Category: Economics & Investing

Letter Re: The Value of a Dollar as Currency Unit

Howdy Jim, Regarding the quotation by Dr. Walter E. Williams wherein he writes about “dollars as being ‘certificates of performance’” it reminds me of discussions years ago of the nature of money. Perhaps it may be condensed down to something such as, “Money is a measure of life energy.” Whether it is fiat paper currency, or silver or gold coinage currency, or electron-charged cyberspace currency, what it measures and thereby accounts for is life energy. As an example consider the different measures of value we accord to an ounce bar of pure silver and an ounce coin of the the …


Feedback on the “Maxed Out” Consumer Credit Documentary

Sir, Today I went through some of the links on SurvivalBlog that I might have otherwise passed over, for whatever reason. I came across the Google Video link: Maxed Out. Normally I would not have taken the time to watch an hour-and-a-half video on the computer, but I was curious just because you would take the time to post it up on your site. I knew that credit cards would one day become a problem, but even in my wildest dreams I never could have imagined anything even close to what is contained in that video. For those of you …


The Countrywide Bailout and the Macroeconomic Picture

As I mentioned a few days ago, Bank of America (BofA) is buying out troubled Countrywide Financial (a home mortgage lender) for more than $4 Billion, and taxpayers are going to help them finance the buyout. This is good news for Countrywide (whose CEO is being given a ludicrous $110 million going away present), but bad news for the economy as a whole, and for taxpayers. I should mention that it has been rumored that BofA felt obliged to acquire Countrywide, because the two firms had some large derivatives contracts, and if Countrywide had folded, BofA would have to write-off …


Understanding Labor, Wealth, and Real Money

Our generation in the First World is presently living in a time of unprecedented wealth, luxury, and leisure. Technology has allowed huge advances in transportation, health care, and commerce. But much of the “wealth” that has been created is transitory. Real Wealth In essence, the only real wealth in the world is extractive. Extractive wealth come from mining, oil drilling, timber cutting, farming, ranching, or fishing. Manufacturing, while important, is essentially re-arranging what was originally extracted. And all other “wealth creation” in the so-called service economy is even more abstract–it is merely shuffling around bits of paper or electronic digits …


Letter Re: Strategies for Saving a House in a Foreclosure Situation?

Sir, I just read your piece on foreclosures. People who are about to get behind on their payments should contact their lender. Banks do not want the properties, they want the cash. Some lenders are willing to negotiate a modification of the loan terms rather than accept the expense of a foreclosure and resale (usually at a loss) of the property. Selling the house before the foreclosure process begins is better than waiting because the cost of the foreclosure will be added to the amount they have to repay the bank. If a person knows they’re going to get behind …


Two Letters Re: Small Town Newcomers and Home Development Covenants

Jim: In my opinion Violas’s comments are balderdash! That’s my reaction to all the ranting over “restrictive covenants”. I wouldn’t buy a piece of property in any sort of subdivision that didn’t have such rules. Let me share the experience that convinced me: About five years ago, I bought a piece of investment property in a small, rural Wyoming subdivision. Lot sizes were 3 to 10 acres and covenants were attached. Those covenants were common sense in nature. hey boiled down to simply treating your neighbor as you would be treated. Problem was, the covenants weren’t enforced. “Nobody’s gonna tell …


Letter Re: Strategies for Saving a House in a Foreclosure Situation?

Hi Jim, Are there any strategies, (i.e.- negotiations, dickering, etc…) that you can recommend for a after a TSHTF situation in which the government has raised taxes so much that you are hinging on hanging on to your retreat? Any examples that worked back in the 1930s? I know you can relate due to your family’s history that you have spoken of. What could we do as a plan to save our properties? Who can we expect to knock on the door, (i.e.- what entities)? Do you think there will be more motivation to seize productive ground? Do you think …


Letter Re: The Precious Metals Bull Charges Onward

Jim- You noted gold reaching an all-time high on Wednesday the 2nd of January. But this writer says: “I’m not really sure how all the ‘Gold at 27-year high’ headlines came to be, but my own calculations tell me that gold would have to break at least $2,400 an ounce [adjusted for inflation] to break its supposed 27-year high.” If that argument is accurate, perhaps it is not yet time to think about getting out of gold 20% at a time just yet. – Robert B. JWR Replies: The “adjusted for inflation” calculations on the real value of gold are …


Sources for Free Survival and Preparedness Information on the Internet, by K.L. in Alaska

Recent comments in SurvivalBlog provided excellent advice on using the public library. You can gain lots of knowledge with no expense, then purchase only those books you want to keep on hand for personal reference. Also, many colleges and universities loan to local residents, so you can use them too, even if you aren’t a student. If your local libraries participate, a great resource is Worldcat. It lets you search for books from home, then go check them out, or get them through interlibrary loan. What will happen to the Internet when the SHTF? There’s no guarantee it will survive. …


The Precious Metals Bull Charges Onward

Instability in Pakistan, $100 per barrel crude oil, declining US manufacturing, and shaky Asian markets have all worked together to push the US dollar down, and precious metals upward. You may have noticed that the intra-day spot price of gold set an all time high on Wednesday, spiking briefly to $861 per ounce. Meanwhile, spot silver spiked to $15.27 per ounce. Although there may be some profit-taking in the next few weeks, I stand by my assertion that the precious metals are in a primary bull market that will carry on for several more years. Amid all this good news …


Letter Re: Peter Schiff’s Commentary–“Not Your Father’s Deflation”

Greetings! Here’s some more ‘great’ news [from Peter Schiff, by way of Kitco.com] for the coming economic crash. Thanks to ‘fiat currency,’ this [nascent] economic disaster won’t be nearly as “mild” as the Great Depression, because consumer prices will rise, and, our worthless money will de value at the same time! At least in the 30’s, the gold standard that backed the US dollar, made it hold value – even if there were fewer in circulation. Ditto silver & gold coins, that were still worth something (I found your blog late, and got started late, but I’m buying junk silver …


Letter Re: Cashing in on Scrap Copper, Brass, and Aluminum

Dear Jim, I am a daily reader of your blog. With all the discussion about gold and silver value I thought it might be prudent to bring up the value of other metals. I am a Master Plumber and I make a small fortune by recycling old copper pipe, brass fittings, valves, and faucets. Number 1 copper is up to $2.75 a pound. Four years ago it was $1.50. Yellow brass is $1.60 a pound. It was only 60 cents four years ago. An old water heater can get you $5.00. I know people that save aluminum cans and take …


Two Letters Re: Wider Implications of the Credit Crunch

Sir, I read your piece on the credit crunch, and believe it or not, it gets worse. Morgan Stanley not only took a $9.4 billion dollar hit, they shored up their books by getting a $5 billion dollar infusion of capital from the Chinese! They received a 9.9% share of the company in return. The same Chinese fund has also propped up the Blackstone Group, a private equities firm. – Tim R. Mr. Rawles: I don’t understand what all this credit and financial news means to us poor folks who don’t have any investments to lose. I have a tiny …


Wider Implications of the Credit Crunch

The news on the financial front has gone from bad to worse. Eric S. sent us this: ECB lends $500 Billion to lower rates, and Stephen in Iraq found this article: Fed Loans Banks [Another] $20 Billion. And if that weren’t enough, K.L. in Alaska sent us this: ACA Capital Holdings Inc. was just de-listed by the New York Stock Exchange. K.L.”s comment was blunt: “[ACA Capital Holdings] is essentially bankrupt. It is one of the insurers of the financial instruments such as municipal bonds, hedge funds and CDOs that have been infected by toxic mortgages. These funds are becoming …


Four Letters Re: Coping With Inflation–Some Strategies for Investing, Bartering, Dickering, and Survival

Jim: Great article. You say you have a stock of spices you bought in the 1980s, and this saves you money. As someone who gets a lot of pleasure from good food, I would caution that most spices lose much of their flavor in a short time, certainly within a few years, especially for typical herbs and powdered spices stored in jars as bought in supermarkets. Yours may be specially packed or stored, or selected long-life types. But for most people, as advised in the “Rawles Gets You Ready” preparedness course, buying in moderate bulk makes more sense. A mail-order …