Category: Economics & Investing

Letter Re: Silver Coins Holding Their Own Against Inflation

Sir; First, this interesting bit from an article from the Chicago Tribune: Food Price Inflation Changes How We Shop. Here are some quotes from the article: “Steadily rising food costs aren’t just causing grocery shoppers to do a double-take at the checkout line — they’re also changing the very ways we feed our families. The worst case of food inflation in nearly 20 years has more Americans giving up restaurant meals to eat at home. We’re buying fewer luxury food items, eating more leftovers and buying more store brands instead of name-brand items…” “Record-high energy, corn and wheat prices in …


Economic Climate Change: The Long Winter May Begin This Summer

I’ve had several consulting clients contact me in recent weeks, all with notes of fear in their voices. They realize that something is horribly wrong with the economy, but they cannot properly isolate and articulate the problem. I haven’t been able to calm them, however, because to an extent I share their anxiety. In my estimation, the “something wrong” that we sense is nothing short of a monumental shift in the economic climate. America is clearly headed for a recession. Most economic recessions are simply a product of the business cycle. These recessions are relatively mild and they often last …


The Hedges Get Trimmed

Just as I warned the readers of SurvivalBlog many months ago, hedge funds are vulnerable to rapid swings in interest rates. (My first warning was even before the pair of Bear Stearns hedge funds collapsed in the summer of 2007.) As the global liquidity crisis has expanded, other hedge funds have started to collapse en masse. Here is an article is from England that is indicative of what is happening globally. (This is a global collapse, because again, as I warned, the current liquidity crisis is global in scale.) Hedge fund legends hit by financial crisis. And here is an …


News from Wall Street and Capitol Hill–The Mother Of All Bailouts Begins to Grow

Last week, the mainstream media described the latest expansion of the Mother of All Bailouts (MOAB), but they politely refrained from calling this what it is: socialism, plain and simple. The grand plan, as it stands now, is to bail out not just consumer banks, but also investment banks, with taxpayer dollars. They are effectively making our life savings and our future earnings surety for a bunch of idiotic contrapreneurs‘ loans on everything from flat top duplexes to McMansions. These were houses that the contrapreneurs bought, that they could never really afford unless the market continued to rise at an …


The Nationalization of Wall Street, by John Ing

Federal Reserve Chairman Ben Bernanke once said: “By increasing the number of U.S. dollars in circulation, or even by credibly threatening to do so, the U.S. government can also reduce the value of a dollar in terms of goods and services, which is equivalent to raising the prices in dollars of those goods and services. We conclude that, under a paper money system, a determined government can always generate higher spending and hence positive inflation.” The Fed slashed short-term interest rates six times in six months to 2.25 per cent from 5.25 per cent despite the U.S. Department of Labor …


Two Letters Re: Some Offshore Retreat Considerations, by P. Traveler

James, I see a lot of letters concerning ‘re-locating’ out of the U.S. What are these people thinking? If there is one country that still has a modicum of privacy, freedom, and the ability to ‘disappear’ into the wilderness, then it is here in the U.S. Where in the world can you own the variety and quantity of firearms than here? [Where else can you] stockpile food, go off the grid et cetera? The legal system is still intact here as well, so you can win in court under most circumstances. I just cant figure Americans willing to give up …


Letter Re: Advice on Gold and Silver Coins as a US Dollar Inflation Hedge

Jim, You recommended that I use Swiss America for some gold purchases, which I did. What would you recommend for bartering purposes exactly, as far as gold and precious metals are concerned? I’m confused by all the “collectors” coins and such which are more expensive. Do you have any specific types of coins that you think would be ideal for trading? I purchased some collector 1 ounce coins for their easy-liquidation (and no tax paper trail on gains) as a hedge against inflation, but I’m looking to get some good barter gold for long-term post-SHTF security (especially now that gold …


Letter Re: Forever Postage Stamps as an Inflation Hedge

Jim, I read the piece about the Forever stamps. Not a bad idea if you mail things. But why pay face value? Stamp collectors often purchase large quantities of stamps looking for a one or two particular stamp. Usually they sell off the remaining stamps at less than face value. Also, many stamp collectors invested in full sheets of Stamps issued in the 1950s and 1960s, thinking full sheets would appreciate in value (They didn’t.) These sheets and other bulk postage can often be found selling at 50% to 90% of face value on eBay. So, if your readers need …


Letter Re: A Machine That Sorts Pennies by Composition

Mr. Rawles, With a 70 pound weight limit, [USPS] Flat Rate [Priority Mail] boxes can be a fantastic deal, especially for small heavy items, as you mentioned. Up until this month, the two sizes available were 11″ x 8.5″ x 5.5″ and 13.625″ x 11.875″ x 3.375″. They cost $8.95 to send anywhere in the U.S.A. Now there is a third alternative, a larger 12” x 12” x 5-1/2” box that costs $12.95 to send (or $10.95 to an APO/FPO address). This is a real bargain. I recently shipped a large quantity of these from Arizona to Alaska. Most of …


Letter Re: A Machine That Sorts Pennies by Composition

Sir: Referring to your comment about sorting pennies in your post about nickels: “At present, sorting pennies simply isn’t worth your time. Although I suppose that if someone were to invent an automated density-measuring penny sorting machine, he could make a fortune. As background: The pre-1983 pennies presently have a base metal value of about $0.0226 each.) Starting in 1983, the mint switched to 97.5% zinc pennies that are just flashed with copper. Those presently have a base metal value of about $0.0071 each.” A penny sorting machine has been developed by a member of the Gold Is Money information …


Guest Editorial: Honey, I Vaporized My Customers, by John Mauldin

By now, everyone knows that the subprime crisis started with non-existent lending standards which resulted in the large numbers of foreclosures we are seeing today. Those foreclosures will be rising throughout the year. We are not near anything like the top of the rising number of foreclosures. Ben Bernanke said last July that losses from the subprime would be in the $100 billion dollar range. True confession. I think I wrote six months earlier that it would be $200 billion. I point that out to make the point that I am an optimist by nature. The latest “bidding war” number …


Letter Re: Forever Postage Stamps as an Inflation Hedge

Sir; You have written favorably of the US Postal Service Liberty Bell (“Forever”) stamps. Short history: The US Post Office Department was reorganized and became the US Postal Service effective July 1971. Employees of the Post Office then became employees of the Postal Service, but saw no changes in their paychecks. They looked the same. More recently, the Postal Service has likely accumulated significant cash from selling the “Forever” series. The government’s pledge is that the stamps will henceforth be honored as postage without supplement……no more adding one or two cent stamps’ postage (or more) to the already purchased forever …


Hedge Fund Redemption Suspensions–Tax Bills are Adding Insult to Injury

You’ve probably read about the seven Hedge Funds controlling $5.4 Billion have been forced to liquidate or suspend redemptions in the past month. Many of their investors had been leaving their full principal intact, quarter after quarter. In many many cases they want to continue to “let it all roll”, so they then used other funds to pay the tax bills on their hedge fund earnings. But now, with redemptions (cash outs) halted, not only will they lose most or all of their principal, but they must also pay the 2007 income tax on the “gain” for the calendar year. …


America’s Mountain of Debt: The Good, the Bad, and the Ugly

Collectively, Americans have accumulated a mountain of public and private debt in the past 20 years. The essential nature of all debts is that they someday must be repaid. Debts can be broken down into three categories: The Good. This is debt with low fixed interest rates, secured by tangible assets that have value that exceeds the amount of the loan. Everything is copasetic as long as the borrowers have a steady cash flow and can make their payments The Bad. This is debt that is either insufficiently secured, or that has a nasty contractual surprise waiting, such as an …


Letter Re: Galloping Bulk Food Prices

James, Just a quick report on what I’ve learned about buying bulk grains and beans. We have a local bulk food depot. I called to place an order. The guy checked with his wholesaler for prices, then called me back. He was aghast. He said everything was up around 25% since he had placed his last order two weeks ago. And up about 100% since the first of the year. The reason, the wholesaler reported, was demand from folks stocking up. The wholesaler was sold out of many items. Then I called an Amish bulk food store about an hour …