Category: Economics & Investing

Two Letters Re: The Five Minute Bank Run

Dear Mr. Rawles, Read the letter from W.D. in Texas with great interest. I have been a recent visitor to your blog and read the postings on the banking system with great interest – and shared them with immediate family. As a Florida resident, even though in the less vulnerable northeastern part of the state, it is prudent to be ready for adverse weather as the ATMs and banks could be closed in an emergency. Good luck trying to get cash at that point in time. I strongly suspect that most people nationwide have about as much cash on hand …


Letter Re: The Five Minute Bank Run

Dear Mr. Rawles: I wanted to tell you a personal experience I just had at the bank that scares me to death. If you think a bank can last a few days during a bank run, then you will be very surprised by my story. I wanted to withdraw $10,000 from a JP Morgan Chase Bank branch in a local Houston [, Texas] suburb. Chase is the second largest bank in the US and Houston is the fourth largest city in the US. I went in and said: “Can I please have my money?” The teller disappeared for 10 minutes …


Letter Re: The US Tax Giveaway Economic Stimulus Charade

Mr. Rawles, On June 27, 2008 the following Associated Press headline was on Yahoo Finance: After-tax incomes and spending show big gains. “The millions of economic stimulus payments gave a massive jolt to household finanances (sic) in May, sending after-tax incomes up by the largest amount in 33 years.” Q: Does borrowing money from the next two generations, while saddling our grandkids with principal and interest repayment obligations to foreign countries really now count as “after tax income”? A: Not to regular SurvivalBlog readers. Regards, – Kevin A. JWR Replies: Those with the Big Government mindset would answer: “Oh, but …


Letter Re: Advice on Getting Started in Precious Metals Investing

Dear Jim, I would like to build up a moderate sized collection of precious metals as a hedge against inflation and also in case of an Argentina like economic melt down. I do not have a whole lot of cash to spend and want small denominations so silver is what I am looking for. I got into the links section and found Eastern Numismatics but from there it got confusing. Different coins had different values which makes sense but I just want to get some “junk silver” so the difference between x coin and z coin is of no concern …


Letter Re: The US Stock Market–A Net Loss for Investors Since 1999

Mr. Rawles, In all the discussion about the [US] supreme court [Second Amendment] ruling, today’s stock market plunge may have been overlooked. The Dow Jones Industrial Average closed at 11453.42. That’s just over half a point gain to date for the millennium. On December 10, 1999, (8-1/2 years ago) the Dow closed at 11452.86. In the years since then, our country has grown by tens of millions of people, and the most optimistic estimates of inflation average 2-to-3% annually. But the market is up only 0.005%. As [the pop music singer] Prince might say, “Party like it’s 1929.” – Robert …


Letter Re: An Economic Observation on the Prices of Silver and Gasoline Versus Fiat Dollars

Jim, I hope all is well with you and yours! I am pleased to note that I have made faithful followers of your blog of many of my friends. The more the merrier! The blog has been an incredible source for enlightenment and inspiration. I now advise everyone that I can prove that since 1964 and based upon the 1964 monetary system, the gallon price of gas at the pumps and the relative price of consumer goods have not increased in cost or value. Only the Federal Reserve note has lost buying power. In my humble and simple observation, cost …


Letter Re: Huge Price Hikes by Dow Chemical are an Ominous Inflation Indicator

Jim, In the news today, Dow Chemical is announcing a 25% price increase, following a 20% increase three weeks ago. Since they produce the feedstock chemicals for almost every industry on earth, this should be a great indicator of what’s coming. – ZBM JWR Replies: Ay carumba! Dow produces a huge variety of chemicals and compounds that go into everything from fertilizers to plastics. This is an alarming indicator of consumer price increases in the near future. When paired with fuel price jumps, this becomes downright frightening for near-future food prices at the consumer level. At this point, precious metals …


Letter Re: Economic Impact of Increasing Gas Prices and Declining Real Estate Prices

Mr Rawles: I sent you a link awhile back about the old timer from Wall Street who is still working in the industry and lived through the first Depression – he was greatly worried about what was coming. I agreed with your assessment that he was wrong about staying in stocks. My own former husband is a Wall Streeter who has moved much of his money out of the country now. He manages part of my own retirement portfolio and has been saying that what’s coming is going to be horrific to bear. His grandparents arrived in the US at …


Two Letters Re: Tomorrow’s Headlines? — A Nationwide Banking Panic

Hi James, First, thanks for sharing Mike [“Mish”} Shedlock’s recent article with the SurvivalBlog.com community. Like you, I’ve grown to trust his observations and analysis and I read his work as often as I read yours – daily. I wanted to add a couple of comments, which will strengthen both Mish’s and your viewpoints concerning your observations on the potential for a nationwide banking panic. First – is that [as mentioned,] the FDIC is preparing for this crisis right now, by hiring back some retirees, with specific experience in dealing with bank failures, as they are expecting a large number …


Two Trillion Dollar Reduction In Credit Card Lines Coming Up, by Mish Shedlock

Credit is drying up everywhere. Banks are now concerned (finally), about rising credit card debt. They have every reason to be. The bankruptcy reform act of 2005, which encouraged such reckless lending is now blowing up in lenders’ faces. Banks and credit card companies wrote that bill. They got everything they wanted. It goes to show you two things: 1.) Be careful of what you ask, you might get it. 2.) Greed kills. Furthermore, I expect many of the debt slave provisions of the bill to be undone after Obama is elected. That will increase defaults. Even if an unwinding …


Tomorrow’s Headlines? — A Nationwide Banking Panic

Since September of 2007, I’ve been warning SurvivalBlog readers about the potential for bank failures and bank runs in the US, spawned by the unfolding global credit collapse. I am now raising my warning to multiple red flags. There are certainly some ominous signs. These include: New banking scrutiny–especially for investment banks. Plunging bank reserves. A few more bank failures this year than in a typical year. A record increase in “bank owned” (foreclosed) houses. New FDIC rules on assessing risks at major banks.To be ready for bank runs, the FDIC has even re-hired some former employees from its division …


Letter Re: Update on Storage Food Shortages

Dear SurvivalBlog Readers: As you may know Mountain House has curtailed all shipment of their freeze dried foods in cans throughout the U.S. until at least October of this year. I repeat, the supply from Mountain House has been cut and I fully believe that when their food in #10 cans is available again, it will be at much higher prices. We still have a large supply of Mountain House Freeze Dried foods in our warehouse. It appears that we have one of the largest remaining supplies in the country as some of our biggest competitors are referring their customers …


Letter Re: Numerous New Economic Crash Warnings

Hi Jim, Within the last couple of days I have noticed that multiple economic and financial institutions have started to issue global financial crash alerts. For instance: – Morgan Stanley warns of a ‘catastrophic event’. The point of maximum stress could occur in coming months if the European Central Bank (ECB) starts to raise rates and the Fed backs away from expected tightening. The rates differential “could trigger a ‘catastrophic’ event”. – The Global Europe Anticipation (LEAP/E2020) team is now convinced that this period will consist for the whole world in a major plunge into the heart of the phase …


Florida at the Precipice of Depression, by Mike Morgan, J.D., CRS, GRI

I was going to call this “Banks March Us Into Depression,” or maybe more fitting is . . . “Complete Collapse of US Banking System.” Folks, that is what we are looking at. I don’t see any way around it. What we’re seeing here in Florida, is your crystal ball. And what happens here, is coming to a town near you . . . soon. This past week I didn’t write anything, because what I am seeing unravel is disturbing to the point I had to question what I was seeing and hearing. So I decided to take as much …


Two Letters Re: Request for Investing Advice

Hello Jim, First off, thanks for an excellent book/resource in your novel “Patriots”. I read it in the last week and it has had a profound effect on me. I also felt the writing was quite good, being entertaining and educational at the same time. Thanks for it! After reading your book (and listening to my brother, who has been talking about TEOTWAWKI for some time now), I did finally do some things to prepare in the last week, but I wonder what the next step is for me. First off, I invested about $80 to make some shelving in …