“My wife calls me a pessimist. I claim I’m a realist. Chances are, I’m just an a** with an attitude problem.” That’s my tag line on one of the sites that I belong to. Now, you may take offense at my wording, but if you knew me, you’d have to agree that the sentiment is pretty accurate.
I’m writing this in the final few days of 2022, and I’ve had to go back and examine that tag line. I’ve had to question whether I am a pessimist, or am I simply well-informed when it comes to current events, and honest with myself with regards to the current state of the world? I guess, on the surface, that if you look at what is presently happening in the world, and acknowledge the events, that it could seem pessimistic. I just choose to acknowledge what is happening as reality, and as a prepper, try to figure out what I can do to try and mitigate the effects of these events. You can’t prepare if you don’t know what’s coming. I also have to admit that, at present, many of these things seem pretty overwhelming. There doesn’t seem to be a lot of sunshine on the horizon. And to be completely honest, the outlook seems to be pretty depressing, if you choose to look at it that way. I guess the reason I call myself a realist and not a pessimist is that I don’t let the gloom and doom paralyse me. I see pessimism as an excuse to throw up your hands, and surrender to the inevitable, because you can’t do anything to change it. A realist will face the facts, no matter how daunting, and not give in to despair.
So, if you have the courage, let’s take a little trip down the rabbit hole that is my mind. I’m going to be 100% honest about what I see out there, and much of it isn’t pretty, so if you are prone to being depressed, or don’t really want to hear the truth, please stop reading right now – go over to Facebook for some sunshine and unicorns. I will put a disclaimer here that these are only my thoughts and opinions. Most of what I talk about is verifiable fact, but as any liberal will tell you, “Truth is relative.” So, buckle up your seat belt, and hold on, as we explore a little bit of “truth” as espoused by The Lone Canadian.
A few years back, I wrote an article for SurvivalBlog. that discussed what I felt was a worst-case scenario. Much of what I discussed was based on the EMP Commission’s findings, the major one being that in a grid-down situation that within one year 9 out of 10 Americans would be dead. I then looked at different disaster/cataclysmic scenarios that would eventually wind up back at the same eventual conclusion. I guess, in some ways this is an update to that article.
I’m also going to touch on intelligence overlays. That is; taking facts from one area and overlaying them in a completely different area, to see what the results are. One of my personal aggravations is that often we see “experts” in a certain field of study brought out to give their opinion on a subject. They are very knowledgeable in their given field, and their facts are well-researched, but very rarely does anyone look at how those facts will affect other areas. They simply don’t overlay the new information in other areas to look at how it might change the present paradigm.
Let’s take a quick overview of world events at the present time. We have really just come out of two and a half years of a world-wide pandemic, with all of the issues this has caused, from lockdowns to mandates infringing on our rights, to supply chain breakdowns, to shortages. We are in the middle of a financial crisis, with inflation running at a 40 year high, interest rates going up seemingly monthly, the housing market indicating that it is going to take a major fall, banks looking shaky due to their monetary policies, crypto’s dropping like a rock, and the stock market bouncing all over the place. We have wars and rumors of wars as Russia prepares for a new offensive against the Ukraine, China continues to show aggression towards Taiwan, North Korea is flying drones and missiles over South Korean airspace, Israel is keeping very close tabs on the Iranian nuclear program, and now Serbia seems to be ready to go at it again in Kosovo. We have a global energy crisis taking shape as many countries pursue their version of the ”Green New Deal”, or attempt to meet unrealistic goals set forth in the Paris accords, in an attempt to stop climate change. We are looking at food shortages on a scale that we have not seen in recent history, due to droughts, and floods, and climate change, and energy shortages, and inflation. And to top it all off, we have a weakening of earth’s magnetic field at a time when we are approaching a solar maximum (2023-2026) and can expect increased geomagnetic storms, sun spot activity, and even CMEs.
Wow! That’s just a quick overview, off the top of my head. So, let’s look at some of these headlines, and overlay some intelligence, and see what that means for us.
The Covid-19 Pandemic
We have been told that the pandemic is officially over, but is it? Or are the effects only now starting to show themselves. Right now, China is relaxing it’s zero-covid policy, and allowing the disease to run its course. Reports are that they expect 2 million deaths, and that the crematoriums are running 24/7 to try and deal with influx. Now, 2 million deaths is a lot, but in a population of 1.4 billion I guess the government feels that it is acceptable. The question on everyone’s mind is whether or not this will lead to new variants that may pose a threat to the rest of the world? And if there are new variants, are they actually a threat, or will they simply be perceived as a threat by our governments, and used to impose further restrictions on the populations of their respective countries?
One of the most unreal moments during the Covid-19 outbreak for me was when one of our elected leaders went on television to talk about the mandates. He very plainly stated that he realized that the vaccine mandates and vaccine passports were a clear violation on our legal rights….but they were going to do it anyway. That act alone showed me that our elected officials do not care for the law, or our rights under the law, and that they will trample on them with impunity. I was raised to respect the law, and the laws of the land, but when you see the very people that you have voted for, to uphold your rights under the law, simply ignore them it makes you question your foundational beliefs. If my own country will basically make me a criminal for standing up for my legal rights then do laws, other than the laws of God, have any real meaning? I think that this is a valid question – one that I haven’t truly answered as yet.
We continue to see the effects of the pandemic daily. Families that were traumatised because they couldn’t be with a loved one in their time of need. Children that are behind in school because of closures. Children who are having issues with speech and comprehension because they were forced to wear masks during their formative learning. Children are our most precious gift and are the future!
Small business closures, millions of them. Small business accounts for about 50% of the workforce in the U.S. and yet we see that over 30% of small businesses that were open in 2020 remain closed today. This has to have had a profound affect on the workforce, and has no doubt contributed to many medium and even large businesses suffering. If those small businesses are not selling, producing, or providing services, then they are not replenishing stock. They are not buying products from the larger producers, which in turn hurts their profits and production. Those small businesses are the backbone of the economy, and what impedes their growth will eventually work its way up the chain.
Supply chain issues were another thing that we found out about thanks to the pandemic. For the first time in decades Americans faced real shortages. As I am fond of saying, “Globalization works great, until it doesn’t.” We have destroyed our own manufacturing capability in the name of greed and profit. Someplace along the way we discovered that we could increase our profits if we had our products or parts of our products manufactured in other countries. It was cheaper than paying Americans to make them. We happily threw away our morals, not caring that these products were being produced by slave labor, or child labor – they were cheaper! That’s all that counts! We could make more money! And so, we outsourced many of the products that we had previously produced for ourselves.
Even products that we continued to manufacture domestically were dependant on parts that are manufactured overseas – and so even they were affected. We have become a society of consumers, not producers. We came to the realization that just about everything that we take for granted, to be on our store shelves, was in some way dependant on foreign countries. Our all-American auto production came to a halt as we found that the cars didn’t run without chips from Taiwan, of tires from China, or widgets from Mexico. We developed a vaccine for Covid but it had to be produced in India, or the Philippines, or someplace other than here, because we didn’t have the facilities. Even now, at the end of 2022 we are facing a shortage of what used to be considered “common” medications, ranging from Tylenol to antibiotics and penicillin. We won’t even mention the “Great Toilet Paper Shortage” that was caused by the pandemic.
Thankfully we had big brother that was willing to step in, and print trillions of dollars out of thin air, to help “save” the people in their time of need. Very little of those trillions actually made it to the people that needed it, and contributed to a longer term, larger problem that the same government helped create in the first place: a financial crisis.
The Financial Crisis
This, in itself, is a huge and complicated subject, and beyond my limited scope to discuss in depth. Let’s face it, you could fill libraries with the books that have been written on the subject. I’m going to try, in a limited way, to talk about this subject as it pertains to me and my understanding of the situation that we find ourselves in.
There are many economists out there that trace our present situation back to the financial crisis of 2008. Some will say that it goes back to 1971, when we officially abandoned the gold standard. You could even go further back and argue that we started down this road in 1913 with the creation of the Federal Reserve. It really doesn’t matter how far you go down the road, what really matters is that we seem to be approaching the end of it, and we need to look at what we are dealing with right now.
Inflation! First it wasn’t going to happen. Then it was “transitory”. Then, all of a sudden, it was here, and barreling along at a rate that was unexpected – to say the least. But was it unexpected? There were many out there sounding the clarion call, including our own beloved JWR, about the financial policies, and where they would eventually lead. Generally, they were dismissed as kooks, or alarmists, or pessimists. Didn’t they know that there was a “Modern Monetary Theory” that didn’t have to follow the historic rules and was not subject to the proven theories. There’s even one economist that they refer to as “Dr. Doom” because he saw and predicted the 2008 crash.
They tell us that average inflation, worldwide, is running at about 7.4%, which is up from 4.35% in 2021, and 3.18% in 2020. Above 30% is considered hyperinflation, and there are a lot of countries that are there already. The United States seems to be hovering around that 7.1%, but we all know that these are manipulated numbers. Just like in every other country. The way the government calculates, and reports inflation has been changed over time, and as a result it can be argued that we have a lot higher inflation than is being reported, or it can be argued that the numbers are much more accurate today than they were using the formula from the 1970s. Either way, what it amounts to is that the powers that be have made it very difficult to compare todays price increases to historical data. Either the old calculations were not done properly, or today’s numbers are wrong. All I know about this is that paying $2.00/gal for gas in 2020, and $5.00/gal today seems like more than a 7.1% increase. But that’s just me. I’m not an economist and can’t make those numbers make sense.
Next, we can look at interest rates. They can call them basis points, or percentages, or whatever they like, but what it means is that we’re paying more now to borrow money. When you look at the average over a longer period the rates are really not that bad. I remember 17% back in the late 1980s. But, the rates over the last decade have been kept artificially low, and people have built their futures on cheap money. Not just people, but companies, and entire sectors of the business world. Nobody seems to have thought that it would come to an end, and you can’t blame them. The government and the Fed were basically promising them that the days of cheap and easy money would continue for the foreseeable future.
Then came Covid, and shortages, and inflation. So now the Fed has to raise interest rates in an attempt to curb inflation. They have started what they call Quantitative Tightening (QT) instead of the Quantitative Easing (QE) that they’ve been practicing since 2008. Basically, they seem to think that by raising rates it will slow the economy, and help get rid of the excessive money they have pumped into the system, especially over the last two years. All that excessive money will be spent because it will now take more money to buy the same goods, thanks to inflation. (or something like that) The issue that I (as a layman) have with that, is that thanks to the supply chain issues we have a shortage of goods available. Many goods became more expensive because of a lack of them, not just because there was too much money in the system, although that didn’t help. Until we reach a point where there is no longer a shortage of products, prices will continue to inflate. The more shortages the more inflation, no matter what the interest rates are – at least that’s the way it seems to me.
The one thing that raising interest rates can do, in relation to my above statement, is to help create a surplus, or at the vary least, a lack of demand. Again, that sounds good in theory, but put into practice it doesn’t always work that way. Let’s look at things that you would typically use a loan to buy – which is where interest rates really come into play. A new car. Well, thanks to supply chain issues there are not a lot being produced so the price has gone up. Used cars become more desirable so the price of them has gone up as well. You could probably still afford one, but with higher interest rates you may not qualify for a loan. When this happens to a lot of people, demand drops, and then at some point the prices will have to drop because there’s a glut on the market. (We’re already seeing this in some used car markets) But that’s just cars.
Let’s look at housing – one of the prime drivers in our economy – and let’s not forget the main cause of the 2008 financial crisis. I’ve read numerous articles on the subject of housing and mortgages. Basically, I have seen it explained two ways: In one way they looked at what a monthly mortgage would buy if you were looking at a new home. Prior to 2022, a $2,500/month mortgage would allow you to buy a $525,000 house, but now that same $2,500/month would only qualify you for a $375,000 house, because of the increase in interest rates. Another way to look at it was that if you had a mortgage where you were paying $1,100/month, and you had to refinance your mortgage, your new rate would be over $1,700/month. Both of these examples are just from memory, but not far off, as the numbers really stuck in my head. But, both examples show how many people will now be priced out of the market, or may actually lose their homes when they have to refinance. This will definitely slow down the housing market, and will help to create a surplus – but is that a good thing?
Eventually, higher interest rates will cause land and house prices to come down from their all-time highs, but until that time we can expect a lot of turmoil. Many people will get upside-down on their mortgages, owing more for their homes than they are worth, and simply walk away. What happens when millions of people simply walk away from their payments or can’t afford to make their payments – the banks get shaky, very quickly. That’s what happened in 2008. When banks wind up lending hundreds of millions of dollars, or even billions of dollars out on assets that are now worth only a fraction of what they were once worth, that adds up to huge losses for the banks – some of which can’t absorb the losses and wind-up insolvent. (that’s a nice way of saying they go broke) But, when a bank goes broke that means that everyone that had their money deposited in that bank could wind up losing it, and wind up going broke as well. So the government bails out the banks to stop a potential collapse of the entire financial system. (Does this sound familiar? Shades of 2008 all over again.
(To be continued tomorrow, in Part 2.)