useful skill in light of the fact that homemade manufacture of ammo is very difficult. The nationwide ammo supply will dwindle very quickly, except for those pockets of people who smartly stockpile for trade.

Body Armor: That’s right. Any kind of body armor is as good as gold in a collapse environment.People in countries across the world wish they had it, and would trade almost anything for it.When you live in a place where a random gun shot (a minute by minute occurrence in many countries), from a criminal’s weapon, or more likely a police or military weapon, could bounce off the curb or through your car windshield, and into your chest, you begin to respect the necessity of Kevlar. The fact that body armor is relatively cheap and is easily obtained in the U.S. should be taken advantage of by barter networks. This advantage may not exist in a couple of years.

Tazers And Pepper Spray: Easy to purchase and stockpile here in America. Better than nothing when facing armed attackers. Disables without death (in most cases), and easier on the conscience. Trades well.

Various Tools: A garden hoe may be a novelty item to most suburbanites and city dwellers now, but soon, it will be a mainstay tool. If you have extra, they will come to you for barter. I’m not going to list every tool in existence here, but I suggest using common sense. What tools do you see being required for daily use? What would YOU need post collapse?

Pesticides: I’m big on organic food and healthy eating, but if my life is on the line, I’m spraying my crops down with whatever poison I can find. Unless you have years of experience with natural pest deterrence methods, then I suggest you do the same, especially in that first year of calamity. A hoard of locusts could annihilate your crop within a day given the chance, and should be dealt with using the most powerful means available.
Cockroach and rat poisons will also be huge sellers, guaranteed. Vermin thrive in unkempt human environments, whether in the country or the city, and with them comes disease.Diseases you thought had disappeared off the face of the Earth, like bubonic plague or small pox, will make a comeback in cities, where streets of death and sewage act like enormous Petri dishes (remember New Orleans after Katrina? Imagine if that had never been cleaned up).
Stock pesticides, even if they offend your environmental sensibilities. You’ll use them, trust me.And, people will trade whatever they can for them.

Warm Clothing: The world is awash in textiles and clothing. Using clothes as your primary means of trade is not necessarily the best plan. However, most of the clothes made around the world are very poor quality, and are not designed for harsh environments. Clothes made specifically for harsh cold or rough wear are harder to some by, and are often very expensive.This is where you would want to focus your investments.
Gortex, for instance, could give you incredible bartering potential. Wool socks are a rarity (how many people do you know with more than two pairs of wool socks?). Water resistant and water proof jackets and overcoats, boots, well made hiking shoes, and waterproofing chemicals and sprays will be needed within trade networks. The ability to make these items, or repair them, will also be valued.

Medicines: This is another difficult item to procure, mainly because doing so often gets you flagged as a possible drug dealer. Certain items aren’t too hard to come by and store, though, and could be life saving barter material in the future. Antibiotics are handed out like candy by doctors today, so storing any extra you have away for trade may be a good strategy. Painkillers are another medical miracle that doctors seem to sprinkle out of helicopters without a second thought. With the risk of injury increasing one hundred fold after a financial tsunami, I suspect even mere aspirin would put a smile on the face of any barter networker.
Eventually, natural medicines and herbs are going to have to move to the forefront, as industry medicines begin to disappear, or become so expensive they are unobtainable. Stocking such herbs and vitamins would be smart, for protecting oneself, not to mention, its savvy business sense.

Toiletries: Yes, yes, we all hear about how great toilet paper will be as a barter item, and how preppers plan to demand cows, trucks, and beach-front property, in return for packages of the silken quilty-soft huggable rolls of goodness. I don’t disagree that it will be highly desired at first. People don’t change their habits that quickly. But let’s face it; toilet paper is a luxury item in a post collapse environment, not a necessity. People are going to eventually go back to older methods of hygiene, like using strips of washable cloth. It might sound gross to us now, but hey, did you think we were going to start using poison ivy and pinecones?
Stock toilet paper, but don’t treat it as a priority. Focus more on cleaning items like soap, toothpaste, and bleach, as well as chemicals that cause human waste to quickly biodegrade.Staying clean is VERY important, because the alternative is catching a nasty bacterial infection that may kill you, when in more peaceful and comfortable times, it may have just given you slightly irritating intestinal distress. The rest of the country will come around to this way of thinking in short order, and many people will come to you for the cleaning goods you stockpiled.

Specialty Items: There are many circumstances that are hard to predict, circumstances that could severely affect barter markets and what items come into demand. For example; a nuclear event, as is in progress in Japan, could just as easily strike the U.S. There are 104 nuclear power plants in the U.S., not to mention the threat of a small nuclear attack (or false flag). The market for goods such as potassium iodide pills and Geiger counters would explode (potassium iodide suppliers were inundated with orders from around the world after Fukushima). How many people do you know with a Geiger counter? I’m one of the few I know with one, and I know preppers across the country! In the wake of a fallout situation, knowing what is contaminated with radiation and what isn’t, knowing if it’s even safe to go outside, is imperative. Having an extra Geiger counter could help you barter your way into any number of goods.
A biological event might bring medical grade particulate masks to the top of people’s lists, as well as disinfectants and even hazmat suits. It’s an ugly thing to imagine, but for those who plan to engage in independent trade, it’s a likelihood that must be considered.

Top Priority Skills
Provided below is a brief list of skills which have served people well in various economic downturns, and will do the same for you in this country. Keep in mind that almost any skill that other people cannot do well has potential for trade, but some skills are more sought after than others. In my research, it is those people who are able to produce their own goods as well as effectively repair existing goods that have the greatest potential for survival in a barter market. Next, are those people who have specific abilities that are difficult to learn and who have the knack for teaching those abilities to others. If you do not have any of these skills, or perhaps only one, then it would be wise to begin learning at least one more now. Keep in mind that competition will very much exist in a barter economy, so knowing as many skills as possible increases your chances of success:
Mechanic, Engine Repair
Welding
Blacksmithing
Firearms Repair, Ammo Reloading
Construction
Architect, Home Reinforcement
Agriculture, Farming Expertise, Seed Saving, Animal Care
Bee Keeping
Doctor, Medical Assistant
Veterinarian
Well Construction, Water Table Expertise
Engineer, Community Planning, Manufacturing, Electrical
Firearms Proficiency, Security, Self Defense Planning
Martial Arts Training
Wild Foods Expert
Hunting
Chemist
Sewing, Textiles
Soap Making, Candle Making, Hygiene Products
Small Appliance Repair
Electronics Repair
HAM Radio Expert
Homeschooling, Tutoring
Again, there are definitely many more trades of value that could be learned. This list is only to help you on your way to self-sufficiency and entrepreneurship in an Alternative Market. Unfortunately, too many Americans have absolutely no skills worth bartering in a post collapse world.

Bringing Back The American Tradesman
Barter networking is a powerful tool for countering the effects of depression, hyperinflation, stagflation, globalization, and beyond. But, networks require that participants actually have necessary goods and services to trade. In only half a century or less, American culture has been sterilized of nearly all its private trade skills. We have lost our desire to produce, and have been relegated to the dregs of a retail nightmare society dependent entirely on consumption and debt. This is going to change, one way, or another.
We can change on our own, or we can wait until fear and desperation force us to make hard choices. I would rather forgo the desperation and the painful fall into the gutter. It makes little sense.
The bottom line is, if you wish to survive after the destruction of the mainstream system that has babied us for so long, you must be able to either make a necessary product, repair a necessary product, or teach a necessary skill. A limited few have the capital required to stockpile enough barter goods or gold and silver to live indefinitely. The American Tradesman must return in full force, not only for the sake of self-preservation, but also for the sake of our heritage at large. Without strong, independent, and self-sufficient people, this country will cease to be.

E.  Trading during an emergency
Know what you need and what’s available: During a “trade-day” gathering, take time to walk around to see what goods others are offering and their relative abundance.  Never make an impulsive buy.  Have a list of what you need for your group and what you may want for future barter as essential goods become more and more scarce.  The longer a crisis lasts, the more people will be bartering for the essentials of life, like food, replacement clothing, salt and sugar, etc.  Consider looking for worn-out items for low-cost that you can restore by repairing (a specific skill) and then resell at a higher price later.
•  On-Display: Don’t keep more than one or two items of a particular kind in view.  Let people make the assumption that there is a very limited quantity.  After selling a “rare” item, you can evaluate whether or not to let the buyer know you have “a few more” for sale.  Having just a few of a kind items for barter may make your “store” look bare, so be prepared to display other things even if you don’t think they will sell.  People are psychologically drawn to seller areas that seem well stocked with all types of goods.
•  Buying: Absent a controlling government for a means of correcting fraud or redressing a trade that was misrepresented the phrase “buyer beware” is even more important. Be very sure you have evaluated and examined all the goods before you accept the trade.  The top layer of a barrel of apples may be fine, but what is the condition of the bottom layer?
•  Contracts:  For high value or large volume exchanges or for situations where goods are to be delivered or picked up, be sure to prepare a short contract that spells out exactly what each party will receive and for what and when. As a minimum, describe the goods, their amount and condition and delivery or pickup date. Never throw way these contracts as they will be the only evidence of ownership you have. Try to ensure buyer-seller goods are exchanged at the same time. Don’t pay for goods and receive only a promise to deliver later unless you know and fully trust the person with who you are doing business.
•  3rd Party Exchanges:  Be on the lookout to buy goods that you know someone else wants. Keep note of what others are looking for that they can’t find.  Being able to acquire these goods and then bartering them for more than you bought them will increase your “goods-wealth”.
•  Beware Bait & Switch:  Don’t assume the goods you receive from behind the curtain or from under the table will be the same quality of the goods you see on display.  Provide payment only after you have examined the exact specific goods you will receive. Check expiration dates on canned and other packaged perishable goods.  Check for wear and damage on all goods.
•  Selling: Consider giving a good initial deal. Give good initial barter value to a new trader and he will return.  It’s also a means to start a good will word of mouth campaign as well as build a positive reputation.
•  First & Last  Offer:  Let the buyer be first to set a price.  They may be willing to give more than you expected.  If you don’t like the price, tell them how scarce and necessary the item is.  This will psychologically reinforce the buyers initial interest in the item.  A poker face is helpful.  If you have to make a first offer, make it higher than what you expect you can get but not unreasonable higher.  A counter-offer will probably be made by the potential buyer.  Options:
Add more goods for a sweetener or remove some to meet the needs of the buyer.  When a potential buyer exhibits an “I can do without it” attitude, you need to decide if you can live with a lower offer or just need to let them walk away.  Never leave a bartering situation with less than you arrived.
o Evaluation of goods by buyers:  Be sure to mention any major faults with your trade goods.  Allow potential buyers to evaluate the minor obvious deficiencies on their own.  If a piece of equipment does not work, say so.  Of course there is no need to tell a buyer about all the rust that they can see for themselves.  A non-functional piece of equipment might be very valuable to someone who needs replacement parts.

F.  Security
Make sure you leave adequate security back home when your group goes to trade days or you may find it stripped to the bone when you get back.
•  Assess trade day area threats: Remember, this is a time of crisis and there are bad and desperate people about. If trade day organizers do not provide perimeter and walk-about security, you need to evaluate how many of your group needs to be at your trade area and how many should move about together during shopping tasks.
•  There may be a need for everyone in your group to be carrying a visible sidearm in a holster to discourage theft and assault. But don’t act as a perceived threat to others.  Be hyper-aware of activities and people around you.  Do not go off with someone alone so they can “show you something”.
•  After making a deal: Once a bargain is made, be sure to quickly close the deal by making the actual exchange.  Take your new purchases back to your group’s area and keep them undercover and under guard.  Trade days will attract thieves.
•  Prevent post-trade day theft: Be on guard for people loitering around your barter area.  They may be “casing the joint”.  Keep all your trade goods inside your roped off trade area and establish a “no goods” zone of more than an arm’s length inside your rope barrier. Don’t be chatty about where you live or the number of people or conditions at your living area. Don’t wear your best clothes to trade days.  Be clean and neat and polite. Strike a balance between appearing not too needy and not to well-off.
•  Make your defense visible: During travel to and from trade days is the time to let your firearms be seen.  Thieves and “highwaymen” will prey upon the least aware and least defended.
•  Beware “Security” services: There may emerge in your area, groups that have only muscle and weapons who offer security services for “guarding” homes and travelers to and from trade days.  These same people may also be engaged in shake-downs, extortion and other scheme of intimidation.

G.  Price gouging
Congress Tells FTC to Define Price Gouging
May 6, 2006,  Washington Post Staff Writer, By Steven Mufson
“In a recent blog entry, Edward Lotterman, an economist who writes a column for the St. Paul Pioneer Press in Minnesota, wrote that anyone trying to define price gouging should consider the following examples: “Paying $12 for two thin slices of cold greasy pizza and two small Cokes in an airport departure concourse; my neighbors selling a house for eight times what they had paid for it years ago; Twin Cities apartments renting for $150 more per month than a year ago; me charging $200 per hour as a consulting expert in a legal case when I get less than $50 per hour teaching at Metro State University.”
Traditionally, the FTC has played a key role in investigating price-fixing or manipulation, offenses that usually involve collusion between two or more players in a market who conspire to reduce competition so they can increase prices. There are many people who allege that major oil companies have engaged in such a plot by limiting output by oil refineries. Schmidt said the FTC was conducting “a very serious substantial investigation that is examining whether there has been unlawful gasoline price manipulation.”
But price gouging is something that usually involves one company or outlet taking advantage of temporary market conditions to charge an exorbitant price. As gasoline prices are going up by the day, many people think that’s what’s going on now.
In a competitive market, that wouldn’t be possible — at least not for long. Consumers would go to some other seller, demand for the price gouger would dry up and he would cut his prices.
Though the FTC has in the past avoided coming up with a definition for price gouging, many state governments and attorneys general have defined it. Usually the definitions are limited to pricing actions taken during emergencies or catastrophes, such as hurricanes. In Florida, the attorney general’s Web site explains that Florida law “compares the price of the commodity or service to the average price charged over the 30-day period prior to the declared state of emergency. If there is a ‘gross disparity’ between the prior price and the current charge then it is price gouging.”
But what’s a “gross disparity”? “Gross disparity would be determined by a jury of Floridians,” said Charlie Crist, Florida attorney general and a Republican candidate for governor. “I don’t think it would be too hard to give it some significant definition in the mind of a juror who would probably be very upset with someone trying to take advantage of a catastrophe.”

Exactly, what is price gouging?
Price gouging statutes seek to stem opportunistic behavior, which is designed to take advantage of an unforeseen opportunity to charge a monopoly price by threatening to withhold output. It is often defined as a 10 to 25 percent increase over prices during the month before an emergency. One state defines “unconscionable price” as an amount charged, which either represents a “gross disparity” or “grossly exceeds” the average price available for these items and services in the same area 30 days immediately before a declaration of a state of emergency.
The term is similar to profiteering but can be distinguished by being short-term and localized, and by a restriction to essentials such as food, clothing, shelter, medicine and equipment needed to preserve life, limb and property. In jurisdictions where there is no such crime, the term may still be used to pressure firms to refrain from such behavior.
The term is not in widespread use in mainstream economic theory, but is sometimes used to refer to practices of a coercive monopoly which raises prices above the market rate that would otherwise prevail in a competitive environment. Alternatively, it may refer to suppliers’ benefiting to excess from a short-term change in the demand curve.
In the United States, laws against price gouging have been held constitutional as a valid exercise of the police power to preserve order during an emergency, and may be combined with anti-hoarding measures. Exceptions are prescribed for price increases that can be justified in terms of increased cost of supply, transportation or storage.
As a criminal offense, Florida’s law is reasonably typical. Price gouging may be charged when a supplier of essential goods or services sharply raises the prices asked in anticipation of or during a civil emergency, or when it cancels or dishonors contracts in order to take advantage of an increase in prices related to such an emergency. The model case is a retailer who increases the price of existing stocks of milk and bread when a hurricane is imminent. It is a defense to show that the price increase mostly reflects increased costs, such as running an emergency generator, or hazard pay for workers.

The true value of higher prices during an emergency
•  A thought experiment: A massive pipe ruptures, tap water grows undrinkable, and consumers rush to buy bottled water from the only two vendors who sell it. Vendor A, not wanting to annoy the governor and attorney general, leaves the price of his water unchanged at 69 cents a bottle. Vendor B, who is more interested in doing business than truckling to politicians, more than quadruples his price to $2.99.
•  You don’t need an economics textbook to know what happens next.
•  Customers descend on Vendor A in droves, loading up on his 69-cent water. Within hours his entire stock has been cleaned out, and subsequent customers are turned away empty-handed. At Vendor B’s, on the other hand, sales of water are slower and there is a lot of grumbling about the high price. But even late-arriving customers are able to buy the water they need — and almost no one buys more than he truly needs.
•  When demand intensifies, prices rise. And as prices rise, suppliers work harder to meet demand. The same Globe story that reported yesterday on Coakley’s “price-gouging’’ statement reported as well on the lengths to which bottlers and retailers were going to get more water into customers’ hands. From <http://www.boston.com/bostonglobe/editorial_opinion/oped/articles/2010/05/04/whats_wrong_with_price_gouging/>

Signal value of rising prices during an emergency
•  Water 60c/bottle rises to 2.99/bottle. (400%)
•  Typical 10-30KW Generator rent rises for $45/day to $85/day in winter power outage. (88%)
•  Generators sales price climb from $500 to $900 in wake of Hurricane. (80%)
•  Sheets of plywood rise from $18 to $60 with the approach of a hurricane. (233%)

Rising prices don’t just serve as a rationing mechanism, they also serve as a signaling mechanism.  Rising prices for generators in Dade County send a signal that Dade County needs generators – and that there’s a hefty profit to be made in getting them there.  The $900 price tag thus serves as a signal for people to buy generators for $500 in North Carolina and bring them to where they’re needed.  As more people do this, the supply of generators in Florida moves closer to demand, the price of those generators moves down, and a new equilibrium is approximated.  The lesson: price gouging is not just a static event, it’s part of a larger dynamic market process.
When a hurricane is coming, all the plywood will still be sold, but for more. It isn’t really “above the market” however, because markets change, and the “market price” is naturally higher when demand increases, as it does before a storm. But all that plywood will still be sold in any case, and will be covering windows and protecting houses somewhere.
What the higher price does, though, is more than just put more money in the retailer’s account. It does something else that benefits us all. Higher prices allocate the plywood to better uses.

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F.   Stockpiling vs hoarding
Hoarding vs. Stocking Up, by Deborah in the UP,
Pasted from: http://survivalweekly.com/?page_id=784
When the pioneers began their trek west, they took with them, supplies, food, clothing, animals.. All the things they felt they would need to make the journey. When they got where they felt was far enough, they stopped and set up shop. This was likely somewhere near a town, but not like we know it today. If they were 30 miles from town, (a trip that would take us 30 minutes) it would take them 2-3 days to get there, and the same getting back. Obviously, that trip wasn’t made very often, and certainly not for a loaf of bread or a quart of milk. That milk was gotten from the cow or goat, and bread was baked, from scratch, most often from a sourdough starter.
A food source was THE most important item on the schedule. Land needed to be cleared for a family garden and pasture fenced for the animals. That garden was all important, and meant life or death to the family. The woman’s role was very important for the homestead. While the man/husband/father toiled with the land, kept track of the animals and kept the family safe, a difficult job to say the least, the woman/wife/mother was expected to provide meals, the life sustaining essence. Where did those meals come from? The garden of course! And while the summer may have been bountiful, the winter could be very lean.. if the family/woman didn’t PREPARE. It was expected of the female to can (a different and difficult process back then), preserve, dry, smoke, salt, whatever process fit the food, just so it could be eaten during the time of lean. There needed to be a winter food source for the farm animals too.. or they would die.. The husband/father was the hunter, and the sons as they grew, but the kill needed to be extended as long as possible, by preserving the meat for later consumption. All of this needed to be done to get the family from one growing season to the next. A year. This was standard! This was normal! This is the way things were!
Granted, those trips to town were rare, but they were necessary for certain items: sugar, salt, bolts of cloth for clothing, maybe even new shoes for a growing child. Necessary too to bring barter items in, for exchange. Many times families did without, that was the way of life… but they made do! As long as they were fed, their world would go on. Having a good, healthy pantry full of food, was normal, desired, strived for, admired.
What has changed?

Today, if someone had a year’s worth of food, to get them from one growing season to the next, … they would be called crazy, hoarders, fringe… looked down upon, feared, ridiculed. … survivalists!! Today, those 30 mile trips to town are often made daily!
What has changed? Society perception.

Today, it isn’t the family garden that provides a secure food source, it’s the local grocery store! How dare we question the availability of the next shipment! Therefore we should all have only a week of food on hand… why? Otherwise we would be Hoarders!
From Wikipedia: Hoarding as a human behavior falls in to two main categories. One type of hoarding is triggered as a response to perceived or predicted shortages of specific goods. Hoarding behavior may be a common response to fear, whether fear of imminent society-wide danger or simple fear of a shortage of some good. Civil unrest or natural disaster may lead people to collect foodstuffs, water, gasoline, and other essentials which they believe, rightly or wrongly, will soon be in short supply.
Unlike hoarding immediately before or in the wake of a crisis, hoarding a resource while its supply is abundant can actually alleviate future shortages because those who stockpile in this manner will not contribute to future demand when supplies are reduced.
.

G.  Anti hoarding laws are vague and simple to implement
Pasted from: http://forum.prisonplanet.com/index.php?topic=122032.0
•  State Legislation’s Role in Anti-Hoarding
Most states have chosen to enact their own anti-hoarding laws. That means some states may not have such laws, others do and not all are uniform. However, uniformity of state law is something governors are striving for under the Interstate Compact Agreement. The Compact Agreements, much like Executive Orders for the president, really don’t require voters’ input. They are law if the legislature doesn’t object, much like Congress that has 30 days to object to an EO before it becomes law.
At times of “declared emergencies”, each governor cedes (gives over) authority of his/her state to the federal government. When a governor declares it for his state, he becomes the delegated representative of the federal government according to an Interstate Compact Agreement.
Bottom line, even though federal legislation does not directly address anti-hoarding, goods can be seized if national circumstances are felt to warrant it whether or not amounts stored are deemed excessive in your state’s eyes.

•  Hawaii As A Specific Example of Anti-Hoarding
For Hawaii, this information will be found in Title 10 under “Public Safety”. It is located after legislation on militias, state guard troops, etc. Then you find the jewel… In Hawaii you are considered a “hoarder” if you have more than one week’s provisions on hand BUT you have to dig to uncover this information. Here is a specific example:

“HAWAII REVISED STATUTES REVISED 1997, Title 10:
(1) Prevention of *hoarding, waste, etc. To the extent necessary to prevent hoarding, waste, or destruction of materials, supplies, commodities, accommodations, facilities, and services, to effectuate equitable distribution thereof, or to establish priorities therein as the public welfare may require, to investigate, and any other law to the contrary notwithstanding, to regulate or prohibit, by means of licensing, rationing, or otherwise, the storage, transportation, use, possession, maintenance, furnishing, sale, or distribution thereof, and any business or any transaction related thereto.”
In the actual Title document for Hawaii, you will not find the specifics for what length of time constitutes “hoarding” nor an amount. Instead, you must look at the committee notes which describes it as the opinion that one week’s supplies per person is considered adequate food provisions. It is not spelled out what those provisions shall consist of or how much is considered “adequate” until you get to the committee notes.
You will probably have to “dig” for the committee notes as well. Lynn Shaffer, our legislative interpreter, explains committee notes this way. “When the legislature agrees that a law or statute is needed to effect certain governmental goals to prohibit or encourage civilians to respond in a particular way, that statute has attached to it (you will see it printed in the law books) what is called “committee notes.” The courts, when making a determination of how the statute is to be interpreted and applied to the case before it, looks to “legislative intent” or what was recorded in the committee’s notes when the bill was meandering its way through the legislative process.”

•  OK, so If I ‘hoard’, then what?
Again using Hawaii’s Titles as an example, any items in excess of what legislation has deemed appropriate to store (in Hawaii’s case any amount over 1 week) is subject to forfeiture and may be confiscated, ordered destroyed or may be redistributed for public use. See exact text below:
“128-28 Forfeitures. The forfeiture of any property unlawfully possessed, pursuant to paragraph (2) of section 128-8, may be adjudged upon conviction of the offender found to be unlawfully in possession of the same, where no person other than the offender is entitled to notice and hearing with respect to the forfeiture, or the forfeiture may be enforced by an appropriate civil proceeding brought in the name of the State. The district courts and circuit courts shall have concurrent jurisdiction of the civil proceedings. Any property forfeited as provided in this section may be ordered destroyed, or may be ordered delivered for public use to such agency as shall be designated by the governor or the governor’s representative, or may be ordered sold, wholly or partially, for the account of the State. [L 1951, c 268, pt of 2; RL 1955, 359-25; HRS 128- 28; am imp L 1984, c 90, 1]”
http://forum.prisonplanet.com/index.php?topic=122032.0

•  Where do Anti-Hoarding Laws come in?
These ideas of anti-hoarding legislation may have stemmed from two areas of confusion:
First is from Executive Orders in place dating back to 1939 which Clinton has grouped together under one order, EO #12919 released on June 6, 1994. The following EOs all fall under EO#12919:
10995–Federal seizure of all communications media in the US;
10997–Federal seizure of all-electric power, fuels, minerals, public and private;
10998–Federal seizure of all food supplies and resources, public and private and all farms and equipment;
10999–Federal seizure of all means of transportation, including cars, trucks, or vehicles of any kind and total control over all highways, seaports and water ways;
11000–Federal seizure of American people for work forces under federal supervision, including the splitting up of families if the government so desires;
11001–Federal seizure of all health, education and welfare facilities, both public and private;
11002–Empowers the Postmaster General to register every single person in the US
11003–Federal seizure of all airports and aircraft;
11004–Federal seizure of all housing and finances and authority to establish forced relocation. Authority to designate areas to be abandoned as “unsafe,” establish new locations for populations, relocate communities, build new housing with public funds;
11005–Seizure of all railroads, inland waterways and storage facilities, both public and private;
11051–Provides FEMA complete authorization to put above orders into effect in times of increased international tension of economic or financial crisis (FEMA will be in control in case of “National Emergency”).
(http://www.millennium-ark.net/News_Files/Exec.Orders/EOs.html)

What has changed? The world has changed. Where once it was expected for a family to provide for itself, now, if they do, it could be taken from them, legally…to provide for those who did not.

Public attitude regarding stockpiling vs hoarding
•  It’s not hoarding! Hoarding is taking more than your share when resources are scarce. In times of plenty, we STOCKPILE to minimize our need for resources when they ARE scarce… Remember – stockpile good, hoarding bad!
•  I agree with the term “stockpile” not hoarding.
•  We survivalists aren’t hoarding, we’re just food collectors. Myself I collect hard red winter wheat……… and a little bit of cocoa powder as well LOL
•  Hoarding is a word with big time negative connotations. Purchasing all the wheat in town during SHTF and charging 3x what you paid (if selling at all) would be hoarding but going to the local big box tomorrow and getting a hundred points of rice would not be hoarding.
•  Stockpiling the basics for your own use is “hoarding”, stockpiling so you can make absurd profits is known as “price gouging”, which is illegal in some states after the TSHTF has happened. In a TEOTWAWKI, price gouging could very well be punishable by facing a firing squad.
•  If I save all my money and put it in the bank is that hoarding or being frugal with my resources? If I invest in things that turn a profit down the road i.e. food stuffs, or commodities, wouldn’t that be considered a wise investment? Perception is always the determining factor.

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Filed under __2. Social Issues

Bank your own

Bank safe(News & Editorial/ Bank your own)

1, 2, 3 your storage of value for the next several decades
1)  Maintain your own bank of value,  store your long term and retirement savings  in useable, exchangeable commodities, ie.,  government stamped and milled precious metal  coins.
2)  Don’t hold debt as “wealth” =  fiat national paper currency, continued death by inflation.
3)  Don’t hold or trust any more paper “money” to your bank than needed for monthly  transactions.
Mr. Larry

A.  Whom To Believe On Gold: Central Banks Or Bloomberg?
26 Mar 2013, Gold-Eagle.com, by Jeff Clark
Pasted from: http://www.gold-eagle.com/editorials_12/jclark032613.html

Bloomberg reported recently that Russia is now the world’s biggest gold buyer, its central bank having added 570 tonnes (18.3 million troy ounces) over the past decade. At $1,650/ounce, that’s $30.1 billion worth of gold.

Russia isn’t alone, of course. Central banks as a group have been net buyers for at least two years now. But the 2012 data trickling out shows that the amount of tonnage being added is breaking records.

The following table lists the countries that have added to their gold reserves this year, while the second one tallies those that have been selling. You’ll see how recently each country has reported, along with its percentage increase.

Changes in Central Bank Gold Reserves in 2012   (Million Troy Ounces)
Year-End 2011 YTD 2012 Last Reported Net Change Percent Change
Countries Increasing Reserves
Turkey 6.28 11.56 Dec 5.283 84.1%
Russia 28.39 30.79 Dec 2.405 8.5%
Bank for   International Settlements 15.6 16.71 Dec 1.114 7.1%
Brazil 1.08 2.16 Dec 1.08 100.0%
Philippines 5.12 6.2 Nov 1.079 21.1%
Kazakhstan 2.64 3.71 Dec 1.07 40.5%
South Korea 1.75 2.71 Nov 0.965 54.9%
Iraq 0.19 0.96 Nov 0.773 405.3%
México 3.41 4 Dec 0.596 17.3%
Paraguay 0.021 0.263 Sept 0.242 1152.4%
Ukraine 0.9 1.14 Dec 0.239 26.7%
Belarus 1.21 1.37 Dec 0.164 13.2%
Tajikistan 0.15 0.2 Dec 0.05 33.3%
Brunei 0.06 0.09 Oct 0.031 50.0%
Mozambique 0.08 0.11 Oct 0.025 37.5%
Serbia 0.46 0.48 Nov 0.022 4.3%
Jordan 0.41 0.43 May 0.02 4.9%
Kyrgyz Republic 0.08 0.1 Dec 0.014 25.0%
Greece 3.59 3.6 Dec 0.008 0.3%
Mongolia 0.11 0.12 Nov 0.004 9.1%
Suriname 0.071 0.074 Dec 0.003 4.2%
South Africa 4.02 4.02 Nov 0.003 0.0%
Moldova 0 0.002 Dec 0.002
Bulgaria 1.28 1.28 Dec 0.001 0.0%
Pakistan 2.071 2.072 Dec 0.001 0.0%
Subtotal Gross Increases 15.2
Changes in Central Bank Gold Reserves in 2012   (Million Troy Ounces)
Year-End 2011 YTD 2012 Last Reported Net Change Percent Change
Countries Decreasing Reserves
Sri Lanka 0.32 0.12 Sept -0.204 -62.5%
Germany 109.19 109.04 Dec -0.159 -0.1%
Czech Republic 0.4 0.37 Dec -0.028 -7.5%
Macedonia 0.22 0.22 Dec -0.001 0.0%
France 78.3 78.3 Dec -0.001 0.0%
Malta 0.01 0.01 Dec -0.001 0.0%
Subtotal Gross Decreases -0.39
Total Net Change 14.8
Sources: IMF, CPM Group. Data as of 1-31-13.

Based on current data, the net increase in central bank gold buying for 2012 was 14.8 million troy ounces – and that’s before the final 2012 figures are in for all countries.

This is a dramatic increase, one bigger than most investors probably realize. To put it in perspective, on a net basis, central banks added more to their reserves last year than since 1964. The net increase – so far – is 17% greater than what was added in 2011, which was itself a year of record buying.

Here’s a picture of total central bank reserves since the financial crisis hit.

Bank buy gold

Whatever gold’s price movements, positive or negative, central bank officials have continued adding a lot of ounces to their reserves.

But this understates the case, because most of the data exclude China, as well as a few other small countries. China last officially reported gold reserves in 2009, so the totals in the chart since then exclude whatever its purchases might have been.

Here’s where it gets interesting: Bloomberg claimed that Russia has been a bigger buyer of gold over the past decade than China – by a full 25%. Based on data about gold imports through Hong Kong and the fact that, for the most part, Chinese production doesn’t leave the country, it seemed to me that this could not be right.

The Chinese central bank holds an official 1,054 tonnes of gold in its reserves. Bloomberg states, based on IMF data, that China has added somewhere around 425 tonnes over the past decade.

I can’t say exactly what the correct number is, but the Bloomberg number almost has to be wrong. Here’s why:

  • Gold imports through Hong Kong in December alone hit a record high of 109.8 tonnes.
  • Imports for 2012 also hit a record high of 572.5 tonnes.
  • If you add 2012 mine production – remember that China is now the world’s largest gold producer – roughly 970 tonnes of gold was delivered to various entities within the country last year.
  • Cumulative imports since 2001 have reached 1,352 tonnes.
  • Since 2001, imports plus production total a whopping 4,793 tonnes.

So Bloomberg is essentially saying that roughly 10% of the total gold available inside the country during that period was added to China’s reserves. While it’s true that Chinese citizens are buying a lot of gold (though perhaps more silver), it’s highly doubtful that private parties bought 90% of all the gold brought to the Chinese market during this period. I think – but can’t prove – that China’s central bank is buying more gold and at a faster pace than its Russian counterpart.

Jim Rickards, a highly respected author and hedge fund manager, said last month that China has probably already accumulated between 2,000 and 3,000 tonnes of additional gold reserves. If he’s right, that would be roughly double or triple the 1,054 tonnes it reported in 2009 – not the 40% increase Bloomberg’s numbers suggest.

At the very least, we can say that the Bloomberg report left consideration of China’s imports and production out of its report naming Russia the top gold buyer of 2012. Okay…but so what?

Well, Jim thinks the next big catalyst for gold will be an announcement from China about its reserve position. Here’s what he told me in late December:

“The catalyst for a spike into the $2,500 to $3,000 price range for gold will be an announcement by China, probably in late 2013 or 2014, that they have acquired 4,000 tonnes or more in their official reserve position. This will put China on an equal footing with the US in terms of a gold-to-GDP ratio, and validate gold as the real foundation of the international monetary system. Once that position is validated, gold will move to the $7,000 range in 2015 and beyond.”
Even if Jim’s estimate is high or China doesn’t make an announcement until later, it’s clear that central banks around the world are buying gold in record quantities.

It almost makes you wonder… do they know something we don’t?

The Russians gave us some hints.

Evgeny Fedorov, a lawmaker for Putin’s United Russia Party, said last week, “The more gold a country has, the more sovereignty it will have if there’s a cataclysm with the dollar, the euro, the pound, or any other reserve currency.”

President Vladimir Putin told his central bank not to “shy away” from the metal, adding “After all, they’re called gold and currency reserves for a reason.”
The Chinese have been quiet on this topic recently, after being very vocal a few years ago. Here’s a recent quote.

The current international currency system is the product of the past,” said Hu Jintao, General Secretary of the Communist Party of China.
Others have provided clues as well.

“We’re in the midst of an international currency war,” said Guido Mantega, finance minister of Brazil.

“Quantitative easing also works through exchange rates… The Fed could engage in much more aggressive quantitative easing, to further lower the dollar,” said Christina Romer, former chair of the Council of Economic Advisors.

Economist Kyle Bass recently spoke to a senior member of the Obama administration about its planned solutions for fixing the US economy and trade deficit. When he asked, “How are we going to grow exports if we won’t allow nominal wage deflation?”, the answer he got was, “We’re just going to kill the dollar.”
Yes, we’re talking about the US dollar. Perhaps some investors have gotten complacent about the risks to the world’s reserve currency – but not central bankers. It’s not hard to see why: whether they admit it or not, central bankers must know what it means to run the printing presses the way the US has since 2008, even if price inflation is not immediately obvious. It’s no surprise they want to hedge their bets, moving more reserves into something with actual value… something that can’t be debased by a few computer keystrokes by an increasingly unfriendly government.

The US dollar has been the world’s reserve currency since WWII. That’s beginning to change, and the movement into gold is just one facet of that change. The buying by central banks is exactly what one would expect to see as we approach the end of the dollar hegemony.

The message from central banks is clear: they expect the dollar to move inexorably lower. It doesn’t matter that it’s been holding up against other currencies or that the economy might be getting better. They’re buying gold in record amounts because they see a significant shift coming with the status of the dollar, and they need to protect themselves against that risk.

This leads to a second message: gold is not overpriced, in spite of the 500%+ increase since 2001. Indeed, with the recent correction, central banks are likely buying more, even as you read this.

Central bank gold buying will continue, of that we’re certain. Even after Putin’s binge, gold accounts for only 9.5% of Russia’s total reserves. China’s 1,054 tonnes is roughly 2% of its reserves. It’s clear that both countries, along with others, have decided to accumulate as much gold as they can, as quickly as they can, before the dollar’s decline becomes more pronounced… and permanent. This could explain why some central banks don’t publicize their purchases. It also means that Bloomberg and other mainstream media outlets could be caught off guard when China announces higher gold reserves than expected – perhaps much higher.

Clearly we should take notice. If central banks are preparing for a major change in the value of the dollar, shouldn’t we? The fact remains that the US dollar cannot and will not survive the ongoing abuse heaped upon it by government planners and federal officials. That not only means the gold price will rise, but that many, if not most currencies, will lose a significant amount of purchasing power. This has direct implications for all of us.

Embrace the messages central bankers are telling us – the ones they tell with their actions, not their words. Buy gold. Your financial future may very well depend upon it.

.

B.  Guest Post: The US Debt Crisis – How High Will It Go?
01/05/2013, Zerohedge.com, submitted by Tyler Durden
Pasted from: http://www.zerohedge.com/news/2013-01-05/guest-post-us-debt-crisis-how-high-will-it-go
Authored by Chris Ferreira, originally posted at Economic Reason blog,

The implications of the US debt crisis are not well understood in most circles, and it is not widely spoken about in the media and during important political debates. The irony is that the US debt is so significant that it plays a monumental role in finance and modern political strategy. The debt poses great risks moving forward, and yet it is referred to in only the vaguest of terms.

bank how much is it

Here is why the US debt must grow every year and why it is mathematically impossible for it to continue forever.

Before we can understand why the debt must grow every year, here is a visual representation, to scale, of how much the current debt is standing at. Each tall uniform column in the background of the picture below refers to a pile of $100 bills stacked one on top of another. Each “tower of debt” consists of 10 x 10 fork-lift palettes that reach out into the sky and are higher than the old World Trade Center buildings. These towers of debt represent $US 16.394 trillion. However, by the time you wake up to read this, it will be larger than that. DemonOcracy does great work on visual representation of the US debt levels.

Why did the US debt grow to these proportions?

Short answer: the US government spends more than what it receives in revenue. In 2012, the US federal government expects to receive $2.5 trillion in revenue, while the total spending carried out by the federal government is $3.8 trillion. The difference ($1.3 trillion) is debt piled onto of the previous debt.

To put $1.3 trillion into context, it is approximately $3.56 billion a day. To make matters worse, the current debt does not take into consideration federal obligations such as social security, Medicare, pension, and retiree health promises. According to David Walker, former controller of the US, when these unfunded programs are added to the enormous debt, it stands at $70 trillion and growing–that is $10 million per minute!

Seventy trillion dollars is over four times the debt in the picture on your left, dwarfing the current US GDP; in fact, it is approximately the world’s annual GDP in 2011.

The government allows for the debt to continue to grow by adding new debt on top of old debt plus compounded interest. Instead of paying back the debt, the government just borrows more to cover previous interest. The interest payments on the debt is over $1 billion a day. When “Uncle Sam” takes out a loan, it is called a bond (I.O.U.). These bonds are purchased by investors, banks, and foreigners. These bonds are a promise to pay capital plus interest. What “Uncle Sam” does, essentially, is pay his investors with his credit card and create new loans to cover interest.

Talk about short-sighted finances with no discipline.

Compounded interest has allowed the debt to grow exponentially, and has reached, in my opinion, unsustainable levels where the debt is reaching at the vertical portion of the “hockey stick” formation.

bank debt ceiling

Compound interest is the eighth wonder of the world. He who understands it, earns it … he who doesn’t … pays it.
……….Albert Einstein

How does the US government allow the US debt to grow?
Doing the “right thing” is usually political suicide for politicians. Cutting expenditure to pay its bills to pay down the debt will make the economy implode. Instead, the government in power continues its daily activities and promotes new social programs to promote reelection. Almost half of the spending done by the US government goes to entitlements (Medicare, Medicaid, social security) [Oops! I have to disagree here. My Social Security check is NOT an “entitlement”. This money was taken from my paycheck for over 40 years, not because I couldn’t save, but by a Federal law that forced my employers to extract the income. They took the money and instead of saving and investing the dollars in profitable pursuits, spent the dollars as fast as they took it in. Social Security has always been broke, there was NEVER an account with we Employees funds saved. Now that MY RETIREMENT SAVINGS have been squandered by those who “knew better” and took the money, the dysfunctional group purporting to “lead” us are weaseling out of paying us back by falsifying inflation rates and berating Social Security benefit recipients as “entitlements” – similar in status to Food stamps, WIC, Obama phones, union bailouts, etc. Mr. Larry] . If any cuts are carried out in this sector, you can expect riots on the street (approximately 28% of the US population are baby boomers and 80% of investments and laws are carried out by this powerful demographic.) Cuts to entitlements are highly unlikely!

bank gov spending

The continuous debate on raising the debt ceiling is all about a government mismanaging its money and not being able to control it–much like a child with no discipline. Since debt is being mismanaged, it has caused many distortions in the markets, and yet the debt is allowed to grow because of the US Congress. The debt ceiling has been increased 10 times since 2001. If the debt ceiling were actually a ceiling, the market and debt distortions would have imploded the economy–an implosion necessary for the economy to restore its equilibrium and liquidate all inefficiencies.

“Too big to fail” is absolute nonsense.

Paying back investors, costly wars, entitlements and bailing out the “financial terrorists” (who caused the crisis) all add to the national debt and to the dysfunctional economy that continues to operate until its debt will cease to grow. The problem with this system is that it created significantly more credit (someone is the creditor to all the debt) than “cash” money (money in your wallet). Every time debt expands, the credit supply also expands.

According to the FED, the Total Credit Market Debt Owed (TCMDO) is approximately 53$ trillion and 2.4$ trillion in the true money supply (M1). In other words, cash money is approximately 4.5% of credit (TCMDO/M1).

The result to our economy is that “boom” periods are hardly driven by cash money, as cash money is insignificant in relation to credit. Credit is what drives the markets, and it is this same credit that “busts” the markets as well, in times of credit contraction. In order for debt to expand, someone must be lending the US this money. At the moment, the lenders are China, Japan, and the OPEC countries.

But why do they continue to buy this debt?
Because they have too.
The US Dollar is the reserve currency of the world. You need it to buy oil, a vital component of any economy. Since other countries like China cannot print US dollars at their leisure, they have to get it from somewhere. They get it from trade with the US. The US buys products in Asia and the rest of the world with US dollars, and in turn these same dollar surpluses are used to buy oil and US bonds, creating a much needed artificial demand for US dollars.

This is also how the enormous US $558 billion trade deficit in 2011 was financed. The US has been in a trade deficit since the 1980′s and it continues the grow as jobs and manufacturing are being lost to more competitive nations. The trade deficit also accounts for the national debt. The financing of the debt creates artificial demand for US bonds which helps lower the interest rate and coincidentally helps to raise the debt levels even higher.

The table below shows the leading foreign holders of US debt, which are China and Japan, followed by the OPEC countries. These are the main financiers of the US trade deficit.

bank treasury holders

But here is the Achilles’s heel for the US debt scheme:
In order to maintain and continually expand the debt, the US dollar needs to remain the reserve currency. In order for there to be continuous demand for these dollars and debt instruments, the US dollar needs to maintain a hegemony over competing currencies. Any threat to the dollar needs to corrected immediately. or else confidence in the US dollar will be quickly eroded and the subsequent tsunami of US dollars abroad rushing into the US will cause hyperinflation as never seen before.

William R. Clark’s excellent book, Petrodollar Warfare, treats this issue precisely, going in depth into the Petrodollar collapse and how the US maintains its dollar supremacy with its current imperialistic foreign policy. This gem of a book is a definite read for anyone wanting to know how the US truly maintains its power on the world stage.

Undoubtedly, the extent of US debt would never have been possible had the US dollar not been the reserve currency and had there been less favourable global trade policies to provide a channel for the distribution of dollars.

Why must the debt grow every year?
To keep the debt-servitude paradigm going. To increase economic activity in a country operating in this type of system, you need to increase the level of credit and thus debt grows in tandem. This is self serving: if debt is the “fuel” to increase economic activity, interest payments will become larger and larger, until eventually it reaches a point where debt can no longer be increased. This point is known as the Minsky moment–when there is no net benefit to extra debt.

Adding debt, both public and private, creates an environment of servitude among the population while the banks are generating extra profits. Through their lobbyist groups, the financial terrorists create favourable laws to keep people enslaved with debt.

Real estate, for instance, is a heavily subsidized investment; such subsidies entice people to purchase real estate and as a result, people are unwittingly working for the banks. In a real free market, people save money for a purchase.

The word “save” is becoming archaic in this debt servitude paradigm, a paradigm that was build on sand and cards and that can and will eventually collapse. The foundation, of course, is confidence in the US dollar.

So there we have it, in our “creditopia” world, if debt does not expand, the economy cannot grow and jobs cannot be created. In order to increase debt, foreigners have to continually finance the ever growing debt by purchasing government bonds and selling consumer products to the US. In turn, the US must increase the level of consumption, decrease savings, and eliminate the threat of any nation posing a risk to the US dollar hegemony. Is this a symbiotic or a parasitic relationship? Is is certainly a relationship that cannot grow forever. It poses an economic risk for ALL nations due to the interconnectedness of the global economy.

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Places to hide money at home

(Survival Manual/2. Social Issues/Places to hide money at home)

A.  Twenty Places To Hide Money At Home Besides Under Your Mattress
March 1, 2007, The Simple Dollar, Written by Trent
http://www.thesimpledollar.com/2007/03/01/twenty-places-to-hide-money-at-home-besides-under-your-mattress/

“Recently, I posted a discussion about why I keep a small amount of cash at home under the figurative mattress for major emergencies. One of the controversies with that article was the idea of actually storing cash under your mattress. So, to alleviate those fears, I sent out a call to a large number of contacts asking where they would keep money at home besides under the mattress and compiled the sensible responses into a list of twenty places where you can store your money besides under the mattress.
Why would you store it somewhere else? In the event of a burglary, under the mattress is one of the first places burglars look for cash, so by finding another place to store it, you’re drastically reducing the likelihood of having your emergency cash stash found or stolen. My recommendation is to choose one of these hiding places and place your cash there rather than actually under your mattress. I’ll even go so far as to say that I actually use one of these twenty myself.
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Here goes:
1.  In an envelope taped to the bottom of a kitchen shelf
2.  In a watertight plastic bottle or jar in the tank on the back of your toilet
3.  In an envelope at the bottom of your child’s toybox
4.  In a plastic baggie in the freezer
5.  Inside of an old sock in the bottom of your sock drawer
6.  In an empty aspirin bottle in the bathroom (bundled up with a rubber band around it)
7.  In the pocket of a particular shirt in your closet
8.  In a “random” folder in your filing cabinet
9.  In an envelope taped to the bottom of your cat’s litter box
10.  In an envelope taped to the back of a wall decoration
11.  In between several pages in a random book or two on your bookshelf
12.  Buried in a jar in the back yard (my grandfather, incidentally, did this very thing)
13.  In an envelope in the glove compartment of your car
14.  Underneath a potted plant (or even buried in a small jar in the soil)
15.  In an envelope taped to the bottom of a dresser drawer (so you can reach it from the inside of the dresser below it)
16.  Inside of a big coffee cup in the back of a cupboard
17.  Inside your Christmas decoration box
18.  Inside of an empty bottle of Guinness in the back of the fridge with the cap seemingly in place (smash it to get the cash)
19.  In a plastic baggie inside of a flour or coffee container
20.  In an envelope inside of a DVD case
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B.  Seven Secret Places To Hide Cash In Your Home
July 8, 2009, Frugal Dad, by Jason
http://frugaldad.com/2009/07/08/places-to-hide-cash/
It’s a good idea to keep a little cash in your home for emergencies. How much you decide to keep is up to you, but I would suggest keeping enough cash on hand to pay for a week of groceries, and maybe a night or two in a hotel. Because this money will not be earning interest, and is subject to being stolen by a burglar, I don’t suggest keeping a huge stash in your home. In addition to a small amount hidden at home, I also stash cash in our online savings account (my ING Direct review) to put a little distance between me and some of our savings. Think of cash stored in one of the best online banks as an offsite backup disaster recovery plan. When you’ve settled on an amount you should think about secret hiding places to stash the cash. We’ve all seen those spy movies where the guy removes the tile from the back splash behind his stove and pulls out a cache of bills, passports and ammo. Well, the following ideas may not be worthy of James Bond, but they will improve the chances of your money surviving a break in. Seven Secret Hiding Places for Your Cash

1.  In the freezer wrapped in aluminum foil. Save a little styrofoam from the next pack of meat you buy and cut it down to the size of a couple large steaks. Put your cash in a Ziploc bag, stick it between two pieces of the used meat tray and wrap it in aluminum foil. Take a piece of masking tape and write “Scraps – 05/22/2005.” Robbers are not likely to look through the pack, and if they pull back the foil they’ll only see the familiar styrofoam tray and stop.
2.  Sandwiched between the cardboard backing of a hard-to-reach picture frame. Most thieves pull back pictures from the wall to see if money is taped to the back, but they aren’t likely to take the time to look behind the glass, the cardboard backing and the picture itself. Use a pen knife to split the cardboard backing into two halves and sandwich the cash in between.
3.  Under a piano, entertainment center or anything weighing a couple hundred pounds or more. If you have a hand truck around the house it’s pretty easy to just lift up the corner of a piano and slide an envelope under it. However, a burglar probably won’t be able to lift something this heavy, and would spend his time digging through the drawers or inside of the furniture rather than trying to lift it.
4.  Inside a used can of soup. The next time you have soup, open the bottom of the can to empty the contents and the leave the top in tact. Rinse the can thoroughly, then use it to cover your stash of cash hidden inside your pantry. Stack a few cans of soup on top just to make it less convenient for someone to pick it up out of curiosity.
5.  Buried in the “soil” of a fake plant. If you have a fake plant, or small tree, in your home, wrap your cash in a Ziploc bag and nest it inside the “soil” of the plant.
6.  In hollowed out pages of a book on your book shelf. Using a pen knife or box cutter, carve out a few pages of your least favorite title. Hide your cash inside the book and return it to the book shelf.
7.  Inside a kid’s toy hidden in their closet. Kid’s rooms are notoriously messy, and kids are not known for having large sums of money. Take apart an old plastic toy they no longer play with and hide your stash of cash in there. Return the toy to the bottom of the pile of toys in your kids closet, or toy chest, and it should be safe. It’s important to remember that any cash saved at home could be lost in a fire or natural disaster. The ultimate hiding place is a fireproof safe bolted to the floor, and even that isn’t fool-proof. The ideal spot for storing large amounts of cash is an online savings account, far away from your house and any potential danger. But for the small amounts you stash at home, take the time to put it out of sight. Also, remember to tell a spouse or close friend about the money in case you are not able to get to it (you die, or become injured or ill and cannot communicate). Keep enough cash on hand to cover you a few days in a major emergency, but not so much that you’d be completely wiped out if it all disappeared.
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C.  The Ultimate Secret Hiding Place In Your House
Bit Rebels, By Diana Adams
Pasted from <http://www.bitrebels.com/geek/the-ultimate-secret-hiding-place-in-your-house/>

I’ve always thought the idea of leaving a time capsule for future generations to find would be fun. It’s even fun to pack away a magazine or trinket in a box only to find it years later in the basement or attic. Wouldn’t it be neat to find a tiny hidden treasure somewhere in your house that someone who lived there years before left for you to find? It reminds me of the story of the teenage boy who got a bible from his grandparents for his birthday. He tossed it aside, thinking it was such a boring gift. If he had just opened it up, he would have found the $100 bill tucked away inside. We never know what little life treasures we can find all around us in any given moment.
I remember when I wrote How To: Leave A Time Capsule For Future Generations. It was an article about how to hide a note behind a light switch. However, what if you want to leave more than just a note? What if you want to leave a little thumb drive of information or pictures, or even a little token representing the era?
This is the Doortop Stash project from Make. I have never before thought about using the inside of a wooden door to hide something. However, to me, this might be just a little bit too good. It’s so clever; there would be a good chance nobody would ever find it! If you would like to make one of these nifty little secret stashes for yourself, you can get the step-by-step instructions on DIY Doortop Stash.
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D.  The Construction of Secret Hiding Places
***
 a free downloadable pdf file ***
The pdf file can be downloaded from:
http://www.uaff.us/SecretHidingPlaces.pdf

The Table of Contents for that file is as follows,

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