Economics & Investing Category

Saturday, April 19, 2014

Friday, April 18, 2014

Dear HJL,

Regarding the letter about “Banksters”, I spent a few years in banking. I was the guy that ran the computer department. I have never found anyone more clueless about computers than bankers. Every teller had a paper tape calculator in front of them. They had to do all the calculation, then enter the computed values into a computer terminal. Their constant question to me was, "Why do we have a computer?" That did not endear me to the management. A senior VP of operations came to me telling me, he wanted to run a manual test for backup to the computer. I asked him where he thought this could be done. He said accounting. I asked how many bookkeepers would be required to process the quarter of a million transactions every day. We decided there wasn't a building big enough in the city, nor enough bookkeepers. There has not been a great deal of improvement in the thinking of bankers. They are in the business of collecting money, not spending it, to protect their customers. Well, that's true, other than the required insurance, which will not cover enough. Humans are short-sighted critters. They rarely learn from history or the experiences of others.

I moved on from there. I discovered there is more widespread ignorance about computers than knowledge. - DCJ

HJL Replies: It seems that there are a number of industries that are incredibly distrustful of computers, even though they use them daily in the actions of the business. It is also a individual “people” problem. People do not like to change and will not learn new technologies unless forced. The educational system in our country seems to be in the same boat. The children in the classroom will often be able to run circles around the teachers and administration with electronics, yet the teachers are expected to prepare them for industry.

Of course, the students need to learn how to function without a calculator, too. Contrast your experience with the next time your local Walmart has a power outage. Rather than run the registers manually, they just shut down because the clerks usually can't count money. I used to have fun with my students who worked there by deliberately going through their checkout line and purchasing something under $20. I would hand them a $20 bill, let them ring it up, so the computer told them how much change to give me, and then hand them some additional change so I would get a different return of change. I would then often have to help them count the proper change out.

Thursday, April 17, 2014


In reference to the article "", the author speaks about selling on eBay and using PayPal. I must advise your readers that this is indeed a good idea, however, please be informed about the rules and regulations dealing with taxes. There are limits as to how many items/listings you can sell and how much money you gain prior to them being reported to our favorite entity– the IRS. There are a few things that can be done, such as selling in lots. For example, if you have 10 dolls, rather than selling each one individually they can be sold in one lot; this would count as one, not 10 listings. Also if any limits are exceeded then you would have to abide by your specific state laws regarding a small business license and all the fees that go with it. I'm just saying, do your research on both sites. Great article by the way.

o o o


Great article although one thing jumped out about "STEP 3: Liquidate Useless Items to Generate Extra Cash" and the example of selling off old clothing. That is a great idea as long as you are buying things you need, BUT those old clothes might be worth more in hyperinflationary times than they are worth today. We are already seeing a surge in consignment stores of all types as the cost of living has escalated.

It is a good idea, just be careful on what you sell as the future values (monetary or barter) may surprise you. Thanks - B.M.

Wednesday, April 16, 2014


STEP 1: Believe in the Lord Jesus Christ and Accept the Free Gift of Salvation

The war against the U.S. dollar, the middle class, and free-market capitalism is spiritually rooted, so therefore the solution is spiritual. Important Note: Step #1 is the most critical because absolutely nothing is more important than the forgiveness of sin. "Being justified freely by his grace through the redemption that is in Christ Jesus:" (Romans 3:24)

STEP 2: “Know Thy Enemy”

Educating yourself about macro-economics is critical, and this website has produced a lot of good online documentaries.

STEP 3: Liquidate Useless Items to Generate Extra Cash

Successfully implementing Step 3 has caused a few extra thousand dollars to flow into my life. From flipping a purportedly rare $26 investment book for several hundred dollars to selling off my 1990's Ralph Lauren college wardrobe that was gathering dust, this eBay idea has proven to be a God-sent bonanza.

  • Building a war chest of cash is essential to every survival plan, so generate additional capital by selling off unwanted/useless items.
  • Set up an eBay account and begin to sell useless/unwanted items. Here's how:
    1. Create an eBay Account .
    2. Sign-up for PayPal Account .
    3. Download eBay Turbo Lister.
    4. Identify unwanted items of value and take quality photos.
    5. Acquire boxes and labels for shipping and package professionally in advanced.
    6. Build inventory within Turbo Lister by creating new items.
      • Use a catchy title and write out a detailed, honest description.
      • Upload a minimum of two or three quality pictures.
      • Sell at fixed price for 30-day duration as a private listing.
      • Provide free shipping, but factor shipping cost into your price with two days handling time.
      • Require immediate payment via PayPal and returns not accepted.
    7. Add items to upload and then upload all or selected items to eBay.

STEP 4: Invest in Basic Necessities and Develop a Strategy for Bartering

If or when the economy experiences runaway inflation, everyday household items will spike dramatically and panic buying may ensue as a by-product.

STEP 5: Build an Emergency Food and Water Supply

Inflationary psychology may become a huge factor because in a similar manner to what occurs when there's an imminent threat of a hurricane or severe snowstorm, panic is triggered and people begin to stockpile things, which creates shortages and causes prices to skyrocket. This in-turn exacerbates the panic. Building an emergency supply circumvents this dilemma.

  • Educate yourself on emergency food storage and buy one year's worth of food.
  • Visit to review emergency preparedness companies and products.

Reputable Emergency Preparedness Companies:

STEP 6: Seek Out Alternative Currencies to the U.S. Dollar

Hedging against an abrupt U.S. Dollar devaluation and the volatility of holding fiat (paper) currency is a must!

  • Educate yourself on bullion buying, and purchase American Gold/Silver Eagles along with junk silver.
  • View Kiyosaki/Mike Maloney Video.

Reputable Precious Metals Dealers:

CAUTION: Precious Metals investing is rife with rip-off artists, market manipulation, unscrupulous broker/dealers, and the risk of government confiscation. Novice investors should not enter the market without proper education. (Visit and read the free Special Report.)

Recommended Reading: Rich Dad's Advisors: Guide to Investing in Gold and Silver by Mike Maloney.

STEP 7: Grow Your Own Food (if possible)

Once again, inflationary psychology may become a catalyst that leads to food shortages, so the more food an individual can grow on their own the less dependent they will be on a supermarket.

STEP 8: Resolve to Increase Your Macro-Economic Intelligence

Financial knowledge is power. The greater an individual's financial intelligence, the greater will be their ability to decipher Fed monetary policy and the impact it will have on their life.

STEP 9: Adopt the Mindset of a Survivalist

Hyperinflation in the U.S.A. could lead to a societal collapse. If Steps 3 through 7 are implemented, an individual may have to protect themselves from thieves who did not prepare.

STEP 10: Psychologically Prepare for a U.S. Dollar Collapse

The majority of Americans will be completely blindsided by a collapse of the U.S. dollar and won't know how to adapt in a hyperinflationary economic environment. Accepting the probability and making preparations gives an individual an edge, because it eliminates denial, anger, and fear.

Legendary, French General Napoleon Bonaparte famously coined the phrase "two o'clock in-the-morning courage."[22] This is immediate, unprepared courage one would have to exhibit when faced with an unexpected crisis in the wee hours of the morning.

Unfortunately, it has been said that this type of innate courage is extremely rare, and the reality of the matter is that very few people are prepared psychologically or emotionally for any kind of out-of-the blue emergency.

As our world continues to become increasingly unstable, wicked and chaotic, developing crisis-anticipation instincts and transforming ourselves into agents of contingency will become mandatory.

  • Mentally accept the possibility and cultivate an attitude of faith and gratitude.
  • Listed below are a few ways to stay mentally and emotionally fit:
    1. Combine ceaseless prayer with daily meditation and reading of the Holy Scriptures.
    2. Establish a vigorous exercise routine to be implemented at least three times per week.
    3. Supplement your diet with pharmaceutical-grade antioxidants, Vitamin D, and Fish Oil.
    4. Incorporate anti-anxiety, stress-reducing spices and herbal tea blends into your lifestyle; these include Chamomile, Passion flower, L-Theanine, Lemon balm, Ginger, and Turmeric.
    5. Spend at least 15 to 20 minutes a day outside breathing fresh air and absorbing sunlight.
    6. Associate with like-minded, intensely cerebral people who possess a positive mental attitude.
    7. Become a tactical thinker by studying Sun Tzu and Carl von Clausewitz.
  • Read "He Who Hesitates is Lost: The Psychology of Survival"

S.P. from S.C. is an Adamant Believer and Faithful Servant of the Lord Jesus Christ



[22]Strock, James. "Napoleon Bonaparte | Two O'Clock in the Morning Courage." Last Modified July 24, 2012.

Tuesday, April 15, 2014

"Those who cannot remember the past are condemned to repeat it." - George Santayana

Back in late June of 2010, I stumbled upon Robert Kiyosaki's Rich Dad Blog for the very first time. Well, after browsing the archive section, I found myself reading and subsequently re-reading his May 11th post entitled "Living on Borrowed Time."

There was just something about this particular blog post that left me eerily intrigued.

In a nutshell, "Living on Borrowed Time" references Kiyosaki's own book, Rich Dad's Conspiracy of the Rich: The 8 New Rules of Money, and basically acknowledges that while we're currently in a “calm before the storm” phase, he believes the U.S. economy is heading for undergoing two different types of economic depressions--both an American and German-style depression.[1]

To make a long story short: I became intrigued with the blog because Kiyosaki dropped the economically calamitous financial term HYPERINFLATION.

You see, back in '96, at the tender age of twenty, I read renowned financial writer Howard Ruff's Making Money: Winning the Battle for Middle-Class Financial Success, and in that book he writes very comprehensively about what are dubbed as "the 'flations"-- Inflation, Stagflation, Hyperinflation, and Deflation.

According to Ruff, "Inflation is not rising prices. Rising prices are only the consequence of inflation. Inflation is really badly mislabeled. It should be called 'monetary depreciation'."[2]

Well, hyperinflation is monetary depreciation on steroids!

Unlike ordinary inflation, which can actually be healthy for an economy, Hyperinflation is runaway inflation that normally occurs as the by-product of a government's inability to borrow money.[3] During a Hyperinflationary scenario, there is a complete loss of faith in a country's currency, and people begin to desperately get rid of their money the very moment they earn it.[4]

It was fifties economist Phillip Cagan who famously defined Hyperinflation as "a non-annualized inflation rate of 50% or more [per] month";[5] and once this sky-high level is attained nobody in their right mind will desire to keep their money because of the fact that out-of-control inflation is rapidly eroding its attractiveness as a "store of value."[6]

The entire course of economic history is littered with nations who've witnessed the debasement and collapse in the value of their currencies. Notable and well-documented examples of countries that faced this dire, financially apocalyptic fate include Germany's Weimar Republic (1921 - 1924), Argentina (1975 - 1991), and probably most spectacular of all is the rampant 231 million percent inflation Zimbabwe experienced where a single loaf of bread ended up costing over $10 million![7]

Are you prepared for a German-style Depression in the U.S.A.?

Unfortunately, the controversial news I have for you is that several prominent financial minds believe hyperinflation is coming to America. The reason you're reading this article is because, after conducting extensive due diligence, I've concluded that the U.S. dollar is extremely vulnerable to devaluation and the probability is very high that hyperinflation could be triggered.

So what are the compelling facts that could possibly support such a dire conclusion?

Well, here is the short and unsweetened bottom line: The Federal Reserve's disastrous monetary policies and colossal U.S. government spending is a veritable formula for inflation.[8]

Over the course of six years, the Federal Reserve has pumped over $3 trillion into the economy via Fed Chairman Ben Bernanke's "quantitative easing" (QE1, QE2 and QE3/"QE-Infinity", essentially printing money to fund Treasury bond and mortgage-backed securities purchases) program.[9]

Supply and demand says the more scarce something is the more it's worth. Conversely, the more there is of something the less it's worth.

So, when the Fed prints up paper dollars (known as fiat currency) out of thin air and uses this David Blaine-type financial maneuver to buy 70% of U.S. Treasury bonds, not only is it setting the stage for extreme inflation by diminishing the value of existing dollars, it is also embarking on a spending, debt, and dollar-creation binge of historic proportions.[10]

Regardless of what it's called, expanding the money supply to buy Treasury bonds is nothing but old-fashioned "debt monetization", and this shenanigan has universally led to a currency crisis.[11]

By resorting to such a financial tactic, the Fed has shown us how fiscally deplorable the situation really is, while basically acknowledging that there's scarcity amongst foreign lenders, effectively making the Fed the purchaser of last resort.[12] (Both China and Japan have been surpassed by the Fed as the largest owner of U.S. government debt.)

The United States Federal government is currently more indebted than any other country on the planet, with nearly $100 trillion in real total debt, according to a study by California economist James Hamilton.[13, 14] (Boston economist Laurence Kotlikoff and former U.S. Comptroller General in the Government Accountability Office, David Walker, have also challenged official U.S. debt, which excludes unfunded liabilities for Social Security and Medicare.)[15] See U.S. Debt Clock Running at High Speed.

When one contemplates the astronomical scale of this debt load along with the fact that the U.S. controls the world's reserve currency, it must be acknowledged that our country is facing a very serious debt dilemma.

Using the Past as Prologue

In an editorial commentary entitled "The Lessons of History" that appeared in the December 18, 2010 issue of Barron's investment newspaper, author and legendary Hall of Fame commodity trader and index developer Victor Sperandeo, known on Wall Street as 'Trader Vic', made an incisive case for the statistical certainty of U.S. hyperinflation:

In our system, the Federal Reserve can buy all the paper the Treasury can issue, and the Treasury can pay the government's bills with the Fed's newly printed Federal Reserve notes. But at some point, the scales will tip, and debt investors will decide they won't be repaid with the same buying power. Historically, that break point occurs when a government borrows an amount equal to 40% of its expenditures over an extended period of years.

From a historical perspective, Sperandeo acutely pointed out that there have only been a total of 30 countries that have experienced a hyperinflation, and in every single instance, government exorbitance and "money printing" have been critical precursors.[16]

Trader Vic spoke at The Atlas Summit 2013 June 27-30th. His topic was "The Coming Hyperinflation," in which the following three key statistics are duly noted:

"All cases of hyperinflations have been connected with huge budget deficits."[17]

  1. "The figures demonstrate clearly that deficits amounting to 40% or more of yearly expenditures cannot be maintained."
  2. Budget deficits as a percentage of GDP: "our hypothesis that in all cases of hyperinflation annual deficits amounting to more than 20 percent of GDP are present and for all cases except for Belarus, Turkmenistan, Poland, and Yugoslavia."
  3. Total Debt To GDP

    2011 Eurostat/IMF/OECD (estimates)























    United Kingdom



    United States





    Source: Hyperinflation: A Statistical Inevitability by Victor Sperandeo

It's critical to note that for three consecutive years the U.S. government has borrowed forty-plus percent of what it spends, and Debt to GDP now officially exceeds 100%.

INSIGHTFUL VIDEO: Wall Street Trader Victor Sperandeo Presents "The Coming Hyperinflation" - Learn More.

Positioning Yourself for a Once-In-A-Lifetime Market Occurrence

While most will blatantly reject that this economic scenario could ever play out at home, in America, sadly, I'm here to ring the alarm and let it be known that all of the numbers that took place one-hundred percent of the time in the previous 30 instances are present.

In closing, I want you to know that the eternal optimist inside me is yearning to hit you with a Joel Osteen-style summary. I mean, I wish that I could tell you that this “Trader Vic” dude is really nothing but a charlatan who masquerades as the Harold Camping of the financial world and that pondering his ideas is more akin to reading the tale of Alice's Adventures in Wonderland, but this article isn't meant for those with "itching ears" (2 Timothy 4:3). So, I'm not going to sugarcoat the truth.

Victor Sperandeo isn't some run-of-the-mill doomsayer who's out fear-mongering for the sake of publicity. He's reputed to be a master global-macro trader of incredible financial acumen, and it is my conviction that his insights and analysis should be taken seriously.

"Can a nation financing 50% of its budget expenditures in the debt market grow itself out of a collapse? Is the reward likely to match the risk of owning government debt?" he asks.[18]

History is telling us that the current trend of debt excess and massive deficit-spending is highly unsustainable, and unless there's a sharp trend reversal the American economy is marching towards Armageddon.[19]

The backbone of Sperandeo's argument lays in both his unshakable belief that a growth-led economic recovery isn't in the cards and a strong assumption that in order to avert a deflationary spiral, the Federal Reserve will continue to devalue the dollar by flooding the financial system with newly printed currency until inevitably a tipping point is triggered that spooks inflation-wary bond buyers and causes unabated selling of U.S. Treasuries.[20]

As frightening and unpopular as his position is, Trader Vic isn't alone in making this extreme prognostication. (See list of References.) If those in the Hyperinflation camp are right, we can expect a precipitous rise in interest rates, as bonds sell off, and a ferocious exodus from the U.S. dollar that will leave millions of unsuspecting Americans holding practically worthless paper currency with little to zero purchasing power.

In essence, our lingering Great Recession will become a German-style depression.

After viewing Sperandeo's data-driven presentation, I concluded the risk was bona fide, and I began positioning myself to not only survive an abrupt hyperinflationary outbreak, but also to potentially thrive in that worst-case environment.

Contrary to all the gloom and doom rhetoric, it is still my belief that within every dark cloud can be found a silver lining, and for every economic crisis there will be both victims and victors. For the unprepared masses, the unexpected arrival of U.S. hyperinflation would be tantamount to a “financial Holocaust.”[21] But for the small minority who had the foresight to plan and position themselves and their assets ahead of the collapse, this may prove to be one of the most historic opportunities of a lifetime.

The unimaginable demise of the U.S. dollar would be the most significant financial event of the past 50 years and would undoubtedly lead to the single largest transfer of wealth in recent history, as there would be a swift flight away from all U.S. dollar-denominated assets and a global run into tangible assets, like precious metals commodities (with gold and silver the most likely safe-haven candidates to lead the charge).

As the National Debt Clock continues to tick at full-speed, the time we have before the market forces render a final verdict is indeed borrowed. The all-too-important question you have to ask yourself is the following: If Trader Vic and others are correct, would my family and I be prepared for the economic and societal ramifications?

"The time to plan for any crisis is before it happens."

The Conclusion: America is an empire in decline, and the odds are high that within this decade massive changes will be coming to our monetary system. Every American family needs to prepare for tougher times by putting in place an iron-clad contingency plan that would hedge against the disastrous consequences of runaway inflation.

If you're interested in seeing my personal survival plan, check out the basic list of steps I have been taking within my own life in the next part of this article Where I will outline 10 steps you can take to survive an impending currency collapse.


[1] Kiyosaki, Robert. "Living on Borrowed Time." Rich Dad Financial Education (blog). May 11, 2010.

[2] Ruff, Howard J. "The Malarial Economy." In Making Money: Winning the Battle for Middle-Class Financial Success, 31-32. New York: Simon and Schuster, 1984.

[3] Sperandeo, Victor. "The Lessons of History." Barron's, December 18, 2010.

[4] Ruff, Howard J. "FORECASTING THE FUTURE." In Making Money: Winning the Battle for Middle-Class Financial Success, 45. New York: Simon and Schuster, 1984.

[5] Sperandeo, Victor. "The Lessons of History." Barron's, December 18, 2010.

[6] Ruff, Howard J. "FORECASTING THE FUTURE." In Making Money: Winning the Battle for Middle-Class Financial Success, 45. New York: Simon and Schuster, 1984.

[7] Wikipedia contributors. "Hyperinflation." In Wikipedia, The Free Encyclopedia. 2014. Accessed March 23, 2014.

[8] Aden, Pamela, and Aden, Mary Ann. "The Fed Is Conjuring Inflation." Last modified January 2, 2011.

[9] Wikipedia contributors. "Quantitative easing." In Wikipedia, The Free Encyclopedia. 2014. Accessed April 11, 2014.

[10] Aden, Pamela, and Aden, Mary Ann. "The Fed Is Conjuring Inflation."

[11] Stuppler, Barry. "Is Hyperinflation the US Government's Only Way Out?" Stuppler & Company. Accessed March 22, 2014.

[12] Aden, Pamela, and Aden, Mary Ann. "The Fed Is Conjuring Inflation."

[13] Hamilton, James D. "Off-Balance-Sheet Federal Liabilities." University of California, San Diego. Last modified July 17, 2013.

[14] Education News Staff. "UC Professor Pegs National Debt At Nearly Trillion Dollars." Education News. Last modified July 30, 2013.

[15] Miles, Carla. "Seeing unofficial red: U.S. debt almost $87 trillion says San Diego professor - San Diego Personal Finance." Last modified October 15, 2013.

[16] Sperandeo, Victor. "The Lessons of History."

[17] Atlas Society. "Victor Sperandeo: The Coming Hyperinflation." YouTube. August 24, 2013.

[18] Sperandeo, Victor. "The Lessons of History."

[19] King World News. "John Williams - Accelerating Great Collapse & Hyperinflation." King World News (blog). January 26, 2012.

[20] Brown, Greg, and Kathleen Walter. "Sperandeo: Hyperinflation Risk Is Real." Moneynews. Last modified February 4, 2011.

[21] King World News. "World To Witness A Frightening & Historic Financial Holocaust." King World News (blog). August 12, 2013.

Monday, April 14, 2014

Sunday, April 13, 2014

Saturday, April 12, 2014

Friday, April 11, 2014

Thursday, April 10, 2014

Wednesday, April 9, 2014

Tuesday, April 8, 2014

Monday, April 7, 2014

Sunday, April 6, 2014

Saturday, April 5, 2014

Friday, April 4, 2014

Thursday, April 3, 2014

Market Uptrend Intact as U.S. Stocks Climb To New All-Time Highs

What Does Declining Gasoline Consumption Mean?

We are being lied to by the mass media. The much-vaunted "recovery" is smoke and mirrors, created by QE. Stocks are going up but in part because of the decline of the U.S. dollar as a currency unit. Welcome to the Mushroom Growth Recovery: Where the American people are being kept in the dark and fed horse manure. - JWR

o o o

Items from The Economatrix:

We Are Nearing The Dawn Of A New Economic World Order

The Odds Are Never In Our Favor

Sticking it to Millennials and young Americans when it comes to wealth: Households headed by those 40 years old or younger see inflation adjusted wealth 30 percent below 2007 levels while older Americans recoup losses.

Paul Craig Roberts: The Fed Has No Integrity

Wednesday, April 2, 2014

Tuesday, April 1, 2014

Monday, March 31, 2014

Welcome to SurvivalBlog's Precious Metals Month in Review, by Steven Chochran of Gainesville Coins. Every month, we'll take a look at the "month that was" in precious metals (PMs), covering everything from price action to the information that's driving the numbers.

Major Factors Affecting Precious Metals

Of course, the thing that dominated the news in March was Russia's invasion of the province of Crimea in Ukraine and annexation of the area into Mother Russia. Something, that got less attention but had just as much effect on gold, was the failures in China of "shadow loan" funds.


Russian troops poured into the southern Ukrainian province of Crimea in the pre-dawn hours of March 1st, in response to security worries following the ousting of pro-Russian Ukrainian president Viktor Yanukovych, which set off the largest international incident in Europe since the collapse of the Soviet Union. Gold gained strongly on safe haven demand, peaking at a six-month high of $1,392 an ounce in intra-day trading on March 17th. An estimated 20,000 Russian troops entered Crimea, taking over Ukrainian military and government buildings. After the Russian-installed Crimean legislature held a referendum to rejoin Russia, it became clear that only symbolic sanctions would be enacted by the West. Gold began to decline from its highs, but capital flight out of Russia had already topped $60 billion and landed a severe blow to an already struggling Russian economy. The Russian central bank has canceled its last four bond auctions due to lack of demand.


Another bullish factor for gold was the Chinese financial sector. After previously bailing out insolvent companies and "investment trusts", the Chinese government finally made good on its threats and started letting them default. This sent shockwaves through the public, who had believed that Beijing would make them whole no matter what risky ventures they put their money into. This positive for gold was somewhat offset by evidence that the Chinese economy was slowing down. This put pressure on base metals, such as copper and iron ore, which bled through to silver and the platinum group metals.


Riots in Turkey returned to a fever pitch, as President Erdogan ordered censoring of the Internet and blocking of Twitter and Youtube in an attempt to stop more revelations of corrupt acts by him and his family. Recordings of Erdogan and his son talking about where to hide bribes that they had received spread nationwide through Twitter and Facebook.

Anti-government demonstrations in Thailand erupted again, after the Supreme Court nullified last month's elections due to fraud by the party of the Prime Minister, who is now facing official corruption charges and impeachment.

Thirty-four people have died so far in continuing riots in Venezuela, where the nation seems split between Marxist government supporters and anti-corruption protestors, who are demonstrating against high crime, high inflation, and food shortages. President Maduro had three Air Force generals arrested for treason.


The biggest bear factor for gold this month was new Federal Reserve chair Janet Yellen , botching her first press conference on March 19th and telling reporters that the Fed would start raising interest rates next summer. This tanked the stock market and precious metals. Instead of trying to "walk back" her goof, other Fed officials went ahead and agreed with her, keeping the idea of higher interest rates in the news. Of course, the Fed thinks that interest rates are under 2%, even as food prices are skyrocketing. Pork is already 56% more expensive this year, and beef prices have increased 20% since January.

On the Retail Front

Gold and silver both broke above their 200-day moving average in March, due to situations in Ukraine and China and uncertainty over the U.S. economy. Gold hit a high of $1,392 an ounce for the month on March 17, where silver hit its monthly high on March 14, at $21.71.

Net gold imports by China through Hong Kong for February were reported at 109.2 metric tons. This is 30% more than January and 79% more than last February. Keep in mind that Hong Kong isn't the way avenue available to China for gold. Expert on Chinese gold demand Koos Jansen calculates that total gold imports into China are already over 448 metric tons in the first three months of the year. Chinese businesses are starting to import large amounts of gold to use as collateral for bank loans, which accounts for some of that demand.

Another silver vault is opening in Singapore, this one with the capacity of 600 metric tons. It isn't just gold that's being bought hand over fist in Asia. Two new physically-backed platinum ETFs have been launched in South Africa, which is the world's top producer of the metal, and South Korea has opened its first gold-backed ETF, as a measure to combat smuggling.

India has allowed five private banks to import gold, in an effort to ease gold shortages in the country. Until now, only six government-controlled banks and three importers had been allowed to import gold. All banks still have to pay 10% import tax and obey quotas. The draconian import restrictions and high taxes led to a nationwide strike by the gold industry on March 10, which may have played a part in the move.

Iraq bought 36 tonnes of gold in March, valued at over $1.5 billion dollars. The Iraqi central bank said that this huge purchase, the largest by any central bank in the world in the last three years, was to stabilize their currency– the dinar. This more than doubled Iraqi gold reserves. Now that Iraqi oil production has finally recovered, the government wants to divest some of the dollars from oil sales into something more solid.

Market Buzz

Three separate class-action lawsuits were filed this month against the five megabanks that make up the London Gold Fix association, claiming that they have manipulated gold prices since at least 2004. These suits come on the heels of increasing pressure by financial regulators investigating currency and precious metals manipulation at big banks worldwide. Several bankers involved in currency and gold trading have committed suicide or been fired in the last two months, in what the mainstream press consider coincidence or stress from overworking.

John Embry says that the increasing focus on the paper manipulation of gold will force an end to the practice in a matter of months, not years, and will let gold seek its true, physical price. (Scroll down at link for interview.)

Jim Rickards expounds in this interview on how the government's declaration of the large megabanks as "too big to fail" and promising more bailouts has led to irresponsible, reckless behavior that will lead to the collapse of current monetary system. He foresees a new "global reserve currency" replacing the dollar, and financial power being based on gold.

Speaking of bad banks, the European Union has finalized new banking rules that mean depositors can lose their money on a "bail-in" of their bank if it fails. The U.S. Treasury Department is working on similar rules.

A citizens' initiative called "Save Our Swiss Gold" has been blocked by the Swiss Parliament. The proponents of the measure, mandating the Swiss central bank hold 20% of its reserves in gold, had gathered enough signatures to qualify for a nationwide referendum on the subject, but a national vote on the subject was shot down by the lower house of parliament at the urging of the Swiss government and Finance Minister.

Jim Sinclair thinks Yellen will not only reverse the taper, but increase money printing to levels never seen before, weakening the dollar and boosting gold.

Looking Ahead


We noticed that there was ZERO safe haven demand for the dollar during the Ukraine crisis. The yen, Swiss franc, and gold saw the safe haven action. Even the euro did better. This may be the first big sign of the dollar losing its status as the world's global reserve currency.

China has been signing major bilateral agreements to conduct international trade in yuan, cutting out the dollar as the method of settling deals. China and the UK have announced that the first yuan clearing and settlement house in Europe will be set up in London. This will allow international trade between the EU and China to be conducted directly, reducing demand for the dollar and making it weaker. Of course, a weaker dollar means higher gold (and oil) prices, since they are denominated in dollars.


We may be seeing even stronger physical gold demand out of China, as the public has been spooked over losses in investment trusts and co-ops. Some have simply closed their doors, with the manager disappearing with everyone's money. This nervousness is starting to affect small banks in troubled areas of the nation, as two banks suffered a bank run on March 24. China does not have depositors' insurance like the FDIC in the U.S., so if the bank makes too many bad loans, all your money is gone.

Royal Bank of Canada Capital Management has released a study that points to a strong gold rally ahead that could rival the one of 2005-2008. Noting that purchases by gold ETFs was a large factor in the rally of 2005-2008, and outflows from those same ETFs were a major reason for the bear market in 2013, the report notes that these ETFs no longer have the volume to negatively affect gold over the long term, and physical demand from China is many times larger than the ETF demand was, even at its peak.


Major mining companies are warning that global gold mining output could fall below expectations in 2014, due to development cutbacks and policy shifts spurred by the 28% drop in gold prices in 2013. The gold mining industry as a whole has taken at least $30 billion in write-downs, as in-ground stocks have had to be revalued downwards and new projects canceled. The CEOs of both McEwen Mining and Barrick see global production shrinking this year, while Goldcorp CEO Chuck Jeannes said he wouldn't be surprised.

The practice of "high grading"– only mining the purest veins– helps gold production per ton of ore, but it leaves the lower grade veins behind instead of mixing it all together. This can drastically cut the life of the mine and result in that ore being left behind forever, as the tunnels made chasing only high grade ore makes it unsafe to extract.

PLATINUM SUPPLY. The platinum mineworkers strike in South Africa entered its third month in March. This is far longer than anyone had expected, and above-ground supplies are drying up. Conditions in some of the older, deeper mines have deteriorated so much that the companies say that they are no longer safe and will likely be permanently shut down. The strike has halted 40% of global platinum production.

Sunday, March 30, 2014

The Dollar Cannot Be Devaluated and Suicidal Bankers. When serious problems for the dollar surface, as they surely will, and the U.S. has little or no gold to fall back on, the U.S., with its back to the wall, may become a very dangerous entity in the world. Would it be possible for those running the U.S. to loose their heads and choose a suicidal nuclear war in response to a desperate economic situation? Does the destruction of the whole world matter to men about to take their own lives? Do suicidal bankers worry about the fate of the world? - J.W.

o o o

Items from The Economatrix:

Home Sales Look To Be Slowing Down In Coming Months

Spotlight On The Economy: Consumers Spending Still So-So

U.S. Fourth-Quarter GDP Nudged Up To 2.6%

U.S. Jobless Claims Fall To Four-Month Low

Saturday, March 29, 2014

Friday, March 28, 2014

The IRS just issued tax guidance for bitcoin and other virtual currencies. They classify bitcoins as property, instead of a currency, where tax rules of stocks and barter will apply. - H.L.

o o o

Video: Ann Barnhardt - Your savings are being robbed from you. - B.B.

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Items from The Economatrix:

Dollar Value Could Suffer Instant Change-David Morgan

Low Fed Rates Worsen U.S. Retirement Crisis

Stocks Edge Higher After Manufactured Goods Report

Subprime Mortgages Are Slowly Making A Comeback

Thursday, March 27, 2014

Peter Schiff: We're Heading For A Crisis Worse Than 2007 - D.B.

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RBS sent in this link: MOVIN' ON UP IN THE WORLD..... NO LONGER FIRST! While this may seem to indicate a poor economy at first, it may also indicate several positive things. Many in the area have chose to reduce their tax footprint by working lower wage jobs, but remaining at home more. Homeschooling is on the rise and there seems to be a healthy underground bartering community. All may not be what is seems.

o o o

James Rickards: Fed Insolvent, Dollar Will Collapse 90% or More

o o o

Items from The Economatrix:

John Galta: TSHTF Inflation

Jim Sinclair Issues Alert: Dollar Reacting Because Market Knows Russia Has a Nuclear Economic Weapon

A List Of 97 Taxes Americans Pay Every Year

The Central Bank Continues To Scale Back Stimulus As The Outlook For The Job Market Improves

Wednesday, March 26, 2014

Tuesday, March 25, 2014

Monday, March 24, 2014

Sunday, March 23, 2014

Saturday, March 22, 2014

From E.B.: Normally, I don't pay much attention to NPR due to their leftest political lean, but this caught my eye. (Yes, that NPR.) - E.B.

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Fed Fraud and Hostage Markets - D.B.

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Items from The Economatrix:

The Run On U.S. Gold Continues...

Richard Russell - Silver Is The Greatest Buy In The World Today

Putin Could Win World War III Without Firing a Shot

Collapse and Systemic Failure at All Levels Coming to U.S.-Dmitry Orlov

Friday, March 21, 2014

If and when the end of civilized life as we know it arrives, there will be a period lasting from months to years before your community stops collapsing and develops a stable local economy. During this time, the agreed exchange of goods and services between residents is clearly preferable to looting and theft, but successful transactions will not be easy without a widely accepted replacement for money. People may still have cash, credit cards, and checks, but without a central government these are unlikely to be seen as a good exchange for essentials like food, clothes, fuel, or services. A local currency will eventually appear in each economic region, but until it does how can one replace money?

This is a significant question. There's nothing wrong with the old standby of gold and ammunition for long-term preservation of value, but in realistic situations both are hard to use. Someone who doesn't know you may ask themselves, “Is this a real gold coin or a convincing forgery? Will this apparently new ammunition actually work when my life depends on it?” You may find yourself thinking, “Do I want to hand over something like my gold coin, which I know is of real and ever-increasing value, for four old car batteries (or whatever). Will the 9mm ammunition I hand to this person for a box of corned beef today be used to take it back by force tomorrow?” What is needed for day-to-day commerce after collapse are items unlikely to inspire fear, uncertainty, and doubt. This means using things that could have been sitting around your house, that could have been found, or that could have been traded to you. In other words, they are things that are familiar and useful and whose condition and post-collapse value are immediately clear to both parties.

Let's look more closely at value. Perceptions of an object's value will change immediately and then more gradually over time after collapse. Many things that are cheap and common now will become more attractive when they are unobtainable. Former middle class professionals will be spending their days repairing clothes and houses, catching pests, trying to live without power or supermarkets, scrounging food, watching out for bad guys, and walking rather than driving. Every household will need to become self sufficient in a very short time. Perceived value will also change as a crisis persists. Some items that are of marginal trading power immediately after a collapse, when people will still have limited household supplies, will increase the longer the crisis persists. Candles are one example. Think through the stages of a crisis as you choose, acquire, and use your barter goods. Buy plenty of candles, but put them at the back of the cupboard.

The value of what you have for barter will also change depending on local events, the weather, and the season. If someone comes into the community with a trunk full of looted nylon cord and starts to barter it for food, the value of your own cord stock will drop as a result. (This is inflation in its monetary sense.) However, once that stock of cord is used up in a few weeks' time, your own supply will start to rise in value. Being aware of the current state of supply and demand means you know to push something to the back of the store cupboard with the candles for a while.

Finally, perceptions of an item's value also depend on where your community is situated. If you live in a northern state with cold winters that adds barter value to matches and candles (for half of the year at least). A rural community offers more opportunities for trapping and hunting, and increases the barter value of arrows and airgun pellets. The residents of an urban community, on the other hand, will look for street maps at all times of year.

Barter v. Trading

This article is about identifying, stocking, and using the post collapse equivalent of a pocket full of dollar bills. It should be enough that if someone is trading eggs or socks you can buy a pair without having to run back to the house, but not so much that if someone robs you at gunpoint, you've lost a major part of your savings. That's barter.

I define trading being qualitatively different, because it involves much higher-value items. Trading involves some psychology on both sides, similar to buying a car or a house, as opposed to daily shopping. Also, it is less likely you will know the other person or people involved. Trading is the subject of another article, because you don't want to have a reputation for doing it (or, more precisely, doing it for a living). Professional traders have always been distrusted, even by those they know. House flippers, car salesmen, and traditional horse dealers are good examples. However, if you continually trade goods (services are different and safer, because the buyer has a stake in keeping you alive and happy), you'll also have to deal with people you don't know. This is a temptation for the opportunists among them to follow you home. You might drive them off with gunfire, maybe wound a few, but the rest will still be out there, and you and yours have to leave the house eventually.

In a situation where a simple flesh wound, without professional medical attention, will kill you, it doesn't pay to make anyone mad or envious. So rather than trading, you want to barter. Not only that, but after a social collapse it's safest to appear as unprepared and panicked as everyone else. If there's a food handout, be screaming and scrambling in the crowd with everyone else; this may not help your self-esteem, but you don't want to be the nail that's sticking up by not appearing as desperate as your neighbors. Ask around for stuff you already have, and make it sound genuine. If a few good people actually do give you something, take it and remember them.

Barter and donate. Use stockpiled items to gain that most valuable of assets in troubled times– goodwill. Give a few small items to people you know to strengthen the bond between you in the same way that buying them a beer would do now. Always be fair, and throw in something free like news and advice; there will be plenty of both needed after collapse. With any luck, you will be seeing and working with them again as you both rebuild your community.

The Qualities of Barter Goods

Let's start by looking at the kind of items that people are most likely to accept in exchange for small amounts of food, fuel, or time. Note that we're not talking about axes, chickens, or cans of gas, but portable items you can carry unobtrusively, in case you see something useful for possible exchange. Suitable barter goods will be:

  1. Cheap to buy now but will increase in value after collapse because they are not made or replaceable locally.
  2. Stable over a few years in cool dry storage.
  3. Provably in good condition at the time of trading by demonstration.
  4. Portable and robust; made out of durable materials like stainless steel.
  5. Usable by the recipient for further exchange or original purpose.
  6. Widely acceptable and recognizable; hard to counterfeit.
  7. Not so expensive per indivisible unit (like guns) that it is hard to make a fair trade.
  8. Impossible to use against you (unlike large caliber ammunition).
  9. Unlikely to arouse suspicion that you are a hoarder, a trader, or unusually well-prepared.
  10. Usable by you in ordinary life so that they can be rotated like any other stockpiled item
  11. Preferably packed in original containers to increase their perceived value, condition, and safety.
  12. Those containers, if reusable, will add to the value. Don't forget to point this out as part of their value. This includes resealable bottles and boxes in glass, plastic, and metal.

Many things fit these requirements, and most can be found on a Saturday morning visit to Costco or IKEA's household department. If there is a choice, don't skimp on quality. A brand name item, even if it's functionally the same as a Chinese knockoff half the price, will have more sales appeal for the same weight and volume. There's going to be a lot of scavenged trash around, and it's worth pointing this out. Underline this by having examples that look perfect with the original labels and stickers on them.

Examples of Durable Barter Goods:

  1. Precision airgun pellets and hunting arrows; slingshots and slingshot ammunition.
  2. Candles and waterproof matches.
  3. Small notebooks with pencils, eraser tops, and a small sharpener.
  4. Resealable waterproof containers such as ZipLok bags, Tupperware, and small Mason jars.
  5. Fishing line, which can be used for many things besides fishing, and galvanized wire.
  6. Waterproof duct tape. Choose dark neutral colors such as green or gray, not black, white, or orange.
  7. Bicycle and bike chain repair kits; sewing kits; first aid kits.
  8. Plumbing and irrigation repair items such as hose clips, extenders, and plastic valves. Keep them on the display cards.
  9. Stainless steel screws in common sizes; keep to Philips (cross) or slot head versions. If they come in snap-top, plastic containers so much the better. Also strong hooks, bolts, and padlocks.
  10. Small, good-quality, pocket knives or multipurpose tools with can/bottle openers.
  11. Small adjustable wrenches and stainless digging tools/camping knives.
  12. Camping and travel supplies, like vacuum-packed space blankets and collapsible water containers.
  13. LED flashlights, both battery and squeeze dynamo powered.
  14. Fifty-foot lengths of nylon or para cord with the ends heat sealed so they don't fray, carabiners, small books of knots.
  15. Salt and sugar; cubes are better than loose sugar as they can't be extended with fillers like plaster. You need to keep both salt and sugar dry, of course.
  16. Plastic-covered local street and regional maps or map books; colored chalk for marking buildings and routes. Small compasses with measuring features (the Silva range is recommended).
  17. Travel bars of soap and small bottles of rubbing alcohol, which is easy to prove it's genuine with a sniff.
  18. Lightweight industrial type fixings, such as long zip ties and tie-down straps.
  19. 12-volt electrical system components and light bulbs, particularly long lasting and durable LEDs.
  20. Paperback survival and repair guides; to add value supply them with waterproof bags.

If possible get a piece of printed paper like store handouts you can hand out with items such as pocket knives and tools. These will be no cost to you when you buy, but they will increase the perceived value and quality of the item at trade time. Think like a salesman. Keep your trade goods clean and dry, taking particular note of the packaging and labels. Condition is a big part of the perception of value.

Examples of (Eventually) Perishable Barter Goods:

  1. Bite-size candy bars, like those sold in big bags at Hallowe'en. They're much cheaper after the event, like most seasonal items, so use trick or treaters each years as a resource to turn over your old stock, and then replenish it cheaply the next day. Don't worry, year-old candy is fine.
  2. Checkout favorites, like beef jerky sticks and salty snacks.
  3. Spirits, such as whiskey or tequila; small plastic bottles are best (not miniatures, though: too much of the weight is glass). Be prepared for the buyer to crack the seal and take a sample, but they should only do so after the deal is agreed, as a cracked seal significantly reduces trading value. Make a point of sticking around to be sure they're happy, and point out that the bottle has value after it's empty.
  4. Long dated AA-size packed batteries; you may need to prove their condition at the point of sale, so the packs that include a charge tester are ideal.
  5. Nutritionally useless but psychologically attractive foods, like instant coffee and cocoa.
  6. Slingshot elastic bands.

Unsuitable Candidates for Barter Goods:

  1. .22LR or any other type of ammunition. It's a bad idea to trade ammunition or components with anyone, particularly anyone you don't know well or who doesn't have a stake in the community.
  2. Medicines, which can't be proven they are what they look like. They're always worth more to you than anyone else, as you know how old they are and that they are genuine.
  3. Seeds. As is the case with medicines, you can't prove they will grow or indeed are what you claim at the point of sale. They will have little barter value and in any case you need them for your own use.
  4. Pepper spray. Unless you're dealing with someone you know, that's just asking for it to be used on you immediately when you hand it over. Also, you shouldn't reduce defensive stocks.
  5. Cigarettes. They go stale, they're expensive, and if you don't smoke you can't turn the stock over. If you do, then you're not increasing your survival chances any.
  6. Any kind of food. There isn't anything you will need more, and equally you don't want to advertise you have more than you need to others, whether outside or inside your community.

To repeat the last item: Never give away durable food. Offering to trade food makes clear that you have more than you need, and this makes you an immediate target. You don't want starving people following you home, and it goes without saying that you should never trade anywhere near where you live but far enough away that you can lose, or at least identify, people following you. I make an exception for bite-size candy bars or snack foods, as those are unlikely to be hoarded in large quantities, except by those reading this article. You can always say you found them in a vending machine and can't eat them because you're diabetic, or allergic to peanuts and have no more medicine. (Be sure to research and practice that story well before you need it, if you plan on using it.)

It's never a good idea to keep your supplies in one place, either in your house or on your person while walking around. Think of how you behave in a dodgy neighborhood right now. Do you pay for a newspaper by peeling a bill off a thick wad? Of course not. After a collapse every neighborhood will be dodgy, with no police or medical services to call during or after a violent incident. So keep small collections of stuff around your person in pockets, jacket lining, backpack divisions, and so forth. If someone in your household is skilled in sewing and tailoring, get them to make secret compartments in your clothes and bags. Develop a leisurely technique of feeling around for items as if you only have a couple of them with you; keep people from seeing in your bag as you pull stuff out. Again, practice this before going out, and like a gambler going to a risky game, don't take more than you can afford to lose.

Before you start to barter find out as much as you can about what the other person might want, without being too obvious about it. The reason is that you don't want to bring out all of your stock, one thing after another, to find something tempting to them; the more you can keep out of sight the better. Not only does running through your stock show you're carrying a range of useful items (to others as well as the person you're bartering with), but it implies commitment to the deal and lowers your bargaining position. Keep it loose, ask questions even after you've figured out what will trigger a deal, and then as you're leaving saym "Oh, by the way, you might be interested in this ..." and bring it out. When you do, don't just put it on the nearest horizontal surface. Look around for a place worthy of it, brush an imaginary speck of dust off the item, and put it down carefully. Celebrate the product, as I was told to do when being trained to show items in my retail days. The more respect you show it, the more value the potential purchaser will imply to it. (At least, that's the theory.)

Don't Take Out the Trash

You don't even need to spend money to collect some possible barter items, as some trash now will have value after collapse. If there is space, and you anticipate staying put for a while after things go bad, think before you throw that weekly armload of containers in the trash. Empty wine bottles with corks will have value, as will clean screw top plastic bottles, pill bottles, screw top jars, spray bottles, small metal containers, egg cartons, and resealable plastic bags. Just like a stockpile of food, build it up to a reasonable amount and then start turning it over, replacing odd shapes and sizes with uniform types, changing damaged examples for perfect ones, swapping damp-susceptible items, like paper pulp egg containers for plastic. Choose items that pack efficiently, such as bottles with parallel walls that can stack on their sides without slipping. Some containers can be stored inside others, others can stack.

There is a kind of can opener that cuts round the top seam of the can, leaving it with no sharp edges and as as a metal container with a close-fitting top. If you buy one (or several) of these, then the cans in your stockpile can be recycled as useful containers. Deep drawn aluminum cans with an inset base will also stack securely. OXO makes a side cutting can opener– the Good Grips Smooth Edge Can Opener– that sells for around twenty dollars and has received rave reviews on Amazon. Buy one (or a dozen).

What Will Eventually Replace Barter?

Saved recyclables may have another value after collapse, and that's when your community's economy has stabilized to the point where it needs paper money. Perhaps with no power and certainly with little access to advanced printing technology, your town will need something else to serve the same purpose as paper currency but with the same qualities, including that:

  1. It can't realistically be copied with current technology,
  2. It's lightweight and easily recognizable, and
  3. Each element can be individually identified (if only with a hand-written number in permanent ink).

There is a simple and obvious answer– old magazines or newspapers. If you have several hundred identical printed magazines then they can be the basis of a simple currency. The older the better, in fact, as you can be all the more sure no-one else has any of the same issue in their house or corner store.

The lower right hand quarter of page 21 of a magazine, for example (no matter what the subject) can no more be copied in a survival economy than a hundred dollar bill, and it fulfills the same requirements, with the advantage that you personally own the entire stock and as a result become part-time banker for your community.

Perhaps that quarter page represents four hours of someone's time, two shotgun shells, or a chicken. It can be redeemed for such, if the bill holder demands it from you, but the trick of banking is make sure that few or none actually do. The bills are more valuable as an exchange medium. If more are needed you then use the upper right corner of page 21, and you've just doubled the money supply, but be careful of the inflationary effect. If a lower denomination is needed, use page 25 for one quarter the value of parts of page 21. Glue examples to a noticeboard in the middle of town for reference.

This is how banks work right now, and this is also how, when the time is right, you can help move your community away from barter, with the bonus that such currency is of no use or value to anyone outside the group that mutually agrees to accept it.

Research and Practice

This short article can only skim the surface of barter in the post-collapse economy. It's up to you to take this as far and in what directions you choose. One way is to read about similar situations elsewhere or in the past. What did people do to survive in Germany after 1945, in the Central African Republic during its numerous civil wars, and in the United States during the depression years? What kind of barter systems appeared and survived?

Look at documentaries about very poor communities in the U.S. and overseas. What discarded pieces of packaging do they reuse, and what do they use them for?

Read and think about post-collapse novels, particularly the slower, older, community-centered classics such as “Lucifer's Hammer” and “Alas Babylon”. Most contemporary novels and indeed all movies are too short, too broad-brush, and too action-oriented to provide the detailed scenario needed for thought experiments like this. However, a serious novel will fill your mind with a richly-detailed community that you can re-purpose by imagining yourself in it and then reviewing strategies for survival, based on your own situation. Think about trade goods as you walk around Home Depot, IKEA, or Office Max, or any large store. What is cheap and plentiful today that may be valuable and unobtainable after collapse? You might think everything, but remember the requirements listed above. Viable trade goods are not as easy to identify as you might think.

Read or view a few videos on salesmanship, and practice haggling at common locations like flea markets and secondhand stores. The essence of bartering is that there is less pressure to make a good deal as there is less at stake on both sides; flea markets are a good way to experience this. It's a quick and informal transaction with little pressure. To experience the other side of the transaction (selling rather than buying), hold regular yard sales. These both clear space for your supplies as well as give you the chance to practice bargaining.

Those who fail to prepare, prepare to fail.

Thursday, March 20, 2014

Wednesday, March 19, 2014

Tuesday, March 18, 2014

Monday, March 17, 2014

New doomsday poll: 99.9% risk of 2014 crash - G.G.

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Continuing in his excellent series on inequality: Thoughts from the Frontline: Inequality and Opportunity - John Maudlin

Warning: To read the full article, you will have to register.

o o o

Items from The Economatrix:

Consumer Sentiment At Lowest Point Since Nov.

In-The-Know Insiders Are Now Dumping Their Stocks

19 Signs That The U.S. Consumer Is Tapped Out

Sunday, March 16, 2014

Saturday, March 15, 2014

Friday, March 14, 2014

Dear SurvivalBlog,

I will be making a stop at my local coin store tomorrow for a pre-64 dollar's worth of pre-64 coins.

I'm going to pay my bet off to you in style, because you went above and beyond in posting it. - J.N.

o o o


With regard to the recent discussion on taking delivery on precious metal orders. Over the past several years I have purchased junk silver coins and some gold coins at local coin auctions. In some instances I have been able to obtain silver coins at less than spot market prices. This may not be an option for those residing in remote locations, but it has worked well for me. - W.W.

HJL Replies: Auctions can be a “gold mine” when it comes to all sorts of items, especially estate auctions. It does seem that more and more are aware of potential value, and good deals are harder to come by though.

Thursday, March 13, 2014

You guys printed the post mortem report on Tulving today, I read your site almost every day and have never seen any caution note about Tulving posted.

I specifically wrote you a fact based email with dates about my dealings with Tulving and requested you warn your readers.

SHAME ON YOU for any of your readers that lost money since I sent you that article.

Before you respond with "we have given notice to only deal with reputable online dealers", note in the article you posted today that Tulving had a stellar reputation for 10 years.

I would bet a dollar you won't print this, but you ought to be ashamed of yourself for not getting the warning out two months ago.

You've lost a ton of credibility in my eyes by printing an "after action" report, when you could have been helping shout the problem out earlier.

I bet somewhere someone who reads survivalblog has some of the purported 30 to 40 million dollars that is said to be "missing" in this saga.

Personally it appears I was extremely lucky as we took delivery only after filing complaints and our delivery was only 2 months before the operations cease. sincerely - J.N.

JWR Replies: I regularly get reports of delayed shipments at precious metals dealers, usually quite irate, often alarmist, and usually assuaged just a few days or weeks later, when orders are properly filled. It is a constant barrage of "CRYING WOLF." I have received dozens of e-mails, like your first one, about Tulving, since I started the blog in 2005. Only two of the precious metals firms that were mentioned in those e-mails went bankrupt. (And I blew the whistle on one of them, at the first opportunity.) So this begs the question, on how many of those e-mails should I have raised the alarm? The correct answer: Hardly any of them. Why? Because most them came from just one source. In the intelligence world, we call that “single source intelligence”, and it is notoriously unreliable.

Yes, there were some red flags about Tulving (your e-mail, and one other), but nothing that unmistakably jumped out at me and led me to believe that they were about to go under.

If Tulving were one of my advertisers (past or present–and FWIW, they never have been), then I would have had cause for a some due diligence.

The fact is I'm not omniscient, and up until two months ago, I was a one-man operation, without a lot of time to delve into investigative reporting.

There is one other factor that you may not have considered: These days, small publications are regularly sued out of existence in libel cases. I can't go shooting from the lip. As a "shallow pockets" small businessman, I simply cannot afford to.

Please walk a mile in my shoes. God bless.

HJL Adds: There are industry analysts that work full time to provide that information to investors. It is unreasonable to expect that level of evaluation from an online blog whose focus is much broader than just investments in PMs. SurvivalBlog endeavors to get information like this into the hands of readers as soon as possible and, in fact, the article was posted in less than 24 hours from when we received it. We also simultaneously received this warning from a SurvivalBlog reader:

“…In my case, at least, they did so after gladly accepting my wire transfer, without telling me they could not deliver as promised. I foolishly failed to update my research on them because I had successfully performed multiple transactions with them over the last eight years. Had I done so I would have quickly discovered their formerly good reputation began to deteriorate quickly last year, including numerous Better Business Bureau complaints. Please let my expensive lesson be an example to others - Always do your research even with a history of successful transactions. Obviously for my next purchase my first contact will be with a dealer who CURRENTLY advertises with Survivalblog - I have only had excellent experiences with them. - Pablo

That would be the first warning I had of Tulving in the two months I have been at SurvivalBlog. It is vital that each customer verify the supplier each time they enter into a major financial transaction with a vendor. SurvivalBlog continues to verify information of those companies that advertise with us, because we have intertwined interests, but even then, it is possible for the vendor to hide things. As JWR stated, Tulving, while mentioned in the blog several times over a period of years, has never been an advertiser in SurvivalBlog. We will continue bringing warnings to the readership if they are valid, but it must be more than a single-sourced complaint. Anything else is libelous.

Wednesday, March 12, 2014

Tuesday, March 11, 2014

Monday, March 10, 2014

Sunday, March 9, 2014

This map only has data from 1999 and 2009 but is surprising nonetheless: The Geography of Government Benefits. It's very easy to compare 1999 to 2009 and see just how much government assistance has grown. - Skyrat

Items from The Economatrix:

Three-Month Low In U.S. Jobless Claims Offers Hope For Labor Market

US Applications For Jobless Aid Reach 3-Month Low

Stock and housing gains put US net worth at record

What Costco Is Saying About The Economy

Saturday, March 8, 2014

Friday, March 7, 2014

Thursday, March 6, 2014

Hello Hugh,

First of all I am not an investment expert, so I have to read and call experts. I recently left a company and moved to North Carolina. I was going to cash out my 401K, but I was starting a one-man business so I waited. I formed my own company and got started. After a short while I looked at 401 cash out options. (I am only 45.) One great option that is available is called a solo 401K. First, you have to be a one-person shop. That is easy. Go to the courthouse and register a DBA false business name. (If you are doing business as anything other than your name and not a corporation that is what it is called.) It's just $16 in NC. Then go online to the IRS and apply for an EIN-Free. Then go to your bank and get a business account. (It's just a $100 deposit at Wells Fargo.) Now call a solo 401K company. (I use Ira Financial There was a one-time fee of $1200, then an annual $200 fee if you add to it. I rolled over $50K. There was no penalty and no tax, and I bought gold and silver coin delivered to me. No penalty. Mine to hold. Easy for anyone to start a business that never has to amount to a thing. I hope it helps. Please research! - R.M.

Wednesday, March 5, 2014

First I want to thank Little Fish for offering more explanation to readers on economics and finance. I appreciate the opportunity to respond to the questions and concerns in this post in hopes of providing clarity on the IRA LLC concept and our company.  

We at Perpetual Assets are staunch free market capitalists.  We do not like to be handcuffed and would never require anyone to purchase metals from our company. Most of our clients do because we have earned their trust, are competitively priced, executed their IRA LLC conversion perfectly, and provided excellent service along the way. In addition, one does not have to sell to us either. There are no other charges for taking physical possession.  Shipping is even free on most large transactions.

We provide an extensive amount of information on the subject to our clients throughout the process, all of which back up the structural investment framework of the IRA LLC. This includes legal affidavits, concrete do's and don't's, tax code analysis, court cases, and IRS field advisory statements. I am making all of this information available to the public on a single web page that we will provide in the coming days.  

I would argue that defunding even a relatively small IRA could have harmful ramifications. In this article I give an example of a $100k IRA cash out. Depending on one's tax bracket you can see how even a $30k cash out could have significant taxes and penalties, making the $1895 setup fee a viable option to get your hands on the most metal possible. Of course, at some point (currently age 70 ½) you will be forced to take taxable distributions from your IRA LLC. Yes, you can literally pull out those shiny gold, silver, or platinum eagle coins as IRA distributions years later.  Yes, it will be a taxable distribution, but pulling out $5,000 value in silver per year is a lighter blow to your taxable income than cashing out a full $30,000+ IRA.

There should be no concern about the IRS considering this an example of 'hiding' assets. As manager of the LLC the individual is the fiduciary of the assets owned by the LLC. He or she is in complete control of the storage of said assets.  Our favorite three-letter regulatory bodies are not alerted when one executes this process. All they know is that John Doe has rolled his IRA, SEP, Simple or 401k over to a self-directed IRA platform with one of the largest and oldest IRS-compliant custodians in the marketplace. In the event of an IRS audit, the individual is responsible to furnish the assets of the LLC. That's when Mr. Doe has to dig a hole in the ground and knock the dust off those IRA LLC owned coins and prove he has not spent or otherwise personally used those assets. The IRS does not know you hold coins in your hand unless you are audited, and again we are not hiding anything, and certainly not advertising it. The only reporting requirement is an annual valuation of the LLC assets (dollar amount) to the custodian as they update their total assets under management.

In the end, this is all about control and choice. Legally, as a firm we can never endorse non-compliance. That being said, if some mid- to late- 30s Germany draconian measures begin to show face, regardless if they threaten gun rights, metals, retirement accounts, or personal freedoms, our goal is for our clients to have a choice and assets within 50 feet of the client's possession; we give you that liberty. As we occasionally tell clients, we try to protect you from everyone, except yourself. - Will Lehr

Tuesday, March 4, 2014

Monday, March 3, 2014

Welcome to SurvivalBlog's Precious Metals Month in review. Every month, we take a look at "the month that was" in precious metals, covering everything from price action to the information that's driving the numbers.

February In Precious Metals

Three major factors for precious metals in February were Chinese physical demand; poor economic news in the U.S. (which was blamed on sequential blizzards); and emerging market crises, especially Ukraine.


Chinese gold sales last month hit 246 metric tons - a record for January - but the pace didn't slow down after the Lunar New Year as expected. Chinese gold buyers weren't just lured by low prices in February, they were protecting themselves against a possible financial collapse similar to what happened with Lehman Brothers and AIG in the U.S. in 2008. A substantial portion of China's economy is depending on unregulated "under the table" loans to companies who can't qualify for a bank loan. The Chinese central bank started reducing the money supply to squeeze out this practice, and the citizens, fearing bank defaults, started pulling their savings from banks and flooding jewelry stores to buy gold chains and bars. Chinese weekly gold demand has exceeded weekly global mine production for all but two weeks so far this year.

When the official Chinese gold import numbers for 2013 were released by Beijing, Western news sources jumped on the fact that domestic Chinese gold mining and scrap gold recycling totaling 500 metric tons was not accounted for. Many people speculate that this missing gold ended up in a shell company belonging to the Chinese central bank, to keep its gold purchases hidden while it sells off U.S. Treasuries.

Economic Slowdown

Many analysts were looking for a correction in the stock market bubble this month, and disappointing economic data gave many the cover to jump ship. On February 3rd, both U.S. and European stock markets saw their biggest one-day drop in six months. An estimated $24 billion in investments was pulled out of U.S. equity markets that week. At the same time, gold skeptic Ed Bowsher wrote a column in MoneyWeek titled "I've Never Bought Gold Before - But I'm Buying It Now."

There was no fight over raising the debt ceiling in mid-February, which would have given gold a boost, but the yellow metal really didn't need it. Both gold and silver continued to show gains, even when the stock markets pushed higher. Gold rose above the 50-day moving average on January 23rd, and never looked back. On February 7th, it rose above the important 100-day moving average, and on Valentine's Day, it broke the $1,320 mark, above the 200-day moving average. At the same time, silver posted it's longest rally in 45 years, dating back to 1968. Both metals are handily beating the stock market in 2014 so far.

SHTF in Emerging Nations

Gold (and silver's) excellent month wasn't just about an oversold market and good fundamentals. There was literally blood in the streets on three continents, as popular uprisings against corrupt governments escalated to gunfire from both sides.

Anti-government protestors in Thailand got hold of M-79 grenade launchers seized from riot police, and turned them on their former owners. Snipers from both sides have also inflicted numerous casualties.

Venezuela was on the brink of a full-scale civil war all month, as a divided populace held mass demonstrations for and against the government. Protests were sparked by food shortages, an inflation rate over 50%, and rampant crime. Dozens have been killed in the fighting.

The big news this month was of course Ukraine. With a government on the brink of default and a currency hitting new lows, President Viktor Yanukovych agreed to a deal from his Russian allies to scrap an agreement for closer ties with the EU in exchange for a $15 billion loan to Ukraine. This set off protests by thousands of citizens, already disgusted with what they saw as cronyism and a looting of the national treasury by Yanukovych and his inner circle. Leading protestors were "disappeared" by the government, and demonstrations devolved into street fighting in the capital of Kiev, with hundreds dead and wounded.

After Yanukovych was deposed by parliament, he fled to the Crimea in southern Ukraine. This area is full of the descendents of ethnic Russians settled here by Stalin after purging the local population, and is a Yanukovych stronghold. This is also the home of the Russian Black Sea Fleet, and Putin has no intention of losing this strategic port. 150,000 Russian troops and tanks are massed on the Ukrainian border, holding "war games". On February 26th, 120 uniformed gunmen with no insignia stormed the Crimean parliament building, and raised the Russian flag after days of protest between pro- and anti- Russian crowds in Sevestapol.

All these events have been a major factor in gold's rally of nearly $100 in February.

Market Buzz

Gold and silver had a very strong February, despite a pullback at the end of the month. Both have solid uptrends in place, and bulls have the short-term advantage. One market sector that has seen conflicting rumors is India. It seems that almost daily, there are reports that the Finance Ministry is going to ease the draconian gold import restrictions, or are going to leave them in place. Over 200 metric tons of gold was estimated to have been smuggled into India in 2013, costing the government $1 billion in lost taxes.

More proof that physical gold is moving West to East, never to be seen on the London or COMEX ever again, is the report that 80% of gold exported by Switzerland in January went to Asia. Most of this gold came from the London Gold Exchange. The 400 oz Good Delivery bars are melted down and purified from .999 to .9999 fineness, then re-cast into 1 kilo bars for the Asian market. alerts its readers that the Financial Times scrubbed a report from their website that said an auditing firm examined the London Gold Fix from January 2010 to December 2013, and found evidence that suggested collusion or manipulation of gold prices approximately 50% of the time. Eric Sprott notes that the coming end of gold manipulation is a "golden opportunity" for investors.

Peter Schiff says that Yellen is better for gold than Bernanke was, and explains why in this video from February 19. Another of our favorite links from this month is Matthew Lynn's "Three Warning Signs From Higher Gold Prices" on MarketWatch.

Speaking of the London Gold Fix, it seems like the largest bank in the world by assets, the Industrial and Commercial Bank of China, is positioning itself to take over Deutsche Bank's role at the exclusive table. ICBC has purchased the London commodities and forex division of Standard Bank, which gives it the presence in the international gold market to qualify to be one of the five banks in the world that sets the benchmark gold price.

On The Retail Front

The U.S. Mint reported that demand for the Silver Eagle bullion coin has quadrupled since 2007. Year to date sales for the Silver Eagle through February was nearly 8.5 million coins. The Perth Mint has a new collectible hit on its hands with the "Gods of Olympus" series of 2 oz silver high relief coins. The first coin, featuring Zeus, sold out within hours of its introduction.

There was some "buried treasure" news this month, as we learn that the hard work and research of two Scottish treasure hunters paid off when they unearthed 322 medieval silver coins during a dig in gale-force winds. Unlike the United States, treasure hunting laws in Scotland and the U.K. encourage metal detectorists to turn significant finds in to the government, because even if a museum decides it wants the treasure, it has to pay the market price, which is then split between the finder and land-owner. Not at all like the confiscatory practices in the U.S.

The big story was of course the California couple who stumbled upon the largest buried cache of gold coins ever found in the United States, while walking their dog on their property. The 1,427 gold U.S. coins date from 1847 to 1894, and many are in mint condition. The find is estimated to be worth $10 million, with some of the coins worth over a million dollars by themselves.

Looking Ahead

We still haven't seen the stock market correction we seem to be overdue for, and gold and silver have good market fundamentals heading into March. Ukraine is going to be a big hotspot, and if the Erdogan government in Turkey collapses or goes bankrupt, it could drag Greece and Cyprus down with it. There are many nations right now experiencing the type of conditions that we hope we don't see in the U.S. but should prepare for. Economic numbers for the U.S. will carry a lot of weight, as there won't be blizzards to blame for them any more. Eric Sprott notes that the government has changed the way the CPI is measured for the 20th time in 30 years, to hide the true inflation rate. Will prices at the cash register force Yellen to raise the benchmark rates she charges the big banks? Keep in mind, the guy they hired for the #2 spot at the Fed is an expert on hyperinflation.

Steven Cochran is the Senior Content Writer for Gainsville Coins

I am not suggesting the IRA LLC is the bulletproof solution to government confiscation of retirement accounts. However, the LLC investment company does offer another layer of protection. If the government requires a percentage of accounts be invested in treasuries, for example, they may very well come after self-directed IRAs and require them to sell real estate, metals, or any other asset to fulfill the new bond investment obligation. If they come after these specific self-directed IRA LLCs, the individual has the choice to comply or to not comply. Non-compliance certainly has its ramifications, and I am not endorsing it, but choice is a powerful variable.

President Obama's recent introduction of the new and improved retirement savings vehicle has many people up in arms. Some see this as a trial balloon– a test message by the administration to gauge public opinion. Perhaps it is. After all, full force retirement account bail in without catastrophe is not only improbable, rather impossible, without large-scale resistance. After caving to 2008 Hank Paulson threats of tanks in the streets, the populace, and dare I say, Congress, is not as apt to hand away those civil liberties.

The question is not if an ever-increasing bankrupt government will bail in retirement accounts; it is rather when. Some argue the lowest hanging fruit in the private pension industry are the government employee pensions. That is likely true. If so, the highest hanging fruit in the private pension industry would be self-directed IRAs, and furthermore IRA LLCs.

I liken this to an analogy of government confiscation of precious metals. Consider this: In the event of widespread PM confiscation, what will be the lowest hanging fruit versus the path of most resistance? I would argue the easy targets are vaults and depositories with registered and often certified holdings of PMs. Did you know the majority of IRA metal that is held by trustee is held in COMEX registered vaults? So here we have folks investing in traditional self-directed "Precious metals IRAs" to protect themselves and their savings, when in fact they are telling the regulatory bodies exactly what PMs they own and exactly where they are held.

Let's not forget the Patriot Act changed the game as it pertains to the legalities of claim on holdings within banks, trustees, and depositories. You may think you, or your IRA, own that metal, but legally you do not, at least not in times of "national emergency." Isn't that when we are going to need our metals the most? That, my friends, is low-hanging fruit.

Now consider the path of most resistance– door-to-door PM confiscation. I believe that is about as likely as door-to-door gun confiscation. How many PM owners in our community are armed to the teeth? I imagine those door knocks would be met with stories of theft, loss, boating accidents, gambling, and drug addictions. The boys in government always prefer the path of least resistance.

The IRA LLC offers segregation and protection in numerous regards. It provides the ability to physically store gold and silver that is owned by your IRA, or like account. It also adds a layer of separation from banks, brokers, and thieves. You literally remove your assets from the commercial banking system. Take your retirement off grid. Protect yourself.

E.B. - Looks like the fed leadership is introducing the idea of inflation as a “solution”. I don't think this is a mistake nor a spur of the moment idea. This was probably a planned comment. Fed may need to let inflation run hot to meet goals: Evans

Items from The Economatrix:

Yellen Repeats Fed Likely To Keep Trimming Asset Purchases


Is This Time Bomb Going To Implode The Economy?

The Coming Global Monetary Reset

Sunday, March 2, 2014

Saturday, March 1, 2014

Friday, February 28, 2014

Hello HJL,

Just thought I'd let you know I'm a little less than satisfied with Northwest Territorial Mint. I chose them to buy silver from because I knew I could trust a company that your site promotes. While I still trust NTM I feel I should say, however, they should tighten up a little bit. I've made four orders so far and received one. I'm quite pleased with that order, but at the same time the turn-around is very long. It took over a month to receive, and yesterday I received an email saying my 2nd order will be delayed one month. I can only expect my remaining tw orders will be delayed as well. Don't get me wrong, I appreciate NTM and will continue to do business with them. I was just hoping you guys could goose them a little and get them to improve the service. If I'm the only one complaining or if I am some kind of idiot, please disregard this email. Thanks for all you do and God bless. - J.W.

JWR Replies: Whenever the spot price of silver takes a dip (as it recently did twice, to $19.50 per ounce), the retailers and mints get buried in orders, and they very quickly build multi-month order backlogs. Even the U.S. mint has been slammed with orders. It regularly sells out of some products and periodically suspends sales, to allow time to catch up. See:

Like all of the other high-volume and low markup mints, Northwest Territorial Mint has suffered delays because of large order influxes. Their mint is physically limited by the speed of their machinery to how many coins and bars they can produce and ship each week, and still meet high quality control standards. But the good news is that in their four years as a SurvivalBlog advertiser, Northwest Territorial Mint has NEVER failed to fulfill an order, or welched on a promised price.

Now compare the silver mint situation to .22 rimfire ammo manufacturers and retailers–where in the past year they have widely canceled orders, rationed customers, and more than doubled prices. (In fact, during the worst of the ammo shortage crisis, some retailers quintupled their prices.) All in all, I'd say that Northwest Territorial Mint and most of the other silver mints have been far more ethical and trustworthy.

The law of supply and demand is inescapable. In times of extreme demand, manufacturers have two choices: either raise their prices or queue their deliveries. I am thankful that Northwest Territorial Mint has consistently chosen the ethical course of action.

Lastly: I must warn you and other readers: Do not do business with shady, fly-by-night companies. Buy only from reputable companies, or you face the prospect of losing 100% of what you send them. Best Regards.

Thursday, February 27, 2014

Wednesday, February 26, 2014

It has been interesting following the various offerings on this blog having to do with economics, physical possession of precious metals (PMs), IRAs, and such. I believe I have some things to add to the conversation that I have not seen mentioned before and that may be of interest to “preppers”.

By way of introduction I consider myself a "survivalist." I have a degree in Business Economics from a major university. Furthermore, I have been working in the world of banking/finance for the past 30 years. What I am about to offer does not constitute investment or tax advice, rather it's my view of things from my little corner of the world. I have nothing to sell and no affilition with anyone who does. We may disagree on some terminology or exact numbers, so it is my hope that we can focus on the big picture and what it paints rather than disputed minutia.

How is the economy really doing?

The debt this country now carries, as well as the debt of most civilized countries of the world, not to mention the unfunded liabilities cannot be repaid, ever! Since the near collapse of 2007-2008, the stock market has been fueled (pumped up) by the flow of printed money (Quantitative Easing 1, 2, 3, and 4; operation twist; bail outs; et cetera) rather than by corporate earnings. The money isn't really even printed any more; it's electronic.

Allow me to explain how Quantitative Easing (QE) works. We have recently been functioning with both QE 3 and QE 4 running simultaneously to the tune of $85 billion per month. The "tapering" down that has recently occurred represents $10 billion per month. So, between the two we are now at $75 billion per month. The mechanics of that are this: Every month the U.S. Treasury (UST) electronically creates (out of thin air) $85 billion (or $75 billion at the moment) U.S. dollars. They wire this amount to a private entity, known as the Federal Reserve (Fed). The Federal Reserve then uses part of that money to buy U.S. treasuries (back from the U.S. Treasury) and part goes to large banks to buy troubled mortgage-backed securities from them. The Federal Reserve then owns those investments. When the banks "sell" their assets to the Federal Reserve, they take billions of dollars a month in cash that they are supposed to be lending out to stimulate the economy, yet large amounts end up going to buy stocks. Those "inflows" are why the stock market went up for several years in a row.

If you didn't follow that explanation, let me make it simpler. The U.S. Treasury uses computers to digitally create "money," then wires it to the Federal Reserve, who uses that "money" to buy bonds that the UST is selling. Thereby, the UST gets the "money" back for "selling" the bonds all to keep the government afloat. If you or I did that, we would be put in jail in short order and rightly so.

Now let's look at the cumulative effect of this. Let's set aside all the bailouts– Fannie, Freddie, AIG, GM, and so on. Let's set aside QE 1, QE 2, operation twist, and so on. We also will set aside the debt going into 2007. Aside from all the previously mentioned financial manipulations and indebtedness, QE 3 has been running for 15 months and QE 4 for 12 month. So, that is approximately $1.170 Trillion dollars "printed" to prop up our government in just the last 15 months! Wait, there is more (and you thought there was a “recovery”).

Where did that $1.170 trillion dollars go? It is part of the investment portfolio of bonds and mortgages that the Fed owns, right? The Fed receives interest and principal payments for maturities of those bonds every month (just as you would if you owned them). How much is that? I don't know for sure, but the Fed just recently announced that their total portfolio is about $4 trillion. While we don't know what their average yield is, what percentage of the portfolio is "nonperforming"? My guess is that their entire portfolio brings in about $60 BILLION in income and maturities PER MONTH! (I believe that estimate to be on the low side.)

What does the Fed do with that money? They buy more U.S. Treasuries. Let's add that to the mix $60B + $85B = $145B. Right! It is taking $145 BILLION DOLLARS PER MONTH to keep the wheels on. That is approximately (just shy of) $2 TRILLION DOLLARS that has been “printed” in the last 15 months, just to prop up our government. This, of course, is in addition to tax receipts and bond sales to entities other than the Fed.

Why are some people "defunding" retirement accounts?

For one reason the "math" above scares the dickens out of them.

I believe that with the flip of a switch, the government could "nationalize" all IRA's, 401k's, 403b's, and so on. Possibly, you're the optimist of the family, and you don't think the government is going to steal your retirement funds. You think "they" are going to turn this ship around without an economic collapse. With that outlook, why then have money in an IRA account? The answer is "deferral," meaning you are deferring the payment of taxes due on those assets to a later date. So, by not paying the taxes now, you have more money in the account and invested.

When talking about traditional IRA's, what I tell people (no matter what their age) is not to think it's all yours; it's not. You have a partner in that account by the name of Uncle Sam. Part of the assets belong to you and part belong to Uncle Sam. Your job is to figure out how to buy out your "partner" as cheaply as possible.

In accounting language, we “recognize” there is a tax liability associated with the money in our IRA, but we choose to not “realize” it until a later date. Again, why? Well historically, the assumptions to that decision are 1) that when we retire (stop drawing a paycheck) and start taking income from the IRA, our marginal tax rate will be lower than it was when we were working, so we will get by with paying less tax on the distributions, and 2) that inflation will stay more or less the same. The "economic real rate of return" is your gains on investment minus taxes and inflation. So, say your IRA gains 8% in a year. It's growing tax deferred (no taxes now) and inflation is 3%. Your economic real rate of return is 5% (8% minus 3%). Make sense?

How does this “blow up”?

  1. If things keep humming along and TPTB can keep things cobbled together, the only option to pay debt is to raise taxes. We are not going to "grow" our way out of this. My friend, who emigrated from Finland, told me that when he left he was paying taxes at the 85% marginal bracket. Here in the U.S., if you take an IRA withdrawal now and pay 30% in taxes, you obviously keep 70%. However, if in ten years you would pay 60% in taxes, then by taking your money out now and buying out “your partner” now, you would be WAY ahead. If things stay together, tax rates will go up. Conventional wisdom is to plan that, at worst, when you retire your withdrawals will be taxed at the same rate as when you were working. Nobody wants to get their head around the possibility of tax rates being double (or more) in ten or fifteen years.
  2. Inflation. Let's say that the money supply is five trillion U.S. dollars. Then, five trillion more dollars are printed. Since dollars are only backed by “the full faith and credit of the U.S. government” rather than gold, the value of the existing dollars in circulation is cut in half. That leads to inflation. To say it another way, "the time value of money" means dollars today are worth more than dollars will be tomorrow, even in normal inflation. However, with inflation of 25% per year, a candy bar costing a buck at the beginning of the year can be purchased in a quantity of 100 with $100. At the end of the year that same $100 will buy only 75 candy bars. The dollars at the beginning of the year were more valuable than the ones at the end of the year. Dollars that you withdraw from an IRA today will have more purchasing power than dollars you withdraw later. You might reply that that is okay because the money in your IRA is invested and growing. That's fine, but they could be invested and growing outside an IRA account also, with no partner to take a portion of all of your gains.

When you take the pieces of paper known as dollars and convert them to hard assets that store value (not to mention that can go up or cost more later), it can be a good investment. I did this with dog food. We purchased a year's worth of dog food at first and tracked it. The inflation of dog food that year ran 16%. So by purchasing it in advance, our "internal rate of return" was 16%, with the only risk being if it got infested or for some reason couldn't be used. That's a pretty low risk proposition for that rate of return.

Roth IRA Conversion

Some people with traditional IRA's are eligible to convert them to Roth IRA's. You pay taxes when you convert, so you succeed at buying out your partner, but typically they are not suited to physical possession.

10% Penalty for Early Withdrawal

In my mind that penalty is simply the cost of playing the game. If the asset is only “recognized,” then it is merely on paper. You have to “realize” it in order to take possession (save the IRA LLC referenced below). The taxes (as above) were not created by taking a distribution; they have always been there. You just decided to buy out your partner now. Alternatively, you can look at the 10% penalty as insurance that you will always have control of those assets.

What about the IRA LLC vehicle that was mentioned in Will Lehr's recent blog article, I will admit to only knowing as much about the subject as he and his web site provides. It's an interesting concept and would seem to be most beneficial to investors with large IRA balances. That way you could justify the upfront legal fees. I agree that if you start defunding an IRA with multiple six figure balances, you are going to experience tax bracket "creep" and get hit awfully hard with taxes. My philosophy on that is that if you are not paying taxes or are in the 15% marginal tax bracket and you have an IRA, you should absolutely be taking distributions to fill up the 15% "bucket," at a minimum. Don't ever expect to get off paying taxes at a rate of less than 15%.

What I like about the IRA LLC vehicle is that it is:

  1. Invested in Precious Metals, and
  2. Allows for physical possession without taxation. Remember if you can't touch it, stack it, and count it, then you don't own it.

My concerns would be:

  1. That is a pretty rare and sophisticated way to manage IRA assets, and this creates some questions that I don't have answers for. Would the IRS view that as "hiding" or attempting to "hide" assets? Wouldn't the IRS then know that you have PM's in your possession?
  2. In the IRA LLC, you have not "bought out" your partner Uncle Sam. If you do very well and double your money, you have just doubled "Uncle Sam's" take also. If tax rates go up in the future, you take the hit for that.

After a review of their web site, here are my thoughts, considerations, and unanswered questions regarding the IRA LLC:

  1. Are you required to purchase your PM's from Perpetual Assets? I would guess, yes.
  2. I noted that as of this writing, their commission charges for a one ounce Gold Eagle is 5.2%. I personally don't think that is out of line, but it is a factor to consider. If you have to purchase your PM's from them, then the fees/costs were not fully disclosed.
  3. Do you have to sell to them?
  4. Is there also a charge to sell?
  5. Are there charges, other than shipping, for taking physical possession?

In fairness Mr. Lehr said up front, "This platform has its pros and cons".

I hope my thoughts and observations will be helpful. I recognize they are certainly a departure from what the main stream financial media is spoon feeding the sheeple.

Good luck and God bless.

Tuesday, February 25, 2014

Monday, February 24, 2014

I have subscribed to John Mauldin's newsletter for quite some time now and while I don't agree with everything he says, I usually enjoy his writings. I'm looking forward to his series on “income inequality”. Take a look at his latest: The Worst Ten-Letter Word. Warning: An email subscription is required to see the full article.

o o o

Stoic Cyprus back from the dead after banking collapse - Telegraph - JBG

Items from The Economatrix:

Fed Minutes Point To Continued Paring Of Stimulus

U.S. Home Sales Plunged 5.1 Percent In January

Is Food Inflation Coming Back?

Return of Goldilocks Economy Means A Weaker USD, But Beware The 3 Bears

Sunday, February 23, 2014

Friday, February 21, 2014

Thursday, February 20, 2014

D.B. sent in this article about exposing the Depression the U.S. is in, rather than “recovery”.

o o o

My Budget 360 has an interesting article on how the stock market is a sham for the average person.

Items from The Economatrix:

Economy Takes $50 Billion Winter Weather Hit

Gold To Scale New Heights On Strong Technical Picture

Extending Unemployment Killing Economy

Wednesday, February 19, 2014

We are now training our children to depend on the Government for Savings as well. Sen. Ron Wyden (D-OR) is trying to introduce legislation that will create universal savings accounts for children and provide the first $500 for it.

Items from The Economatrix:

U.S. Currency Weak And About To Crash--Karen Hudes

We're Going To Be Hit With A Tsunami Of Inflation-Peter Schiff

US Stock Market-To-GDP Ratio Favored By Warren Buffett Points To Imminent 50% Crash

Home Builder Confidence Plunges In February

Tuesday, February 18, 2014

B.B. sent in this article on the Bullion Baron: Soros Reloads SPY Puts, $1.3B Bet On S&P 500 Decline

o o o

Bob also sent in this follow up to “Singularity” that asserts that the models are not working. In this article, Robert Samuelson - no darling of the economic right to be sure - provides an assessment of applied economic theory and finds that economists don't really know what's going on and can't really predict where we are headed. This act of self analysis and honest reflection is somewhat refreshing.....even though - as in yesterday's article/blog - there is no answer provided. Perhaps that is the real insight, that even economists are finally realizing the conundrum in which the global economy is poised. The Lights Go Out On the 'Dismal Science'

Items from The Economatrix:

Food Prices Soar As Incomes Stand Still

Bank Of America Warns \

Following the Bodies: "We Are at the Precipice of Something So Big, It Will Shake the Financial World"

Monday, February 17, 2014


I am not a tax preparer, but I have been a financial adviser for more than 30 years. I have been growing more concerned about potential government confiscation of a portion of the public's Individual Retirement Accounts (IRA's) and 401(k) plans (employer-sponsored retirement savings plans). The "myRA," that Obama introduced in his State of the Union address, could be a precursor to a plan that would take part of the assets in these plans, and replace them with U.S. Treasury bonds.

One alternative, of course, is to take your money out of your IRA. You'll owe taxes, of course, and a 10% penalty if you're under 59 ½ years old at the time. If you're over that age, the penalty will disappear. If you own a Roth IRA, withdrawn assets before the above age will be taxable and penalized, with no tax consequences after reaching that age.

I have read a variety of materials suggesting that investors in these plans should either set up self-directed plans or even use Limited Liability Corporations (LLC's). The purpose here would be to make it more difficult for the government to get its hands on a portion of the assets, since a self-directed plan would be invested in physical gold and/or silver coins, and an LLC could invest in real property or even a business.

However, the government does not have to "get its hands on" assets in such plans. All it has to do is require plan custodians to convert a certain percentage of the assets to cash, and to send that cash to the government, under penalty of law for not doing so. Anyone who did not comply with such an order would be guilty of a felony. Becoming a felon can easily result, among other things, in not being able to legally own guns of any type.

In addition, once a taxpayer reaches age 70 ½, he or she must start taking Required Minimum Distributions (RMD's) from a traditional IRA or employer-sponsored plan. The exact dollar amount is currently based on the value of the account on 12/31 of the previous year, and an actuarial table available on in the publications section. If one has an LLC-run IRA entirely invested in real property, raising the necessary cash inside the IRA to take these distributions could be difficult.

My point here is to caution readers not to overreact and blindly follow someone who is selling a package that purports to avoid the problems of limited investment choices and potential government confiscation. Also, as a side note, owning real property in an IRA brings with it a set of VERY stringent rules; the violation of any of which can result in your IRA being entirely set aside and immediately taxable. The IRS has not yet targeted these strategies, but as they become more popular they will begin focusing more on anyone who is using them.

At the very least, if you are considering one of the more advanced strategies, have an independent tax preparer or attorney review what you're planning to do. Do not rely blindly on the material provided by those selling you the strategy. - M.W.

B.C. sent in this article that seems to be a a pretty even handed view of the macroeconomic landscape. The Author uses the mathematical concept of singularity and the astrophysics concept of a black hole to provide analogies of the risks we face. He also discusses what he believes to be a “flight path” away from the black hole. - We Are Approaching The Economic Singularity

o o o

And D.B. sent in another article outlining the End of the Middle Class. When the New York Times is running it, it must be obvious.

Items from The Economatrix:

Are U.S. Consumers Crumbling?

Industrial Production Report Was Even Worse Than It Sounded

Sunday, February 16, 2014

Saturday, February 15, 2014

Friday, February 14, 2014

C.M. sent in this video link on Prince Rupert's Drops. It's an amazing science phenomena that I think you will enjoy seeing. C.M., however, uses it as an object lesson on our economy. When the Federal Reserve has built enough stress into the US society (and the global economy) with market manipulation, all that will be needed to finish the job is a scratch.

Items from The Economatrix:

US Wholesale Stockpiles Rise 0.3 Percent December

Competition For A Job Lowest Since The Financial Crisis

Jim Rogers: \

Thursday, February 13, 2014


I found the article from Will to be very accurate, creative, and informative. His information was spot-on, although I would add a few comments:

  • Disclosure: I have an employer-matching 401k plan and a Roth IRA that I rolled over from a previous job (paid the tax on the conversion).
  • If you think the government will seize the assets, then it really does not matter what type of plan you have; they will follow the paper trail.
  • A more realistic scenario would be a hefty tax on retirement plan, since the funds are pretax contributions (excluding Roth).
  • The threat of confiscation would destroy the markets, so any plan to do so would be slow. If things keep changing then take out your cash and pay the fine.

A wise man said, "You will not go broke taking a gain." Holding out forever to avoid paying taxes on a gain can be a bad idea. I converted a 401k to a Roth because I can take the initial investment back out without a penalty. You might be able to do more on your own with the cash. - O.M.

Wednesday, February 12, 2014


I know what crosses your mind when the term "prepping" is used. Obviously, as you're reading this on a website created for the sole purpose of helping people prepare for the worst, you're thinking of preparing for “Dooms Day”. I know what I think of when I hear, see, read, gander at, and think of the word "prepping." Just a few short years ago, the only thing that was on my mind was the day-to-day. I was a new mom, married to an Army soldier, paying a mortgage, trying to complete my Bachelor's degree, and working a full-time job as a barista at a local bookstore. Life was stressful, mainly because I was alone with my then 18 month old son, while my husband was gone on his second deployment. One evening, while my son was asleep upstairs and I sat at home trying to complete a smidge of homework for one of the many Criminal Justice classes I was taking, I stumbled upon a forum on the Internet committed to prepping. At that time I didn't think anything of it. Honestly, at 21 years old, I thought the forum was full of a bunch of loonies, barricaded in their basements scared of the world. Cocking a "whata buncha weirdos" eyebrow, I continued on with my homework research, never imagining that I'd be where they are one day.

It's funny how some things happen in life that completely changes your outlook on "the big picture." We thought we were untouchable. We were young, had our own house, two vehicles, nice things, a healthy son and seemingly all the money in the world (or so my naïve brain thought). Unfortunately, my family and I were victims, more or less, of the financial crisis of 2008 and 2009. After my husband decided to transition from Army to civilian life, his job prospect fell through, and we lost everything. I won't go into too much detail, but it was a big slap in the face for us. After our bankruptcy was discharged, we began to work on rebuilding our credit and get back on our feet. We were blessed with another child (a girl), and my husband went on his third tour with his Reserve unit. At this time, we thought it best to live with my parents, so I could have a bit of help with the kids and put some money into savings. This is where I had hoped and prayed for a new beginning.

The number one unwritten rule amongst military spouses, whose other halves are deployed: Don't watch the news. It'll scare you to death. Still, I couldn't shy away from some of the articles that began to circulate on the Internet. No, not about the goings-on in the Middle East; well, okay, maybe a little. What scared me the most was how the recession was still, in fact, going on, an even more severe collapse was imminent, and how this collapse was on a greater scale than even the Great Depression of the 1930s. From what I read and researched, a total economic collapse was on the horizon, and there was nothing any of us could do about it. I'm sure this information was around before late 2012, but I hadn't really read or heard of it until then. My husband and I knew what it was like to have no saved money and live paycheck-to-paycheck, barely getting by on how little unemployment paid. However, we didn't (and don't) know what it's like to be without food or water, watching our children starve or having to beg for even half a day's worth of work just to get the basic essentials for our family. Suddenly, I didn't think those loonies were so crazy. Suddenly, they were the sanest people in the entire world. So, in early 2013, we began to prep. We began to prep for a total economic downfall.

Imagine for a minute, if you will, a world without jobs, without money flow, without all the frivolous pleasures, such as eating, that we as Americans take for granted. Now imagine the recession of 2008-2009, and then triple it. At that time about 15 million people were unemployed. Statistically speaking, that's 10% of the total population. During the Great Depression of the 1930s, unemployment reached 25%. What would you do if it was 30% or 40% or even 50-60%? Now imagine if the government wasn't there to attempt to bail you out. I believe that there will be layoffs within government agencies, such as in the unemployment and food stamps offices, so claims will take months instead of weeks to process, if they are processed at all. And what happens when people realize that no government assistance means that they get no money, which equals no basic necessities for their families? There will be a sharp increase in theft and burglary. Civil unrest is bound to ensue. This, my friends, is how our fledgling preps will, hopefully, save us in the event of total economic collapse.

Food and Water Storage

The first thing any prepper will tell you is to store food! If you don't have enough money to cover the inflated cost of a loaf of bread, what are you going to do? Bake it yourself, of course. What if you don't have the money to buy the flour? You can either store flour in 5-gallon food-grade buckets, or buy a grain mill and grind wheat berries yourself! The seeds of plants (such as whole corn kernels and wheat berries) tend to store better and longer than the pre-made stuff anyway. THE best book that I've found on food storage is Julie Languille's "Prepper's Food Storage: 101 Easy Steps to Affordably Stock a Life-Saving Supply of Food." She lays out each type of food staple in order of priority, how to store the food, and even how much you need for each individual. Flour, for instance, will store for up to 10 years as long as it's stored properly. My experience with buying food is that I always buy food, canned foods in particular, that have at least a two-year expiration date from the date that I bought it. That way I know that I have food stored that's good for at least two years, and I rotate to ensure that I always have "fresh" food available for consumption.

This little tip may be a "DUH," but I need to address it. Walmart's all fine and dandy to go to for single items, but when you're prepping, you want to buy in bulk. I have a Sam's Club membership and very soon hope to have a Costco membership; I've heard great things. Having a membership to one of these big box stores (literally a store selling big boxes), I believe, is essential to building a food supply.

Gardening and canning are also extremely important for food storage. I start an indoor garden around mid-February to early March every year. I plant everything from lettuce to corn to squash and from strawberries and blueberries to herbs. We always end up with a very successful garden, which I am very proud of (though not without trial and error, of course). In order for our hard work to not go to waste by rotting, we can what we are unable eat at once. There are a lot of sources on the Internet on how to can your veggies and make jellies from the fruits you produce.

In addition to food storage, you also need to think about water storage. A general rule of thumb is to have one gallon of water per person per day stored for emergencies. Personally, I think it needs to be more than that. In an economic collapse, assume you won't have the money to pay your water bill. You'll need extra water for bathing and cooking. I store three gallons of water per person per day. Just be vigilant of "best by" and "expiration" dates. The water I have stored is good for a year, so I rotate like I do with my canned goods. In addition, I have an emergency all-in-one water filter on hand that is guaranteed to filter up to one million gallons of water. It was a bit pricy at $69 from Bass Pro Shops, but, in a survival situation, it is $69 well spent.

Protecting Your Loved Ones

During the recession, not only did my city cut its budget by $300,000, but they took volunteers to quit from the police and fire departments before they had to start laying people off. If there are few or no police and fire crews available to help you in a crisis, what would you do in a tight spot? There are plenty of preppers out there that will tell you guns are the number one form of protection. While I do agree, there are many other options out there to protect your families and home from thugs; some don't require ammo.

As said in the previous paragraph, guns are essential to your protection. It is our Constitutional right to bear arms and use them if the occasion arises. In the event of civil unrest, this occasion may, unfortunately, become commonplace. Personally, we have three (and want to add more), and we make sure to keep plenty of ammo on hand. After Obama announced the limited number of rounds a magazine could hold, ammo started disappearing off the shelves. Some is still really hard to find unless you want to pay double the price at a “mom and pop” shop. So, what would happen if you ran out of ammo?

Knives are an integral part of a prepper's hoard. I can't tell you how many knives and swords my husband collects. Many of them are deadly, others are just for show, but survival knives are essential in all areas. Not only do they offer protection, but they can help you hunt, cut things, make things, and so forth. I personally have a Gerber serrated Big Rock. Thankfully, I haven't had to use it in a survival situation, but it sure has come in handy during camping to cut twigs and fishing line. If it came down to it, though, it would be the perfect weapon to protect myself, my kids, and even my husband.

Pepper spray is a girl's best friend. I purchased my first pepper spray canister in 2008 when a girlfriend and I went on a cruise by ourselves. We drove out to California, took our cruise, and then stayed in Vegas for two nights on the way back. There was no way I was going out there without some sort of protection. Thankfully, I didn't have to use it, but I did test it before we left. It's powerful stuff. It's definitely enough to startle and distract an attacker long enough for you to get away. Along the same lines is a personal stun gun. There's a great direct-selling company out there called Damsel in Defense. They have a large selection of personal stun guns. Again, while I've never been in the situation to need to use mine, I have it on me at all times. The voltage is enough to put an attacker on his (or her) ass long enough for you to get away. These are non-lethal ways to protect yourself and your loved ones, not only on a daily basis but in a crisis situation. I have never used any weapon to protect myself. I've never been in a situation that required it. However, when the economic collapse occurs (especially if it's worse than the Great Depression), then people will become scared. Fear leads to violence. Protecting yourself and your loved ones becomes a very real scenario that you must be prepared for. I would definitely take shooting classes and go to the range often. My brother has land just east of the city where we live, so we try to go out there twice a month to shoot.


No one really wants to think about what you'll do in a situation in which you are evicted or lose your home to foreclosure. In an economic collapse, that possibility is very real. Having some experience in dealing with a foreclosure and my mortgage company, I can tell you that it can take anywhere from 3-4 months or even years before the bank will force you out. Our bankruptcy has been discharged for nearly three years and our mortgage company still hasn't foreclosed on our house. That's a different story for a completely different day. The point is you should have your house for a few months at the very least. Do you know where you will go once they finally do kick you out? You need to have a plan in place. Do you have a nearby relative you can stay with? Do you have a secondary location you can go to? What if the economic collapse goes further than just the economy? What if a deadly pandemic occurs or a fidgety enemy decides to launch off some nukes? You need to have a bug out place in which to go.

Recently, I attended an online seminar about survival. One of the speakers talked about picking out the best bug out location. If anyone reading this has watched "Doomsday Bunkers," the first thing someone's mind goes to is an underground bunker. Yes, I want one, too, but let's be real here for a sec. I don't have $450,000 to spend on an underground luxury resort. You want to try to find a place that's within a 75-miles radius of your main location and try to find an alternate route to get there. You want to avoid major highways and interstates because, in a bug out scenario, everyone will be taking the main roads. Another presenter spoke on bug out locations, and she stressed the importance of being as far away as possible from large cities and major highways. The reasoning is that rioting, looting, burglary, and all crime in general will occur in areas with large populations. You don't want your location to be a target to desperate people.

I'm lucky to live in an area with friends and family close by. In the event that I was to lose my home, I know I would be able to bunk with them. Also make sure your bug out location is prepped. It's not exactly a safe location if your bug out retreat isn't stocked with the basic necessities.

Bug Out Bag/Vehicle

Another thing that is often discussed and considered one (or two) of the more important items to have in a crisis scenario is a Bug Out Bag (BOB) and a Bug Out Vehicle. It's essential that you have, at the very least, 72 hours worth of survival gear, if you have to bug out on foot. You need to make sure that you have aBOB for each member of your family-- even kids, toddlers, and infants! Bug Out Bags, like your Every Day Carry (EDC), is personal in nature and varies from person to person. While I won't go into serious detail about what I carry in mine or what I've packed in my children's or what my hubby has in his, I will name some basics that you want to include:

  1. Food. You'll want at least 72 hours worth of food. This could literally be anything that you enjoy eating, as cheap or as expensive as you want it to be. Recently we priced Mountain House freeze-dried meals. For my family of four at three servings a day for three days, it would cost about $160 for individual packages, including breakfast, lunch, dinner, and even some dessert. We did find a bucket (29 servings) of Mountain House entrees for $55 on So, it definitely pays to shop around. Right now, we have individual packets of oatmeal, Ramen Noodles, energy and granola bars, beef jerky, two or three freeze-dried packets of Mountain House, and a few others items. Whatever you choose, try to get at least 2,000 calories per person per day. If you're on the run, you'll need them.
  2. Water. My husband is in love with his Camel Back, so we do have two that we keep next to our BOBs. What about water filtration on the go? We carry water purification tablets, but they typically only purify 16 ounces of water per tablet. So, try to keep a portable water filter packed away, too.
  3. Change of clothes and comfortable shoes. In my mountainous region, comfortable, broken-in hiking boots are a necessity, as is a change of WARM clothing. There's a running joke here that we experience all four seasons in one day, which actually isn't far from the truth. We've gone from rain to snow to 70 degrees in one day, so you want to be prepared for all types of weather.
  4. Knife and another weapon(s). We actually carry a couple of different weapons and instruments. Knives are an invaluable must-have that you'll regret not having. As said before, I like to keep a Gerber Big Rock tucked away in my BOB. It may also be wise to pack a multi-tool-- the ones with screw drivers, knives, little cork strews, and so forth. We also have several guns with holsters that we will be carrying.
  5. On-the-go shelter. We do carry a lightweight backpacking four-man tent with us. I mean, this thing is tiny compared to the bulkier, pricier, fancier versions. I'm not looking for comfort in a crisis; I'm looking to survive. They have one-man tents, two-man tents, and four-man tents. There may even be a three-man lightweight tent, but I haven't seen any) available at my local Bass Pro, Dick's Sporting Goods, or REI. We chose a four-man tent because, well, we have four people in our family. While my children are still quite little, if we're bugging out for an extended period of time, they will grow bigger, and we'll need the extra space to accommodate them. I've heard of people packing tarps for a make-shift tent, and it's actually not a bad idea to have a back-up or camouflaged shelter.

I would like to include a note here: I have only researched BOBs; I have never actually had to use one in a life-and-death scenario. I have brought my BOB hiking, and let me tell ya, it gets heavy. My backpack is a NorthFace Women's backpack actually meant for backpacking. The shoulder straps are comfortable, but when you're packing everything you think you'll need in a survival situation, you realize very quickly (especially if you're running) how every ounce matters. I would suggest packing your BOB and taking it on a walk, a jog, or even a run. See how it feels. If it's comfortable for you, great! If not, reevaluate and pack lighter. I learned that I had to pack lighter, but not necessarily give up some of the things I thought we'd really need. Get creative with it. Hint: Those itty bitty TSA-approved travel containers have been a life-saver.

I would like to also point out here that hubby and I are planning a 72 hour STHF scenario. We will be going up into the mountains and surviving on what is only in our BOBs. (If you want to do something similar, make sure you research whether or not you'll need a permit.) The only real way to test and ensure everything works the way you need and want it to is to actually test it out. Now, I've been camping, but this will be the farthest extreme I've ever taken it. If I want to survive and I want to protect my children in a survival situation, I need to know that everything in my BOB works. I need to know if we've packed enough food, appropriate clothing for the weather, and things like that. I would suggest you do, too. People tend to say, "Oh, that's easy. I can go camping," or "Oh, that's easy, I can garden for my family's survival." I personally thought gardening would be easy, but, no, it's not. Half my plants didn't sprout my first go around and then the other half didn't make it in the actual garden. I was left with practically nothing. The old saying is true: practice makes perfect.

The next item on the agenda is a Bug Out Vehicle (BOV). Hubby has a nice Ford F-150 with 4-wheel drive. It's perfect for us. It's not too big, not too small, and perfect for my family of four. In my climate, a 4-wheel drive vehicle is necessary. We have chosen it to be our BOV in the event that the crisis occurs before he upgrades this Fall. While the gas mileage isn't the greatest, it has everything we need. I also have a little Dodge Avenger that we could fall back on in case we decide that the Ford's lack of MPGs is not advantageous. Again, I'm upgrading to a family SUV in the Fall, but if SFTH before then, these are our options. You want to keep your BOV stocked (and both my vehicles are). My husband has a Craftsman tool box in the bed of the truck that is stocked with rope, axes, and tools. You want to make sure that you have the basics necessary for car survival-- blankets, water, extra food, and anything else you think you'll need if your car is stuck.


My experience with the financial crisis has taught me a lot. It has taught me how living within your means is essential. It has taught me to never take anything for granted. It has taught me to live simply. It has taught me to prepare for the worst and pray for the best. I hope this article has been somewhat informational to all you preppers out there-- beginners and advanced.

Tuesday, February 11, 2014

America's make-work sectors have run out of oxygen - P.S.

Gold and U.S. Bonds the New Great Trade? - C.S.

Items from The Economatrix:

221 Percent Increase In One Year? Why Are So Many People Renouncing American Citizenship?

U.S. Economy Adds 113,000 Jobs In January

It's 'As If 100,000 Service-Sector Jobs Went Missing,' Rosenberg Says

The Shackles Of Consumer Credit In A Low Rate Environment- Banks Would Rather Leverage Low Rates From The Fed Than Lend Money To Cash Strapped American Households. 15 Percent Average Rate On Credit Cards And Typical Savings Account Rate Near 0 Percent.

Monday, February 10, 2014

Sunday, February 9, 2014

Saturday, February 8, 2014

K.F. sent in this link that explains some of the mechanics of rampant inflation.


B. sent in this link about 10 Characteristics of Debt Free People, noting that: “There is a lot of directed activity for preppers and folks who just want to be more self-reliant generally, but it frequently is a set of broad statements without any implementing recommendation's. This article is short but provides some real psychological and practical steps and might be of interest to your readers. I personally believe this to be the most important and the first step because it provides the freedom of choice for all that follows. It is written more for suburbanites, but the themes are universal.”

Items from The Economatrix:

The Stock Market In Japan Is COLLAPSING

Senate Passes Farm Bill; Trims $90 A Month From Food Stamps For 850,000

The US Economy Is Growing Much Slower Than You Think...

The Final Swindle Of Private American Wealth Has Begun

Friday, February 7, 2014

CW4 sent in this list of Bank Failures so far this year:

Syringa BankBoise ID 34296 Sunwest Bank January 31, 2014 January 31, 2014

The Bank of UnionEl Reno OK 17967 BancFirst January 24, 2014 January 28, 2014

DuPage National BankWest Chicago IL 5732 Republic Bank of Chicago January 17, 2014


A.S. sent this in: How weak is this recovery? A modest pullback on food stamp funding in November took a big cut into Wal-Mart's bottom-line in Q4. In other words, the nation's largest retailer is depending on revenues from 47 million Americans funded with EBT debit cards. Isn't the unemployment rate dropping? Sure, but many of the new jobs are in the low wage economy. The biggest users of food stamps are the working poor:

The EBT recovery - Food stamp cuts impact Wal-Mart


Onward or Is That Backward...or Is That Downward...or Is That...?- P.W.

Items from The Economatrix:

U.S. Manufacturing Sees Biggest Slowdown In Years

Natural-Gas Prices Jump Nearly 7%; Oil Rebounds

Brace Yourself For A Big Heating Bill

Thursday, February 6, 2014

Wednesday, February 5, 2014

Putting Silver Price Rigging Into Perspective

Is California built out?Privately owned housing starts remain all-time record lows. Affordability continues to crush home buying but signs of lower prices loom.

Is your money safe at the bank?An economist says 'no' and withdraws his

Items from The Economatrix:

India's Central Bank Governor: 'International Monetary Cooperation Has Broken Down'

Nearly 1/2 Of America Lives Paycheck-To-Paycheck

Index Of Consumer Sentiment Dips

Tuesday, February 4, 2014

How many articles have you read about prepping on a budget? This website and many others have explored the topic in depth. Grow your own food, buy in bulk, cut unnecessary expenses, learn to improvise, and get out of debt. The old saying is “use it up, wear it out, make do, or do without”. We should all be following this advice. At the same time, we should ask the obvious question, 'Wwhy are so many of us on such a tight budget these days?”

One reason may be that your income has decreased, stagnated, or disappeared. If you are unemployed, under employed, retired, or disabled, it will be harder to make ends meet. Even if you are still working, your paycheck may not be keeping up with inflation. Despite the government statistics, the basic necessities cost more than they used to. Think of all your expenses: housing, food, fuel, clothing, transportation, education, entertainment, and communication. Modern life isn't cheap.

There is one expense that we often take for granted-- taxes. Have you ever sat down and thought about how much of your monthly budget goes directly or indirectly to pay taxes? Typical state and federal income tax can cost you 20-30% of your entire salary. Then there is the cost of sales tax and property tax. Don't forget about social security and payroll taxes. How about licensing and governmental fees/tariffs that are just disguised taxes?

Gather up all your bills and take a close look at how much of each bill involves a direct tax. You probably pay tax on your cell phone service, cable bill, fuel bill, and shopping bills. Next time you fill-up your gas tank, check the receipt for how much tax you paid to the state and federal government.

In addition, think of the indirect taxes you pay for that tank of gas. What percentage of the price of gas comes from taxes the oil company had to pay and pass on to the consumer? The companies themselves often pay property tax, payroll tax, income tax, and other taxes. What does gasoline really cost, minus all the added expense of indirect taxes passed on to you? What would a loaf of bread cost, or how much less would your rent be if we weren't subject to all these taxes?

Lowering or eliminating taxes to free up money in your budget is not a ground breaking idea. However, taking the time to actually add up how much you pay in taxes every month could turn the most devout socialist to a Tea Party conservative pretty quickly. You are not paying $400 per month for gas, but really $340 for gas and $60 towards direct taxes. Of that $340 for gas, perhaps another $20 is for indirect taxes passed on to the consumer. For your convenience, the gas station collects the government's direct tax. You never miss this money because the tax is included as part of the price per gallon.

We need to think about taxes differently, and start asking new questions. Why do we allow private companies to collect taxes for the government? How long do these companies get to hold on to our money before they send it to the government? Why can't I opt out of this scheme?

When I fill up my tank, I want to pay for gas. Unless I agree to it, I don't want the gas station collecting taxes from me. At the end of the year, I can send the government a check for all the taxes I owed for the privilege of buying gas and other taxed goods and services. In the meantime, all that tax money is my money and earning interest or available for investment.

More importantly, writing this tax check would not be easy for many people. They would realize how much money they are throwing away to a wasteful government to support endless wars, special interests, and entitlements. Some people wouldn't even write the check, knowing the government could never prove how many taxable items they bought with cash. Think of all the extra cans of food they could buy then.

Monday, February 3, 2014

A complete Ira type and benefits summary

There is much clout and confusion about IRAs and their uses for purchasing precious metals and real estate among the truth, freedom, and self-reliance communities. In this article I aim to clarify the different options and the benefits and potential pitfalls of each, especially as it pertains to taking physical possession of IRA Gold & Silver.

Perhaps the biggest advantage of the IRA LLC to the precious metals investor is that the individual (as manager of the LLC) can take physical possession of Gold and Silver Eagle Coins with IRA funds and it is not a taxable distribution.

The concerns of retirement account confiscation or bail ins have been an increasing trend over the last few years. The fact is our government is broke and history, even recently in Poland and Cyprus, shows that pensions and other retirement accounts have become targets for looting. The financial website Zero Hedge recently wrote about Obama's new Treasury IRA plan rollout that was just announced at a State of the Union address on 1/28/2014. The bottom line is that these risks are real, and there are ways to protect yourself and your hard earned money. Converting your IRA to an IRA LLC may be one solution.

What is a Traditional IRA?

Traditionally an IRA is a tax deferred growth account that allows one to save for retirement. An individual can contribute a portion (up to $5,500 - $6,500 for 2013 and 2014) of his or her annual income with that contribution reducing the individual's taxable income. Then the money compounds (ideally) tax deferred. The individual pays taxes on the gains in the account later in life during the distribution stage, allowable at age 59.5 and mandatory at age 70.5. Some strategies for self-employed individuals, like a SEP account (which will be covered in depth in my next article) allow the individual to contribute much more-- up to 25% of the individual's total income, lowering the person's adjusted gross income (AGI) even further. IRAs and like accounts are eligible for rollover to self-directed accounts, which offer more investment flexibility, greater control by the individual, and more layers of protection from bail ins via forced Treasury purchases.

What is the 401k plan?

The 401k is a type of group plan typically administered through an employer for its employees. Some employers contribute or match a portion of the employee's contribution to his or her individual account within the plan. This additional contribution is a major advantage to this plan. The down side, unfortunately, is that few of these plans offer what are called 'in service withdrawals', or rollovers into an IRA or self-directed IRA platform. With most 401ks, the individual's money is 'locked up' until retirement age or employment severance. However, an old 401k from a previous employer is eligible for rollover to a more flexible platform.

What is a self directed IRA?

Self directed IRAs encompass about $100 billion, yet still only about 2% of total IRA assets. Under this structure everything is the same as a traditional IRA, except that the custodian is one that allows and specializes in alternative investment classes for retirement accounts. The large financial institutions, when acting as custodians for IRAs, typically only allow investments into the piggybanks from which they profit the most, such as publically-traded stocks, bonds, mutual funds, and bank CDs. The custodian is the IRS-compliant trustee who houses the account that your IRA owns and ultimately approves its investments. Self directed IRA custodians allow investments into numerous desirable investment classes, including real estate, precious metals, private placements, and LLCs. These accounts differ in their setup fees, ongoing management fees, flexibility, and (most importantly to the precious metals investor) where the assets are held.

Let's talk about fees...

Traditional IRAs and 401ks managed by broker dealers, investment advisors, and fund managers typically have some of the highest fee structures; this is another major reason the self-directed platforms are more favored. Many of these fees are hidden load fees that the investor never even sees. In recent years median expense ratios for mutual funds have been 1.27% plus 1.2% in trading fees. Thereby over time the average mutual fund has yielded a 7% return before fees, but only 4.5% after fees.

Fees for self directed IRAs...

The two main types of self directed IRA accounts are those that allow investments into precious metals and real estate. The precious metals IRA advantage is its low cost to setup and maintain. Setup fees range between $250 and $500, with annual maintenance and storage fees of $150-$500. The disadvantage here is control of storage. The bullion must be held by a third party depository. Self directed plans that are geared for real estate can differ in cost based on transaction frequency or the portfolio value. A $100,000 portfolio can expect about $500 in annual fees; annual fees for a $500,000 portfolio jump to about $1,600. A relatively small portfolio with limited transactions may only pay a few hundred dollars in annual fees.

The IRA LLC...

I must lead with a caveat here that I am biased to this concept. I am a 'for profit' consultant and facilitator of the IRA LLC. This platform has its pros and cons, just as any other. The upfront cost can range from $1,500 to $3,000 to have an attorney or professional facilitator set one of these up. The proper setup is crucial because there are numerous legal documents, affidavits, and compliance requirements that must be met. Once setup, the flexibility is great and the ongoing fee structure is very low-- typically $115 to $200 per year. Within the structure the LLC acts as an investment company that is managed by the individual, whom is also the beneficiary of the IRA. As long as there are no prohibited transactions the investor can invest in literally anything except collectibles and life insurance contracts. Many include investment real estate, bug out property, private placements, oil and gas leases, loans, currencies, Bitcoin, and other LLCs in their portfolio. The LLC also adds another layer of protection against potential government pillaging of retirement accounts, as referenced above.

Perhaps the biggest advantage of the IRA LLC to the precious metals investor is that the individual (manager of the LLC) can take physical possession of Gold and Silver Eagle Coins with IRA funds without it being considered a taxable distribution. The metal does not have to be held at a depository. For folks that have considered cashing out their IRAs or 401ks (thus paying taxes and penalties for early withdrawal), this can be a much cheaper alternative to physically holding precious metals. There are no additional IRS reporting requirements, merely an annual dollar asset valuation reported to the custodian.

If you want more information or if you simply have questions, feel free to visit our website and contact us anytime. At the least, educate yourself!

Will Lehr

Perpetual Assets

Sunday, February 2, 2014

Welcome to SurvivalBlog's Precious Metals Month in Review, by Steven Cochran of Gainesville Coins. Every month, we'll take a look at the "month that was" in precious metals, covering everything from price action to the information that's driving the numbers.

January in Precious Metals

December closed on the usual down note as the last bit of tax-related selling went through, but January started off strong, as the big commodities index funds had to buy gold to meet new percentages. The index rebalancing only added fuel to an oversold gold market, as the price jumped $30 in 48 hours. Part of the reason for gold's very good month may have been more people realizing that the stock market and real estate were in a bubble, with even National Public Radio running pieces on the QE-inflated stock market. In a Fox Business interview, Peter Schiff put to words the unease that many may be feeling about the phony recovery when he said, "We have a lousy economy, and the Fed is patching it by creating inflation." "We are spending all this money that the Fed is creating. That IS inflation... if the Fed were ever to do the right thing, and let interest rates go up, and shrink its balance sheet, the market would implode."

On January 6th, someone tried to stop gold's rally by selling 400,000 ounces worth of gold contracts in the space of ONE second. It only had a temporary effect though, as the market had rallied even higher two days later, into the high $1,240s level. Violence in Thailand, Egypt, and Syria lend safe haven support to gold. Mining companies began releasing reports around this time for the fourth quarter of 2013, showing increased production and level expenses. This was/is from a practice called "high grading," where the miners are only working the purest veins in order to recover a higher amount of gold per ton of ore processed. This reduces expenses per ounce of gold mined in the short term, but it lowers the overall life of the mine. When no "good" ore is left to mix in with the low grade ore, the mines become unprofitable and are shut down, leaving the low-grade gold in the ground.

By January 17, gold prices were at a five-week high of $1,254/oz. This was the same day that Deutsche Bank, the largest bank in Germany, announced that it was the subject of an investigation by Germany's highest regulator into currency, gold, and silver manipulation, and that it would be quitting its involvement in the London Gold Fix. The London gold fix is a twice-daily conference call between five of the world's largest banks, where they "fix" the benchmark rate of gold. This benchmark is used in trillions of dollars of transactions, including hedge funds and gold purchases by central banks. The president of Bafin, Germany's top regulatory agency, said that the manipulation in currency rates and gold may be larger than the LIBOR scandal.

On January 23, strikes in South Africa against the platinum mining companies began, halting production of 70% of global platinum supply. Prices weren't affected much, as the mining companies had stockpiled six weeks of above-ground ore. More important for gold that day was Pakistan banning gold imports for 30 days. This was the second time since August it had done this to prevent the outflow of dollars from its economy. Of the four metric tons of gold imported into Pakistan in the last six months, more than 25% of it was smuggled into India. This caused gold to post its biggest one-day jump in three months, hitting a two month high of $1,279, and closing at $1,270/oz.

Another big story in January was the news that Germany only repatriated five tons of gold from the Fed in all of 2013, and that the bars were melted down and recast by the Fed before they were given to the Germans. Germany only got 35 tons back from France, which is less than six hours away from the Bundesbank's vaults in Frankfurt.

In the last week of January, citizens in Cyprus rioted at the headquarters of the Bank of Cyprus, demanding their money back after they were "bailed in" against their will. This group of over 8,000 people have been trying since November 2012 to get their money back.

The last week in January also saw money pouring out of emerging market economies ahead of the FOMC meeting, as Indonesia, India, Brazil, South Africa, and Turkey, among others, saw their currencies hitting multi-year lows. Even Russia was caught in the currency devaluation as foreign investors scrambled for dollars to bring money back home. Combined with a high-yield "trust fund" in China almost defaulting and setting off a chain reaction, investors had had enough and pulled out. This caused a big safe haven demand for gold, which spiked to a 10-week high of $1,279/oz. This all contributed to the safe haven demand gold saw this month.

Another factor was the demand in Asia ahead of the Chinese New Year on January 31st. Asian demand was high, but not quite as high as expected. This may have been because buyers went bargain-shopping on the $1,186 low in late December.

As expected, the Fed reduced its monthly quantitative easing program by $10 billion, meaning that "only" $65 billion would be created from thin air to buy bonds and mortgage-backed securities from Wall Street banks in February. This put more pressure on the emerging market economies, who were just last year complaining that the U.S. was conducting a "currency war" against them by flooding the market with money. Now that the money spigot is being closed, their economies, which had become dependent on the Fed's liquidity, are suffering withdrawals.

The month closed out with central banks in India, South Africa, and Turkey making emergency rate hikes to stop runaway devaluation of their currencies. This helped the situation enough for panic to ease. Consumer-fueled fourth quarter GDP in the U.S. showed 3.3% growth, which helped Wall Street break a losing streak and spark profit-taking in precious metals.

Market Buzz

Indian Finance Minister, P. Chidambaram , said on January 27, that the easing of restrictions on gold imports into the country would be reviewed at the end of the fiscal year on March 31st. Any action would be conditioned on how far the reduction in the Current Account Balance has progressed. The government is under increasing pressure to ease the draconian restrictions on importing gold to what has traditionally been the world's largest gold consuming country.

On CNBC, Peter Schiff declared, "The Fed is trapped; buy gold now." While the Fed did taper this month, Schiff's assertion that it has no exit strategy and will have to continue at least some money printing may very well prove true (just before interest rates rise enough to prevent the Federal government from making interest payments on the debt.)

Eric Sprotttakes a look at the April gold take-down and the explosion of physical demand the paper manipulators didn't expect. He runs the numbers and shows that if the Indian government hadn't enacted extreme restrictions on gold imports, global demand would have outstripped all supply.

Our good friend at the Perth Mint Bullion Blog have an article on how "Gold Can Never Be In A Bubble," a thought-provoking piece that's well worth the read. Also, I take a look at the mainstream media's MOPE over how China is holding a record $1.3 trillion in U.S. debt and at putting it into perspective. If we're told that the world economy will explode if China tries to sell off its U.S. debt holdings, how are we supposed to believe that the Fed can unwind a substantially larger balance sheet?

On the Retail Front

Speculators in London and New York may not think gold and silver are worth holding, but everyday people on the street sure do! The Royal Mint ran out of 2014 gold Sovereign coins two days after launch, and sold suppliers that it would take until the end of the month to restock. The U.S. Mint sold over 3 million American Silver Eagles the first two days of sales, and rationed them for the entire month. Since the Mint had two extra weeks this year to make the initial stock of Silver Eagles, some wonder if it was a government-mandated ploy to prevent another record-breaking January for the popular bullion coin. January 2012 sales topped 6.1 million coins, and January 2013 sales hit 7.49 million before the Mint ran completely out.

Speaking of the U.S. Mint, it reported that profits on bullion sales more than doubled in 2013, up 108.8%. An all-time record of over 42.6 million Silver Eagles were sold before supplies were cut off on December 9th, and nearly 1.1 million ounces of gold bullion Eagles and Buffaloes were sold. The Perth Mint in Australia reported working three shifts in an attempt to meet gold and silver demand. Gold sales for 2013 were up by 41% and silver sales were up by 33%.

In Russia, Nomos Bank ,a major private bank, revealed that it had purchased close to 100 metric tons of gold and nearly 400 metric tons of silver to sell to its customers through its branch offices. Japan's largest bullion dealer reported that gold sales were up 63% in 2013, as Japanese citizens prepare for the Abenomics QE designed to raise interest rates to 2% in two years. If they can stop inflation rising and not overshoot their target, they will be the first central bank to ever pull that off.

Looking Ahead

February will start out slow for gold, as Asian demand will be soft after the spending spree for Chinese New Year. The U.S. stock market hasn't seen a real correction in over two years, so is past due, especially after a Fed-fueled 30% gain last year. In the short term, the two major factors that would cause a run on gold is the emerging markets resuming a meltdown and China's "shadow banking" crisis blowing up into a Lehman Brothers-type event. Western analysts are warning that the Chinese government has likely made things worse by bailing out the "Credit Equals Gold" high-yield trust, which reinforces expectations that the PBOC will ride to the rescue and make all investors in risky loan deals whole.

Indonesia carried out its ban on the export of unprocessed ore, despite the shortage of refiners. That means that 4% of global gold production has just been halted. On top of the requirement that all ore be refined in-country, the government is slapping a 20% tax on exports. The mining companies have flat refused to pay it, and have halted production. This is a huge deal in copper, nickel, and tin. Rising prices in these base metals will help silver and the platinum group metals.

Saturday, February 1, 2014

Friday, January 31, 2014

Video: 0% is the Highest Interest Rate the U.S. Economy can Afford - D.D.

2019 U.S. Army budget would eliminate 100,000 Troops - T.

An interesting development as many of the emerging markets are faltering simultaneous with one of China's largest holidays: China's Central Bank Announces Halt of Cash Transfers - SurvivalBlog reader

Fourth-Quarter Earnings Season Another Dud

Items from The Economatrix:

January 1, 2014 All Americans Will Bail Out The Banks

Bundesbank Calls For Capital Levy To Avert Government Bankruptcies

World Market Index (Seeing a lot of red ink...)

Thursday, January 30, 2014

Hello Gentlemen,

I am as capitalistic as they come and have spent the entirety of my life as the son of a self-employed concrete contractor, then owning and running several of my own businesses. Some of us though are questioning the huge profits rolling out of some of the Wall St. firms due to the QE policy of the Fed. It seems like the scales are getting out of balance because of this policy, and the distribution of wealth is appeasing Wall Street while the POTUS's policies and regulations discourage middle income entrepreneurs. The top few percent get government bailouts and windfalls; the bottom 20% or so get increasing benefits; and the backbone of the country, the middle class business owners and employees, are left to pull the wagon on their own. We should be used to it by now, but I believe we are getting a little sore-shouldered! Thanks for a wonderful site. God bless. - T.K.


Dear HJL,

Wow! My eyes nearly popped when I read your remark. I guess it shouldn't surprise me when an older conservative fellow makes such suggestions. Study hard, get a degree, consign yourself to working too many hours, and you too can create your own American pie.

My contention is with your analogy. I love analogy and relation of complex ideas to commonly understood occurrences. I think Jesus was fond of those as well, so I'm delighted to see the new editor enjoys them as well. The problem is, there is only one pie.

Even if we concede that we can make more pies, the truth is there are a limited number of apple trees in the world. Are there really enough apples in this entire world for each of us to make a pie whenever we like? The fruit is limited, as is the grain, along with the land, water, and nutrients required to grow the product.

There is just one pie. We have to share it. There are clearly individuals on this planet and in this country who have used the government spatula to block my fork from getting a bite. When I pull back, they continue cutting out my slice for Tommy Boy, and I can actually hear him getting fatter. In OKC, where I live, the city is in the process of using eminent domain to take property from families and businesses only to turn it over to out of state tommy boy, who will provide locals with amusement, fatty food, liquor, and all the minimum wage jobs that come with those establishments via the MAPS riverwalk project, and then promptly remove the wealth from our state.

You may argue that it is the city government that is to blame. I say this government is a tool used by the elite to get all the pie. Without the government strong arm these fat cats could NEVER acquire the sort of wealth you see (or rather don't see) in the likes of international bankers and commodities holders. (Cargill and other grain shifters come to mind, though they don't get press.)

If Barack Obama was talking to “mom and pop's dry cleaning service” when he said, "You didn't build that," we would know to have a good laugh at him because “mom and pop” worked their fingers to the bone to build their shop from the ground up. If he was saying that to Tommy Boy, we could all applaud him, for once, because you can see from the ketchup dribbling down Tommy's fat chin that he's never built anything in his life. He's just been eatin' my pie. - C.B.


Dear Sir:

In his letter regarding “Myths About Income Inequality,” RM wrote:

“I love democracy, capitalism, and business, but globalism, massive immigration, and 'free trade' DO take money from workers and give it to those at the very top. Free trade and globalism mean poor workers in western countries enrich wealthy people in poor countries. It is a racket and a sham.“

The modern world is a product of production and trade, and the more people engaged in it, the better off we all are. Businesses don't exist for the sake of their workers. Businessmen who make the best decisions for their businesses are perfectly within their right. When they choose to deal with foreigners or liquidate failing companies, they are doing so with THEIR money and are not "taking" anything from employees they terminate that belongs to the employees.

From an economic standpoint, there is no more justification for setting up barriers to trade between nations than there is for doing so between different states, counties, or cities. The only justification is national security. The price of general prosperity is, in LARGE measure, having to change with the times. That price is paid by everyone at some time or another, whether businessmen or employees. There was a time when nearly everyone lived on farms. But that changed as society became more industrialized and farm workers (and owners) were forced to leave the farms and learn new skills. The result was that between 1900 and 1985, the average lifespan of people on this earth more than doubled, going from 30 to 62.

There is only one alternative to free trade. That's some using force to compel traders to serve their interests rather than the interests of the traders. Those who use government force or any other kind of physical force for this purpose are morally no better than armed robbers and every bit as destructive.

As Ayn Rand wrote, people deal by trade or by force. There is no other alternative. Civilized people deal only by trade. - B.C.


Dear Editor,

In response to R.M.'s letter, he has failed to recognize that "a acquisitions corporation, such as Bain capital" cannot and never will be capable of creating wealth, their business model prevents it from happening.

In the simplest of terms, those types of corporations are basically business leeches, as in the fact that they live off of other companies by sucking the lifeblood from them and then discard the host.

There are only three basic routes to create real wealth and not just shuffle money around while skimming value off the top (such as the FED/Banking industry and service industry does).

1) - Farming/Animal Husbandry.

2) - Mining and or Drilling for Gas/Oil.

3) - Manufacturing of baseline capital goods.

Thats it, and it is a very short list. - Tim P.


Dear HJL,

On your recent discussions about wealth, I remember a great professor (there were very few of them), that was teaching us in his Economics 101 class about wealth. His lesson stuck with me forever. The way I understand it and live it, is more towards your description.

Wealth can only be created by making something. Making something from raw materials. The creation needs to be in demand by someone. I don't think it can get any simpler than that. Now I'm sure we can also say that if you help someone make something, that it would count as well. In my mind, anything else, doesn't create true wealth. Here an good article about a similar topic. Regards, C.R.


Dear SurvivalBlog Readers:

I'd like to share in welcoming HJL to the team and look forward to receiving the invaluable information SB is known for.

I would like to point out a trend I have noticed initially; that is the readership challenging our new editor's opinions on a variety of matters (political/economic etc.), especially those related to "economic predictions".

SB is not the forum for this. While it is perfectly acceptable for the readership to add to, challenge or otherwise discuss items that relate to the "how to" of preparedness, (especially if there are errors of a factual nature) SB has always strived to not be a forum for endless debates on the "why's" of prepping and the causes or potential effects of the myriad possible situations that we are preparing for.

I appreciate that articles describing potential scenarios and how to prepare for them are encouraged, but citing anecdotal evidence is not an appropriate response. As our new editor, HJL is given substantial leeway in commenting on various posts, and rightly so. This is why he was hired.

While everyone reserves the right to disagree with an opinion, unless a proven factual error has been stated, debating the why's should be left to those forums that encourage that.

To do otherwise will adversely affect the quality of Survival Blog, primarily by wasting an enormous amount of our new editor's time, not to mention the readers'.

Keep up the good work! - J.M.

HJL Adds: Economics is a part of survival/prepping because we all have limited resources, and we have to be able to allocate those resources appropriately for our respective situations. However, discussions of Bain Capital are only relevant inasmuch as they provide a basis for understanding how our economy works and how to best protect our investments. Have no fear; I won't allow the discussion to degenerate into an endless repetition of worthless information.

B.B. sent in this video preparing for an Economic crash.

On that same note, T. sent in this article on holding physical gold rather than paper gold.

7 setbacks for the middle class - H. L.

Walmart is cutting more jobs from Sam's club. - T.

G.G. sent this link on on The Big Reset, part 2.

Lloyds Banking Group says it has fixed problems that affected Halifax, Lloyds, Bank of Scotland and TSB customers using ATMs and debit cards. - S.R.

Items from The Economatrix:

TNX Chart: Specter Of Rising Rates

HSBC Bank On Verge Of Collapse: Second Major Banking Crash Imminent

Furious Backlash Forces HSBC To Scrap Large Cash Withdrawal Limit

First HSBC Halts Large Withdrawals, Now Lloyds ATMs Stop Working

Wednesday, January 29, 2014

G.G sent this in: The Taxman Driveth: In the future, Your Car May Rat You Out to the Tax Collector.

Santelli Slams Central Bank Policies - P.M.

B.B sent in this link about just how badly the American People are messed over by their elected officials.

Record One-day Withdrawal of Gold from JP Morgan

G.C. sent a link to his video about the HSBC debacle

Standing out in the video is this quote: "As this was not a change to the Terms and Conditions of your bank account, we had no need to pre-notify customers of the change,"
And the price to mail a letter just jumped again.

Items from The Economatrix:

Maguire - "Stunning" Physical Gold Buying Terrifies Shorts

Hathaway - "If I'm Short Gold Here, I'm Getting Really Nervous"

Traders watching for signs to see if this selloff is the big one

Meanwhile, The US Public Is Distracted By This...

Tuesday, January 28, 2014

Dear Editor,

In your post under Economics and Investing, you said: "It's important to understand that when a person creates wealth, they are not taking more of the pie from you; they are actually creating a bigger pie. It's really only government that forcibly takes from you."

I wish to respectfully disagree.

If a merger and acquisitions corporation, such as Bain capital, buys out the company you worked for (Dade Behring, where I worked for over 17 years), slices and dices, sells off the profitable parts to foreign companies, makes you train the new foreign employees (which I had to do), and then terminates your employment with no other job prospects in your region for your skills set, they did indeed create a bigger pie from shuffling papers; however, it all went to them. I have seen no study that shows that the majority of mergers and acquisitions do anything but enrich the paper shufflers who made the deal.

If open border globalists, through buying out members of congress in both parties, create a government that refuses to enact and enforce proposed immigration laws or reduce legal immigration during our worst downturn since the depression, help depress wages via massive immigration over the last 40 years, and demand and get amnesty after amnesty, then they also create a bigger pie, but it nearly all goes to those employers who hire immigrants and the immigrants themselves. This leaves the rest of us to pay for our own dispossession.

If I am an international globalist corporation and I pass Nafta and Gatt, I create a bigger pie too by making our workers compete, for instance with North Koreans who are working right this very moment in a "free trade" zone in South Korea for 38 cents an hour. This also creates a bigger pie, but not for the workers who lose their job here due to the wonders of 'free trade'.

Sir James Goldsmith, a wonderful billionaire capitalist, wrote a wonderful book called The TRAP, that warns of the harmful results of globalization and free trade. There is a wonderful and prophetic interview with him on Charlie Rose the year before he died in the 1990s.

A prophetic interview with Sir James Goldsmith in 1994 Pt1

I love democracy, capitalism and business, but globalism, massive immigration, and 'free trade' DO take money from workers and give it to those at the very top. Free trade and globalism means poor workers in western countries enrich wealthy people in poor countries. It is a racket and a sham. - R. M.

HJL Replies: Thank you for this response. This is obviously a topic that deserves more discussion. Unfortunately, since this is a new position for me here at SurvivalBlog, I am still learning the ropes and, at this time, cannot attend to this in a manner worthy of your response. I will, however, place this on my to-do, research further, and post an article on it in the future. In the mean time, I would enjoy hearing from any others who would like to chime in.

Monday, January 27, 2014

P. sent in this interesting link about Russia:Russia's Growing Regional Debts Threaten Stability

o o o

Local governments extending tax breaks to movie production companies is becoming commonplace now; Even to the point where cities and states compete with each other to be the hosting location for the movie company. Several readers sent this link in showing How Leonardo DiCaprio Cost New York Taxpayers $30 Million. HJL Adds: My own city recently released financials showing that in the past year, they hosted four movie productions, giving significant tax breaks to the production companies, with less than $9,000 increased revenue to the local businesses.

o o o

More disturbing news about the Federal Reserve and QE.

Items from The Economatrix:

Life Without Benefits Gets Tougher For Jobless

$90 Cut To Food Stamps For 850,000

Here It Comes - More Leading Economists Call For Capital Controls

1.4 Million Jobless Officially Get The Emergency Claims Axe

Sunday, January 26, 2014

H.L. sent this item: Oil Set to Rocket. HJL Adds: This sounds interesting. My concern is the statement: "The oil companies will be raking it in..." I've heard this before and it smacks of the 1% talk. The oil companies may make a pretty good profit, but nowhere near as good as some other companies.

I have been receiving a large number of submissions regarding income inequality, usually describing that the top 1% now have as much as one half the world's wealth. It seems repugnant at first, but it's important to note that this concept is based on an incorrect reading of data and statistics. Here are a few links I pulled up refuting that assertion: The Income Inequality Myth, 6 Myths About Income Inequality In America, and Myths About Income Inequality In America and Occupy Wall Street is Wrong. It's important to understand that when a person creates wealth, they are not taking more of the pie from you; they are actually creating a bigger pie. It's really only government that forcibly takes from you.

On the other hand, 40% unemployment is a disturbing trend. This was sent in by an anonymous reader.

Items from The Economatrix:

IMF Warns of Deflation Risk

World Bank: Global Economy At A Turning Point

This Is What A Central Bank Losing Control Looks Like

Saturday, January 25, 2014

Friday, January 24, 2014

Thursday, January 23, 2014

Wednesday, January 22, 2014


I enjoyed the January 10 letter titled "How To Use Your IRA /401k to Fund a Survival Retreat Property". I'd like to offer a few comments that your readers might find helpful.

My bona fides: I am a tax attorney who has dealt with self-directed IRA's in audits and in Tax Court. I have gotten my clients some very good results in those arenas. I deal primarily with real estate in IRA's. The same rules that govern real estate would apply to other non-traditional investments via Self-Directed IRA's ("SDIRA").

ROBS: The transaction that was described by "An Anonymous CPA" in the January 10th article was not a typical self-directed IRA deal. Rather, he described a very specialized sub-species of 401(k) deals known as "Rollovers as Business Start-Ups", or "ROBS". Understanding that context is key. The CPA's information was accurate insofar as ROBS transactions go. While there are some common features, the posted information does not really apply to SDIRA's in general. For more information on ROBS a little googling will uncover several outfits that promote such transactions. Most such outfits are one-trick ponies; they do ROBS and nothing else. One important caveat on ROBS: While technically legal (at least as far as I can tell, I've never researched ROBS to the nth degree, I refer ROBS work to the specialists), the IRS does not like them. The Association for Advanced Life Under-Writing posted the following on their website in a May 21, 2009 article:

"The IRS has placed a high priority, especially in the Small Business/Self-Employed Division, on so-called ROBS (rollovers as business startups) of which this transaction would be considered a part, even though it did not involve a rollover. Apparently there has been substantial advertising and marketing of the Roth IRA business technique and the Internal Revenue Service is determined to shut it down through the use of repetitive and detailed audits."

While I have not dealt with such an audit, I think the quote is correct. ROBS are complex transactions, and one little misstep would allow an IRS auditor to impose severe penalties. If one wishes to execute a ROBS transaction, paying $6k+ for highly-specialized advice would be an absolute must. Further: Most of the ROBS specialists make a living off of selling ROBS and are therefore not very objective ("To a guy with a hammer everything looks like a nail"). In IRS parlance, they'd be viewed as "promoters". It would probably make sense to have a second opinion from someone who does not make a living selling them.

Prohibited Transactions: As the name implies, Prohibited Transactions ("PT's") are bad. Specifically, if an IRA engages in a PT:

  • The entire IRA ceases to exist. All of the money in it is distributed and most or all of it is taxed as ordinary income. If the amount is large, the tax bracket will be quite high.
  • If one is under 59.5 years old, he'd almost certainly pay a 10% penalty on the amount distributed.
  • Additional penalties would apply, usually in the 20% to 30% (of the taxes) range, but sometimes higher.
  • Interest charges will apply as well.
  • In general, we advise clients that a PT in an IRA means that that 50%+ of the IRA will go to the government.
  • The size of the PT has no impact on whether the IRA gets blown. A $100 PT could blow a million dollar IRA. For this reason I am very, very conservative when it comes to PT's. Anything that could even arguably be a PT should be avoided like a female intern avoiding a Clinton job offer.
  • PT's in 401(k)'s are "less bad". Heavy penalties would still apply, but a PT does not destroy a 401(k) the way it does an IRA. 401(k)'s have other advantages, including larger contribution limits and better asset protection features. 401(k)'s can be invested or "self-directed" in almost exactly the same manner as IRA's.
  • I will describe PT's in very basic terms. This description is not a substitute for good, customized advice. Rather, it's designed to provide an overview of an important and complex subject. This topic is rarely covered as it should be. I put PT's into three basic categories when I speak on the subject:
    • First: "Doing Business" with Certain People (IRC 4975(c)(1)(A) and (B))
      • No buying, selling, lending, extending credit, guaranteeing loans, leasing, provision of services or furnishing of facilities to/from disqualified persons ("DP")
        • Subtle but important: "Furnishing of facilities" - e.g., IRA assets in your basement would be a problem even if you did not charge the IRA for the use of the space. Basement = facilities. Bad.
      • Key Disqualified Parties
        • Lineal descendants and ancestors, including those of a spouse
          • Direct or indirect
          • "Indirect" means no matter how you structure it, if the end result is the same as if it had been done directly, your IRA is toast. For example, instead of lending money to your father (who is a DP), you lend it to your cousin who lends it to his dog who lends it your dad. It's indirectly the same as your IRA lending money to your father and therefore it's a PT.
      • The IRS is very, very sophisticated when it comes to looking for indirect PT's. They call and interview a number of persons during IRA audits and they ask probing questions. Thinking that "they'll never catch it" would be a dangerous conceit.
        • YOU are a DP as to your own IRA, see below under "fiduciary".
        • IRA Service Provider is a DP
          • For example, the lawyer who provides services to your IRA is a DP. As such your IRA cannot, for example, lease property him.
        • Fiduciaries are DP's
          • These are people who can direct the IRA's investments. You can do that, as can an investment adviser whom you've hired to help invest the IRA's assets.
    • Second: Services
      • Technically a sub-category of discussion above - but not discussed or examined enough by supposed "how to" gurus, and one that often trips people up. I've never seen a good discussion of this issue on the net. So I treat it as a category of its own.
      • As a "fiduciary", YOU are a DP with respect to your IRA
      • The statute therefore says that you (a fiduciary and therefore a disqualified party) cannot provide ANY services to the IRA.
      • The statute does not exempt services if they are provided for free.
      • So if you provide any services to your IRA, you have a PT.
      • Stick to directing your IRA, have others do the work
        • For example, you should NOT manage properties owned by your IRA. Nor should any other DP.
        • Do enough work, and you have a "service"
        • You can direct the IRA or direct others to do work on behalf of the IRA - but nothing more. You can research and choose investments - but nothing beyond that.
        • Investments can be anything that's not banned. Certainly real estate, physical gold and silver (subject to certain restrictions), ammo, firearms that are not "collectibles", etc.
      • The term "services" is not defined. When push comes to shove and the IRS creates a definition (one fine day in court), the court will defer to the IRS per the (unconstitutional, created in FDR's time to enable the Praetorian bureaucracy) Administrative Procedures Act.
    • Third: The Sole Benefit Rule - the IRA's assets must be invested for the sole benefit of the IRA. You may not use its assets for your benefit - no matter how small or indirect that benefit is. Several recent cases have hammered taxpayers for some pretty indirect benefits.
      • For example, if the IRA makes a loan to a company that is not a DP and the loan indirectly benefits you (e.g. - you own a small interest in the company or you work for the company, directly or indirectly) such a loan would be prohibited.
      • This means NO personal use of the property, no matter how minor or indirect.
        • Hunt on the IRA's property once and you've blown the IRA. Stay overnight. Cut some firewood. Do a little shooting. If any of that gets caught, the IRA is simply done.
        • The IRS HAS caught such things. People fear them. When they start interviewing people close to the IRA holder (I have seen it done), you'd be amazed at who squawks. It's human nature.
        • If someone close to you uses the property in the manner described above (a friend, a co-worker, a family member), same result.
        • I repeat: NO personal use of IRA property, no matter how indirect or how trivial.

Distributing half a house: As another reader posted, one can distribute partial interests in IRA property. This allows one to control the amount of income tax (in the case of a Traditional IRA, it wouldn't matter in the case of a Roth) incurred each year.

Swanson case: That case is grossly over-hyped by promoters. They imply a ruling that is much broader than what the case actually said. No need to discuss the dull details. I'd simply add "cites Swanson a lot" to my "Danger Will Robinson IRA Promoter BS Detector".

Government Seizure: I think a direct seizure like Argentina's is unlikely in the US. My reasons:

  • While our Republic is in its death throes, certain traditions still have considerable residual power. For example, legislation or regulations require advance notice and follow a long, highly visible path. Ample warning would likely exist to react (e.g. - eat the penalties and distribute). Executive orders (that is, the Diktat so beloved by our Dear Leader) are really not a realistic means of executing such a seizure - the law itself is too clear. EO's work when you can make a small tweak that has great effect (e.g. - we are not enforcing this subparagraph - you know, the one about deporting illegals, etc.). This could change if things got bad enough to enable the man on the white horse to do as he pleases - but we are not quite there just yet.
  • Too many people have IRA's and 401(k)'s. An act as dramatic and direct as confiscation would wake even the sheeple.
  • Too many people in power have and use them as well - remember Romney's $20M to $100M SEP IRA?
  • Indirect action will get the same result much more quietly (e.g. - QE) because most people will not do "extreme" things like invest in physical gold and silver. The little frog gets boiled slowly but thoroughly, no need to toss him in the microwave and make a mess that might get attention.

Equity Trust Company: (ETC) Ain't what it used to be. For a number of reasons their service has declined dramatically. For example, deed transfers now take much longer, and are sometimes botched or forgotten entirely. Not ideal if for some reason one needs to make a fast transfer or distribution. There are lots of self-directed IRA custodians, do your research and find one that fits your needs. I hope ETC regains its former excellence, I do not think it likely.

Bottom line: IRA's, 401(k)'s and other tax-deferred or tax-free retirement vehicles are excellent means of efficiently funding non-conventional assets such as land, buildings, timber, gold and the like. But our Byzantine tax system has added a price to such vehicles in the form of complex legal requirements. Ultimately the tax savings are worth the hassle. But please DO accept the hassle and get good advice. Ignoring the legal hassle or cutting corners ("I did it myself, how to is on the internet, it must be true!") will cause a bitter harvest in favor of the IRS down the road. Do it right. - Prepper Tax Dude

Tuesday, January 21, 2014

Monday, January 20, 2014

Fractional reserve banking and central banking began their reign of destruction upon our financial world a few centuries ago.

Politician’s greed and need for control over people have been ever present.

Their mutual interests created an unholy union from which were born two progeny. Call them Fire and Ice. Call them Inflation and Deflation.

This is their story – simplified and sanitized.

FRACTIONAL reserve banking allowed banks to loan out considerably more currency than was received from depositors – this increased the supply of currency in circulation. If demand for currency did not increase proportionally, then each currency unit was devalued and prices increased. The first child born of the unholy union – Fire – destroyed the purchasing power of the currencies in the world financial systems. (Inflation was created via fractional reserve banking instead of the usual debasing coinage or printing paper.)

Do you remember gasoline selling for $0.15 per gallon? Why does it cost 20 times as much now? The fires of inflation have destroyed most of the value of the currency unit – each dollar in circulation.

Because of government greed, its need for power over people, and every politician’s desire to meddle and spend, government granted bankers the power to create and control currency, monetize debt, fix interest rates, and so much more. Central Banking was born. In return, government could spend in excess, borrow from bankers, members of the legislature collected handsomely from the banking community, national debts expanded, and interest expense paid on those debts grew to outrageous levels. Politicians, their friends, favored industries, and bankers won, while most others lost.

For a personal perspective, how much interest have you earned on your savings since 2008? Does it seem like you lost and bankers won? Have your after-tax wages increased proportionally with your expenses since 2008, since 2000, since 1971? Probably not!

But it gets worse. After Fire – Inflation – has burned through the purchasing power of the currency units, then Ice – Deflation – the second child, destroys most of the remaining debt-based assets. Ice is cold; he contracts monetary systems. Ice – deflation – creates central banker nightmares and becomes the second phase of financial destruction for the people.

If you loan me $1,000,000, then you believe you have an asset – my debt to you. But if I can’t or won’t pay, what is that asset worth? Probably close to zero. The monetary system and your assets have deflated by approximately $1,000,000. Bankers inflated the quantity of currency in the system while Fire consumed much of its value; but, when the reckoning occurs, most of the remaining debt-based assets must be revalued down. Ice finished the destruction.

Fire and Ice: Inflation and Deflation!

If a government owes $17 Trillion to various people, other governments, agencies, pension plans, and corporations, and that government must borrow merely to pay the interest on the $17 Trillion, some might call that government insolvent. Ponzi finance will not continue forever.

From a brilliant essay by Jeff Nielson, titled When Deflation Becomes Hyperinflation: “As the debts go higher and higher (which can only end in a deflationary crash); we see the money-printing accelerating at least as quickly, if not faster (which can only end in hyperinflation).”

If the $17 Trillion in debt grows to say $50 Trillion in debt, is it still “all good”? What about $170 Trillion in debt? And while the debt is growing, Fire is consuming much of the purchasing power of the currency. Inflation grows until the forces of Ice overwhelm the system and the $17 Trillion or $170 Trillion in debt is revalued. Perhaps the inevitable deflation pushed the value down to a much lower value or perhaps to zero. How much are $17 Trillion in bonds and notes worth if interest rates triple? How much is it worth in real purchasing power if it can’t be repaid without “printing” the dollars for repayment?
Eventually we arrive at economic depression – when the economic sins of the past are realized, when debts are paid or defaulted, when the reckoning occurs. Central bankers, politicians, and owners of debt-based assets hope the reckoning will be delayed a little longer. But the day of reckoning does come. Enron, MFGlobal, Zimbabwe, Weimar Germany, Argentina, and 100 other collapses and hyperinflations are not exceptions.

Fire and Ice. Inflation and Deflation. Inflationary depression, deflationary depression, one before the other, or simultaneously?

Will we burn in the Fire of inflation or freeze in an Icy deflationary depression? Or will our politicians make it “all good” forever?

The Case for Fire – Inflationary Depression:

• Inflation is built into our financial system.
• Gasoline no longer costs $0.15 per gallon. One million other examples are available.
• The Fed has expanded their balance sheet by $3 Trillion and counting. Japan is “printing” even more rapidly.
• The Fed has created an additional $16 Trillion or so (per audit) in extra “deflation fighting” loans, gifts, swaps, repurchases, etc.
• The U. S. national debt exceeds $17 Trillion and is increasing exponentially.
• Central banks create more Dollars, Euros, Yuan, and Yen to stimulate inflation and “fight deflation.” More QE, helicopter drops, and checks to everyone are always possible. Central banks even tell us they are “printing” to create inflation and avoid the nightmare of deflation.
• It will continue until a crisis forces change.

Jeff Nielson: “…we have the hyperinflationary spiral, as exponential money-printing inevitably leads to the only mathematically possible outcome. Any item produced in infinite quantities, and at zero cost must be worthless, as an elementary proposition of logic/arithmetic.”

The Case for Ice – Deflationary Depression:
• If the governments of the world can’t repay their debts, how much is their debt truly worth?
If the debt isn’t marked down substantially, then the value of the currency (think currency war – a race to debase) used to pay the debt must be drastically reduced. Either way the purchasing power of the repaid debt is likely to evaporate.
• There is always a day of reckoning. How much of the debt will survive the reckoning?

Jeff Nielson: “…hyperinflationary money-printing cannot prevent a debt-default implosion. If this was true; then we would have never seen any sovereign nation go bankrupt. Deadbeat nations would simply keep printing, and printing, and printing their worthless paper until they became ‘solvent.’”

Our monetary systems and our personal assets are besieged by both Fire and Ice.

Jeff Nielson: “The hyperinflationary depression first predicted by John Williams is not merely a plausible scenario. It is an absolutely inevitable fate.”


You decide what your future will include. Gold and silver have been a store of value for 5,000 years. Call them real money, or a store of value, or monetary energy, or safety, or insurance.
The Chinese, Indians, Russians, and many others are choosing gold and silver instead of paper. They fear both Fire and Ice. The western world depends upon paper assets as we pretend Fire and Ice are under control, while we ship massive quantities of western gold to the east where it is better understood and appreciated.

Fire and Ice have little impact upon gold and silver. Gold and silver were money long before the unholy union of fractional reserve banking and government unleashed Fire and Ice upon our world through inflating paper currencies and deflating debt. It is time to protect our financial future with gold and silver – Fire and Ice resistant assets.

Suggested Reading:

Jeff Nielson: When Deflation Becomes Hyperinflation
Gary North: Inflation: The Economics of Addiction
David Schectman: The Fed Has All the Markets in Lockdown
Darryl Robert Schoon: 2014 The End of the Beginning
The Deviant Investor: Created Currencies … Are NOT Gold!

About The Author: G.E. Christenson is the Editor of The Deviant Investor

JWR's Comment: I'm still leaning toward what I posited back in February of 2008: Successive waves of deflation and inflation, and then simultaneous inflation and deflation.

It goes without saying that "Fire and Ice", is a reference to the Robert Frost poem of the same name:

Fire and Ice
by Robert Frost

Some say the world will end in fire,
Some say in ice.
From what I've tasted of desire
I hold with those who favor fire.
But if it had to perish twice,
I think I know enough of hate
To say that for destruction ice
Is also great
And would suffice.

Sunday, January 19, 2014


I just read your article about stocking up on nickels.
You suggested requesting new "wrapped" (fresh Federal Reserve Bank issue) rolls but then there were updates regarding the [potential] change to steel nickels. I did additional research and it appears that the nickel is still made of 25% nickel and 75% copper. Correct?
So the suggestion would still be valid today. Correct?
Or is it better to not request "new" nickels?

Thanks, - Patrick F.

JWR Replies: To the best of my knowledge the composition of U.S. has NOT changed since 1946. Although there are tentative plans, there have not yet been any steel nickels minted in the U.S. (Although there are many steel nickels in Canada, including the current mintings. Be sure to search the SurvivalBlog archives for details, since the composition of Canadian nickels has changed dramatically over the years. For example, you will find articles like this: Advice on Canadian Nickels.)

Presently (as of January, 2014), when you request rolls of nickels in the United States they will all be 75% copper and 25% nickel, unless you get lucky and a roll might include one or two War Nickels. Those are composed of 56% copper, 35% silver and 9% manganese, and they will be dated 1943, 1944, or 1945. They are also recognizable by their extra-large mint marks on the reverse. It is quite rare to find any War Nickels still in circulation.

One of your letter writers about IRA funding of retreat property said that “you can’t distribute half a house,” therefore the distribution could be a big tax hit. You cannot use or live in an IRA owned property until you take 100% distribution and take the tax hit at tax time, it is true. However, you can take gradual partial distribution over time to make the tax hit more tolerable.

I have an IRA property that is a rental and the IRA ownership is currently 100%. I will start taking small distributions when I must at 70 and 1/2 years, if the rental income is not enough to qualify for the required percentage of withdrawals (this is dependent on your life expectancy per IRS tables). For example I could take 10% personal ownership of the property annually and the 10% value of the house is added to my taxable income for that year.

This may not help people who need to move to their retreat suddenly, but hopefully explains that distribution of property can be taken gradually. - A Colorado Reader

Saturday, January 18, 2014

Friday, January 17, 2014

I have a question in regards to the reply article on turning one's IRA or 401(k) into a survival retreat property.  Any ideas on how it would play out with one's survival retreat that is in their IRA or 401(k) if/when the government confiscates retirement accounts or forces one to turn their retirement accounts into a government retirement account like what was recently done in Poland and other countries? Would the person lose their home/farm or be forced to sell it? Would the government get control of it?

I'm curious because we have a fairly decent amount of money in retirement accounts that I am not comfortable with keeping there.  I would like to cash them out (yes, take a hit financially) to buy property and hard assets with.  The problem is that my husband is not on board with that.  He is still not convinced that things will go bad sometime in the future. (Sadly, I believe he suffers from Normalcy Bias.)  If we were able to legally convert our accounts into something like what the article's author stated then this might just be route that my husband is comfortable with.  My big concern though is what might happen in the case of the government confiscating individual's retirement accounts.  Any thoughts on this are greatly appreciated.

Thank you for all that you do.

Peace, - T.C. in Minnesota

JWR Replies: Great question. But that presently is an imponderable, because we have no way of knowing how any such future legislation might be worded.

It is also impossible to predict how soon the U.S. Dollar will come unraveled. (It is not a question "if" but rather "when.") The safest approach is for anyone who is age 50 or under is to cash out (biting the bullet and paying the tax penalties), and shift those funds into tangible precious metals that are kept architecturally very well hidden at home--preferably mostly in small denomination silver that has a low risk for counterfeiting. (Well-worn non-numismatic pre-1965 "junk" silver is the lowest risk. It is also the most recognizable for barter.) The slightly less safe approach is to roll over 401(k)s and IRAs into precious metals IRAs, under custodial control, and hope that the government doesn't get grabby before you retire. The most risky approach is to blithely assume that the U.S. Dollar will still have its full value in 20 years, and leave your 401(k)s and IRAs in typical stock portfolios. Unless you are presently close to retirement age, the latter approach is foolish, in my opinion.

With many more Federal budget crises on the horizon, one other legislative threat to 401(k)s, IRAs, and Social Security is an elevation of the defined retirement age and fund distribution age. It is conceivable that with an act of of congress, the retirement age could be raised to 70, just before you turn 65. ("Just five more missions, Yossarian!")

Thursday, January 16, 2014

I told you so... Is America ready for a brown nickel? Note that if there is a distinct color change, then Gresham's Law will kick in even more quickly, driving the old cupronickel Nickels out of circulation in less than two years. I should mention that one statement in the article is incorrect: "In 1965, rising silver prices forced the Mint to switch the nickel, dime and quarter to a mostly copper composition." The nickel DID NOT change composition starting in 1965. It has been 75% copper and 25% nickel ever since 1945. (The nickels minted with some silver were a wartime expedient, because nickel was desperately for armament production.)

G.G. suggested: Laurence Kotlikoff on Debt, Default, and the Federal Government's Finances

Kevin P. wrote: "I saw this animated map of the rise of Wal-Mart and I immediately thought that the end result [map] is probably a good indication of the clusters of population.  It might be wise to pick a retreat in an area with relatively few Wal-Marts if you can." JWR's Comment: Note at the very wide distribution of Wal-Marts in The American Redoubt region and in the Dakotas.

Items from The Economatrix:

Discounts Slam U.S. Retailers' Holiday Season Profits

Jobs Number Shock

Big Banks Set for Best Year Since Crisis

Wednesday, January 15, 2014

Tuesday, January 14, 2014

Monday, January 13, 2014

To follow up on a recent letter "How To Use Your IRA /401k to Fund a Survival Retreat Property", I recommend that people try Equity Trust for IRA/401k management. (I am not employed by these folks nor are any of my family or friends). Their fees approximately 10% of the fees described in the article. With their trust services so there is no need to incorporate. I purchased our retreat in 08' with my IRA, & have subsequently made other real estate purchases as well. Since then we not only have constructed a guest house but all the underground septic, well/water lines, & power lines with the IRA. Rents on other properties in the IRA are sent back to the IRA. This has worked out great for us.
One subject that was not covered is distribution of the assets. If the distribution is real estate and it is in one parcel, that is how it is distributed. You can't distribute half a house. The value, which is added to your income that tax year, (not in a Roth IRA) could be a hefty tax all in one year depending on the property.
Should you incorporate the shares in the IRA they can be valued and sold but I am not sure you can buy them out of your IRA. The reason I say this is should you want (for whatever reason) to sell the property out of the IRA and put the cash back in the IRA it is no problem. However, you or your immediate family cannot be the purchaser. Lots of quirky rules. The main thing is you cannot use the property personally while it is in the retirement account. Using the property can result in a tax penalty or worse.
Bottom line is these folks at Equity can do this a lot cheaper and it is not a fly by night company. Having said this, I'll bet there are other companies doing the same things at completive fees. - Mr. A.

Over at TF Metals Report: Where is the German Gold? (Thanks to J.B.G. for the link.)

Craftsman tool owners take note: Sears enters ‘death-spiral,’ retailer could be gone by 2017: Brian Sozzi. (Warning to dial-up readers: Has an automatically-loading video.)

B.B. sent: IMF: 'This is Our Last Wake Up Call for Your Savings'

Items from The Economatrix:

"The Biggest Redistribution Of Wealth From The Middle Class And Poor To The Rich Ever" Explained...

Over at Mac's blog: What if all this prosperity was just an illusion?

What to look for in December jobs report.

Sunday, January 12, 2014

War on Poverty 50 years on, victory nowhere in sight.

Snyder: “There Is Intense Competition For Virtually All Kinds Of Jobs”

Congresswoman Urges Welfare Name Change: "Transitional Living Fund". [JWR's Comment: As I see it, so long as charity is coerced and bureaucratized, the "transition" she describes is from my wallet to someone else's wallet, without my consent. State-sponsored Robin Hoodism cannot to be found in the Constitution. It is a modern socialist construct, and little more than organized theft. Charity should be entirely voluntary and a function of church, not state.]

Items from The Economatrix:

Forecast 2014: Economic Trends

If You Are Waiting For An “Economic Collapse”, Just Look At What Is Happening To Europe

Say Hello To My Little Friend, Inflation: Shrinking Packages, Higher Tuition, Rising Healthcare Costs, Real Estate Values Jumping All The While Household Incomes Remain Stagnant.

Saturday, January 11, 2014

Friday, January 10, 2014

Dear SurvivalBloggers,
How do you use your IRA /401k to fund survival property or fund a startup business in the area you want to exit to?
I have been running into many of my clients here in the north east, way outside the American Redoubt, that want to take greater control over their 401k or IRA’s that have accumulated over a period of time.
Being a reader of this web site for a number of years, I felt that I could explain to your readers thru a simple monograph of what an individual or group of individuals could accomplish with a little planning and action in regard to this premise:  The stock market is not a place to have any of your assets.  Let alone your retirement assets.  How can you remove the assets from a stock or mutual fund based IRA or 401k ?     You know you need to do something to protect you and your family soon, very soon, but you may not have the funds to accomplish this now.  If you spend a few minutes to read through this to gain a small understanding that you don’t have to lose all your retirement contributions when the fall occurs you will be half way there.  I must warn you up front that this will be a complex transaction. Extremely time consuming and hopefully the custodian you utilize along with your legal and financial advisors can handle it. This is a small overview, food for thought.

Face it, the retirement you in vision or hope for has a limited if at all chance of occurring. The financial actions of the last fourteen years of our federal government have just about removed the United States dollar from being the base currency of the world.  It has also enslaved its populace by transferring economic growth for social programs.  For better or worse this is not the government of our parents.  We will have to live in it until the pendulum of normalcy swings back; or be prepared to deal with the consequences of it not occurring. Remember that inflation is coming. To what extent no one knows,   hopefully, not the inflation of the late 1970’s or early 1980’s.  When it occurs what will happen to your money? Your retirement funds which are locked down into money markets are probably not indexed for inflation.  Should have, would have, and could have decision tree will all be told.  This nest egg could be put into use right now not ten twenty years from now.   You have heard and read enough here and other sites that the stock market is ripe for another correction. “Oh don’t worry good stocks will always come back” Or, you may have heard that if you put stop limit loss (which is basically a tool that if you own a stock you can direct your broker to sell the sock if it drops to a certain price) you will mitigate the loss on the price.  Great Plan in a normal economic system.  However, with over seventeen trillion in debt the financial china-syndrome is just around the corner, by the way, how will you get your money back from the brokerage house? Only those who diversified thru debt free real estate will have something of value. Especially if you start as soon as possible to put it into place a strategy.

This is where a self-directed IRA/401(k) can help. This will be the tool that you will be using to redirect your funds from the retirement vehicle into an ultimate safety net such as:  farm land; timber land with cabins; survival retreats; horse farms; coal mine; a franchise, a startup business etc…I think you get the idea.   How can you do this? It all started back in 1996 when the IRS lost in Tax court the Swanson case (Swanson v commissioner 106 TC 76 1996) this held that a newly established entity owned by an IRA and managed by the IRA owner may make investments using IRA funds without violating the prohibited transaction rules under Internal Revenue Code Section 4975.   This allowed individuals to fund investments with their retirement funds and not consider this funding to be a prohibited transaction (explained later). This was subsequently affirmed by the IRS in Field Service Advice Memorandum (FSA) 200128011.

Enough technical stuff, just know that it is legal and you will have some hoops to go through, but look at the alternative. Your money stays were it is unable to be accessed without penalty until you reach 59 ½ years of age and then you would need to include it in ordinary income (taxed) on what you withdraw (unless of course you have a Roth) and hopefully able to access. So how do we take advantage of this? Many advisors and stock brokers are not aware of this method because it does not provide sufficient profit for themselves or for their institutions (surprise-surprise).  However, there are many ways to accomplish this; I will present one that I have seen utilized to build and construct a 2,800 square foot underground bunker on 300 acres of land.  

The first step in this process is to contact the entity in which you have your investment.  This may be a bank, brokerage house, or your current employer.  (As an aside: why would you have all your retirement funds invested in the company you work for? ask former Lehman Bros. employees if it worked for them!). If they allow you to accomplish this great if not then you need to find another custodian of your funds that will allow this to occur and transfer (rollover) your assets to that entity.  Once allowed some of the questions you need to ask are: what is the setup fee? (Usually around $6,000—not cheap which must be paid with funds outside the IRA) what is the annual fee to manage such a task? How much cash must be kept within the IRA to fund future expenses of the investment?  Once the fee structure is settled then your custodian must establish a business entity which will ultimately own the real estate.  This is an easier process then you think, the entity used must be a C-Corporation and not a pass-through entity.  To my understanding the LLC or S-Corporation (pass-through entities) are specifically not permitted to be used. Then, for simplicity sake, the IRA buys the stock of the C-corporation from the C-corporation, thereby transferring funds into that entity. The funds go from IRA/401(k) into a 401(k) entity that owns the stock of the corporation.  It should be noted that the entity that your IRA invests in must meet the simple definition of an operating company.  More than likely the Real Estate Operating Company that is created will purchase the land/farm/survival retreat and actively managing the property. 

It is important here to discuss an operation company.   An operating company is an entity that sells a service or a product.  If the company is to be considered a Real Estate Operating company the entity must hold the property as inventory to sell it ; or, actively managing the property thru collection of rents, responsibility of repairing and general improvement.  You cannot go and buy a farm and sell the commodities (wheat, corn, oats, hay, straw, beef, milk etc…) and keep the cash.  The entity receives the proceeds. You are what the government considers a disqualified person. It can pay a fair wage, however you must be careful not to violate the prohibited transaction rules of IRC 4975.  A disqualified person covers a range of people including those persons who have a fifty percent or more interest, a member of their family, or even an individual with a 10 percent or more interest. (I know 50% or more? 10 % or more interest this is why you need competent advisors).   Because a prohibited transaction can happen if a sale, leasing, lending of money, furnishing of goods, services, facilities, or the transfer thereof to a disqualified person for their benefit can cause the whole plan to become nonexistent and all be taxed and penalized.  Are we having fun yet? 

Let me simplify: You your wife, your like-minded brother and his wife all agree that it is time to purchase a survival retreat.  However, you all realize that you do not have the cash on hand to accomplish this without taking on a vast amount of debt. All four of you have IRAs or 401k.   You all transfer your funds into one financial advisor. A new corporation entity is created.  The corporation sponsors a 401(k).  Existing retirement funds are rolled over into the new 401k .  The new 401k purchases the farm/money producing entity.   The entity is in existence to make money, so it has a business purpose. Its an operating company. It has filed its Articles of Incorporation with your state.  You have obtained a tax identification number (EIN). You may have to register with the State for a sales/use tax ID number. You may need a business license or register with the local Ag agent. Since it is a viable business it will need workers.  You then can pay yourself and the others a fair, competitive, arms-length wage. You may have a need to store items in a secure environment and build an underground facility to accomplish this. 

Every corporation is responsible for keeping at its principal place of business accurate and complete books of records of accounts and minutes of the shareholders/directors. 
This short narrative was written for informational purposes only. If you want to relocate to the American Redoubt and would like to open a business; purchase an existing business; buy a working farm; buy a timber outfit ; or just take control and have some retirement funds or have family or friends of like-mind this summary is for you.  Please also keep in mind that your financial advisor and accountant does not need to know the true reason behind what you are accomplishing with your funds; nor, do they need to know that your underground storage facility is really a bunker.  - An Anonymous CPA

Thursday, January 9, 2014

Wednesday, January 8, 2014

Tuesday, January 7, 2014

Monday, January 6, 2014

Sunday, January 5, 2014

Saturday, January 4, 2014

Friday, January 3, 2014

Thursday, January 2, 2014

Wednesday, January 1, 2014

Tuesday, December 31, 2013

Tracey in Tennessee recommended some free online courses such as Economics 101 and Constitution 101 offered through Hillsdale College in Hillsdale, Michigan.

B.B. sent: Bitcoin is Gold 2.0

Reader Jeff E. suggested this piece at Forbes: Romney Was Wrong About The 47 Percent, The Problem Is Much Worse

Monday, December 30, 2013

Welcome to SurvivalBlog's Precious Metals Month in Review, by Steven Cochran of Gainesville Coins. Every month, we'll take a look at the “month that was” in precious metals, covering everything from price action, to the information that's driving the numbers.

December in Precious Metals

December is traditionally a slow month for precious metals, and the second-best month for stocks. This trend was amplified this year, as we saw lots of good economic reports from Europe, China, and the U.S. The stock markets, already hitting highs fueled by central bank money printing, sucked cash out of bonds and the precious metals market as everyone tried to get a piece of the action. This had gold around the $1,250 level to start the month.

The second week of December saw the U.S. Mint ship out the last of the 2013 Silver Eagle bullion coins (nine days earlier than last year) to cap the best year ever in sales; and the U.S. Congress actually come to a budget deal of sorts. It didn't touch Social Security or other hot button issues, but everyone proclaimed it was proof that Congress could actually get something done. Precious metals shot to their high point of the month on the news, even as the dollar also advanced (usually a drag on commodity prices.) Stocks took this as pretty much clinching the chances of the Fed deciding to give Chairman Ben Bernanke a taper as his retirement gift.

The Fed followed through on the 18th, and reduced the $85 billion a month in “money printing” by $10 billion. That's only a 12% reduction, but as the Congressman once said, “a few billion here, a few billion there, and pretty soon you're talking about real money.” Precious metals hung tough in wildly oscillating trading immediately after the announcement, but was later sucker punched to the $1,200 level, where it spent the rest of the month.

Stocks worldwide went berserk, setting new records, because the Fed promised over and over to keep benchmark interest rates at or near zero at least through 2014, even if unemployment dropped under 6.5%. It was about this time that rumors started swirling over Stanley Fischer being named to the #2 position at the Fed, when Yellen moves into the chairmanship. Fischer was Bernanke's doctoral thesis adviser, and also taught ECB Chairman Mario Draghi and many other central bankers.

Most recently the head of the Bank of Israel, Fischer has also held top positions at the IMF and the World Bank. He is noted as an expert on hyperinflation, which may be one reason Obama offered him the copilot's seat at the Fed.

Market Buzz

Rumors are increasing that the Indian government will ease import restrictions on gold, even as the 10% import tax remains in effect. The domestic jewelry industry has almost been wiped out, and smuggling is bringing in hundreds of tons of gold that the government is not collecting taxes on. National elections are in May, and the ruling party is now about as popular as Congress is in the U.S., so this would be a logical action to take to improve their chances of staying in power.

Supporters of “hard money” are standing by the fundamentals, as Western quick-money speculators sell their physical gold to China. Eric Sprott for example, said in a recent interview “If you believe you're right, and the data says hold your ground, you hold your ground. Normally, there's a pretty big payday at the end.” Some industry watchers are speculating that China's central bank will reveal how much gold they really hold next year, as it seems they do so every five years. The last official report was for 1,054 tonnes in 2009, so 2014 would mark five years from that report.

On the Retail Front

Even though all the talking heads are going on about how no one wants to buy precious metals any more, the story on the streets is much different. Retail investors have pushed the sales both the American Silver Eagle and Canadian Silver Maple Leaf coins to new record highs this year. The U.S. Mint has announced that the 2014 Silver Eagle will not go on sale until January 13th, and that supplies will be allocated (rationed.)  Pre-orders for Silver Eagles are already a best-selling item.

The Royal Canadian Mint has brought new security features first introduced on the Gold Maple Leaf in 2013 over to the Silver Maple Leaf for 2014. The Mint recently won a Coin of the Year award for implementing similar features on their circulating $1 and $2 coins. In addition to the micro laser-engraved security mark (what some people are calling a “privy mark”,) the entire background of the new Silver Maple Leaf will have a radial line design constructed to make counterfeiting much more difficult. You can see images of the new Silver Maple features here.

Looking Ahead

Looking at the fundamentals ahead, this is what we see:

Asian demand for gold was sated in large part by outflows from Western gold ETFs in 2013. The amount of gold sold by ETFs for the year equaled 800 metric tonnes, 25% of global production. This is a trend that physically cannot continue, because the ETFs have a finite amount of gold. Since that gold is being sold to China and India, it will not come back onto the market. Where will these ETFs get gold once the price starts to rise again?

Another drag on gold supply next year will be the fact that gold prices are now at or below the all-in cost of production for many mines. Expect more mines to reduce production or even close unprofitable mines. This will lead to severe labor unrest in nations with high labor costs, like South Africa.

This may also lead to China buying even more gold mines in 2014. Chinese companies, using loans from the government, have bought up $4 billion worth of gold mines and mining companies in the last two years. While other mines are reducing production, these Chinese-owned mines are expanding production on orders from Beijing, and shipping it all back home to China. This reduces the amount of gold on the open market, but still does not satisfy all of China's gold demand. China is now the world's largest consumer of gold, even though it is also the world's largest producer of gold.

A third factor that may reduce global gold supplies is the law passed recently by Indonesia's parliament, demanding that all ore be smelted in-country instead of being shipped out raw. This presents a problem, as there is only one copper smelter of any size in the country, and Indonesia is the world's largest producer of tin and copper ore. The Indonesian executive branch knows that this law is suicidal for the country, and is trying to find ways to help the mining companies work around it. Freeport, which runs the world's largest copper mine at Grasberg, said that production will fall to 20-30% of maximum if the law is not amended or repealed, meaning the loss of 30,000 local jobs. Grasberg produces 3.2 million oz of gold a year as a by-product of copper mining, and this law may mean a shortage of 840,000 oz on the global gold market.
We see retail investment demand for silver continuing to grow, after a record year in 2013. If someone tells you “oh, that's because of the price crash,” remind them that the U.S. Mint sold out of Silver Eagles in EIGHT DAYS when the new 2013s were introduced in January. That was 7.49 million ounces of Silver Eagles sold when silver spot price was above $30/oz.

Inflation will be the “monster in the box” in 2014, as the Fed seems blind to the fact that it is its own policies that have the Big Banks holding on to quantitative easing money, instead of lending it out. Since the Fed has artificially suppressed benchmark interest rates, the Big Banks have parked some $2.5 trillion in QE money back at the Fed for a guaranteed return, instead of lending it out. The big Wall St. banks earned $6.25 billion last year in interest from the Fed, on cash the Fed itself printed in the hopes it would improve the economy.

Instead of fixing the problem at its source and getting the banks to actually lend that money, some economists at the Fed want to try and raise the inflation rate on purpose, thinking that they can make it stop rising when they want to.

Dallas Fed President Richard Fisher was shocked by the idea, telling a crowd “the idea of ramping up inflation expectations from their current tame levels strikes me as short-sighted and even reckless.” Fisher said that the long-term inflation dangers that the Fed has already caused “will surely test our capacity to manage policy going forward.”

As far as official inflation rates, they have been changed in the same way as unemployment rates have, in order to hide the true condition of the economy (Check the old U6 unemployment rate, which includes unemployed people who can't find a job, and compare it to what the government reports.)  Brent Johnson of Santiago Capital recently told people “If you believe in math, buy gold.” He explains that inflation is nested in the stock market and real estate bubbles.

More and more people are expressing concern over the stock market and real estate bubbles based more on euphoria and greed than fundamentals. In addition to Reagan's budget director David Stockman, this year's co-winner of the Nobel Prize in Economics Robert Shiller warns of bubbles in both real estate and stocks. Shiller is famous for predicting the “dot com” crash and the real estate crash.

The taper is a tiny drop in the bucket, and the budget deal in Washington did nothing to fix any real problems. With ever-expanding national debt, and a China that is signaling it really doesn't want to keep buying U.S. debt, dollar devaluation grows closer.

The more I learn about cryptocurrency, the more it reveals itself as a Godsend that could save us all from the tyranny of a central bank manipulated currency. I see this now as a revolution in civilization itself, nothing short of what penicillin or the internet has meant to us. It is new and undiscovered, just as America was in its beginnings, it is an unfolding wonderment.

When Bitcoin was starting up a few years ago, I fooled around with it on my computer trying to mine some coins, but it became apparent that I needed a lot more compute power to be able to mine very many coins at all. So I gave it up and de-installed the software. 

I certainly wasn’t going to buy any of these coins on the MtGox exchange at about $6 a coin if remember correctly. It seemed like a scam, not worth even buying 10 coins.

What I didn’t see was that the developers who designed this system had figured it all out and they foresaw what I did not, that this was going to be big, really big. I am now beginning to see what they saw. They have true genius and vision. They also love freedom.

I missed the boat with Bitcoin, if I had just bought a hundred or so coins, I could sell them today and be $60,000 richer. People are skeptical, but you can not argue with success. Bitcoins are worth something whether we like or not, or whether the government or the central banks likes it. The truth is they can’t stop the avalanche now. It’s world-wide and totally private. Even taking down the entire internet may not stop the use of crypto currency as long there are computers and thumb drives, coin can be exchanged.

I think Bitcoin is too expensive to get into, like gold at $2,000 at per Troy Ounce, so I am presently looking into mining and investing in some alternative crypto coins such as Litcoin now selling for $16.35 per coin. There are many others now, such as Peercoin, Primecoin, and Worldcoin.

Some will succeed like Bitcoin and some will fall by the wayside as the gold rush into crypto currency begins. There is room for competition, Bitcoin is limited by design in the number of coins it can produce and many have already been mined and are expensive.

There is room for other systems and the same visionaries who brought us Bitcoin are busy designing new systems as I write this.

In the near future I will be writing more about crypto currencies and will post it on  Also check out the many cryptocurrency forums by doing a Google search for cyptocurrency.  - Tim T.

Sunday, December 29, 2013

Saturday, December 28, 2013

Friday, December 27, 2013

Thursday, December 26, 2013

The Hidden Motives Behind The Federal Reserve Taper. [JWR's Comment: The renewed talk of the Fed tapering from the current $85 billion per month of Quantitative Easing (QE) money creation is balderdash. Presently, I can see only two possible solutions for the Fed's quandary: 1.) They find another excuse not to taper Fed purchase of MBS derivatives and other securities. or 2.) They do taper the current QE program, but meanwhile surreptitiously create another form of monetization that is just a big, or even bigger. (This might involve foreign central banks, in a mutual back-scratching arrangement, whereby we'll buy their garbage paper, if they'll buy ours.) I suspect that they will pursue Option #2.]

It’s a Very Merry Christmas for Washington Insiders

G. Edward Griffin: "If America Doesn't ABOLISH The FED, The FED Will ABOLISH AMERICA"

Items from The Economatrix:

Fed Will Not Taper & You Can Expect Chaos After The Decision

Quantitative Easing Has Become Heroin To The Financial Markets: Federal Reserve Balance Sheet Hits $4 trillion.

83 Numbers From 2013 That Are Almost Too Crazy To Believe

Tuesday, December 24, 2013

What Does the Price of Gold Do In Deflation? (Thanks to Pierre M. for the link.)

B.B. sent: The Federal Reserve Is Leveraged Roughly 70 Times

Italy's president fears violent insurrection in 2014

Andre D. sent a link to an opinion piece by Gordon Brown: Stumbling Toward the Next Crash. (Brown is a Labour Party member of the British Parliament a former Chancellor of the Exchequer and former Prime Minister.)

Monday, December 23, 2013

D.L.T. sent us this: The modern economy depends on dozens of obscure metals. What happens if we run out?

Over at Sipsey Street Irregulars, some more evidence that ammunition was and still is a wise investment: Logistics: CMP advisory on .22 Long Rifle

My old friend Conor recommended a BBC news segment about the little-publicized EB-5 Green Card program: Chinese investors 'buying' US green cards for $1Million. (Warning to dial-up users: The included video is launched automatically.) Of course the reverse side of that coin is found in countries like Panama, where American retirees are effectively buying residency for as little as $1,000 per month.

Sunday, December 22, 2013

J.W. suggested this piece by Jeff Thomas, over at Doug Casey's International Man site: It's Not "If;" It's "When"

G.G. suggested this news item: Sterling to go plastic, Bank of England decides

Also from G.G.: Price of Ground Beef Hits All-Time High

Saturday, December 21, 2013

Reader Andre D. sent: Feeding the Bubble: Is the Next Crash Brewing?

Charles Hugh-Smith: A Quick Guide to What’s Fake: Everything That’s Officially Sanctioned. [JWR's Comment: While I disagree with his viewpoint on

government intervention in the marketplace and on taxation (I'm a laissez faire minimalist-government libertarian), I almost always enjoy reading Charles Hugh-Smith's piercing observations.]

Over at The Daily Bell: Forced Savings Bait and Switch

Items from The Economatrix:

U.S. October Business Inventories Up 0.7%

Why The Budget Deal Is Bad News For Gold: Pro

Is Your Job About To Be Outsourced By A Computer (The Probability Is 47%)

Military Retirees Feel Betrayed By Congressional Budget Cuts To Pensions

Friday, December 20, 2013

Thursday, December 19, 2013

K.A.F. sent a link to some fascinating maps: America's Wealth Is Staggeringly Concentrated in the Northeast Corridor. (But take a look at the Bakken region of eastern North Dakota.)

Reader Tim R. suggested this article: Gun Stocks Soar, Gun Control 'Dead as an Issue'

Pierre M. sent: North America to Drown in Oil as Mexico Ends Monopoly

Items from The Economatrix:

Proposal On Capitol Hill Would Nearly Double Federal Gas Tax

The Economy: What's Ahead In 2014

Improving Economy: Is It For Real?

Wednesday, December 18, 2013

Tuesday, December 17, 2013

Monday, December 16, 2013

This year saw a battle for the direction of precious metals waged between speculators and short-term “paper gold” traders in the West, against record-breaking physical demand in the East. That physical demand from Asia reached new highs in 2013, underpinning a market that saw the outflows from precious metals ETFs eagerly snapped up by the Chinese and Indians.
Gold and silver ended the year about where they ended 2010, while platinum was down only slightly from 2012. Palladium was the big performer, doing even better in 2013 than last year, but not as well as the all-time high reached in 2011.

Central bank money printing didn't ignite hyperinflation in 2013, as many feared. This was mostly because the banks that were receiving these funds kept them to themselves, instead of lending them out. Sine the money didn't circulate as intended, inflation was kept in check. The central banks had hoped that the Big Banks would lend money to businesses, and restart the economy. But the banks found someplace they could make more money than by making loans in a time of abnormally low interest rates: the stock market. The Fed kept interest rates artificially low for the fifth year, and companies used low interest loans to buy back shares and boost their stock price.This also had traders dump shares of precious metals ETFs and jump with both feet into stocks.
Outside of blatant manipulation, precious metals showed a tendency to stick to tight trading ranges, faced with good news and bad. Inflation in Asia, combined with low gold prices, kept the gold flowing from west to east. Let's take a month-by-month look at the year in precious metals for 2013.

The “fiscal cliff” was averted on December 31, but it was just a “kick the can” solution, pushing the sequester to March. The Bank of Japan imitates the Fed by starting its own open-ended Quantitative Easing, and India raises the import tariff on gold from 4% to 6% in an attempt to stop record-breaking demand. In the US, the new 2013 American Silver is introduced in the middle of the month, and completely sells out in under two weeks. The U.S. Mint stops sales of the coins for two weeks, because it has no silver blanks. The Royal Canadian Mint rations Silver Maple Leafs, due to excessive demand.
The German government announces that it is going to repatriate its foreign-held gold, but the Fed refuses to give it to them. It even refuses to let the Bundesbank representatives even see the gold (they wanted to check serial numbers on the bars.) A deal is finally reached to let the Germans have their gold bit by bit, over seven years. Unrest in South Africa rises as platinum miners announce plans to close unprofitable mines.

On the heels of the German repatriation story, news leaks out that the Mexican central bank has never actually seen the gold it supposedly owns in London. The Mexican high court orders an audit. The Shanghai Gold Exchange hits the first import record of many this year. In the U.S., the stock market panics when records show that the Fed considered scaling back its “money printing” of buying $85 billion a month in Treasuries and mortgage-backed securities. Gold drops when it is revealed the George Soros sold 55% of his gold ETF holdings at the end of 2012.
Europe, already in disarray over the Greek bailout, is now faced with a deadlock election in Italy, and  the possibility that Italy will default and leave the EU.

A divided Congress is unable to make a deal, and the sequester across-the-board spending cuts hit an economy still in trouble. The banking industry in Cyprus blows up, unable to survive its large exposure to Greek debt. All banks are closed, and credit cards frozen. Cypriots have to resort to bartering to survive. The “Bail-In” is invented, where the government seizes a portion of depositors' money to help pay for the bail out of the banks. Germany and the rest of the EU refuse to finance a normal bailout, as Cyprus was a tax haven where people hid money.

The Great Manipulation hits the gold market. In the early hours of April 12, gold contracts totaling 400 TONS are sold into the market when everyone was asleep, crashing the price down $200/oz. Whoever did this lost millions of dollars, so it is assumed it was a large player who stood to gain by crashing the market. Things didn't work out exactly as planned, as a global frenzy for physical gold erupted. The Hong Kong Gold Exchange totally ran out of physical gold, and silver bullion in the U.S. disappears as buyers purchase everything in sight. Production bottlenecks mean that a temporary silver shortage results.

Gold continues to fall, losing $60/oz on the month, but this is mainly from “paper gold” trading in the West. A physical gold shortage in Asia persists, even as gold in the West is resmelted into .9999 fine 1 kilo bars and sent east to eager buyers. In Switzerland, a populist right-wing party gains enough votes on their petition to call a national referendum on repatriating Switzerland's foreign gold reserves.

Currency exchange rigging among the Big Banks is revealed, yet central banks claim there is no gold or silver market rigging. India increases gold import taxes again, to 8%, after Indians set a record for gold imports after the April price drop.
June 19: Fed Chairman Ben Bernanke tells reporters that the Fed will start “tapering” it's $85 billion a month in bond purchases this fall, with a complete end by next summer. Stock markets plunge, the dollar skyrockets (killing foreign currencies) and gold falls under $1300/oz. Banks in China, who are the main sellers of gold there, run out of physical gold. The Indian rupee collapses, putting gold (which is denominated in dollars) out of the reach of many.

Gold recovers back over $1300 as physical demand in Asia hits unprecedented levels. Gold import restrictions in India means the market price for gold there is $20 over global spot. Smuggling is exploding, as gold supply dries up. The Shanghai Gold Exchange announced that it has now shipped more gold into China in the first seven months than it did for all of 2012. Iran is hit with more economic sanctions over its nuclear program, and Turkey is found to be paying Iran in gold for for cross-border oil imports. A new 200-ton silver vault in Singapore is pre-booked to 30% capacity before it even opens its doors. A revolution breaks out in Egypt, while a civil war continues in Syria. This lends some safe-haven support to gold.

Precious metals recover more from the June drop, with gold hitting a two-month high and ending at $1394. Silver enters a bull market, rising 20% over the June lows. The U.S. threatens military intervention in Syria after news that the Assad government used chemical weapons against rebels. Violence escalates in Egypt. India raises its gold import tax to 10%. Pakistan bans gold imports for one month, after it becomes apparent that people are using a tax break loophole to import gold and smuggle it into India. The Chinese economy starts improving, raising gold demand. Rumors start that the Fed will start “tapering” next month.

The Fed shocks everyone and decides not to start reducing quantitative easing. The U.S. government is locked into a budget showdown over defunding Obamacare, which threatens to have the government default on its debt. Europe is still unsettled, with Greece wanting to renegotiate its bailout.

The U.S. government goes into partial shutdown for the first time in 17 years, over the budget showdown. The government comes within hours of defaulting on its debt, which shakes global confidence in America so much that the Chinese call for a “de-Americanized world” where nations won't be so exposed to the dollar. Gold in India hits $120/oz over global spot price due to shortages. Small jewelry companies are rumored to be setting up their own smuggling rings to survive. China and the EU start cracking down on bad bank loans. The Fed doesn't even talk about the shutdown, and thinks things are great, panicking the markets into thinking, surely, they will taper in December. Gold recovers back above $1,300 again.

The Fed scares markets by talking about a December taper, which knocks gold back under $1300. The U.S. Mint announces that the 2014 Silver Eagle bullion coins will be released a week later in January, to give them time to make enough, but they will still be rationed from day 1. American Silver Eagle sales hit an all-time record on November 12. November 20 sees massive gold manipulation TWICE in the same day. Each time, 150,000 oz (4.66 tons) of gold was sold at once, causing circuit breakers to trip and halting trading for 20 seconds both times. This was paper contracts of course, no physical gold changed hands.
The economy in the U.S., China, U.K., and Germany improve markedly, as the Chinese announce market reforms to make the yuan easier to use in international trade. A surprise deal with Iran and the major powers boosts stocks, but the same day, China puts an air defense zone over Japanese-held islands that are claimed by China. This rallies gold enough to make up some of the losses due to taper fears.

Rapidly improving economies in the U.S., U.K., and China pressure gold to five-month lows, but gold pops back over $50 as the market becomes over-sold.

About the Author: Steven Cochran is with Gainesville Coins

Dear Sir,
When stockpiling ammo, should one focus on FMJ and soft nose/hollow points or FMJ only?  FMJ is a better value per bullet, plus it's supposed to be a lot more accurate and reliable than SP/HP, but of course, it sometimes comes at the cost of stopping power.

I'm packing a semi-auto in 308/7.62x51, and to my knowledge, there haven't been many complaints about the stopping power of the 7.62x51 ball cartridge in military circles; many complaints come mainly from the kick and weight.  Add to that the fact that after TEOTWAWKI, shooting through cover and mass fire will become the norm and FMJs look pretty appealing.  Not to mention the fact that most bulk sizes of ammo only come in FMJ.

I've been stocking both so far, but with money getting a bit tight, I'm looking at switching over to just FMJs, so is this a good idea?  Your input is appreciated.

Oh, one more thing: Do you know of any places that offer tracer rounds and which brands are the good ones?  My rifle bolt doesn't lock back when the magazine is empty, so I'm wanting to emulate the fictional Doug Carlton from Patriots.

Sincerely,  - D.S.C.

JWR Replies:

As with all of your other preps, balance is the key. There is no point in buying all premium ammo. Logic dictates that you will need some inexpensive ammo for target practice and some "middling" quality ammo, for barter.

For handguns I current recommend this mix: 80% jacketed hollow points (JHPs), 18% FMJ (aka "ball"), and 2% exotics (tracers, frangible, KTW or Arcane AP, etc.)

For most military caliber rifles I currently recommend this mix: 70% FMJ, 10% spire point soft nose, 10% Match (preferably HPBT), 5% AP, and 5% exotics (such as tracer, incendiary and API.)

For most civilian (hunting) caliber rifles I currently recommend this mix: 90% soft nose, 5% Match (preferably HPBT), and 5% AP handloads, if bullet weights, bullet diameters, and bullet point styles are compatible with pulled military AP bullets. Note, for example, you cannot use pointed bullets in tubular magazine lever action rifles, even if the bore diameter and bullet weight is correct.

Some of my favorite ammo sources are:

Dan's Ammo,
Lucky Gunner,
Sunflower Ammo
Cheaper Than Dirt,
and Keep Shooting.

I also buy some ammo directly from manufacturers, mostly here in the American Redoubt. I recommend:

Black Hills Ammunition
BVAC Ammunition and Components
HSM (aka The Hunting Shack)
Buffalo Bore Ammunition
and Patriot Firearms and Munitions

Oh, and by the way, SurvivalBlog's Editor at Large Michael Z. Williamson recently mentioned that one of his favorite sources is (They currently have a good deal on Federal 5.56 ball.)

The Talon brand tracer ammo is decent, but given the uneven burning of the tracing composition, the accuracy of virtually all tracer ammo accuracy will never be quite comparable to military ball. The Lake City arsenal tracer ammo is excellent, but it is hard to find. The last time I checked, Lucky Gunner had some, as did UNAC.

There is a great on-line reference site now available, for comparison pricing: Be sure to check it out!

James Wesley,
My wife needed a new car (SUV to be exact), and that got me looking into the fiscal situation in detail to come up with a price range. I first detailed the expense side of the balance sheet down to monthly average activities and dining out costs, but my world was shaken when I looked at the income totals. Like a growing number of men, my wife makes more than me, her career being much more in demand these days. This I knew from the start; we're not that far off but there is, as the left would put it, an apparent income inequality. Like most spouses, we are free to spend small amounts for fun, gadgets and the like, but the larger expenditures (anything over say $200-$300) need to be run by one another to ensure its within budget or qualifies as an emergency expenditure. In fact, I would be hard pressed to say that either one of us has ever wanted for anything within reason since we were married. This is why I was shocked at the figures that came from calculating our annual household income; shocked however, isn't really the word, more like appalled, angry, frustrated and down right offended.

I used our pay stubs to calculate our income, and for fun started with gross aggregate income (if you've never done it give it a shot, it's enlightening.) My shock came not when the individual taxes were deducted, but only after the net incomes were combined and compared to the gross. Our household net income turns out to be, near as makes no difference, almost the same as my wife's gross income. After taxes, my whole year of work translates into only about $3,000 that my family ever gets to see. It was a striking viewpoint. One can argue about tax rates and who pays what bills, but in the grand scheme of things; when it all gets laid out on the table as a family, nearly all of the work I do every day is just going to pay the family's taxes.

As a husband, those numbers made me sick to my stomach, to know that nearly all of my salary goes to someone other than my family is as disheartening as it gets. It's one thing to see the taxes taken out of your check every two weeks, it is quite another to put it into net versos gross annual terms. Coming to the realization that nearly all of what I earn goes into someone else's checkbook has given me the true meaning of words I long tried to exemplify, and if I may paraphrase Ayn Rand, " An end must be put to the infamy of paying with one life for the errors of another." - Ed K.

Sunday, December 15, 2013

Saturday, December 14, 2013

Friday, December 13, 2013

James W. recommended this market analysis: Five Charts: The Real Story Behind Silver

If you've ever wondered which charities are top-heavy, R.B.S. recommended this site: Charity Navigator. BTW, I was pleased to see that Compassion International (one of my favorite charities) was so highly rated.

Items from The Economatrix:

Billionaire Eric Sprott - The End Game Is Absolutely Horrifying

Chart Of The Day: US Labor Force Declines By 25,000 In Past Year Despite 2.4 Million Rise In Employable Americans

Washington Is Standing In The Way Of US Recovery

Thursday, December 12, 2013

Wednesday, December 11, 2013

Sherry K. suggested: Farmland holding value in tanked market

Frequent content contributor H.L. sent this: Gold Smuggling Increases 7x In India And Surpasses Illegal Drug Trade

J. McC. mentioned another peril of using social media: Two million Facebook, Gmail and Twitter passwords stolen in massive hack. [JWR's Comment: In today's world, your digital persona can be submitted as evidence in both civil and criminal trials. All that it would take is a malicious hacker gaining control of a moribund Facebook or Twitter account to commit wholesale character assassination that might not be detected for months or even years. You could lead a quiet, moral and peaceable life and yet be greeted some morning by a SWAT team with a no-knock warrant--later learning that they came calling because in the fictitious cyber world you have been branded as a racist-bomb-building-dope-smuggling-pedophile-hater. I say again: Avoid enrolling in social media!]

Items from The Economatrix:

Horrific Consequences: “People Don’t Understand the Scale of the Emergency That’s Going On Right Now”

White House: Extend Jobless Benefits

GDP Figures Revised Much Higher, But The Numbers Aren't As Strong As They Appear 

Tuesday, December 10, 2013

Monday, December 9, 2013

Mr. Rawles:
Can you tell me in simple terms how will the current Federal budget crisis and the credit market turmoil play out, in like the long run? How can I protect my savings, in all this chaos? Which are the safe currencies? Thanks, - S.G.

JWR Replies: Physical gold is presently heading to China in huge quantities, month after month. (Roughly 1,000 tons of gold per year!) At some point in the near future, the banksters of the West will run out of gold and be left with nothing but a paper-based house of cards. Following the current period of deflation, the end game for Dollar-based debt will likely be: hyperinflation domestically and a concurrent partial debt default, internationally. Mass inflation is the ultimate stealth tax and bail-in. There is no "safe" currency. Your only escape from all of this will be in the form of tangibles. First get your money out of banks and the stock market. Then parlay most of those funds out of Dollars and into practical, barterable tangibles.

Sunday, December 8, 2013

Professor Laurence Kotlikoff: $200 Trillion in Long Term Obligations and Fed is Printing 29 Cents of Every Dollar

G.G. flagged this bellwether event: Chinese Yuan Surpasses Euro, Becomes Second Most Used Currency In Trade Finance

After the recent looting spree in Cordoba, Argentina: "Cleanup on Aisle Three." [JWR's Comments: People will come unglued and start looting when the police go out on strike, or otherwise don't show up for work. Count on it. Oh, and by the way, store owners will have to Go Full Koreatown, and gun up, or lose everything.]

Items from The Economatrix:

Too Big To Fail Banks Are Taking Over As Number Of U.S. Banks Falls To All-Time Record Low

Why The U.S. Economy Should Be Scared Of The Amazon Drone

Saturday, December 7, 2013

Reader Bob C. notes " interesting divergence between risk money (hedge funds), smart money (institutions) and dumb money (retail investors)": Institutions Have Been Dumping Billions Of Dollars Of Stocks All Year, But Now The Selling Is Really Accelerating. (At the same time that some middle class suckers are borrowing money to buy over-valued stocks, the smart money is heading for the hills!)

It Will Implode: “We Will See The Demise of the Dollar”

Items from The Economatrix:

‘Underground’ Economy Signals Soft Growth

US Car Sales Jump In November

Expect Devastating Global Economic Changes In 2014

Friday, December 6, 2013

Icelanders Overthrow Government and Rewrite Constitution After Banking Fraud - No Word From US Media

Which Currency Is Up Over 9000% This Year and Sells for Almost as Much as an Ounce of Gold? JWR's Comments: I've been recommending the use of Bitcoin since May of 2011. $100 put into Bitcoin at that time would now be worth thousands. Of course Bitcoin is virtual, so it should not be confused with genuine money (like gold or silver), which has inherent practical value. But at least there is a finite limit for the world supply of Bitcoin, which is more than can be said of all of the various fiat paper currencies. In the long term, all paper money eventually reaches its real value, which is its value in kindling fires. Not so for precious metals, which hold essentially the same value today as when they were first mined and refined, even if that was thousands of years ago.

Only 16 cents on the dollar??? Detroit Eligible To File Chapter 9; Pension Haircuts Allowed Bankruptcy Judge Rule.

Looking inward: Indonesia Rejects Extension of Chevron Oilfield Contract

Items from The Economatrix:

Are Another 1.3 Million Americans About To Drop Out Of Labor Force (And Send Unemployment Plunging)?

Inflation Watch 2013; Price Of Christmas Surges 7.7%

Why It's Going To Be A Whole Lot Worse Than In The 1930s

Thursday, December 5, 2013

Wednesday, December 4, 2013

Tuesday, December 3, 2013

Monday, December 2, 2013

Sunday, December 1, 2013

Saturday, November 30, 2013

Friday, November 29, 2013

Wednesday, November 27, 2013

Tuesday, November 26, 2013

Monday, November 25, 2013

Sunday, November 24, 2013

Saturday, November 23, 2013

Friday, November 22, 2013

Thursday, November 21, 2013

Wednesday, November 20, 2013

Tuesday, November 19, 2013

In today's economic environment, spot silver below $21 per Troy ounce is a bargain. For those who don't consistently make dollar cost averaged silver purchases, this is a good time to hedge into physical silver.

Some clips from the 2013 Sovereign Man Offshore Tactics Workshop, Santiago: Violent Revolution coming to Europe; Ron Paul, Nigel Farage, Jim Rogers

Cue up an Asian rendering of Carmina Burana or some other ominous doom music: Canadian Province Issues Offshore Yuan-Denominated Bonds. (Thanks to AmEx for the link.)

Ann Barnhardt: The Survival of Civilization Depends on You.

Venezuela jails 100 'bourgeois' businessmen in crackdown. (Thanks to H.L. for the link.)

Items from The Economatrix:

Citi Warns "Fed Is Kicking The Can Over The Edge Of A Cliff"

The Fed's 100-Year War Against Gold (And Economic Common Sense)

Moody's Cuts Top Banks' Debt Ratings; Doubts Feds Would Bail Them Out

Monday, November 18, 2013

It appears that Federal Reserve Governor Janet Yellen will be taking over as Fed Chairman soon. (Although, I suppose that in the politically correct Newspeak, she will ignominiously be called a "Chair." ) As she assumes command of that soiled centenarian private banking cartel, all that I can say to her is: Welcome to the Crack House.

Back in April of 2012, I wrote: "Remember when I compared Quantitative Easing debt monetization to crack cocaine addiction? It appears that Tim Geithner and Ben Bernanke have moved up to the level of co-dependency and are only one step away from collapsing on an uncovered mattress on the floor of a squalid roach-infested apartment."

I still stand by my assertion that the Fed banking cartel and the Treasury Department are hopelessly addicted to debt monetization, commonly called Quantitative Easing (QE.) At this stage, the Fed cannot stop monetizing without triggering an economic tsunami. Presently, they are creating $85 billion per month out of thin air. The Fed is now consistently buying 70% of the bond supply each month, and now owns 32.47% of all 10 Year equivalents. The net effect of the continuing Free Money Fix has been a false economic recovery, artificially low interest rates, and a zombie housing market. (It looks like it is breathing, but in reality it is still putrefying.) Again, the Fed cannot stop or even slow down their monetization, or the entire system will collapse. Mutual fund manager Peter Schiff has called the Fed's predicament "QE To Infinity," and he's right. There is presently no exit strategy for the Fed, and in fact there can be no exit strategy. I now foresee monetization increasing in the months and years to come. Then there will come that inevitable Gideon Gono moment, when confidence in the Dollar is lost and it becomes effectively worthless.

You're now the Madam of the Crack House, Janet. You might as well accustom yourself to your new surroundings, and buy yourself a dress suitable to playing the part. This is your new life, so get used to it. There is no rehab available. Tell your Wall Street buddies that their "fix" will continue to be handed to them through that hole in the door. Keep that QE money pumping, Janet. Laissez les bon temps roulez.

There is nothing more addictive than a free money fix, is there? - J.W.R.

Sunday, November 17, 2013

Saturday, November 16, 2013

Friday, November 15, 2013

Thursday, November 14, 2013

Wednesday, November 13, 2013

I noticed that spot silver just took a dip to below $21 per ounce. For those who don't dollar cost average, this would be a good time to make a purchase.

From OSU's Socratic Club: A couple of good illustrations of the perils of socialism.

G.G. suggested: Larry Kotlikoff Asks "Is Hyperinflation Around The Corner?

By way of Ol' Remus (who is now back to regular weekly posts): 36 Times Obama Said You Could Keep Your Health Care Plan

Items from The Economatrix:

Huge Cracks In US Financial Fortress, Petro-Dollar Final Death Throes

U.S. Unfunded Liabilities: The Coming Big Squeeze on Your Wallet

IMF Proposing 10% Supertax Bail-In On All Eurozone Household Savings

Tuesday, November 12, 2013

Monday, November 11, 2013

Sunday, November 10, 2013

Saturday, November 9, 2013

Friday, November 8, 2013

Thursday, November 7, 2013

Wednesday, November 6, 2013

Tuesday, November 5, 2013

Monday, November 4, 2013

I never paid much attention to warnings of [mass inflation or] hyperinflation. Because most discussions about hyperinflation only mention the loss in value of savings, and I have none (in the form of dollars, anyway) I blew this off as a threat that wouldn't affect me.

But I recently realized that the threat of hyperinflation to folks like myself, who live paycheck to paycheck is not the loss of value of our savings. Rather it is the time it takes our pay-rate to catch up with the new price of the goods and services we purchase... if it catches up at all!

I think my best hedge against hyperinflation is a small business venture that would prove successful during poor economic (and possibly downright primitive) times.

Thank you for the great blog and books! - Sam F.

JWR Replies: You are correct. In anticipation of mass inflation and wild swings in the valuation of international currencies, the safest approach would be to invest in inflation-proof tangible goods that would be the core of your business inventory, or the raw materials needed to make a product. Although you will still be at the mercy of inflated postage and shipping costs, at least your inventory will hold its value, even as the Dollar itself melts away in the blast furnace of inflation.

Sunday, November 3, 2013

Saturday, November 2, 2013

Friday, November 1, 2013

Thursday, October 31, 2013

Wednesday, October 30, 2013

Tuesday, October 29, 2013

I was unexpectedly laid off two years ago.  Although I eventually landed another position after months of searching, losing my job was perhaps the most humbling and painful experience I’ve been through in recent years.   Truth be told, I was also bitter.  The frustrations of hunting for a new job in a tough market, starting up a sideline family business and wondering where in the world my family of six will end up really began to take their toll.  I sorely needed a distraction and an excuse get out of the house! On a whim, I started going to auctions.   

Auctions have become an avid interest –they’ve taught me new negotiating skills, how to identify bargains and they’re an avenue for extra income to shore up our finances.  Surprisingly, I found auctions to be an exceptionally good source of prepping and barter supplies.  You can buy many items for pennies on the dollar, and others for bargain price that won’t break your budget!

What types of supplies can be found at auction?  Here’s the abbreviated list of items I’ve bought or seen up for bid at even small country auction houses:

  • Military surplus including ammo boxes, clothing, backpacks, boots, helmets, Gortex parkas, rain gear, manuals, and gear components like magazine pouches, radio carriers, etc.
  • Shortwave and CB radios
  • Antique, fully functional fruit and vegetable presses
  • 90% silver coins
  • Firearms (antique and modern), parts, tools and accessories like magazines, scopes,  and cleaning kits
  • Archery and fishing equipment
  • Tools, including plenty of quality hand tools
  • Welding Equipment
  • Camping equipment including high quality sleeping bags, lanterns, stoves and cooking accessories
  • Reloading equipment including dies, presses, books, parts and bullets/casings.
  • Navigation:  maps, compasses and GPS equipment
  • Communications equipment including old shortwave radios with tubes to modern CB radios, marine radios, and handhelds.
  • Canning equipment and supplies, modern and hundred year old food dehydrators.
  • Freezers
  • General household supplies for stocking a retreat
  • Lockers for storing stuff in your basement
  • Vehicles, campers, tractors and ATVs
  • Cases or personal hygiene items such as soap, shampoo, razors – convenience store stuff
  • Tractors, ATVs, farm equipment and gardening supplies
  • Extra large trailers in new condition selling for more than 50% off bottom line dealership prices.
  • Large heavy duty plastic containers with weather stripping and lockable tops for shipping military stuff overseas – great for storing your preparedness items in quantity!

The list is nearly endless!
Before touching on key topics, remember these important points:  There is no risk in attending an auction – absolutely none!  If you don’t bid, or if you don’t win, you walk out without having spent a dime.  In fact, for your first 1-2 auctions, you should just sit and observe.  You can learn a lot by watching people who have been attending auctions for years!  However, if you choose to bid before you understand the way auctions work, you can easily overpay and/or blow your budget.  Start out slowly! 
If you have no experience with auctions, you’ll need a few tips and ground rules to get you started before you give this fun adventure a try.

Locating Good Auctions

My favorite sources of auctions are and I’ve also found estate auctions advertised in local newspapers and on Craigslist. If you’re already visiting yard sales during the day to find prepping supplies at bargain prices, you can work auctions into your routine since many are held in the evenings. Write down the times and dates of auctions you are interested in, so you can map out an efficient route and conserve time and gas money.  If you attend a significant number of auctions, you will start to find there are certain auctioneers that know how to run a fast paced and well organized auction.  Get on their email list!

Know What’s Being Sold Before You Go
First, you need to locate auctions that are offering the kind of merchandise you want to buy (this is a great time to refer to your list of prepper related needs and wants).  If you aren’t careful, you can waste a lot of time and gas money traveling to an auction that won’t be selling items you’re interested in.

Carefully review online auction descriptions and image galleries to understand what is being sold.  If details aren’t available, ask the auction house for an inventory list.  I specifically look for keywords in the following categories:  camping, guns, reloading, surplus military equipment, silver (coins or bars), knives, canning equipment, farming equipment and tools.  If these items are present at an auction, chances are there are others that aren’t on the web site.

Auction location is also important.  City auctions tend to offer higher priced items such as art work and collectibles.  You can also find city auctions that offer tools and building supplies.  Rural auctions almost always offer items that are of interest to preppers, including farm and garden tools, workshop supplies, even tractors and trucks.  As with any auction, you have to be very careful to verify the items offered meet the general theme of what you are looking for.

If you see one or more of these items listed at an estate auction, chances are the estate will be selling off many items you’ll be interested in.  If you see the same items at a combined auction run by a traditional auction house, you may need to be a little more discriminating.  Some auction houses combine many unrelated lots of merchandise together and you’ll need to wade through baby items, vinyl records and 1970s clothing to get what you want.  I haven’t found anyone that still likes polyester leisure suits.

Here’s the list of items I consider as I choose which auctions to attend:

  • Location – how far are you willing to drive?  Gas money adds up, especially at today’s prices.
  • What’s the auction house premium?  This is commonly 10% but can be more or less.
  • Does the auction accept debit cards, credit cards, checks and/or cash?  Ask in advance!
  • Is there a discount for paying in cash?
  • Is there an extra fee for using a credit card?  Some auction houses add a 3% fee for the use of credit cards.
  • Who is calling the auction?  Do they have a good reputation for delivering an organized event?
  • Will the auction help you load larger items into your vehicle?
  • How well advertised was the auction?  The less advertised, the better.
  • Will food or snacks be served free of charge for a reasonable price?  This is an important detail that should not be overlooked, especially if you are bringing children.  Some auctions can easily run for 5-6 hours.

Research Merchandise Values.
Okay, let’s assume a few items at a particular auction have caught your eye.  How do you know what fair value is, and more importantly, what a good bargain price is?  Look at closing prices on online auction sites like eBay (you can use your smart phone for this).  You may also let your experience buying at both yard sales and retail locations help guide you to the right price.  Ultimately, your goal is to purchase items you can use in your preparedness plan at a bargain price (i.e., a survival knife or a pre-1965 90% silver coins with common dates.)

You can also flip auction items to make a profit.  The same valuation research you use to identify items for your supply stash can also be used to recognize bargains that can be sold for a profit now or during TEOTWAWKI event.

My research includes adding specific items to a spreadsheet, adding notes about fair market value, and notes about low and high selling prices.  I also set a limit on how much I am willing to spend on a particular item.  I bring these notes with me as part of my auction kit.

What should you bring?

  •  Your notebook with notes on items that you would like to bid on, and for recording details about your winning bids
  • A predefined budget that you will not exceed
  • A small calculator to keep track of your purchase totals
  • A sturdy bag or two, or a box to carry your items away in
  • A small quantity of 3x5 cards with your name and cell phone number on them.  If you win a larger item that cannot be handed to you at your seat, quickly write your bidder’s registration number on the 3x5 card for the auction assistant to tape to the item.
  • Payment in the form of cash, credit card, check or debit card
  • An iPhone, iPad or other smart device to research prices on the fly
  • A good partner (i.e., spouse) to stop you from bidding too much on an item (shin kicking works)
  • A small supply of snacks, bottled water
  • A good sense of humor – you’ll need to laugh it off when the auction-savvy 12 year old kid seated to your right and the white haired great grandmother on your left take turns owning you in the bidding process.
  • Cash – remember to stow it in a safe place on your person.

Where should you sit?
Get a seat close to the front, but at least a few rows back and be in clear view of the auctioneer or their assistants.  Why not sit in the front row?  I like to watch people who are more savvy than I am.  If they stop bidding or shake their head “No”, then they have reached their limit on what they are willing to bid and for very good reason.  I use their reactions as a queue to stop or slow down my own bidding if I am not knowledgeable about the item being sold.  Once you’ve selected a seat, place a piece of paper on the seat with your name on it.  This prevents the seat from being claimed by someone else while you are inspecting merchandise before the auction begins.  Experienced auction attendees seem to honor this seat code – many place masking tape on the seat with their name on it so it cannot be blown off.

Inspect Merchandise Before the Auction Begins!
If the auction house is close to your home and allows previews prior to auction day, take advantage of this opportunity.  You may find that the auction is not the right one for you and wisely choose to spend your time at another venue.

Plan to arrive at least an hour early on auction day.  Review all the merchandise on the floor and go through boxes.  It’s time well spent – you’ll see many items that were not included in the online auction gallery.

Carefully review the items you plan to bid on, even if you previewed them the day before or online.  Why?  Online image galleries don’t always show the true condition of each item. Sometimes items can be damaged when handled in preparation for the auction, more may be added at the last minute, and you want to make sure high value items like coins weren’t switched.  Mildew and cigarette smoke odors may also be present on the item.  Mechanical items must be checked for functionality and long term serviceability.

When Should You Bid?

Once the auction starts, don’t be the first bidder.  Let’s use a common camping lantern in well used but serviceable condition as an example.  The auctioneer may start the bidding at $50.  Nobody in their right mind would bid that high.  He’ll continue to reduce the bid until somebody bites (usually $5 on an item like this).  Once the first bid goes in at $5, hold off on bidding yet again until others have bid up the price a little.  The strategy is to suppress the price.  If you bid too early, the price may run much too high and someone (probably you) will be overpaying.   Wait for the bidding to slow down.  If the price is still below your target, bid with a pained look on your face.  It adds to the drama.

Note:  When you’re the winning bidder, remember to write down specifics such as a short description of the item, the winning bid price, and where the item was placed if it wasn’t given to you at your seat.  Auction houses occasionally make mistakes and enter a wrong winning bid amount, and items placed outside of your possession have been known to disappear.  Most auctions have rules that say once you are the winning bidder, you own that item, even if you haven’t paid for it yet!

Don’t get caught up in the rush of bidding on a particular item.
It’s not worth overpaying for any one item unless you absolutely must have it.  If you start attending auctions on a regular basis, you’ll see the same or similar items on the auction block a few weeks later.  You can bid again.  For instance, let’s say you wanted that camping lantern but your maximum bid of $15 wasn’t enough.  Somebody else got it for $17.50.  Don’t kick yourself.  You may see a top end Dietz lantern a couple of weeks later and get it for your bid limit.  I’d rather have the Dietz in my prepping supplies, wouldn’t you?

Occasionally, it’s okay to take a risk on an item when your gut instinct is telling you the winning bid is still a bargain.  I recently bought a very ornate and heavy cast aluminum mailbox that was resold for 10 time what I spent on it... and I know nothing about mailboxes!  In another round of bidding, a knife nobody wanted turned out to be worth quadruple what I bought it for.  A box of coins with a few 90% silver dimes mixed in with other odd coins turned out to have 75 pieces of 90% silver dimes and quarters at the bottom; nobody bothered to dig through the box before bidding started.

Once the auction closes (or you’ve hit your spending limit), proceed to the cashier.  You’ll be paying the winning bid price, plus the auction house premium (often 10%), plus a credit card transaction fee if you are not paying in cash, and sales tax.  On the topic of sales tax, it’s a good idea to know your state sales tax regulations.  In my state, we are not charged sales tax on currency or bullion purchases.  I’ve had to educate a cashier on this topic on more than one occasion.  I now bring printed copies of the relevant sales tax regulations.

Remember to tip workers who help you load heavy items into your vehicle.  Chances are you’ll be seeing these people again if you continue to attend regional auctions.

Using Auctions To Source Items For Profit

A word of warning:  BE CAREFUL!   It’s very easy to lose money in the resale game.   If you are going to do this for profit, it’s wise to pick a few classes of merchandise and build your expertise.  You need to possess a solid understanding of how each item is valued and its resale potential.  For instance, I’m a fan of antique pocket and survival knives.  Early on, I overpaid for knives I thought were worth more than my winning bid.  Those mistakes were sometimes painful!  I made it a point to understand exactly what I was bidding on, the resale potential, and all costs involved in buying that particular knife and reselling it via other channels.  I am far better off not bidding on an item if I don’t know enough about it.  75% of the time, post mortem research proves I would have overpaid.  To summarize – don’t buy something to resell for profit unless you are confident in your knowledge of the resale market.

[JWR Adds: I recommend that you assemble a reference library that can serve you both for establishing the authenticity of goods, and for establishing their relative values. Be sure to print out some useful data and weight conversion formulas, and keep those pages in a reference binder. In my estimation, you will need your own copies of the following books:

Buying definitive references is a wise move that will keep you from making some costly mistakes. This preparation fits in with the old saying: "It takes money to make money."]

Dealing With The Competition
You are going to meet a long list of interesting people.  Almost everyone I’ve met has been warm, friendly and polite… until the bidding starts.  That nice little old lady that chatted with you politely before the start of the auction?  She’s now a stone cold blood sucking vampire zombie glaring at anyone trying to bid on “her” depression glass.  I’ve also seen Mr. Friendly lean over and talk to their coin buying neighbor while Mrs. Friendly took advantage of the distraction by offering the winning bid on a few silver half dollars. Stay focused, but remember to have a little fun laughing at the cast of characters!

What About Storage Unit Auctions?
You’ve seen or heard about the popular television show Storage Wars.  Bidding on storage units can be fun and frustrating at the same time.  If you are looking for TEOTWAWKI supplies, you may find a few units that meet your criteria.  Less than 5% of the units contain what I would consider useful to a prepper.  For example, one unit was filled with high quality gardening and landscaping supplies and sold for $175, and another unit had a significant quantity of camping and outdoors gear but the winning bidder clearly overpaid.

You don’t really know what you’re getting at these auctions since you are not allowed to actually touch the contents of the unit prior to the end of the auction.  Storage units are always a gamble.  That said, we have bought a few units and they’ve yielded very interesting items including brand new freezers,  complex first aid kits, an expensive portable heart defibrillator, and office equipment.  I bid on storage units for profit, not necessarily to source prepper supplies.

Attending storage auctions is not for the faint of heart.  I’ve heard more than one high bidder grumble, “I’m paying them for the privilege of clearing out all this worthless garbage!”  That’s right – you get to cart everything you don’t want down to Goodwill or the dump.  Keep that in mind while bidding!

Don’t rule out GoodWill and Second Hand Stores
With careful shopping, you can pick up extreme bargains at your local second hand stores.  Finding bargains is an exciting prospect.  I’ve seen plenty of old, sturdy ball jars, canning equipment, flashlights, hand tools (including high quality American made brands), power tools, survival/preparedness books, and even oddball items like gas regulator valves.  The items can be quite unexpected – from mosquito netting to binoculars or a (previously) expensive backpack.  Favorite finds have been a serviceable Benchmade Knife for $2.85 ($125 new), cold weather famous brand pants for $15 ($150 new), cast iron cookware, and some very expensive clothing for my children at absurdly low prices.  I also buy my work clothing at GoodWill stores - $70 unused current style dress shirts for $12 or a pair of expensive khakis for $3 on half price day is nothing to laugh at.  One trip to the dry cleaners and they are added to my wardrobe.

My favorite items to shop for at Goodwill include clothing, especially items that can be stored away for future use or charity.  In most cases, I am buying these items for 70-90% off the original cost.  It’s not difficult to source lightly used boots (including military surplus), name brand quality cold weather gear, top quality gloves and brand new garments with tags.

Shopping at second hand stores can be hit or miss.  As with auctions, if you have a plan, you can make the most of your time and money.  Here’s a quick list of my “rules”:

  • Know the locations of all the stores you’d like to visit.  Stores located in prosperous neighborhoods in larger cities or suburbs are great targets.
  • Call stores in advance to ask about discounts.  Some charity based stores will give you a hefty discount if you make even a single item donation when you arrive.  One of our local chains offers a 20% discount on that day’s purchases when you donate unwanted items.  Hmmm… 20% off items that I’m already getting a 75% discount on?  Score!  Other stores discount color coded price tags tags by up to 50% but only do so on certain day of the week.
  • Travel to each store in the most efficient manner possible to save fuel and time.
  • Move through quickly.  Look at each shelf and rack carefully, but do so with a keen eye for top quality supplies.
  • Bring your list of needs and wants.  If the item isn’t on your list, or is not a good addition to your prepping inventory, pass the item by.  These items can still add to a large tab when you check out.  By the way, this is where it pays to have an extensive list of supplies you want to add to your prepping inventory.
  • Don’t break your budget!  If you can’t afford it now, it will show up again later in another store.
  • Finally, before making a purchase, do the look-sniff-try it test.  Look all over the items for defects.  Sniff clothing for odors.  Try all items for functionality – zip zippers, button snaps, even use a local outlet to plug in tools to see if they work as designed.

Ready to have some fun?  Get Going!
It’s easy to get caught up in the negativity of preparing for whatever challenging TEOTWAWKI scenarios lay ahead.  Go have some fun - attend an auction or two and walk away with a smile on your face!

Final Note: God’s blessings and answers to prayer arrive in some of the least expected ways.  Although I lost my job, I learned how to source items to add to our preparedness inventory at very low prices.  We were also offered a relocation package as part of my new job that put us within a stone’s throw of the Redoubt, and we’re now hunting for a property to settle our family.  To God goes all the thanks, praise and glory!

Monday, October 28, 2013

Sunday, October 27, 2013

Saturday, October 26, 2013

Friday, October 25, 2013

Thursday, October 24, 2013

Wednesday, October 23, 2013

Faber: Fed's QE Causing 'Colossal Asset Bubble' (Thanks to B.B. for the link.)

Andre D. sent: Down and out: the French flee a nation in despair. Mike Williamson wrote to mention that it is pitiful to see young Frenchmen actively seeking job experience in Vietnam, because of the relative economic freedom versus socialist France.

Also from Andre: Barroso in urgent push for extra €2.7bn Commission budget - EC no longer able to shoulder financial obligations, says parliament president

Items from The Economatrix:

Maguire Predicted Gold Surge - Now Says West Is Collapsing

The Frightening Reality About What Is Happening In The US. "[T]his morning one of the Chinese rating agencies downgraded the US.  This may not be seen as significant as one of the major rating agencies downgrading US debt, such as Fitch or Moody’s, but it lit the gold market on fire and tanked the US dollar..."

Blue Pill Of Debt Exchanges Temporary Increase In Debt For Inflation: Taking The Blue Pill Of A Fabricated World Addicted On Debt As US Standard Of Living Hits 10-Month Low.

Tuesday, October 22, 2013

Not too late to register! Nampa, Idaho Appleseed October 26-27, 2013. (BTW, you've got to love a state where television stations list events like that, at their web site. Somehow, I don't think that would be likely for a television station in New Jersey.)

   o o o

Wyoming apparently got a bad "homophobic" rap, in the much-publicized death of Matthew Shepard. In The Book of Matt: Hidden Truths About the Murder of Matthew Shepard, the author documents how Shepard's death was at the hands of another man with whom he'd had sexual relations, and was about retribution in an illicit methamphetamine deal gone bad, rather than "gay bashing." And it is now clear that his murderers were not strangers. They knew Shepard well. And now we learn that one of him knew him in the Biblical sense.The lesson in all this: Don't take mass media reports at face value. Their reporting is often driven by political agendas and social engineering goals.

   o o o

A great north-central Idaho flying video from Ttabs: Just Another August Morning. Disclaimers: The haze (atypical) was from some forest fires. No animals were harmed in the making of this film. But one was shaken up bit. The pilot notes: "Recorded in mid-August. I departed Elk River Idaho and for a while, headed into the Clearwater Mountains and the north Dworshak Reservoir to do a little scouting for elk. I then headed to the west where I hit the vaulted wheat fields around Kendrick, Idaho and proceeded SW to Lapwai Idaho where I began a climb up to the Camas Prairie and finely landed at Craigmont Idaho for a break. "

   o o o

New beginning: Father of Benghazi hero moves to Bigfork [Montana]

   o o o

Here is yet another success story for a home-based business that allowed a family to move to The American Redoubt, and to thrive: Their clever honey spinners are made in the USA and are powered by an owner-supplied variable speed electric drill motor. (These are centrifuges used to extract honey from beehive frames.) They are located in Rexburg, Idaho.

   o o o

They've learned how to conveniently move from teat to teat, even in Idaho: Insurance exchange director quits, gets contract.

   o o o

A quantum leap in grid power reliability: The Western Interconnection Synchrophasor Program. In the Pacific Northwest, the Bonneville Power Administration (BPA) has been an early adopter.

Monday, October 21, 2013

The recent political crisis over the delayed raising of the U.S. debt ceiling was just a precursor of a much larger crisis that will occur when interest rates inevitably rise. Once they do rise, it will become impossible for the Federal government to service its debt without massive monetization and concomitant mass inflation. There may also be some draconian stopgap measures such as levies on bank accounts (a.k.a. "bail ins"), nationalization of private pension funds, nationalization or forced common stock purchases for IRA and 401(k) plans, currency controls, bank holidays, bank withdrawal limits, currency recalls, limited access to safe deposit boxes, IRA and 401(k) withdrawals limits, and perhaps even another ban on privately held gold bullion.

For the past seven years I have urged my readers to diversify their investments out of U.S. Dollars and into tangibles. I am now repeating that with an even greater sense of urgency. It is high time to deliberately draw down you bank accounts and stop rolling over your CDs. I now urge my readers to gradually withdraw as much cash as you can, leaving only as much in your checking accounts as you need to pay your monthly expenses and to make your tax payments.

Beware of CTRs

If you have more than $10,000 in your account and you attempt withdraw it all at once, then by law your bank teller will fill out a Currency Transaction Report (CTR). These reports are available to the IRS and other government agencies. To avoid this, you need to gradually withdraw your cash, in unequal amounts, over a period of weeks or months. If you have a lot of cash to move, then one viable approach is to write checks to open bank accounts in other banking institutions, and then deliberately draw down those new accounts with numerous small cash withdrawals.(Less than $7,000 each.) According to Wikipedia, CTRs include "an optional checkbox at the top if the bank employee believes the transaction to be suspicious or fraudulent, commonly called a SAR, or Suspicious Activity Report." If your bankers suspects that you are "structuring" withdrawals, then they will feel obliged to file a SAR.

What to do with the cash you withdraw:

1.) Get your beans, bullets and Band-Aids squared away. This should be your highest priority. Don't consider "investing" in anything else until you get your key preparations established.

2.) Keep some greenback cash "mattress money" in small bills. If possible, keep enough cash for a couple of months worth of expenses. Again, keep it very well hidden at home, or bury it in waterproof containers.

3.) Only after accomplishing Steps 1 and 2, buy some physical silver. In the U.S., pre-1965 dimes, and quarters are the best choice. Keep your silver very well hidden at home, or bury it in waterproof containers. Make sure that you let a couple of trusted relatives know exactly where it is hidden, in case you might come to harm.

4.) Invest in some common caliber ammunition. Here is your shopping list, in a nutshell: Rifle: .30-06, .308 Win., 5.56 NATO, 5.45x39, 7.62x39, .30-30, and .22 LR. Pistol: .45 ACP, 9mm, .40 S&W., .357. 38 Special. Shotgun: 12 Gauge, 2-3/4" length. (Buy a good mix of buckshot, slug and birdshot shotshells, with an emphasis on buckshot.)

5.) Invest in some good quality battle rifles, handguns, and full capacity magazines.

6.) Buy productive farm or ranch land (with good pasture and hay ground) that is in a viable retreat region.

7.) Invest in your education. That is the ultimate form of portable wealth. A second stream of income may become important in the coming years, so getting an education in a practical trade would be wise.

8.) If you have substantial liquid wealth (more than $500,000), then start shuttling some of it offshore. But because of the coming currency fluctuations, I recommend that the majority of that be stored offshore in physical precious metals. If you don't already have a deeply trusted relationship with a family in your offshore host country (you should!), then you will have to trust a bank deposit box in your offshore host country.

9.) Buy a few books of "Forever" postage stamps. These may become useful for barter, as they will hold their value against inflation better than cash.

10.) Invest in a depression-proof business that is portable. (See the blog article links in my reply to these letters.)

11.) Build your personal reference library.

12.) If you are elderly, then invest in preparedness for your children and grandchildren. In the depths of the Second Great Depression, you won't be able to count on the government to help you. But you can count on your close relatives.

What NOT to do with the cash you withdraw:

1.) Unless you are a multimillionaire, don't buy large quantities of gold or gemstones. Not only is gold too compact a form of wealth for practical barter, but it is also far more likely to be confiscated than silver.

2.) Don't build up your Bitcoin wallet balance above 15 BTC. Because Bitcoins are a synthetic currency and Internet-based, they are subject the whims of larcenous politicians. Bitcoin transactions can be tracked, because nearly every Bitcoin transaction has a corresponding e-mail trail. (And anyone who thinks that their e-mails are all "safely encrypted" is fooling themselves.)

3.) Don't buy urban or suburban real estate.

4.) Don't buy a second home in a "resort" area. As I've mentioned before in SurvivalBlog, resort areas will be targeted by looters in times of social chaos.

5.) Don't invest in fine art, vintage wines, rare postage stamps, classic cars, or collectibles. Those will sell for just pennies on the dollar in the Depression. (If you want any of those, then wait for the opportunity to "buy low.")

6.) Other than some home security webcams, commo gear, a starlight scope, and a Dakota Alert passive IR intrusion detection system, don't waste your money on electronic gadgets.

7.) Don't invest in foreign currencies. There are no more "safe" currencies!

8.) Don't invest in foreign stocks. Tangibles will trump, worldwide.

9.) Don't over-prepare or over-invest in one area, at the expense of others. (For example, buying all guns and no storage food, or vice versa.) Balanced preparedness is the key!

Bottom line: The time for hesitation has passed. If you leave your liquid assets in a bank or in a savings and loan, then you are now a sitting duck.


Interest rate turmoil again affected holding company trading revenues heavily in the first and second quarters of 2013. According to the latest report from the U.S. Office of the Compttroller of the Currency (OCC), rate trading derivatives losses were $3.018 Billion in 1Q 2013 and $3.804 Billion in 2Q 2013.

It is noteworthy that the present-day casino in credit derivatives has built up in the era of ZIRP, where interest rate changes have been miniscule. The losses reported in the first two quarters were apparently triggered by the unexpected rate moves of less than 20 basis points. (Two tenths of one percent.)

While the total credit exposure to risk based capital has declined for the top four U.S. commercial banks that do derivatives trading, the notional value of their derivatives increased by $2.2 trillion, to $233.9 trillion. And JPMorgan (the world's biggest derivatives trader) just by itself holds derivatives contracts with a notional value of around $71 Trillion! (To be precise: $71,289,673,000,000.) To put that in perspective, the total value of the US economy is around $15 trillion.

The counterparty risk in credit derivatives would be gigamongous, if interest rates were to spike several full points, and any large institutions then subsequently failed. If you thought that the bailouts back in 2009-2010 were huge, then just wait and see what the next credit crisis brings. - JWR

I often have readers and consulting clients write to ask me about establishing family trusts. These are used to shelter assets including land, houses, vehicles, and firearms. In the context of present-day America, one of the goals of any good trust is anonymity. So I recommend that you pick a generic "vanilla" name that is innocuous and that is un-related to your family surname, your locale, the nature of the included assets, your politics, your religion, or your personal interests. The goal here is to have name that won't trigger suspicion or scrutiny. Some good choices would be "The Hallifax Trust" or "The Sunnyside Trust." Some bad choices would be: "The Porter Family Patriot Trust, "The Spirit of 1776 Trust", "The Auric Trust" or "The Kalashnikov Trust."

In the past, I've recommended creating a separate gun trust, primarily for NFA registered ($5 and $200 Federal transfer tax) guns and suppressors. But that window of opportunity appears to be closing. - JWR

Insider: Supermarkets Have Less Than One Day Supply Of Food On Hand

RBS sent a link to some fascinatingly detailed information: Farm Subsidy Data. RBS says: "The database tracks $256 billion in farm subsidies from commodity, crop insurance, and disaster programs and $39 billion in conservation payments paid between 1995 and 2012. Just enter your ZIP code and you will find who has taken subsidy money from the Feds."

Worth ranting about: Dylan Ratigan speak up about U.S. government obligations.

Items from The Economatrix:

Complete Collapse & Economic Meltdown Will Shock The World

Why The Gold Surge Is Just Starting: Peter Schiff

US Credibility Continues To Erode: Gundlach

Sunday, October 20, 2013

Saturday, October 19, 2013

Friday, October 18, 2013

New Jersey Island Won’t Get Its Landlines Back After Sandy Because Copper Is Too Expensive. [JWR Adds: It might be less expensive for the phone company to provide a 3-watt PV panel and DC-to-DC phone charger for each customer!]

K.A. and Michael C. both sent this Zero Hedge link: Foodstamp Program Shutdown Imminent?

The global copper supply glut is expected to triple in 2014--showing that the economic depression is continuing.

Items from The Economatrix:

Debt Deadline Approaches: Here’s What Would Happen If U.S. Defaults

This Is What Has The United States Truly Terrified

Fitch Places U.S. on Rating Watch Negative, Markets Slump

Thursday, October 17, 2013

Wednesday, October 16, 2013

To SurvivalBlog Readers:
I have gone back and read or skimmed the archives of every entry in SurvivalBlog since it's inception in 2005. I'm sure that anyone who has read even a small portion of this excellent resource has come to realize that a means of self-protection is critical in a SHTF situation and that firearms are the primary tool to that end. To those that may not yet be aware, many popular types of ammunition have been scarce and have become more expensive and attempts by the government to regulate sales and possession of ammunition are becoming more frequent. A particular brand and type of .22 ammunition that I bought in bulk in August of last year at 3.1 cents per round is now almost impossible to find at below 20 cents per round. Increased manufacturing and materials costs cannot account for this increase.  This has had an effect on the entire firearms industry.

Popular opinion as to why this happened is all over the place and includes reasons such as hoarding, manufacturers/distributors/dealers profiteering, scalpers, government intrusion into the market, etc. The shortage of ammunition and the run on the purchase of firearms appears to have started shortly after the last Presidential election. Again, opinion varies but many people feel that the President's apparent anti- firearms position along with an increase in urban violence and increased pressure on Government officials to "do something" about the "gun problem" has caused a run on the market. This run now appears to be subsiding slightly but is far from over after nearly a year.

This letter, however, is not about firearms or ammunition, gun control or politics. It is to draw attention to how thin the thread is that ties us to the things that we need for our daily survival. I may be "preaching to the choir" here but just imagine if some event were to occur that pushed the cost of your favorite kind of canned beans from $1.89 to just under $14.00! Yeah, you could change brands or stop eating beans but what if the event or events effected the entire food industry? What if the event or events effected the petroleum distribution industry? Trucking? Electricity production? Again, I know I'm preaching to the choir but the above example of ammunition is real and could have just as easily happened to something more critical to our daily existence than ammunition. We now have proof that hoarding, manufacturers/distributors/dealers profiteering, scalpers, government intrusion into the market, etc can occur in a very short period of time. We also now have proof that the event or events may not too obvious in the daily scheme of things and might even go unnoticed until it was too late to react. Notice how little it took to trigger the shortage and price increases noted above? What would happen in the event of massive crop failures, widespread climatic disasters, disease, wars, economic collapse, inflation, martial law, rioting, etc either singly or in combination?

There are statistics that show that there is one firearm for every three people in the United States. Out of every three people in the United States, how many of them eat? Drink water? Depend on electricity? Would that not make shortages and price increases occur even more quickly and severely when a greater number of people were effected and the involved items more critical to survival? JWR has said repeatedly that you should buy tangibles.  In my view, tangible does not mean gold coins that you can hold in your hand as opposed to a paper certificate saying that you own gold. Last year at this time, gold sold for $1,754 per ounce, today it is worth $1,271!  I have already shown you what some ammunition prices have done within that same time frame. If I had taken my own advice, I would have bought more ammunition instead of silver coins which have gone the same way as gold.

I'm not trying to suggest what you should  or should not buy. I'm just suggesting that the things we really need on a daily basis may be not be there when we need them or at a price we can afford and that a seemingly insignificant series of events could trigger the shortages and the hoarding, scalping, etc. etc. I know I am going to continue eating my favorite beans for some time and not at $14 a can!  We now have proof. The handwriting is on the wall. Read it.

Be safe and prep as if your life depended on it, - G.L.D.

Tuesday, October 15, 2013

Life imitates art: IMF chief: U.S. dance with the debt limit is ‘very, very concerning’ [JWR's Comment: Thankfully, she stopped short of saying: "default appears imminent." Perhaps next week someone from the Deutsche Bundesbank will make some off the record remarks...]

G.G. flagged this: U.S. Adds Two Times More Debt than Economic Output in Last Two Years

Shenandoah blog: Stasicare. (Thanks to B.B. for the link.)

P.W. sent this from Zero Hedge: They’re Coming for Your Savings

Also from P.W.: U.S. banks no longer too big to fail says Tucker

From The Economatrix:

If We Are In An Economic Recovery, Why Are Major Corporations Firing Thousands?

What China Really Thinks of the Shutdown

More D-Word: Tough choices if US Defaults:  Debt ceiling crisis could leave millions in lurch

Monday, October 14, 2013

Several readers mentioned this: Computer Glitch Blamed For Nationwide EBT System Shutdown On Saturday. The food handout computer system came back up late Saturday evening, but just imagine this happening in all 50 States and in all of the Territories for more than a week.

When some people vote with their feet, it gets noticed: Billionaire Branson Leaves UK for Caribbean Tax Haven

Items from The Economatrix:

Nothing Left To Financially Lose: Biggest Drop In Confidence Since Lehman Brothers And Why Some Are Unmoved By Government Shutdown.

Unemployment Claims Surge, Partly Due To Shutdown

Lew: Benefits at risk without rise in debt ceiling

Sunday, October 13, 2013

Jim Grant: America’s default on its debt is inevitable

National Pravda Radio (NPR) recently produced an infographic showing Everyone The U.S. Government Owes Money To, In One Graph. Laughably, it shows the 2.1 Trillion owed to the Federal Reserve shaded in blue as debt held by "Federal Government." I have a news flash for them: The Federal Reserve is no more "Federal" than Federal Express. It is a private banking cartel that was given a monopoly when it was created a century ago. So for Democrat Congressman Alan Grayson to suggest the Fed "cancel" its Treasury debt (as he recently did) would be like you asking your local banker to "cancel" your house mortgage, as a little favor. That isn't going to happen.

Items from The Economatrix:

Derivatives And The Government Shutdown: Wall Street Bets One Thousand Trillion Dollars Of Everybody Else’s Money

Gold Crushed! 2013 Losses Now Over 20%

Retailers’ Warning To Congress: You’re Killing Christmas!

Saturday, October 12, 2013

Friday, October 11, 2013

James Wesley,
I read your blog daily for news and inspiration. I just sold my house and have equity that we want to purchase a new home with...debt free, pay cash.We will be looking for a home in Texas, and hope to be settled in in the next 18 months. My question, what do I do with $200,000 in the mean time?  I'm terrified to put our earnings from the sale into a bank.
Thanks - Stacy D.

JWR Replies: In my opinion silver bullion (pre-1965 "junk" coin bags or 100-ounce serialized Engelhard bars) are your best bet, for an 18 month time span. With the recent dip in silver prices, you will at least break even, and might come out ahead. If secure storage space is at a premium, then you could opt for gold American Eagles. (Gold is presently 61 times more compact, per dollar.)

Until October 15th the documentary An Inconvenient Tax will be available via streaming to Netflix subscribers.

Economics Professor Laurence Kotlikoff: Oh, and By the Way, Our Government Is Totally Broke!

A useful primer: Rehypothecation of Collateral

G.G. flagged this: Five Alarming Facts About Entitlement Spending

Items from The Economatrix:

The D Word, again: US default seen as disaster dwarfing Lehman's fall "Among dozens of money managers, economists, bankers, traders and former government officials, few view such an event as anything but a financial apocalypse."

Peter Schiff Warns of Martial Law

Where Did The Gold Go?

Thursday, October 10, 2013

John E. sent this: Russia to Grab Pension Money, Temporarily

Michael Z. Williamson (SurvivalBlog's Editor at Large) spotted this: Obamacare's winners and losers in Bay Area. (One confused Dem resident of the People's Republic of California commented, after learning that his insurance rate would jump to $10,000 per year: "Of course, I want people to have health care. I just didn't realize I would be the one who was going to pay for it personally.")

The bond funds are still getting hammered by just rumors of Fed tapering: Gundlach’s Fund Had Its Biggest Redemptions in September.

Items from The Economatrix:

U.S. Treasury Warns Of What’s To Come: “Catastrophic Effect… Could Last For More Than A Generation”

Shutdown doesn't hurt us? That's bull

It's Official:  No Jobs Reports

Wednesday, October 9, 2013

G.G. flagged this: Families hoard cash five years after crisis. [JWR's Comment: Could it be that the collective conscious recognizes that the "recovery" is a charade? Not mentioned in precious meta;s saving, which is the norm in India, although actively discouraged by the government.]

MasterCard joining push for fingerprint ID standard. (Thanks to H.L. for the link.)

What the wealthy are doing to beat inflation

Items from The Economatrix:

The Biggest Drag on the Job Market Just Got Bigger

Catastrophic Consequences of a U.S. Default Explained

The Grand Financial Shift: Rich Own Assets While Poor And Working Class Deep In Debt. 70 Percent Of Wealth For The Bottom 80 Percent Locked Up In Principal Residence.

Tuesday, October 8, 2013

The release of the latest anti-counterfeiting edition of the U.S. $100 Federal Reserve Note is scheduled for today. The new bill has lots of pretty gold-colored elements on the right side, but like its predecessors ever since 1963, it has NO gold or silver backing. So this is just the latest in fiat funny money. I'm often asked by readers if they should gradually replace their stored cash when new currency is released. The general answer is yes, since there may come a day when the older bills are repudiated. (After all, what is the point of anti-counterfeiting features if the older currency is allowed to circulate side by side, indefinitely?)

Boehner says U.S. on path to default if Obama won't negotiate

A Depressed Bank Of America Predicts "Agreement Is Almost Impossible As Long As Obamacare Is On The Table"

At Zero Hedge: Greece Considering Confiscation Of Private Assets

Items from The Economatrix:

Going For Broke: The Multiple Lost Decades Of US Household Income. Is It Possible To Have A Recovery While The Standard Of Living Collapses?

US Banks Stuffing ATMs With 20-30% More Cash In Case Of Panicked Withdrawals

Private Sector Adds 166,000 Jobs In September

Monday, October 7, 2013

By the year 2020 we may be in the midst of (or in the early stages of recovery from) a major depression or perhaps even a full-blown socioeconomic collapse. An old saying is: "Hindsight is 20/20." So here is a gedanken: What will people observe in the year 2020, with the benefit of hindsight?
The following is my conjecture on what folks will cite when asked: "What went wrong?"

  • Profligate government spending at all levels
  • Multigenerational welfare
  • Rampant food stamp dependence (1/6th of the populace, as of 2013!)
  • Loss of American competitiveness
  • Declining academic standards and performance
  • Decline in manufacturing and a shift to a service economy
  • A systematically debased currency
  • Deteriorating roads, bridges, power distribution, and civic water systems
  • Increasing dependence on technology and long chains of supply
  • General apathy, moral decline, and degeneracy
  • Artificially manipulated interest rates
  • A declining work ethic and detachment from traditional self-sufficiency skills
  • Socialist policies, over-regulation, and over-taxation
  • Malinvestment in everything from wind farms to Tesla Motors
  • A narcissistic, self-absorbed, and overweight society
  • A populace obsessed with popular culture, fads, gossip, fashion, celebrities, and media sensations
  • A populace that ignores genuinely important issues
  • Statism
  • Corporate welfare
  • A corrupt crony relationship between Wall Street, the Federal Reserve banking cartel, and the Treasury Department
  • Enormous, uncontrolled debt--both public and private
  • Never-ending bailouts of public and private organizations, paid for with tax dollars.

They will also ask themselves: "What could I gave done differently, to be prepared?" They will realize that they could have, and should have decided to:

  • Move to a lightly-populated farming region that is well-removed from major population centers.
  • Learn traditional skills such as gardening, canning, hunting, welding, and home mechanics.
  • Network with like-minded individuals.
  • Get out of debt. and stay out of debt.
  • Stock up on storage food and other key logistics.
  • Arm yourself and get tactically-oriented firearms training.
  • Develop a second income stream with a home-based business that will be depression proof and resilient to mass inflation
  • Assemble a reference library.
  • Train in advanced first aid.
  • Get a ham radio license.
  • Become involved with your local farmer's market.
  • Join a local Volunteer Fire Department.

I don't claim to have any special insight on the future. But I can certainly see social, political, and economic trends and project their likely outcomes. The current trends do not bode well. Just by themselves, the public and private debt burdens will be enough to cause major problems in coming years. Get ready, folks.

Sunday, October 6, 2013

Saturday, October 5, 2013

Friday, October 4, 2013

Thursday, October 3, 2013

Wednesday, October 2, 2013

Reader Paul B. sent a link to a "must read" article on Quantitative Easing and the velocity of money, wherein economics professor Laurence Kotlikoff of Boston University asks: Is Hyperinflation Just Around the Corner?

Karl Denninger Goes Galt on His Tax Footprint: It's Called Evolution, Gentlemen (Tickerforum Changes)

A.M.B. sent: Government shutdown: Get up to speed in 20 questions

Items from The Economatrix:

The Job Situation Looks A Little Worse

Here's Why Unemployment Is Still At Unacceptable Levels

US Is Broke, Can't Afford To Raise The Debt Ceiling Says Schiff

Tuesday, October 1, 2013

Monday, September 30, 2013

Sunday, September 29, 2013

I was reading Tuchman's seminal work The Guns of August last night and found this quote, where she describes the emphasis in 1910 by author Norman Angell in his book The Great Illusion on how the increasing connectedness of business and nations would assuredly preclude future conflict:

'By impressive examples and incontrovertible argument Angell showed that in the present financial and economic interdependence of nations, the victor would suffer equally with the vanquished; therefore war had become unprofitable; therefor no nation would be so foolish as to start one.'

This cited work was published in 1910, just prior to the Great War.  Not only does this example from over one hundred years ago point out man's failure to learn from history, it also illuminates the path for those who choose to learn.  'He who has ears, let him hear' Mathew 11:15.

Recommend your readers who are interested in this idea of interconnectedness and system resilience read, in these books, in sequence:

1)  The Black Swan: Second Edition: The Impact of the Highly Improbable, by  Nassim Nicholas Taleb
2)  The Shock Doctrine: The Rise of Disaster Capitalism , by Naomi Klein (a Canadian Red Diaper baby but still a valid critique)
3)  The Guns of August, by Barbara Tuchman

Those who want to delve deeper into the idea of system of systems analysis (SOSA) can look to Complex Interdependence Theory, well articulated by Robert Keohane and Joseph Nye. 

As Frank Herbert says in his novel Dune, "The first step in avoiding a trap, is knowing of it's existence."  If the "trap" is system fragility, the trap-avoidance tactic/strategy is engendering system resiliency.  Readers of your excellent blog would be well advised to continue their preparations with the addition of strengthening local social, economic, religious and, yes, even political systems. - Tom K.

Saturday, September 28, 2013

Friday, September 27, 2013

Financial Betrayal - Collapse Assured

H.L. sent: Wild Hogs Roam Streets, Scare People Near Atlanta

Anthony M. forwarded this link: The Fed's 'hidden agenda' behind money-printing. Here is the crux of it: "The CBO estimates that by 2020 total debt held by the public will be $16.6 trillion as a result of the rising accumulated debt. Do the math: If we were to pay an average interest rate on our debt of 5.7 percent, rather than the 2.4 percent we pay today, in 2020 our debt service cost will be about $930 billion. Now compare that to the amount the Internal Revenue Service collects from us in personal income taxes.
In 2012, that amount was $1.1 trillion, meaning that if interest rates went back to a more normal level of, say, 5.7 percent, 85 percent of all personal income taxes collected would go to servicing the debt. No wonder the Fed is worried..."

Items from The Economatrix:

Quantitative Easing Worked For The Weimar Republic For A Little While Too

20 Ordinary Americans Talk About The Economic Despair That Is Growing Like A Cancer All Around Them

Dollar Crash Now Or Crash Later. How Long Can Gold Be Kept In The Box?

Thursday, September 26, 2013

Wednesday, September 25, 2013

I recently had the opportunity to see the 2010 documentary titled "Inside Job", via a rented Netflix DVD. It describes the background and aftermath of the 2008 global credit crisis. I highly recommend it. We are still paying for the mistakes (and crimes) described therein, as the bailout of the financial sector and bubble re-inflation continues, to the tune of $85 billion per month, via Quantitative Easing (QE). Regulators have done nothing to rein in the risk created by the global derivatives casino, which is now even bigger than in 2007. The Fed and the Treasury are busy re-inflating the credit and housing bubbles to even larger proportions. When the next credit collapse occurs (and it will, once B.S. Bernanke and Company lose control of interest rates), it will be cataclysmic for the markets, for the purchasing power of the Dollar, and for the livelihoods of the American people. Be ready for this: Minimize your exposure to Dollars, hedge into tangibles, get out of debt, and develop a second source of income.

Over at Zero Hedge: JPMorgan Says "Buy Gold"

Ron Paul - Bernanke Said The US Economy Is In Bad Shape! He's Getting Out Before Collapse!

Items from The Economatrix:

Dollar Down As Fed Officials Cast Doubt Over Taper

New Vs. Old On DJIA 30

Fed In "Monetary Roach Motel," Won't Taper:  Schiff

Tuesday, September 24, 2013

IRS: Cheapest Obamacare Plan Will Be $20,000 Per Family.

India's coin shortage worsens. Gresham's Law is showing its hidden hand. (Thanks to Diana for the link.)

Peter Schiff - Whatever the Fed Does, Gold Will Rally! US Economy Already Ruined. Schiff posits that the current "recovery" is artificial and the that Fed will increase Quantitative Easing. In the long run, interest rates must rise. Schiff foresees more QE, larger deficits, and another currency/sovereign debt crisis, so he is quite bullish on gold.

G.G. flagged this: U.S. disability rolls swell in a rough economy

Items from The Economatrix:

How The Fed's Bazooka Misfired:  QE-Infinity Sends Experiment Awry

To Challenge These Statements Is Blasphemous

Eurozone Recovery Fades - Will The U.S. Follow?

Monday, September 23, 2013

Travis Brown of How Money Walks On Fox Business: Is It Worth Moving To Another State To Save On Taxes? Brown says that taxpayers worth $2 Trillion have already moved. Note that $45 billion in net worth has moved out of California, primarily to Nevada, Arizona, Oregon, Texas, and Washington. The interactive web app at Brown's site is fascinating.

Speaking of voting with our feet, see the report: Location Matters, published by the Tax Foundation.

Michael Noonan of Edge Trader Plus: Gold And Silver – Fed Taper? Never! Never, Never, Ever

The U.S. Economy Is Close To Imploding

X22 Report: Please Believe Us,The Economy Is Recovering, Really!!

G.G. sent this one: Women Waiting Tables Provide Most of Female Gains in U.S.

Items from The Economatrix:

The Fed Is Trapped, and the Taper Won't Happen Until the Market Tanks

US home sales hit 6½-year high but could slow soon

Gold, Einstein, And The Great Fed Robbery

Sunday, September 22, 2013

James W. recommended: Derivatives, The Gift That Keeps On Taking. [JWR's Comment: I've been warning my readers about derivatives since 2006. That was two years before derivatives CDOs torpedoed the real estate market and triggered a recoveryless recession with bailouts that have doubled the national debt and tripled our money supply. Ironically, the magical smokescreen "solution" to the ongoing recession (actually just a forestalled Depression) has been Quantitative Easing, which creates $85 billion per month out of thin air, mostly by means of buying up Mortgage Backed Securities (MBSes), which are derivatives!]

The Never-Ending Charade Of Debt Ceiling Fights

Items from The Economatrix:

Obama’s ‘Lame-Duck’ Status Could Lead to Wall Street Woes

Gold Rallies on Fed’s Taper Delay; Jim Rogers Forecasts a Drop to $900

House Votes To Taper Foodstamps

Saturday, September 21, 2013

Friday, September 20, 2013

Thursday, September 19, 2013

Gold Is Not A Safe Haven? Tell That To People In Indonesia

U.S. on ‘unsustainable’ budget course: CBO

Fed Says: No Taper. [JWR's Comment: At this point, tapering from the artificial liquidity of "QE To Infinity" would spike interest rates, send the bond market into a tailspin, cause a derivatives tremor (if not a full tsunami), and crash the real estate market. Ben Bernanke has firmly backed himself into a corner. Ben will wean himself of QE about as quickly as your local crackhead will wean himself from his addiction.]

Don't say you weren't warned: Mulligan Mint Files For [Chapter 11] Bankruptcy

Items from The Economatrix:

Holiday-Shopping Season Forecast To Be Worst Since 2009

August Inflation Rises 0.1%, Less Than Expected Driven By Lower Utility Prices

Reality Is Breathing Down Bernanke's Neck

Wednesday, September 18, 2013

Investment Banker Alpert: 'Massive Deflationary Forces' Lurks

Money Versus Currency - Australian Comedian Michael Connell's View

25 Fast Facts About The Federal Reserve

Reader "Subman762" wrote to warn: "There have been some fake Chinese silver plated copies of Northwest Territorial Mint's Stagecoach silver bar circulating on eBay. The corner radii are a little off and the fakes come in plastic holders that open,while the genuine ones are sealed. I was unfortunate enough to buy some of them and they are very convincing. A scratch test quickly revealed their plated nature and the acid test produced mixed results, due to some silver being present. I saw your link to NWTM's web site and wanted to recommend buying directly from Northwest Territorial Mint and not via eBay."

Items from The Economatrix:

Summers Steps Out Of Fed Race

Industrial Production Misses For 5th Month In A Row

They Denied That We Were In A Depression In 1933 And They Are Doing It Again In 2013

Tuesday, September 17, 2013

Monday, September 16, 2013

Fed set to unveil tapering of asset purchases next week. [JWR's Comment: Don't be surprised if you hear that this decision is quietly rescinded, just a few weeks from now. Free money is more addictive than crack cocaine. And I'm sure that TPTB realize that any substantive "tapering" would throw the credit market into a tailspin. Merely talking about tapering is much more comfortable to the banksters. This is something akin to your local crackhead talking about gradually giving up his addiction--and just as likely.]

G.G. suggested: More Americans Struggle to Afford Food

Reader "Dollardog" recommended this: An empty storefront, and a $32,000 tax bill

Items from The Economatrix:

Labor Participation Lowest Since 1978

Employment Trending Down

Initial Jobless Claims Plunge Due To "Computer Upgrades" And "Faulty Reporting By States"

Sunday, September 15, 2013

CFPB's data-mining on consumer credit cards challenged in heated House hearing

Gainesville Coins has produced a handy infographic on how to spot circulating silver U.S. coins. (Statistically, your best bet is to search rolls of half dollars. Ask for a few rolls, the next time that you go to your bank.)

Items from The Economatrix:

US Income Gap Soars To Widest Since "Roaring 20s"

August Jobs Report:  Hiring Continues As Unemployment Falls

An Alarming Jump In "Job Losers"

Saturday, September 14, 2013

Prepping is never far from my mind. A few months ago I was talking with a friend and the subject of TEOTWAWKI (The End Of The World As We know It) came up.
Tom (not his real name) said that he would like to prepare for upcoming emergencies but didn’t know where to start. The answer was simple; start where you are.
Obviously most people cannot start with a full larder and weapons/ammunition cache. That is of course, unless you really do have all of that, in that case…well, that’s where you are.

I asked Tom what scenarios he wanted to prepare for. “Like what?” he asked. You know… EMPs, natural disasters like the Yellowstone Super Volcano, earthquakes, social breakdowns, pandemics…what?

He said, “Yeah. Those things.”

I guess he’s a lot like me. I really don’t know when or why I’ll need my preps…I just know that sooner or later I will!

The only difference in the end will be the timeline of the disaster. It could be years with a war or catastrophic natural event, or just a few days in duration like a blizzard. I wanna’ live through it all and I want all of mine to live, too!

To help Tom get started we did an inventory of what he had: food, medical supplies, stored water, tools, gardening supplies, clothing and shoes, finances, cash on hand, firearms and ammunition, and skill sets. We also took a long and hard look at his home and property.

We then drew up a plan to go from where he was to where he wanted to be. Since he was on a limited budget we needed to get creative.

As we looked at his discretionary income we discovered that he could squeeze about $75 USD per month from his budget.

“Is there anywhere else we can find some money?” I asked.

“I don’t think so”, he replied. Wow, this could take a really long time. Time we don’t necessarily have.

Since Tom and I are really old friends he allowed me to look at his budget. Right away I saw a few places he could cut down to “find some money”.
The following is a running tally of where we were able to gather some resources:
            He, his wife, and daughter all had cell phones. Eliminate land line, savings about $40 USD per month. Total $40 USD.
            Downgrade his satellite TV to basic package. Found money- $60 USD per month. Total $100 USD.
            Shopped for auto /home insurance (I know this guy…) savings $900 USD per year, equals $75 USD per month, total $175 USD per month.
            Take coffee with him eliminating Starbucks, saving $4 USD per day times 20 days per month equals $80 USD per month, total $255 USD per month.
            Tom eats lunch at a restaurant nearly every day. He spends $8-12 USD per, average $10 USD. If he packs his lunch and works through his lunch hour he can leave early and save $200 USD per month, totaling $455 USD.
            He also usually bought a candy bar and a Coke most afternoons. If he eliminated that he would save the money plus cut several hundred calories a week from his diet. I suggested he take a piece of fruit with him.  This cost him about $2.50 USD x 20 = $50 USD / month, totaling $505 USD per month.
            Tom’s wife works about 5 miles from home and her vehicle gets about 32 mpg. Tom on the other hand commutes 80 miles per day and only gets 17 mpg with his SUV. Let’s do some math:
Tom – 80 miles per day x 5 days per week = 400 miles per week divided by 17 mpg = 23.5 gallons of gasoline.
Mrs. Tom - 10 miles round trip x 5 days per week = 50 miles per week divided by 32 mpg = 1.5 gallons of gasoline.
If they trade vehicles Tom would have 400 miles per week divided by 32 mpg = 12.5 gallons and Mrs. Tom 50 miles per week divided by 17 mpg equaling 3 gallons of gas. The savings would be 12.5 gallons (Tom) minus 3 gallons (Mrs. T) or 9.5 gallons per week multiplied by the price per gallon, which was about $3.50 USD at the time we figured this. The savings was $33.25 USD per week x 4 weeks or $133 USD per month.
This added to the $505 USD savings we already had came to$638 USD plus the $75 USD he started with, brought him to over $700 USD per month to start his preps. This totals $8,400 USD per year. Your mileage may vary.

With figures in hand we decided to start a “Prepping Budget”.  We didn’t want to spend all $700 USD on food or guns or on just any one item. We wanted to spread it around so that if TEOTWAKI hits next month he will at least have a little of everything.

Water storage is probably the least expensive item to complete, and next to air and shelter is the most vital for survival. And so it was easy to get his basic water storage completed.
While normally there are only three members in his household, he also has two grown children; a single son in college and a married daughter who has one child and expecting her second. When TSHTF they also expect to take in Mrs. Tom’s handicapped (wheelchair bound) brother. This brought their total to eight. Realistically they should build in a fudge factor of 50%, or prepare for 12 people.

With this in mind we calculated the minimum amount of water to be stored. At two gallons of water per day per person (authorities recommend one gallon per day per person<remember the Preppers Code: two is one and one is none!>) and fourteen days worth stored equals 24 gallons per day times 14 or 336 gallons.
So off to Pepsi went Tom who bought seven used plastic 55 gallon drums that had been used for soft drink syrup for $10 USD each. (total expense was $70 USD) He brought them home and rinsed them out, drained them, made a solution of 5 gallons hot water with 3 tablespoons of dish detergent and placed it in a drum. We replaced the bung (plug) and rolled the drum between us. After a few minutes we drained the drum through a funnel into the next drum. (We let it drain for several minutes to get it as empty as possible) We continued this system until all drums were washed. We did have to change the water after the fourth drum, as it was pretty skanky! The drums were left upside down overnight so that they might drain well.  The next day we repeated the process, again allowing them to drain overnight. Next about 10 gallons of warm rinse water was placed in each drum, they were rolled again and drained.
The next step was to put about 5 more gallons into each drum with a quarter cup of chlorine bleach. We rolled each drum several times over the next day, after which we emptied the drums.
We removed the drums to his basement storage area, wiped the outsides of the drums and placed them on pressure treated 1x4’s covered with ¼ inch plywood. This was to keep the drums off the concrete floor which could affect the plastic drums.
We then placed about a tablespoon of unscented chlorine bleach into each drum and then filled them through a food grade water hose with tap water.
We date labeled the drums so that they could be used and refilled in a consistent manner.
Total expense for his water storage was about $102 USD plus the actual water from his tap.

Keeping in line with an across the board spending he next purchased a solar battery charger online for around $70 USD. Also in the order he spend around $20 USD on each, “C”, “D”, “9v”, “AA”, and “AAA” rechargeable batteries. Total was ~$170 USD.
The next trip was to the LDS Family Food Storage Center where Tom spent $200 USD on commodities. He placed an online order for plastic pails, Mylar bags, and oxygen absorbers. Cost – around $100 USD, subtotal $300 USD, total $572 USD.
Off to Wal-Mart where he bought a Coleman propane camping stove and a 20 pound propane tank. Total there was $120 USD. Total of all $696 USD.

And so Tom was able to get a good handle on his beginning preps with his water storage well started, as well as batteries and charger, a small stock of essential food storage items, and something to cook it on.

Month 2
After another planning session Tom made his purchases for the second month:
            Another $100 USD in rechargeable batteries.
            An AM/FM/SW/ NOAA radio - $120 USD
            A Big Berkey water filter - $320 USD
            3 Dietz kerosene lanterns, a 5 gallon safety fuel can, and 5 gallons of kerosene - $115 USD.
All of these purchases totaled $655 USD. I suggested that he put his $45 USD away for seed money.
He took me literally and bought a number 10 can of heirloom seeds from Emergency Essentials.

Month 3
This time when I met with Tom his list was already made. After a review I agreed to his plan:
            150 12 gauge 00 (double ought) Buckshot shotgun shells for $99.99 USD (Tom already has a 12 gauge shotgun)
            2 cases of MRE’s (Meals Ready to Eat) at $60 USD each, $120 USD total - $220 USD.
            2 large and 1 medium “Alice Packs” for total of $95 USD – total $315 USD.
            3 “experienced” USGI sleep systems @ $80 USD each, for $240 USD, total - $555 USD.
            The $145 USD balance was spent on USGI canteens, web gear, and pouches. Total spent $725 USD (Tom went a little over budget).

Month 4
As I write this Tom is purchasing this month’s preps.
As this is canning (bottling) season there are many canning supplies on sale. His goal is several dozen quart jars, extra lids and rings and a pressure canner. I also recommended that he purchase a good reference manual on preserving food.
(Sidebar: Tom did not have a garden this year but plans to purchase some produce at the local farmers’ market and can some vegetables for the experience.)
We estimate this cost at ~$200 USD, although the produce itself will come from his household budget.
Other purchases this month will include:
            4 Family channel radios (2 sets) with headsets and external mic - ~ $120 USD.
            A handheld GPS and USGS maps for each section to the family farm (BOL) ~ $250 USD.
Hiking boots for Mrs. Tom $125 USD.

Tom’s shopping list for the near future include handguns for he and his wife, along with appropriate ammunition, holsters, accessories, CCW class, and CCW. He also plans to purchase three new shotguns, a 12 gauge pump (tactical style) for him, and two 20 gauge pumps for his wife and daughter.
Of course his food storage, gardening tools, medical supplies, solar/generator, tactical clothing, BOV, MBR and ammo, and a myriad of items remain to be prioritized and purchased.

THE MAIN THING IS THAT Tom, et al, has found a way to afford the things they need. If only TIME will allow them to complete the basics they should be all right. If not… well, they’re already better off than they were!
In summary I would like to add a few observations:

  1. No matter your budget there are almost always some extras you can cut and use that “found” money for your preps. (I wish the US Government would follow this advice!)
  2. It is always better to have 30 days of a wide variety of preps, rather than a year’s supply of any one or two things. Plan accordingly.
  3. Have a plan and for the most part stick to it. An exception might be a really good sale or bargain on something you were going to purchase soon anyway.
  4. Never borrow money to buy preps. If you do use your credit card then pay that purchase off before using it for another prep purchase.
  5. Understand that you will never, never, never be ready for TEOTWAWKI. There will always be one more thing you need, one more skill to hone…

Start where you are, examine your lifestyle and yourself, enlist those who mean the most to you and trust in the Lord. All will be well.

JWR Adds: In addition to budget trimming, to generate cash I would recommend developing a small second income stream, such as home-based mailorder business. And if the inventory that you develop for that business is of items that would be good for post-disaster barter, charity, and your own family's use, then it is a "win-win." Excess frippery (such as collectibles) can also be gradually sold off via eBay. Don't make the excuse of just saying "I don't have the money to prepare." The money is there if you just get creative, as Louie suggested.

Reader Rick D. spotted this over at Zero Hedge: GLD ETF Investors Unable To Get Physical Gold. Here is a key quote: "[Hedge fund manager Grant] Williams warned that the massive and escalating paper claims on physical gold at COMEX warehouses will create an explosion in the price of gold. Paper claims on gold are now at 55 to 1 meaning that there are contracts worth 55 ounces for every one ounce of actual physical gold in the COMEX warehouses."

Singer Joni Mitchell foretells an economic collapse. (Skip forward to 4:20.)

Items from The Economatrix:

Employers Hoarding Labor: Here’s Why That’s Bad News $1 Trillion In US Bank Deposits Held Abroad Will No Longer Be Insured

Housing Market Resumes This Damaging Downtrend

Friday, September 13, 2013

Thursday, September 12, 2013

Wednesday, September 11, 2013

Tuesday, September 10, 2013

Monday, September 9, 2013

Sunday, September 8, 2013

Saturday, September 7, 2013

Ann Barnhardt talks Syria and economic collapse.

Uh-Oh: Chinese Chicken Processors Are Cleared to Ship to U.S. Here is a key quote: "And because the poultry will be processed, it will not require country-of-origin labeling. Nor will consumers eating chicken noodle soup from a can or chicken nuggets in a fast-food restaurant know if the chicken came from Chinese processing plants." (Thanks to F.G. for the link.)

Items from The Economatrix:

U.S. Stocks Rise As Payrolls Data Revise Fed Views

G20 Says Economy Recovering But No End To Crisis Yet

Dollar Holds Near Recent Highs, Upbeat Jobs Data To Help

Friday, September 6, 2013

More details on Mulligan Mint 's legal troubles with Republic Metals have emerged in a recent motion before the court, for a writ of attachment. Once again, I don't recommend placing any orders with Mulligan Mint--at least not until they are free of these potentially show-stopping legal encumbrances.

Reader Allen C. sent: Why Incomes Could Fall For the Next 30 Years.

When is theft not considered theft? When a national government does it, on a grand scale: Poland reduces public debt through pension funds overhaul. (Thanks to John N. for the link.)

Items from The Economatrix:

A new contagion is brewing gold could see mega-highs, according to two super-bank economists

The Global Financial Death Spiral, Part 2

Thursday, September 5, 2013

Ol' Remus of The Woodpile Report pointed me to this piece by Michael Pento: Will the Last Person to Leave the Treasury Market Please Turn Out the Lights? Pento's piece begins: "Wall Street and Washington love to spread fables that facilitate feelings of bliss among the investing public. For example, recall in 2005 when they inculcated to consumers the notion that home prices have never, and will never, fall on a national basis. We all know how that story turned out. Along with their belief that real estate prices couldn’t fall, is one of their favorite conciliatory mantras that still exists today. Namely, that foreign investors have no choice but to perpetually support the U.S. debt market at any price and at any

Business stalls for equipment manufacturers--outlook for precious metal companies flat

Items from The Economatrix:

Money Is Not Safe In The Big Banks

The Jobs That Could Save the Middle Class

Five Reasons the Fed Will NOT Taper in September: “What’s the Hurry?”

Wednesday, September 4, 2013

Tuesday, September 3, 2013

Jim Rogers - US & Syria War, Printing Money = Market Collapse. (Thanks to B.B. for the link.)

G.G. sent: Labor Participation Rate Hits 34 Year Low

I noticed that spot silver was solidly over $24 per Troy ounce in London trading on Monday, and gold was bouncing around $1,390 per Troy ounce. If there is war in the Middle East, we can expect to see substantially higher metals prices. This might be a good time to further diversify out of Dollars and into physical silver.

Items from The Economatrix:

Syria Crisis Could Send Oil Toward ’08 Highs: Schoenberger

The War Effect

Peter Schiff - Don't Bet Against Gold! The Price Will Only Go Up!

Monday, September 2, 2013

Sunday, September 1, 2013

Saturday, August 31, 2013

Jason in Kansas alerted me to this: More Executive Orders on guns: Administration announces new gun control measures, targets military surplus imports. There probably will be more Executive Orders. (Jason opines that will most likely come just after the November mid-term elections, and I concur.) As I've mentioned before, I believe that BHO has set a priority on banning the importation of magazines that hold more than 10 cartridges. So stock up on imported full-capacity magazines, ASAP. If there is a ban, then they will be a great investment. (Depending on the wording of a ban, their prices may triple or even quadruple.)

Emerging market rout is too big for the Fed to ignore.

Items from The Economatrix:

Citigroup Sees Gold at $3,500/oz; Silver Jumping to $100/oz

Wall Street falls, ends worst month since May 2012

Why You Should Sell Gold as Soon as Missiles Fly in Syria

No Fed Taper Until New Year Means New Highs

Friday, August 30, 2013

Thursday, August 29, 2013

Gold and silver will survive as a store of value and wealth. Paper money, the economic status quo, unfunded liabilities, pension plans, exponentially increasing debt, massive budget deficits, “to-big-to-fail” banks, and so much more are at risk of gradual or catastrophic failure.

Gold and Silver

Precious metals have been recognized as wealth and a store of value for over 3,000 years. They may no longer be used as currency but they retain their value. Example: I can’t go to Wal-Mart and buy food with silver coins but, practically speaking, I can sell or trade a gold or silver coin minted by Australia, Canada, or the United States in almost any country in the world at any time. Over the centuries, on average, they have retained their value, whether measured in gallons of gasoline, hours of labor, or food. Can you say the same for dollars, pounds, or any paper money?

The Status Quo

Let’s call the Status Quo the existing state of affairs including the system of politics, government, currencies, banks, military contractors, financial systems and so forth. We all know “something is wrong” with the system, but the system is what it is and we live within it. The system richly rewards the political and financial elite, the upper middle class and a few privileged groups, usually at the expense of the remaining “debt serfs” via higher taxes, massive debts, wars, assets transfers, currency debasement and various controls over the economy.
Throughout history, this process has been repeated many times. From Simon Black regarding Italian history:

“And as one Emperor after another bankrupted the treasury through foreign wars, palatial opulence, and unaffordable social welfare programs, Rome gradually changed for the worse.
Desperate to keep the party going, later Emperors debased the currency to the point of hyperinflation. They imposed wage and price controls under penalty of death. They raised taxes so punitively that people simply quit working altogether.

With each successive emperor, Romans would foolishly believe that the ‘new guy will be different’ and that things would improve. Of course, apart from the occasional sage, Rome’s political leadership became more destructive.”

This is a familiar story. Empires throughout history have always gone through this life cycle of rise, peak, decline and collapse. Rome. Egypt. The Hapsburg Empire. The Ottoman Empire.
And the salient points are always the same – out of control government spending, a rapidly debased currency, costly foreign military campaigns, burdensome regulations, etc.”
“Meanwhile, the ‘richest’ countries in the world (US, Europe, Japan, etc.) are so deeply in debt that they have to borrow money just to pay interest on the money they’ve already borrowed.”
This isn’t rocket science. Predicting the end of this system is not attention–seeking sensationalism; it’s just common sense.”

It is easy to see that many western governments are following essentially the same path as Rome’s road to self-destruction. Rome’s status quo was increasingly expensive to support and eventually failed. Is the status quo in Europe or the United States likely to experience a different fate?

Consider Charles Hugh Smith’s commentary: That Which is Incapable of Reforming Itself Disappears
“Here is my scale-invariant summary of the Status Quo:

  • An economy that is controlled by the government is one in which political power, not the market, controls the distribution of national income. Politics is the arena in which the national income is distributed. The primary contestants are entrenched, vested interests seeking to protect their perquisites and power.
  • A government in which political power is for sale to the highest bidder puts the wealthy at an extreme advantage, as they have the means to buy political power to conserve and expand their share of the national income.
  • In order to do the bidding of the financial Elite, the political Elite redistributes enough national income to the bottom 50% and retirees to buy their silence/complicity.
  • A nation in which political power is for sale is one in which the rule of law is bent to serve those with power.”

“The political and financial Status Quo is incapable of true reform, because real reform threatens the perquisites and power of entrenched vested interests, what I call fiefdoms.”
“That leaves breakdown as the only possible endpoint.
Though the Status Quo still has enough resources to put off the eventual breakdown and collapse for a while longer, I expect an initial crisis to emerge in 2014-2015 that is resolved by the usual politically expedient half-measures.
The sigh of relief that “everything’s been fixed” may last two to three years to 2017-18, and then the ultimate crisis will gather force until it is beyond half-measures, likely in the 2021-22 timeline.”

Or, as Karl Denninger says:
“There is a mathematically-certain collapse in our funding and economic model in the offing and we are now at the point where the actions we have left available to us can only change the outcome from catastrophic to “big suck,” but cannot avoid the inevitable and ugly adjustment that must be taken.”
When debt grows far more rapidly than GDP, the consequences will eventually be catastrophic. Yes, we have ignored the reality of excessive spending, unpayable debts, unsustainable monetary policies, and Ponzi-finance for several decades, but that does not mean we can delay the consequences forever.
Yes, the consequences of failed policies, expensive wars, massive debts, and bond monetization must eventually be faced and the price will be paid. Yes, the consequences might be delayed a few more years, or perhaps even a decade. But, considering the inevitable consequences from the actions of our financial and political status quo, NOW would be a good time to transfer paper assets into real wealth – gold and silver – and store them outside the banking system.
Remember: The world has been living with unbacked paper currencies since Nixon’s default in August of 1971. Since then we have clear evidence that:

  • Governments do not maintain the value of their unbacked paper currencies.
  • Purchasing power declines.
  • Debts and unfunded liabilities increase much more rapidly than the underlying economy which must support those debts.
  • Expensive wars and social programs accelerate the process.
  • Political promises to balance the budget, put the fiscal house in order, and live within our means are good theater, but little more.

Yes, now would be a good time to transfer paper assets into real wealth – gold and silver – and store them outside the banking system.

Further Reading:

Wednesday, August 28, 2013

Tuesday, August 27, 2013

Monday, August 26, 2013

Sunday, August 25, 2013

Saturday, August 24, 2013

Friday, August 23, 2013

On Monday, August 5, 2013, I posted a piece titled "Calling It Quits With Mulligan Mint." It was pointed out to me that it included a factual error, so I've truncated that post.

I'd like to give everyone an update on what has transpired since then.

First, the Good News:

1. I have been impressed that the staff of Mulligan Mint has overcome all of the hurdles of transitioning from a fledgling company that simply struck outside vendor-supplied .999 fine dimensioned blank planchets into a company that now consistently turns raw .999 fine silver into finished coins, in quantity. They have a dedicated and hard-working staff, and they have invested a lot of money into capital equipment to make all this happen.

2.) All of American Redoubt orders placed before August 1st have apparently been filled, as promised. A few new orders have been placed since then, and I've been told that all but 93 ounces have now been shipped. (In summary: Mulligan sold 11,009 1Troy ounce American Redoubt silver coins, Of the 11,009 coins sold, they have minted and shipped all but 93 pieces, the balance of which have been promised to ship by August 24th. So now 99.2% of all American Redoubt coins ordered have been minted and shipped.)

3. I have now been paid my commission. (In the form of 220 ounces of American Redoubt silver coins.)

4. To the best of my knowledge, the order shipping delay has never exceeded five weeks, despite the exceedingly high demand created when spot silver dipped below $20 per ounce.

Now, the Not So Good News:

1.) Rob Gray has never answered my repeated questions about the status of the return of the 71,400 ounces to Republic Metals Corporation. Three times, I've asked him point blank: Has Republic's court-ordered return demand been successfully met? (Either by return or the physical metals or delivery of a bond of equal dollar value.) He has never answered that question. All that I wanted was a yes or no answer.  I consider his repeated failure to respond a mark of intentional evasiveness.

2.)  Rob Gray has left me in the dark about the advent and status of the court-issued restraining orders against Mulligan Mint. The latest Temporary Restraining Order extension was dated August 15th. In my opinion this Temporary Restraining Order (TRO) casts great doubt on the ability of Mulligan Mint to continue to meet its many commitments.

While I am satisfied that the Mulligan Mint staff has fulfilled orders to the best of their ability, I find the company's ongoing legal problems with their key supplier quite troubling. I am also disturbed by Rob Gray's evasiveness and his lack of forthright communication about the company's continuing legal troubles.

With all of this in mind, I cannot do business with Rob Gray, nor can I in good conscience send any customers to him. 

Mulligan Mint has removed the American Redoubt coins from their web site.  I now consider this a closed issue.

Thursday, August 22, 2013

Wednesday, August 21, 2013

A new CATO Institute study found that a mother in New York State with two children is eligible for $38,004 in welfare benefits--which is greater than the annual salary of a first-year New York school teacher. Note where Idaho falls in the benefits spectrum. (Idaho certainly can't be faulted for "encouraging multi-generational dependency." (Thanks to John in Washington for the link.)

G.G. sent: $2,001,093,000,000: Fed’s Ownership of U.S. Debt Breaks $2Trillion for First Time.

Items from The Economatrix:

Stars Aligned For "Serious" Stock Correction

Dave Hodges:  Escape From Wall Street

Cramer:  Giant Reset Looming For Markets

Tuesday, August 20, 2013

Monday, August 19, 2013

Sunday, August 18, 2013

Saturday, August 17, 2013

Reader C.D.V. sent: New Fox, Same Henhouse: Wall Street Takes Over LIBOR. This piece includes some interesting thoughts on derivatives: "A former trader who worked in both New York and London recently told me, 'At the end of the day, this market is running on the [Federal Reserve]. Once they pull out it’s all over. Cheap money, loads of people making loads of money, but no lessons learned.'"

I noticed that Backwoods Home magazine now has a "pay for your subscription in pre-'65 silver coins" option. (We do likewise, for our voluntary Ten Cent Challenge subscriptions.)

Similarly, Late's diner offers 1964 prices to customers paying with silver coins. (A hat tip to H.L. for the link.)

Items from The Economatrix:

Has The Landscape For Gold Changed Forever?

Summer Retail Is A Bust, But Watch Out For Fall

Gold Surge Bodes Ill For Economy

Friday, August 16, 2013

Thursday, August 15, 2013

Eight College Degrees with the Worst Return on Investment. [JWR's Comments: One loser program that they left off the list: the Bachelor's Degree in Social Work (BSW.) OBTW, is it just a coincidence that many of these degree programs are dominated by leftists--both students and faculty?]

Reader CJA suggested: The Incredible Shrinking COMEX Gold Warehouse Inventories

US debt six times greater than declared - study

Items from The Economatrix:

How Washington Could Push Gas Prices Higher

Next Fed Chair Will Lead Us to ‘Economic Ruin,’ Says Peter Schiff

Top technician: Yes, 2013 does look like 1987

Wednesday, August 14, 2013

Tuesday, August 13, 2013

Monday, August 12, 2013

Sunday, August 11, 2013

Saturday, August 10, 2013

Friday, August 9, 2013

It occurs to me that the sudden desire to "privatize" Freddie Mac and Fannie Mae is simply a way to deploy the wet ink dollars out of the Fed and big banks without overwhelming the money supply. We all know what would happen if those dollars entered the mainstream market place. This just seems to me to be yet another ploy to stall the inevitable, but I haven't seen anyone else talking about that. Am I missing something? - Big Jon

JWR Replies: You are essentially correct. The majority of the U.S. Dollars that have been magically created by Quantitative Easing (QE) have been used to buy up Mortgage Backed Securities (MBS) derivatives paper. This was $70 billion per month in QE2 and $85 billion per month in QE3, and this has been going on month after month. QE2 began in November of 2010, and QE3 began in September of 2012.

Quantitative Easing doesn’t do much for the real economy. It is really more of an asset swap that benefits high level financiers. They reap the benefits, while only a portion gets trickled down into the economy at large. It is a grossly inefficient mechanism for boosting the economy, but it has done great things for the bottom lines of the investment houses. It has proved to be just the trick for re-inflating the bi-coastal real estate bubble. Quantitative Easing effectively increases the money supply, since lower interest rates let banks generate more loans. (It unleashes the fractional reserve banking multiplier effect.) But because all of that QE money is top fed and directed primarily at the real estate sector, it is creating false prosperity for both the residential and commercial real estate markets. Granted, a lot of that money is almost immediately reinvested in other vehicles/sectors, but that doesn't change the fact that this money is created out of thin air, and in he long run it will prove to be very inflationary. And, as I've mentioned in my blog several times before, inflation is a hidden form of taxation. Creative legerdemain like QE might outwardly look low risk, beneficial, "and all that happy stuff" but the long term effects will be devastating: Injecting all this artificial money encourages malinvestment, encourages casino style investing, discourages thrift, and does little to build up a long term economic base in sectors like manufacturing. A decade from now, we will look back on QE as one of those World Class "What on Earth was I thinking?" varieties of big mistakes.

All of the recent talk of "privatizing" Fannie Mae and Freddie Mac largely ignores that fact QE money has already been used to prop up both of them. A report issued by the St. Louis Federal Reserve Bank in 2011 notes:

"The first round of QE began in March 2009 and concluded in March 2010. One of the primary goals was to increase the availability of credit in private markets to help revitalize mortgage lending and support the housing market. To accomplish this goal, the Fed purchased $1.25 trillion in mortgage-backed securities [MBS] and $200 billion in federal agency debt (i.e., debt issued by Fannie Mae, Freddie Mac, and Ginnie Mae to fund the purchase of mortgage loans). To help lower interest rates in general (and thaw the frozen private credit market), the Fed also purchased $300 billion in long-term Treasury securities."

In July, 2013, the House Financial Services Committee pushed forward a bill that would Liquidate Fannie Mae and Freddie Mac. It was heralded by HuffPo as a way to "...dramatically reduce the U.S. government backstop in the mortgage market." But in actuality, it is not privatization (or, more properly, re-privatization.) It is simply a new venue for Uncle Ben's Instant Rice Dollars. You and I (indirectly, through dilution of the value of the U.S. Dollar) will be paying to "privatize" Fannie and Freddie. Most of the "privatization" money will be coming from QE Dollars! So the bottom line is that our wallets will be fleeced to enrich a bunch of Wall Street mortgage financiers.

The opinion molders at HuffPo go on to say:

"The House bill would abolish government-controlled Fannie Mae and Freddie Mac within five years and replace them with a non-profit, utility-like platform that investors would use to securitize mortgages. Unlike mortgage securities offered by Fannie Mae and Freddie Mac, the new securities would be issued without a government guarantee."

Oh, really? That might sound great on the surface--as if it will take the American taxpayer of the hook--but what is really going to transpire? Instead of two great big assets for the taxpayers (with a huge underlying liability), they will become assets for the banksters. But here is the kicker: the bankers have been implicitly told: "Don't worry: you are Too Big To Fail", and we will always bail you out. (And they have been, again and again. It is no coincidence that the $182 billion government bail out of American International Group (AIG) in September, 2008 came just a week after the government takeover of "quasi-private" Fannie Mae and Freddie Mac. The real story didn't emerge until two years later.) So we--the American taxpayers--will give up the assets, but retain the liabilities. How charming. And the banksters won't be using their own money to do this. They will be using the unending stream of QE Funny Money--that again, is a hidden form of tax! Someone with a corner office on the 67th floor with a great view of Central Park must be saying: "Sounds like a 'win-win' to me!"

As a blogger who lives out in The Hinterboonies, I am just a distant observer of all these machinations. I can only shake my head in disgust. I know that writing more letters to my senators and congressman will be futile. But one thing that I can do is step back and look at the big picture: The folks in Washington D.C. and their banker buddies are systematically destroying the U.S. Dollar. They are doing so because the American people are ignorant and treated like mushrooms (i.e. kept in the dark and fed Schumer) by the mass media. There is nothing that I can do to stop it. But I can protect myself from the inevitable resulting mass inflation, by shifting most of my assets out of Dollar-denominated investments and into tangibles. The D.C. crowd can debase the Dollar all they'd like, but they can't erase the inherent value of a box of .45 ACP Hydra-Shoks. I recommend that you diversify, similarly.

Thursday, August 8, 2013

Wednesday, August 7, 2013

Special Note: For any SurvivalBlog readers with pending orders (already paid, but order not received) with Mulligan Mint (a former advertiser : Please e-mail me and let me know: Your name, your order number, the number of ounces ordered, your e-mail address, and the date that you placed your order. I will then do my best to get them to ship you order. (Mulligan Mint claims that they are presently shipping orders.)

Matt H. sent this: U.S. gasoline consumption takes a nosedive.

G.G. suggested: Pandemic of pension woes is plaguing the nation

Items from The Economatrix:

Paul Craig Roberts:  Hiding Economic Depression With Spin

Jim Willie:  Bullion Banks Have Pilfered 60,000 Tons Of Gold From Allocated Accounts

Theft By Deficit

“We Have Become a Nation of Hamburger Flippers”: Dan Alpert Breaks Down the Jobs Report

Tuesday, August 6, 2013

Monday, August 5, 2013

stop doing any business with Mulligan Mint.

I believe that the world is on the verge of a possible economic meltdown. I think that there is just too much debt (both governmental and private), not enough assets, and with a end result of the financial system breaking down with devastating consequences.
There are some common problems that the countries I will be looking at  all share. The first is high debt levels that cannot be repaid. However, the more important factor is negative demographics in these countries.  I think that national demographics do not receive enough consideration when analyzing a country's economic potential. This is a mistake. Demographics are probably the single most important issue that should be examined. For example, a country could have massive natural resources available for both domestic use and export. But if this nation has a elderly and child 'bulge' with a very small working age population that doesn't have the manpower to exploit these resources, then the resources will provide this country with very little economic benefit.
The title of this article asks a question. The honest truth is that I don't know what the exact answer is (or when).  I think it will be Europe first, but Japan isn't looking so hot either. China is a export-driven economy. Yes, they have some serious problems too, but I think they won't truly take a hit until either Europe or Japan go off the rails first.
I think Europe's economy collapses first because of something originally designed to help the area's economy: the Euro Currency. Having a regional currency used by multiple European countries is a idea that has failed completely. When a nation controls it's national currency it can devalue the currency if it's economy slows down. A devalued currency will make that nation's exports cheaper for its neighbors to buy. More exports leads to a higher level of economic activity and the end result will be a pick up in economic output overall (Please keep in mind that these are general economic theories, and they may not work every time in every country. If a nation has no exports then a currency devaluation does them no good, since the price of their imports will rise).
Since most of Europe uses the Euro Currency, and not their former national currencies (the Italian Lira, French Franc, Greek Drachma, etc) there can be no currency devaluation at the national level in a effort to goose exports and sell more of that nation's cheaper goods to its neighbors. This is why European countries like Greece, Spain, Portugal, and Italy have been mired in recession for the last couple of years. the 'easy' way for them to get their national economies back on track by boosting exports through devaluation is no longer a available option.
These countries now have to boost their economic output by much harder methods: internal labor market reform, (translation: working more for less) opening up protected industries to competition to make them more productive, decreasing governmental control of the economy, and other ideas that aren't well liked by the locals.
Things are beginning to reach a breaking point in Europe. Yes, I have written in previous articles that I  thought the Euro Currency would be collapsing by now. And maybe I am wrong this time as well. I have underestimated the ability of European politicians to keep kicking the Euro Currency can down the road in their desire to keep things from imploding in Europe. Last year, I did not expect that European Central Bank President Draghi would make his infamous "Whatever it takes" comment and then unveil the ECB's plan to buy unlimited amounts of European sovereign debt in order to keep bond yields low (BTW, one year after Draghi announced the ECB bond-buying plan, there is still today no formal plan, idea, document or even anything sketched out on a soggy cocktail napkin on how exactly the ECB would conduct it's bond buying operation and how the plan would actually work).
The general Unemployment levels across Europe are  hitting all time highs of around 12%. Youth (18-to-25 years) unemployment in countries like Greece and Spain are around 50-to-60% and rising. Since more people are unemployed, this means economic activity is negative pretty much across Europe (Germany is still positive, but not by much) High unemployment and lower growth have two bad effects on a country's finances. First, government has higher expenditures due to increased numbers of unemployed citizens needing government-provided social support. second, governments take in less tax revenue from both businesses and employed individuals. Higher government expenditures and lower incoming revenues can really raise government debt levels. This is why Greece needs another  multi billion Euro Bail-Out (it will be their third or fourth, I have lost track) The Italians may soon be asking for one also. And the Spanish are lining up for their second hand out. Even the French aren't in such great economic shape anymore, and may soon be needing financial help.
The bottom line is that Europe is in trouble and there is no real way out of it until they kill the Euro Currency and go back to previous national currencies. The Euro Currency has become a noose that is slowly strangling European economic growth. Even if the Euro is killed tomorrow, Europe isn't out of the bad economic woods yet. European demographics are ugly. Too many retirees, not enough workers, and not enough Europeans having kids to sustain national populations going into the future. All national Social Security type programs are basically legal ponzi schemes. There needs to be a steady source of incoming workers starting to pay into the system to replace the retiring workers who will soon be receiving payments from the system. Thanks to the postwar 'Baby Boomer' generation that is starting to retire, Social security programs will soon have more money flowing out of the system then into it. (This is just not a European problem, The USA will have to deal with the exact same issue)
High levels of unemployment, exploding debt levels, decreased government revenues, no national currency that can be devalued: add it all up and things are grim in Europe and getting worse by the day. Europe's current downward spiral cannot continue. Something will break, and it will be soon.

Japan is the only country in the entire world with a demographic picture that makes Europe's look easy to fix. Europe's demographics are bad. Japan's demographics  are horrible, ghastly, terrible, and hideous.  Europe has bad sovereign debt problems. Japan's debt problem is simply impossible to fix. They will default someday, probably within the next two years. Japan is reaching the point of no return, and they have few options left.
What does the number 'One Quadrillion' represent? If you said "That is the Yen-denominated figure of all outstanding Japanese Government debt they have issued", then you  just won a free drink on me. Congratulations!  Yeah, that number is accurate. Honestly I'm not sure exactly just how many zeros there are in a Quadrillion, 14? 16? I do know that if you started at 'One' and counted one number every second until you reached One Quadrillion, you would be counting for 32 million years. Does that sound like a number that Japan will ever be able to pay back?
For the last two years, a milestone has been  achieved in Japan, but nobody in Japan should be popping a bottle of Veuve Clicquot champagne in celebration yet because the milestone reached was not a good one. The milestone reached was that the sale of adult 'Depends' style diapers now outsells regular baby diapers. This is because Japan has the fastest growing elderly population in the entire industrialized world. Nobody comes close to the speed that which Japan is becoming old. Once again, demographics are key. If national demographics are bleak, there just isn't much a country can do to fix it.  Japan is no exception. Unless Japan starts  making some huge gains in robotics starting tomorrow and starts developing 'Cylons' (I admit it, I'm a big 'Battlestar Galactica' fan), then going forward they just will not have enough workers replacing all the retiring elderly. Japan does control the value of the Yen, and they have been devaluing it ("Abenomics") but they have a slight problem. Thanks to World War Two, they aren't the most well liked country in Asia ( to put it mildly). They have few friends in the region who want to buy cheap exports from Japan. And thanks to some current nationalistic events regarding disputed territory involving China and Japan, Japan's largest export customer, China, has stopped buying Japan's goods. So even if the Yen gets devalued massively, it won't help much regarding China's  lack of desire to now  buy Japanese products and services.
Making a bunch of robotic worker 'Cylons' is about the only option Japan has left, since they allow almost no migration into the country. The economic picture is getting so bleak that they have had around ten (yes, 10) different Finance Ministers in the last five years. One FM actually committed suicide while he held the post. Another had to  resign and be checked into a mental hospital because the job was so stressful. If you have the time, look up on 'Youtube' some speeches by a billionaire Hedge Fund Manager named Kyle Bass.  He lays out Japan's ugly economic future quite well.

Just when you thought it would be safe to pick up Asia's economic pieces once Japan explodes, here come the Chinese. Unlike Europe and Japan, the Chinese actually have a growing economy. But they have problems. Thanks to China's 'one child' policy, they will soon be hitting some unique demographic issues. Because of the policy and a Asian preference for baby boys, there will soon be a generation of Chinese males without girlfriends or wives who will be caring for four grandparents all by themselves. Personally, I can barely manage my own life, so the idea of taking care of elderly relatives doesn't have much appeal. Luckily, I am not facing this prospect, but a lot of males in China soon will be, and I wish them the best of luck cause they will need it.
Bad demographics aren't the only issue mainland china faces. Due to them becoming the manufacturing center of the world, all that industrialization has produced massive environmental damage that will takes decades to heal. Their factories rely heavily on coal-fired power plants for energy.  Burning all that coal is another factor in China's environmental problems and is also a issue regarding health problems.
There are economic problems as well. When the global economy tanked in 2008, the Chinese central government kept their economy growing by launching a multi trillion Yuan stimulus package. This backfired due to the fact that  many construction projects were launched that were completely unneeded. Think 'bridges to nowhere' on a massive scale. The Chinese built entire cities that stand vacant with very few residents. This overbuilding also produced rampant property speculation, resulting in local governments making bad real estate investments that are now badly  underwater. The speculation also led to large amounts of shady deals and outright criminal activity that has no positive benefit to the nation. The central government is now so concerned about bad debt levels at the local government level that they are conducting a massive audit of local finances to get handle on just how big this problem could be. My prediction is that what the central government learns from the audit of local book keeping will result in a whole bunch of local commissar type folks getting lined up against a wall in a police station basement and.... not walking out again, ever.
I know it makes for pretty depressing reading, but these are some of the things I see ahead for the global economy. Even the best-case outlook still results in  a lot of uncertainty that will soon be upon us. And the worst case means that we could be looking at: Regional conflict?, Economic meltdown? World war? It is something that we all need to keep a eye on. - CDWT

Sunday, August 4, 2013

James K. sent this: The 10 most oil-rich states. "These 10 States accounted for roughly 94% of all onshore U.S. reserves as of the end of 2011."

J. McC. sent this: America’s Urban Distress: Which States and Regions set up their Cities to Fail? Once again, notice the reverse correlation of The American Redoubt region.

Items from The Economatrix:

Extreme Gold Market:  Supply vs. Demand

Old System Struggling and Dying-Catherine Austin Fitts

If "Europe Is Fine" Why Is Deutsche Bank Deleveraging At The Fastest Pace Since The Crisis of 2011?

Saturday, August 3, 2013

Friday, August 2, 2013

Reader James W. sent this: Why QE Can Never End. [JWR's Comment: I concur. Quantitative Easing monetization is a pitiful sham. The Fed and Treasury Department fully intend to ride their False Prosperity Bull to death. They will only stop their monetization scheme when they've thoroughly destroyed the value of the U.S. Dollar.]

Canada Threatens U.S. with Oil Trains if Keystone XL Not Built

Items from The Economatrix:

What Would You Do If A Bank Stole Everything You Owned?

It Is Happening Again:  18 Similarities Between The Last Financial Crisis And Today

Here's The Real Reason Why Wall Street Is Freaked Out About The Insider Trading Charges Against SAC Capital

Thursday, August 1, 2013

Wednesday, July 31, 2013

Tuesday, July 30, 2013

G.G. sent: Cyprus, lenders set Bank of Cyprus bail-in at 47.5 percent, sources say

Over at FOREX Crunch: Is the smart money fleeing stocks? The article begins: "Institutional investors have been net sellers of stocks for the most of the past year or so.. Since late June, this trend increased, with the 4 week average flirting with sales of 1 billion dollars. On the other hand, retail investors have been net buyers since early June..." [JWR's Comment: With the Dow Jones Average bouncing around 15,500, we are entering into what they call a "sucker's market." Get out of stocks, now!]

France is dancing on a volcano, and Europe may go up in flames

Items from The Economatrix:

CBO: Cancel Spending Cuts Now, Boost Economy In Short Run

Obama's Jobs Record:  Where Are We Now?

Are Big Banks Driving Up Commodity Prices?

Monday, July 29, 2013

Reader "Racefan" sent a link to some tax data that is helpful in evaluating retreat locales: Property Taxes on Owner-Occupied Housing, by County, 2005 - 2009, Ranked by Property Taxes Paid.

I don't often used the words "conspiracy theory" and "delightful" in the same sentence, but take a look at Bix Weir's latest essay: The Hidden Meanings in the New $100 Bill!

Items from The Economatrix

Stagflation: The Fed's Worst Nightmare

Ron Paul Talks Gold

Ron Paul On Gold And Why We'll See More Detroits

What's Up With Inflation?

Sunday, July 28, 2013

Saturday, July 27, 2013

Friday, July 26, 2013

Thursday, July 25, 2013

Wednesday, July 24, 2013

Tuesday, July 23, 2013

Monday, July 22, 2013

Sunday, July 21, 2013

Saturday, July 20, 2013

Regarding the article on debt collection, I would recommend these web sites which give some advice on how to deal with debt collectors:
There are consumer protection laws that prohibit offensive behavior on the part of debt collectors.  These sites explain how to use them.
I recognize you may not agree with these site's positions, but, just as the debt collector who wrote in says, good people sometimes get into bad situations.  And, sometimes, if your state's exemptions are too low, bankruptcy is not an option.  So, yes, I consider fighting debt collectors part of survivalism. - N.B.M.

JWR Replies: Of course, avoiding all this from the start...

Mr. Rawles;
In response to N.B.M.'s response to the "How Consumer Debt Collection Works" articles, I must chime in and state that the sites he recommends all encourage the use of loopholes and quirks in the law to, essentially, steal from folks. You borrowed it, the right thing to do is pay it back. We cannot, as Christians and freedom loving people, complain about the national debt, massive bailouts, and the wholesale manipulation of the (no longer) free markets, whilst we all search to shirk our own obligations. That is hypocrisy. Stealing is stealing, whether it takes place on Wall Street or Your Street.

Regards, - Jason in Kansas

As I've mentioned before, a big jump in interest rates could create chaos for the holders of many MBS derivatives. Here is an example of how just a small rate rise caused turmoil: Analysis: Bank of America's interest-rate exposure may be worse than rivals.

Do Western Central Banks Have Any Gold Left? Part III

Detroit files for bankruptcy protection. (Is it just a coincidence that all of the city's mayors for the past 50 years have been Democrats?)

Speaking of Detroit, Commander Zero had some quite wry commentary. (Thanks to Gil in Montana for the link.)

Items from The Economatrix:

China's Financial System Ready To Collapse? Giant Ponzi Scheme Exposed! China’s Debt Is Well Over $507 Trillion, And Yet Per Capita Income Is Less Than $4,500

Fitch Downgrades European Financial Stability Facility To AA+

Weak Retail Sales Means Fed Tapering Later vs. Sooner. [JWR's Comment: Don't hold your breath. Ben is very unlikely to give up QE before he leaves his post in December. Nor is his successor. Free money is the world's most addictive drug.]

Friday, July 19, 2013

Thursday, July 18, 2013

This is an introduction to collections, charge off, repossession, and the current debt cycle that many good people are finding themselves in. It will be a generalization of the rules and laws as they differ from state to state.
Let me start with my credentials. I have been a collector for the last 14 years. I have worked first party and third party files (the difference between the two will be described herein). The accounts I have worked have ranged from five days past due to 10 to 20 years past charge off. I have worked commercial, Small Business Administration, and consumer accounts, specializing in skip tracing, recovery, bankruptcy, foreclosure, repossession, liquidating the collateral, and litigation. I have called all 50 states and all of the U.S. controlled territories along with some foreign countries. I have personally repossessed everything from pens and pencils to major construction equipment along with foreclosures on personal and business property.
In my years of work I have enjoyed the many times I have been able to help someone find a way out of financial trouble. That is the most satisfying part of my job.
The difference between first party and third party collections.
·         First party is where the originating financial institution maintains and services the bad account.
·         Third party is where the bad account is transferred to an outside company for servicing. This can happen in two ways.
        1.       The originating financial institution transfers the bad account for outside servicing without selling it. The original financial institution maintains control of the account but merely lets the new outside servicer make contact splitting every penny collected between the two companies.
        2.       The originating financial institution sells the bad account to an outside collection agency for generally $0.01 to $0.55 on the dollar depending on the average age and balance of the bad accounts. These are generally sold in what is called portfolios and involve up to hundreds of millions of dollars of bad accounts at a time.
It must be noted that many originating financial institutions have formed their own third party agencies to service the bad accounts with the originating financial institution while operating under a different name, so they can squeeze out every penny before they transfer or sell the accounts.
Moving on to the collections cycle.
The collections cycle begins at five days past due. Your account will be included on a list that a collector will review. We will take many factors into account before we attempt to make contact.
·         The age of the account.
   o   If it is a first payment default it will be worked harder than an account that is halfway through its term length.
·         If the account is secured or unsecured.
   o   If the past due account is a personal loan, credit card, or any other form of unsecured debt it will be worked harder than a secured loan i.e. auto loan, boat loan, house loan. There is more to lose with an unsecured loan as there is nothing to repossess. 
   o   Secured loans are worked and lien position is verified. A good collector will generally know where the collateral for the secured loan is at this point.
At 10 to 15 days past due late fees are assessed to the account. Every financial institution has late fees written into all contracts. It is the bread and butter of the financial institution. Late fees and other service fees keep the lights on and bills paid.
·         If the account was deemed to be low risk and has not had a payment credited to it will be called now. Late Payment Notices will be mailed out. Files will be reviewed for any information pertaining to the debtor.
·         It is important that the debtor be contacted now. As a general rule if an account slips further past due the chances that they will never get current increase greatly every day that goes by and the account remains delinquent.
·         Higher risk secured accounts will receive a personal visit. Pictures will be taken of the collateral and questions will be asked of the debtor. If possible, arrangements will be made to bring the account current.
Personal contact with debtors can be dangerous. I have had one gun pulled on me, threatened with physical violence, almost attacked by dogs, spit on, and yelled at. I understand that the debtor is mad at the situation so I don’t take these things personally. When I have to make face to face contact I have to go with a calm demeanor.  I feel that my attitude and actions will direct a possibly hostile event to be a calm and friendly time. I am not there to make the debtor feel bad or embarrassed. I am there to merely talk and see what is going on so I can help solve the issues before it goes any further. It is better that the loan goes through its life cycle and pay off than charge off, although there are profits to be made if the account charges off.

At 16 to 30 days past due repossession is considered. Repossession depends on risk rating--each financial institution has a risk based lending practices. Where each loan is scored on the credit score, past loan history on the credit bureau, and other condition to come up with an (I feel) arbitrary score that may or may not predict the chances of delinquency--collateral condition, amount owed, and the ratio of the estimated value of the collateral and the amount the debtor owes.
Default letters are sent asking that the debtor bring the account(s) current within a set period of time, generally 15 days depending on state laws.
Skip tracing intensifies if no contact has been made. Most of us have done web searches on our own names. It is harmless to do so and should be done to see what is linked to you. I will “Google” you and use other free web sites to try to find you.
If I am unsuccessful with those web sites I will move on to the not publicly available web sites. These sites are paid for by the financial institution and contain enormous amounts of information. These sites list your information-including your SSN, your relatives' info, neighbors info, past neighbor info,  past addresses for you, your spouse, your family, current and past work info, what assets you have, any legal info-lawsuits, family law, bankruptcies, foreclosures, etc.
Between the information gained from public web sites, nonpublic web sites, and your application I can correlate and get new phone numbers and addresses. Cell phones can be found also so don’t think that those are private, yes even the ones bought at Wal-Mart and other retailers can be found.
***A quick side note, don’t use the grocery store discount cards they sell all the information you give them when you sign up to the non public web sites plus they track what you buy and who knows if they give it to Big Brother or not. Hospitals are another source that can and will sell your information.
If your account is unsecured the credit line may be suspended at this time. Any related accounts may be restricted and inaccessible.
The option of Set Off may be exercised at this time. This means that if you have money in savings it may be applied to the past due loan to make as much of the payment as possible. You will receive a letter called either Notice of Action Taken or Notice of Adverse Action describing the amount and date of the Set Off.
 At 31 to 60 days past due the debtor is now due for two full payments going on three. Chances are very likely that the account will not recover at this time. Most debtors will have to rob Peter to pay Paul now. To add insult to injury more late fees are added to the account. Also, if it is written into the contract, the Default Interest Rate will be applied to the account. Default Interest Rate can be as high as 35% depending on your state laws.  
Demand letters will be sent. The debtor will have between 10 to 15 days to bring the account current depending on state law.
The financial situation for the debtor is very serious and bankruptcy is an option now. From what I have seen, debtors that have one account reach this stage have multiple account that are in the same state or going to be in the same state very soon. A major disruption to the debtor’s financial situation has happened and they need an immediate intervention to save their finances.
I will be pulling your credit report now. What I am looking for is new credit lines, addresses, employers, and credit inquiries. By the time the debtor is 31+ days past due they have been in a financial hardship for around 60 to 90 days prior to reaching 31+ days past due. Financial problems don’t just pop up. They build up over a long period of time. Small setbacks build up over time and snowball into the huge burden that faces them at this point. I will be able to see a pattern of delinquency on your credit report. Also I will be able to see which bank(s) you are paying. This lets me know what you hold as important in your financial world.
This is the point in time when desperation takes over the debtor. They start applying anywhere and everywhere for a loan to get them out of the situation. This is also where banks deny the debtor credit because of current delinquency on the credit report, a vicious Catch 22. And so starts the spiral of payday loans. Payday loans and short term loans are no better than loan sharks and should be avoided at all costs.
You cannot borrow your way out of debt.
If there is collateral securing the loan generally it will be assigned for repossession. The financial institution will hire a third party to locate and secure the collateral. Once the collateral is secured the debtor will receive a letter giving them 10 days to pay off the remaining balance of the loan. If the loan is not paid off then the collateral is sold. The sale-depending on state laws- can either be a private sale where the financial institution sells it directly to another person or public sale such as an auction. After the sale the Recovery process starts. Recovery will be explained below.
Unsecured loans are prepped for charge off now. All information about the debtor is gathered and the information is reviewed with management. The decision to charge off an account is made here and the debtor’s account will be assigned a date to be charged off.
There is a world of difference between WRITTEN OFF and CHARGED OFF.
·         "Written off" means that the financial institution has forgiven the debt and will not be pursuing the deficiency balance. If this happens to you get it in writing that they are forgiving the debt. 
·         "Charged off" means that financial institution has moved the loan from a performing loan to a non-performing loan on the financial institutions accounting books. The debt is still owed.

At 61 to 120 days past due the debtor’s account(s) are past the point of no return. While I have seen debtors come back from this point, it is a rare occurrence.
At 61 days past due the debtor owes two past due payments + late fees and one current payment. If the debtor has a car payment of $350 a month, at 61 days past due he owes a total of $1050 ($350+$350+$350) + late fees just to bring the account current.
The accounts are generally charged off by the time they reach 120 days past due regardless of if the collateral is repossessed or not.
The debtor’s checking and savings accounts may be Set Off and closed to recoup some of the charged off balance.
If the debtor has filed Bankruptcy generally the debt life cycle ends here. There are instances where collections can continue and that explanation deserves a different letter.
I do not fault anyone for filing Bankruptcy. It is allowed by law and should be used to reset the debtor on the right path. The stigma of the past is gone and people are not looked down upon as much now as they were in the past. I advocate that if the debtor is with one of the “Too Big to Fail” banks that they do file bankruptcy.
The Recovery process starts at this point. 
The Recovery Process starts immediately after the account is charged off. The debtor has already had his credit bureau report pulled so there is an idea of where the debtor stands financially. After all the Skip Tracing and the collateral has been repossessed the financial institution now has the debtor’s new address and possibly his employer.
Contact is then made with the debtor. Payment arrangements will be offered although the remaining deficiency balance is now due in full. Remember the account is now Charged Off. It is no longer a performing loan on the financial institution’s books. The financial institution has reported the account to the State and Feds as a loan that is no longer on the books-in essence the defaulted loan may become a tax write-off.
Every penny the financial institution collects now is profit. Depending on the debtor’s state laws interest may still be charged. Again the balance in full is due now. Financial institutions don’t have to ask for payments. If the financial institution chooses to they can sue you for the balance. The financial institution will incur legal fees, which will be added to the deficiency balance making it greater. If they win in court they will seek a monetary judgment and garnishment.
In my former state of residence, somewhere in the Redoubt, the maximum garnishment rate was 35% of each paycheck until the judgment is satisfied (paid in full). Try to live with an income that has been reduced by 35% each paycheck if you are already struggling. Pull out your last pay stub and subtract 35% from it. It turns out to be quite a sum.
If the financial institution deems that it is not economically sound to sue the debtor they can choose to service the account as an internal collection account (First party collections) or transfer or sell the account to an outside collection agency (Third party collections).
In first party collections the charged off account is serviced in-house for six months to one year. After that if the charged off account is not paid, then it is sold or transferred to an outside collection agency.

Welcome to the murky world of Third Party Collections.  
Third party agencies are governed by the FAIR DEBT COLLECTIONS PRACTICES ACT (FDCPA) and various other federal and state laws.
Largely the third party agencies follow the preceding acts and laws.  If they don’t, they are financially liable for any damages that take place if they are sued. The fines start at $1,000 and can go through the roof. Along with this the individual collector can be held financially responsible. Some third party agencies have had fines in the $100,000+ range.
A collector with a third party agency is supposed to recite what is called the Mini Miranda when they contact the debtor (This is _name_ with _company name_ a debt collector. This is an attempt to collect a debt any information obtained will be used for that purpose). If they don’t it is a violation of the FDCPA and can be used against them in court.
Third party agencies are up against the clock for initiating a law suit. Each state law is different pertaining to the Statute of Limitations of debt. The Statute of Limitations only limits the amount of time a financial institution can initiate a lawsuit against the debtor. The Statute of Limitations does not limit the amount of time that the debt can be collected on. Hence why “Zombie Debt” is a catch phrase in the media.
Debts that have exceeded the Statute of Limitations and have also fallen off the debtor’s credit bureau are still collectable. The Statute of Limitations restarts every time there is a payment made on a “Zombie Debt”.  So if you have a “Zombie Debt” and a collection agency calls I recommend that you do not make a payment. As always seek legal counsel and get a professionals opinion about this debt.  
Third party agencies will try anything and everything to get you to pay. It is their job to keep you talking and stumble into making payments. Legally, you don’t have to (As always seek legal counsel and get a professionals opinion about this debt). Morally you should. It is up to you to make that choice.
If the charged off account is not paid on it will be sold to another third party agency. This cycle will continue forever. Like I said I have called on accounts that were close to 20 years old.
Some notes on charged off accounts:
If you have fallen on hard times (I have) and have had an account charge off (I have), don’t feel like it is the end of the earth. If you can, make payment arrangements with the original financial institution. They will probably be more lenient at this point.
If you can’t, and the original financial institution does not sue you, be prepared to receive a lot of calls. You can choose to ignore them or talk to them. Remember third party agencies are paid a wage plus a bonus for each dollar collected.  
A little suggestion for the third party agency calls;
·         Record them if it is legal to do so.
·         While on the phone with the collector be courteous and pleasant. Let the collector be the aggressor.
·         Do not let them bully you.
·         Do not let them argue with you.
·         Do not let them call you names.
·         They cannot, if the account is outside the Statute of Limitations, threaten to sue and garnish you.
·         There is no such thing as a Debtors Prison. You cannot go to jail for a debt unless you committed fraud. As always seek legal counsel and get a professionals opinion about this debt
My personal views on charged off accounts:
Bad things happen to good people.
As a collector I try to understand what happened that caused the account to charge off. For the most, part people are well intentioned and mean to pay for what they buy or incur through other means. I will treat you with all respect that you deserve. You are still a brother or sister under God and I have a responsibility to treat you kindly.
Bankruptcy is a personal choice. The world we live in today does not look down on it as much as they have in the past.  I do not fault you for using a legal means to get a fresh start on life. You would be surprised how much the pile of debt weighs on you and how liberated you feel after the bankruptcy is over. Just please learn your lesson and don’t do it again.
I have had hard times and fallen behind on my bills too. I am human and make human mistakes.
I'll close with an inside joke: Debt collectors are some of the hardest people to collect from. We know the rules of the game.

I heard from the folks at Mulligan Mint that the one ounce American Redoubt silver coins, are still selling well, and they have cleared most of their order backlog. When I last checked they only had about 500 ounces in Redoubt coins left to fulfill, and they expected to mail all of those this week. But anyone placing orders henceforth can still expect delays of up to three weeks, during times of peak demand. (Whenever spot silver dips below $20 per Troy ounce, the floodgates open.) For some perspective: The U.S. Mint reported that it sold a whopping 27.6 Million Silver Eagles in just the first two weeks of July. (Perhaps a typo.) No wonder that there are backlogs!

M.E.W. suggested this article and video segment: Kyle Bass: The next 18 months will redesign the economic orthodoxy in the West

What Is Driving Gold Now?

R.B.S. sent news of yet another government scheming to deprive its citizenry of that "barbarous relic": Granny’s Gold Bars Are Key to Vietnam Push to Boost Dong

Items from The Economatrix:

Gold Price Crash Is Over:  Jim Sinclair

The World Is Becoming Increasingly Unstable, Global Markets Could Be Due For A Shock

Why Is Living In America Becoming Harder And Harder These Days?

Wednesday, July 17, 2013