Economics and Investing:

From Peak to Valley. Dr. Housing Bubble reports: Beverly Hills real estate selling for 1989 price levels. Home sold for $920,000 in June of 1989 and has a pending sale at $920,000 in 2011. [JWR Adds: So much for oft-touted “buy and hold” strategy! Oh, by the way, how much did the owner(s) of that house cumulatively pay in mortgage interest, property taxes and insurance, for those 22 years? Doubtless somewhere north of a million bucks. And how much has the purchasing power of the Dollar declined in those 22 years? So… Cui bono?]

J.B.G. sent this: Government Has Borrowed an Additional $29,660 Per Household Since Obama Signed Stimulus

Jeff in Virginia sent this: Banks told to stress-test for 11% jobless rate: report

Items from The Economatrix:

Silver Gains on Inflation Concerns and Tight Supply

Food/Financial Crisis of 2011  

How Much More Demand Can Silver Handle?  

Employers Rejecting Unemployed Job Applicants  

Drought In China Will Not Hit World Grain Prices

Milk Prices Going Up, China to Blame

Dow Notches Third Straight Week of Gains  

Gold Rises to Five-Week High, Physical Demand “Very Much” About Inflation And Low Interest Rates  

Odds ‘n Sods:

F.G. sent us a list of some regions not to live in: The 11 Most Dangerous Cities. Reading that list should make folks yearn to relocate to truly safe places.

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Mark Levin Goes Nuclear Over Obama Destroying the Country. (Our thanks to John R. for sending the link. This might be a good link to forward to your congrescritter’s office.)

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At Clinton Speech: Military and CIA Veteran Bloodied, Bruised and Arrested for Standing Silently. And how would have the JBTs reacted if fifty people in the audience had simultaneously done the same thing? I predict that quite soon, protestors will put social networking to use. I consider shunning–either walking out of a speech or just silently standing and turning your back on a politician–to be a worthy and entirely acceptable form of protest.

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Troy H. sent a link to a fascinating piece on the growth of conservative, Libertarian evangelical churches in the Inland Northwest.

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Fight by states over Obamacare takes wing: Idaho House steps between federal mandates and constituents

Jim’s Quote of the Day:

“These six [things] doth the LORD hate: yea, seven [are] an abomination unto him:

A proud look, a lying tongue, and hands that shed innocent blood,

An heart that deviseth wicked imaginations, feet that be swift in running to mischief,

A false witness [that] speaketh lies, and he that soweth discord among brethren.” – Proverbs 6:16-19 (KJV)

Notes from JWR:

A Beta Glitch. 🙁 We’ve discovered that some of the 47 beta testers of the SurvivalBlog 2005-2010 Archive CD-ROM may have been accidentally mailed blank CD-ROMs by the publisher. Yikes! If your v0.5 Beta CD-ROM was blank, then please e-mail our archival guru, and we will put you on the list to get a free replacement copy. Our apologies! We are hoping to have the Version 1.0 CD-ROM orderable by everyone on or before March 10th. Thanks for your patience.

—

Today we present another entry for Round 33 of the SurvivalBlog non-fiction writing contest. The prizes for this round include:

First Prize: A.) A course certificate from onPoint Tactical. This certificate will be for the prize winner’s choice of three-day civilian courses. (Excluding those restricted for military or government teams.) Three day onPoint courses normally cost $795, and B.) Two cases of Mountain House freeze dried assorted entrees, in #10 cans, courtesy of Ready Made Resources. (A $392 value.) C.) A 9-Tray Excalibur Food Dehydrator from Safecastle.com (a $275 value), D.) A 250 round case of 12 Gauge Hornady TAP FPD 2-3/4″ OO buckshot ammo, courtesy of Sunflower Ammo (a $240 value), and E.) An M17 medical kit from JRH Enterprises (a $179.95 value).

Second Prize: A.) A Glock form factor SIRT laser training pistol. It is a $439 value courtesy of Next Level Training. B.) A “grab bag” of preparedness gear and books from Jim’s Amazing Secret Bunker of Redundant Redundancy (JASBORR) with a retail value of at least $300, C.) A $250 gift card from Emergency Essentials, and D.) two cases of Meals, Ready to Eat (MREs), courtesy of CampingSurvival.com (a $180 value).

Third Prize: A.) A Royal Berkey water filter, courtesy of Directive 21. (This filter system is a $275 value.) , and B.) Expanded sets of both washable feminine pads and liners, donated by Naturally Cozy. This is a $185 retail value.

Round 33 ends on March 31st, so get busy writing and e-mail us your entry. Remember that articles that relate practical “how to” skills for survival have an advantage in the judging.

Review of the USSA Tactical Shotgun Course, by Bubba Man

Here is my review of the USSA Tactical Shotgun #220 course, conducted in December, 2010. I started out with about 850 rounds of #7 bird shot, 150 rounds of 9 pellet 00 Buck and 50 slugs. I should have brought more slugs as I wound up borrowing about 10 from one of the other students. When I was done, I had about 200 rounds of #7 birdshot and 50 rounds of 00 Buck and no slugs.

First let me get this out of the way; Those of you who know me, know that I am currently a fat, out-of-shape, somewhat crippled up, older man. This put me at a disadvantage against the performance of the other students. I was also using a inexpensive (read cheap) Chinese knock-off of a Remington 870 Express pump shotgun. One other student was using a pump (it was a Mossberg 590A1 that had been customized). All of the others, including the instructor, were using semi-automatic action shotguns of one type or another.

It was easy to see the difference in rate of fire and overall action between the pumps and the semi-auto guns. The semi-autos were out shooting the pumps at a rate of 3 to 2 or 4 to 2. Target reacquisition was also much faster on the semi-autos. So with all of this, I could not quite match the round count of the other students. I burned a tremendous amount of energy, just operating my weapon over the course of the training that greatly reduced my performance.

However, having said that, I consider the training to have been excellent. The instructor (Mike Seeklander) is a recognized champion in the Three Gun competition community and has a long career in law Enforcement and as a tactical trainer of Law Enforcement Officers. During the entire class he went out of his way to make sure that we understood the reasoning behind what he was teaching. He consistently stresses the importance of the “stay in the fight” mentality and how to cultivate it during training to help avoid the development of ‘range’ habits. A strong emphasis was placed on deliberate action during training to build the correct habits which are what we will fall back on under stress.

The classroom portion of the class was very short (2 hours out of about 24) and covered the basic admin and safety issues required for any firearms class. After which we retired to the range and began with zeroing our shotguns with slugs at 50 meters. The entire remaining portion of the class was practical hands-on shooting. This was done at a variety of ranges on differing types of targets.

One of the most challenging portions of the class was the final activity on the second day. We were taken to the Rogers Range, which has computerized pop-up reactive targets at close to medium range (I believe it runs from about 10 to about 30 meters) that can be computer programmed to pop-up in a random pattern, with between one (1) and six (6) targets popping up (this can been a real challenge when you have a 5 shot tube).

I do not recall the amount of time that the targets were up, but we had 10 seconds to reload between rounds.

At the beginning of the class, Mike told us that shotgun combat was a matter of “shoot and reload, shoot and reload”. The Roger’s Range exercise drove this home as nothing else in training could. During that exercise every deficiency that you or your equipment have will be clearly manifested. It was an extremely useful exercise. I fully intend to try and get the management to let me do that one on my own at the Rogers Range in the future after I improve my equipment. Another of the useful things in this class was the use of buckshot at different ranges against both paper and pepper-popper targets to help us get an idea of the spread and relative power of a load of buckshot at short and long ranges. Every one in the class decided after those exercises to include slugs in their basic load out.

The practical exercises included training on the differences between cover and concealment, effective use of the cover available in the battlespace you find yourself in, the value of preplanning the cover available in your usual areas and how to use a vehicle for effective cover.

Once again, very useful training. And for me specifically, knowing that even with the deficiencies that I currently have, I can perform these tasks.

On the final day of the class, we ran the ‘shoot house’, which was one of my personal ambitions. We were taught to use deliberate rather than dynamic movement techniques and to make maximum use of ‘cover, time and distance’. One interesting point about the shoot house exercise is that it will give you a new appreciation of the effects of stress on your mind and body during a gun fight. For me personally and for many people I know, that kind of a more realistic type of training environment seems to convince my body that we are doing the real thing and my limbic system behaves accordingly, with the adrenaline dump, the distortion of perceptions and the whole nine yards. This was the first time that I had personally experienced auditory exclusion. While everyone else’s shots were loud to the point of deafening, even with my electronic ear muffs, I could barely hear my own.

I did learn that [equipment] quality has a huge impact on usage. The majority of my problems during that class were related to the weapon operation problems that I experienced.

One last word on equipment; one of the students was using an optic (I believe it was a Trijicon RMR Dual Sight 9.0 MOA Amber Dot. He graciously allowed us each to try it and it was a tremendous aid in rapid target acquisition and getting a good shot off quickly. It is definitely something to think about. In summary, I found the class to be a valuable learning experience and a smashing good time. I look forward to taking it again some time in the future.

Letter Re: Preparedness on a Tight Budget

Mrs. R.J.,
I rejoice to read of your plans to prepare. It’s good to know you’re in Arkansas. The Christians at Ark Haven believe that is a protected area for many reasons, physical and spiritual.

Three generations on one piece of property is definitely getting back to the old ways. Two acres is great — focus on compact crops and animals; Jeavons lists crops by square foot yield and calorie count so you can be sure you’re getting the correct amount in his book “How To Grow More Vegetables” (read it free here). (And yes, it appears this free book is acceptable with copyright laws.) Each person can live on less than 5,000 square feet (perhaps less) so two acres ought to be plenty of food, with surplus to be charitable with, or to sell.

You said, “I have read many of the stories on SurvivalBlog but have yet to read a one from someone on a very tight budget” but I recall seeing several articles just this year on preparing with a tight budget. Use the Search box to check the blog archives, you might find what you’re looking for.

You said, “We want to add some how-to books to our library…” The following web sites have so many free books, it’s more than you can possibly read in the next year, perhaps in your lifetime:

A friend with high-speed internet and a thumb drive could bring them to you.

You said, “We are interested in special growing lights…” Before buying those, and using more electricity, consider an earth-sheltered greenhouse, which costs little to build and uses no electricity or gas, even in frigid northern Idaho. Also check out Eliot Coleman’s books from your library (or use inter-library loan); he is successful year-round in snowy Maine, using unheated greenhouses.

You said, “We (…) don’t know when or how we can add the grinders, expensive water filters or the solar power we will need.” Grinders: There are plans online for simple pipe-based grinders. I found this one. Water filters: Here’s a short article called “Five ways to purify water without fuel or purchased filters.” There are a sixth and seventh way in the comments under the article.

Solar power: Use less.  I believe our family could get by with just these rugged solar LED lanterns  at $15 each and perhaps a water pump. Those in poorer countries say that electricity is one of the easiest utilities to get rid of. But if you cannot get rid of it, then Sunelec has gotten costs down to almost $1 per watt. Even with low cost panels, rebates and incentives, I estimated that the payback rate was still seven years. There are other ways to save, such as raising animals (instead of buying meat).

See also the book: Preserving Food Without Freezing or Canning

I highly recommend you read about Permaculture. Permaculture’s emphasis is on letting God’s designs in nature do as much of the work as possible. It’s about working smarter, not harder, and once established most gardens take care of themselves without much costly input or labor. The best book I’ve found is “Gaia’s Garden, Second Edition: A Guide To Home-Scale Permaculture” Don’t let the name throw you (like it first did for me), it’s not new age earth worship; just solid advice.

Also learn about seed saving; it’s not as easy as it sounds, there are some technical details you should know.

You can grow some of your own herbal medicines. This is another field which New-Agers have taken over, but it need not be that way.

Consider learning about animal trapping and wild foraging; this knowledge would pay off quickly. Take some of the seeds from the wild plants for your garden; outsiders will believe you are growing weeds 🙂

You might consider building a survival community such as Ark Haven is trying to do. There’s strength in numbers, and you can bring in specialists (doctors, vets, carpenters, skilled shooters, etc.) who can round out the skills you’ll need to pull through.

Lastly, continue to bank on the promises of God. I like to recommend reading Matthew 6:19-34 out loud. It has a stronger emphasis when you read it aloud. Same with Habakkuk 3:17-19 and Nahum 1:7. It’s as though half of the Bible is written for times like these.

“Trust in the Lord with all your heart, and do not lean on your own understanding. In all your ways acknowledge Him and He will make straight paths. Be not wise in your own eyes but fear the Lord; turn away from evil.” – Proverbs 3:5-7

Sincerely, – C.D.V.

Two Letters Re: Investing in Nickels, in Quantity

Jim,

Thanks for the blog. I’m a huge fan, and your blog is literally a rock-solid anchor for me and my family during all this turmoil.

I took “Rick in Kentucky’s” claim that he could get $190 worth of nickels into an ammo can as a challenge. My ammo is flat green can has yellow paint on it which reads as follows: “200 CARTRIDGES, 7.62 MM, NATO 0 M80…” I took out a full can that I have where the coins are arranged laying down, dumped out the rolls, and started stacking vertically as described by Rick. It was quite a trick to insert the last one in the corner of the bottom row. But it works out! 4×12 x2 high x2 dollars each = $192 dollars and 45.9 pounds. Wow, I could easily see where there is even a slightly dented ammo box that it would be impossible.

One could get away with adding [loose] individual nickels to bump up the value, but certainly not to the $200 threshold, and of course, then the can’s contents would no longer be all rolled coins. – Jeff in Colorado Springs

 

Hi James,
Regarding the letter about fitting more nickels into a standard U.S. 30 Caliber ammunition can. One reader wrote that he could get $190 worth into a can.

I have been experimenting trying several stacking methods and I found one that I like the best.  I stack the nickel rolls vertically (on end, standing up) four to a row across the width of the ammo can.  (Think of like stacking one shotgun shell on top of another.) Each of the two layers takes 11 rows of 4 plus one odd row of 3.  That makes 47 rolls per layer equaling 94 rolls total.  I’ve tried everything to squeeze the last roll in on each layer but it just won’t go.  Interestingly, it makes it easier to pull the rolls out having one roll missing per layer.  This makes for $188 of coins per can.  I call this method “the standing shotgun shell technique” of coin roll stacking/packing, LOL.

What I like about this system is that when you open the can, you are able to immediately see what’s in the can; that there are 4 standing rolls across, and 11 columns of 4 plus one odd column of 3. It’s great, because at a glance I can tell how many are in the can and it’s very easy to count.  Using the other method, it’s a lot like guess work, particularly if any bottom layer has odd numbers by not stacking directly one on top of another..  It’s also very easy to pull a roll straight up and out.

I tried prying that last coin roll in to each layer and couldn’t do it, but I’ll happily settle with 94 rolls per can equaling $188.  It amazes me how versatile the ammo can is, and what a great idea it is to use these containers. Thanks for all your good work. – M.

JWR Replies: Thanks for doing that experimentation, folks.

Economics and Investing:

Loyal reader “OSOM” (“Out of Sight, Out of Mind”) pointed us to an eloquent piece by Bill Bonner (of The Daily Reckoning) titled: “Where to Be When Black Swans Appear” OSOM’s comment: “This is a great introductory article for those folks who don’t yet read SurvivalBlog.”

Daniel H. flagged this evidence of flight from the U.S. Dollar: China sells $34.2bn of US treasury bonds.

Jon R. mentioned this at The Daily Reckoning: The Food Crisis is a Dollar Crisis

The latest FDIC Friday Follies: Regulators shut two small banks in Georgia; makes 20 US bank failures this year. (Thanks to G.G. for the link.)

Items from The Economatrix:

Rising Wholesale Prices Spur Inflation Concerns  

How To Fake An Economic Recovery  

UK: Shock Rise in Unemployment as Workers Hit by Wage Cuts 

Oil Rises to $104 Amid Middle East Tensions  

China Rice Laced with Heavy Metals

Odds ‘n Sods:

Reader Lynn G. sent a link to a web page on nuclear EMP.

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Attention SurvivalBlog readers in Colorado: Reader James A. just alerted me that Classic Mustangs in Denver, Colorado recently bought 100 U.S. Army surplus CUCV diesel pickups and Blazers at auction. (I assume these came from Fort Carson, Colorado.) They are offering them either semi-restored (with custom paint jobs and engine block heaters) or essentially “as-is” with their original CARC paint..

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John B. sent this: NRA-ILA :: Senator Grassley Presses BATFE On Project Gunrunner

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Reader Pierre M. spotted this: Jeffrey on Socialism’s Trajectory: Obama’s HHS is Bigger than LBJ’s Government

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Attention SurvivalBlog readers in the Portland, Oregon/Vancouver, Washington region: Razor wire at a bargain price.

Note from JWR:

Today we present an article by Dr. Cynthia J. Koelker. Regular SurvivalBlog readers will recognize her as a frequent contributor to SurvivalBlog and the editor of ArmageddonMedicine.net. She was also just named SurvivalBlog’s Medical Editor.

Seven Antibiotics to Stockpile and Why, by Cynthia J. Koelker, MD

Assuming your personal physician will help you stockpile antibiotics for TEOTWAWKI, which should you request?  Is there a logical reason to have amoxicillin on hand rather than doxycycline? 

Here’s what I would suggest and why.
No antibiotic is effective against every type of microbe.  Certain ones will kill aerobic bacteria, others are used for anaerobic bacteria, still others are effective against resistant strains, and certain people are allergic to or intolerant of various antibiotics.  The following are all generics, running about $10 for about a month’s treatment.

  •  Amoxicillin is the old standby for most respiratory infections (probably most of which are viral and don’t even require antibiotics).  It is excellent for strep throat and some strains of pneumococcal bacteria.  It is also safe for children and pregnant women.  It is well-tolerated, causing little stomach distress or diarrhea.  The drawbacks are that some people are truly allergic, and many bacteria have developed resistance to amoxicillin (especially staph) through overuse among both humans and animals.  Anyone truly allergic to amoxicillin should substitute erythromycin or another antibiotic. 
  • Cephalexin works on most of the same bacteria as amoxicillin, plus is stronger against Staph aureus, which mostly causes skin infections.  It rarely works against MRSA (resistant staph), however.  It is also well-tolerated in children and is safe in pregnant women, causing few side-effects.  Like any antibiotic, it carries the risk of allergy.  People who develop anaphylaxis (a life-threatening allergy) with amoxicillin probably should not take cephalexin, as there is a good 10% cross-reactivity between the two.  If I had to choose between stockpiling amoxicillin or cephalexin, I would choose cephalexin.  The combination drug, amoxicillin-clavulanate (Augmentin), is as strong against staph, but more expensive and harder on the stomach.
  • Ciprofloxacin is useful for anthrax (which I’ve never seen), urinary tract and prostate infections (which are very common), and many forms of pneumonia and bronchitis.  One of the more important and selective uses of ciprofloxacin is in combination with metronidazole for diverticulitis.  This potentially life-threatening infection usually (or at least often) requires two antibiotics to resolve.  (Levaquin and Avelox are a bit stronger than ciprofloxacin and could be substituted for this, but are much more expensive.) Ciprofloxacin is not used in women or children unless the benefit clearly outweighs the risk, although the risk of joint damage (seen in animals) appears minimal.  Taking ciprofloxacin by mouth is nearly as effective as taking by IV.
  • Doxycycline is useful in penicillin/amoxicillin-allergic adults for respiratory infections and some urinary/prostate infections.  It is avoided in children and pregnant women unless the benefit clearly outweighs the risk (of permanent tooth discoloration in children under the age of 8).  Doxycycline is sometimes effective against penicillin-resistant bacteria.  If I were limited to either doxycycline or erythromycin, I would choose erythromycin for stockpile.
  • Erythromycin is useful for most of the same infections amoxicillin is used for, and thus can be substituted in penicillin-allergic patients.  However, erythromycin tends to cause the intestine to contract, often causing cramps or diarrhea.  (This property is sometimes used to help patients with conditions that impair intestinal motility.)  It can be safely used in children and pregnant women. 
  • Metronidazole is an unusual antibiotic used for very specific infections.  It is aimed primarily at anaerobic bacteria, primarily those found in the intestine.  It is also used for certain STDs, including trichomonas.  As mentioned above, it is very useful in combination with ciprofloxacin (or SMZ-TMP, below) for diverticulitis.  It is the only inexpensive antibiotic effective for Clostridium difficile (c. diff, or antibiotic-related) colitis.  It is also effective against certain amoeba.  This drug is not used in children unless the benefit clearly outweighs the risk.
  • SMZ-TMP is a combination drug of sulfamethoxazole and trimethoprim.  The latter antibiotic is used mainly for urinary infections.  The sulfa component is effective against many respiratory bacteria and most urinary pathogens, although ciprofloxacin is somewhat stronger.  The main reason to stockpile SMZ-TMP is due to its effectiveness against resistant staph (MRSA). 

Of course, only the most understanding fellow-prepper physician is likely to prescribe all these in quantity.  The list can be narrowed a bit, by dropping doxycycline (since erythromycin covers most microbes that doxycycline would kill, and can be used in young children) and amoxicillin (because cephalexin covers most amoxicillin-sensitive bacteria and has the benefit of effectiveness against staph aureus). 

My top five antibiotics would therefore be:

  • Cephalexin
  • Ciprofloxacin
  • Erythromycin
  • Metronidazole
  • SMZ-TMP

Of these, SMZ-TMP and ciprofloxacin have the most duplicate coverage, as do cephalexin and erythromycin. Since the intolerance of erythromycin is much higher than is allergy to cephalexin, I would favor cephalexin.  Ciprofloxacin is stronger for intra-abdominal infections than SMZ-TMP, and is less likely to develop resistance.  Although its use in children is a bit of a concern due to the question of joint pain (although this is rare), I would favor ciprofloxacin over than SMZ-TMP, even though SMZ-TMP is effective against MRSA.  However, when the use of antibiotics is severely curtailed, antibiotic resistance will also decrease, and therefore MRSA will become less of a concern.

Therefore, my top three antibiotics to stockpile would be:

  • Cephalexin
  • Ciprofloxacin
  • Metronidazole

Using these three alone or in combination would cover around 90% of the infections physicians commonly encounter, as well as several less-likely threats (including anthrax and C. diff).

About The Author: Cynthia J. Koelker, MD, SurvivalBlog’s Medical Editor is the author of the book 101 Ways to Save Money on Health Care, which explains how to treat over 30 common medical conditions economically, and includes dozens of sections on treating yourself.  She also hosts the popular medical prepping blog at www.ArmageddonMedicine.net.

Letter Re: Food, Nickels, Silver and Gold

Mr. Rawles:  
Like the ridiculous commercials touting Internet stock trading in the recent past, today the sheeple are treated to commercials extolling the wisdom of investing in gold, all the while the economic world is apparently heading for a meltdown of epic proportion.  As an ardent fan of your novel “Patriots” and a daily reader of your site, I must question the wisdom of investing in either physical gold or rolls of nickels as one will not be able to eat either. And frankly, if someone appears at most doorsteps offering either as payment for goods or services after the proverbial SHTF, I would believe said traveler would more than likely walk away disappointed and still hungry.  I believe in the wisdom of investing in tangible goods that can be used in some form or fashion along the lines of food, ammo, etc.  How many folks even know what they are looking at when presented with shiny, gold jewelry as an item of barter?  Let’s face it, the average person has little or no knowledge or means to determine the value of shiny baubles and coinage while true tangibles can quickly be assigned value in today’s world and tomorrow’s.  Furthermore, I must admit the amusement of picturing said travelers hauling ammo cans full of nickels around while wondering what it was they left behind which could have helped put a little food in their bellies either thru trade or application. Respectfully, – Jon in New York

JWR Replies: You are mixing two concepts: survival preparedness and investing. For more than 10 years I have warned people that they need to get their “Beans, bullets, and Band-Aids” squared away before ever thinking about doing any hedging with metals.  Food comes first!

I’m also on record as stating that common caliber ammunition will be a better barter item than silver coins in the event of a severe crisis.  You can’t eat precious metals, but ammunition will be recognizable and sought after because it can both help provide self defense and be used for hunting. Furthermore, I’m a strong advocate of investing extra funds in silver rather than gold. Just read the “For an Ounce of Gold” chapter of my novel “Patriots: A Novel of Survival in the Coming Collapse”.  I first drafted that chapter in 1990. My position hasn’t changed appreciably since then. Here is a brief except:

Next, Kevin reported on his transactions.  “I got an entire buffalo hide in really good shape for 10 rounds of .30-06.  I figure that it’ll help keep us warm up at the LP/OP next winter.  Another guy traded me a small Bearcat scanner–one of the portable ones the size of a walkie talkie–for 20 rounds of .45 ACP.  It runs off of batteries, and we have plenty of ni-cads, so I thought, ‘why not?’  Not many people have any source of power nowadays.  I figure that’s the only reason the guy was willing to sell it so cheap.  I also got a pair of Belgian white rabbits–a buck and a doe, for 25 rounds of .22 long rifle.  My mother would be proud.  She’d say that I got ‘Such a deal!’  The cage for the rabbits cost a lot more, though.  For it, I had to give up a whole 50 rounds of .22 and three pre-’65 silver quarters.  I think it’s amazing what a few silver dimes or quarters will buy.” 

After a pause, Kevin said, “I feel sorry for all those people I knew who bought one ounce gold coins as a ‘survival hedge.’  I can see now that a full ounce gold coin is too compact a form of currency, and it isn’t easily divisible.  I suppose that people who bought the gold coins minted in the one tenth of an ounce weights are more fortunate.  What would a full ounce of gold buy?  That Corvette that we saw advertised?  A half a dozen cows?  Maybe.  It certainly wouldn’t do much good for someone trying to buy day-to-day necessities.  It’s pretty apparent that our stock of .22-rimfire ammo is a lot more useful as a store of value and as a means of exchange.”  [End quote]

For those that already have their survival preparations squared away, some hedging with metals is indeed appropriate.  The alternative is to watch our savings consumed by currency inflation. We cannot store our net worth in the form of food. Unless the economy is totally destroyed and doesn’t come back within a generation, then metals will have utility. But again, it will be silver, not gold that will be better for barter. The chances of a total, multi-generational “wipe out” are microscopically small. That is just about the only situation where metals investing would be folly.

On a related note, SurvivalBlog’s poet laureate “George Gordon” just forwarded me some commentary by Gary Gibson posted over at Whiskey and Gunpowder that echoes what I’ve been recommending for three years: Gold, Silver, Copper, Nickel and the Slow Death of Money. And today I noticed this new article: Today’s Best Investment…Rhymes With Pickles. So it it is clear that I’m no longer a lonely voice in the wilderness that recommends socking away some Nickels as a hedge on inflation. Wake up, folks! Nickels are already worth 145.35% of their face value. I can’t think of many other investments with that sort of assured gain, starting on Day One.

The mass inflation that I expect in the next few years will quickly destroy the purchasing power of the U.S. Dollar, and will quickly propel the value of Nickels to thrice their face value, and beyond. In essence, when paper money starts to become worthless, then even base metals will be seen like precious metals. The alternative is holding paper currency that is not even suitable for toilet paper, because it is unsanitary. At least for as long as you can continue to obtain Nickels at face value, they are a good investment. That is abundantly clear.

Letter Re: Gauging Government Over-Spending

Dear Mr. Rawles,

Thank you for your hard work on the blog. I did some thinking and research today concerning the Federal budget and want to share what I found with you.

How much does the Federal government spend and how do we put this into context? There are several ways to look at this data. First, one can compare the dollars spent today versus those spent in 1962. Using the data from supportingevidence.com, I found: The government spent $106,821,000,000.00 in 1962 (106 billion dollars) according to http://federal-budget.findthebest.com/detail/64/1962. However, adjusted for inflation this would be about 700 billion dollars. The government spent $3,552,000,000,000.00 (3.553 trillion) dollars in 2010. This is 33.25 times larger, accounting for inflation. One might ask, are things 33.5 times better now than in 1962? Are we getting more or less for our money? Is health better? Are we more secure? Are we happier? Are we closer to God?

Still, there are several differences between 1962 and 2010 that we need to take into account. First, the population is bigger and second the GDP is bigger. Accounting for population, in 1962 the government spent about $3,800 per person, adjusted for inflation while in 2010 that same figure was $10,250.00. One could argue that there should have been a savings of scale. Things should be less expensive buying in bulk. We don’t need more warheads, for example to protect the population but we do need more roads. Unfortunately there is not a savings of scale regarding retirement benefits (as in Social Security). Anyway, the government is spending 2.7 times more per person now than in 1962. This is somewhat better but still begs the questions of whether we are 2.7 times better off now and whether we needed to spend $3,800 inflation-adjusted dollars per person even back in 1962.

Finally, we can look at the budget compared with GDP. In 1962 the Federal Budget was roughly 18% of the GDP whereas in 2010 the budget is fully 25% of GDP. Projections are that it will again fall to about 22% of GDP but that assumes lower spending, increased productivity or both. A major assumption is that the size of Medicare, Medicaid and Social Security will shrink as the “Baby Boomers” die. We are currently seeing a major argument in Congress concerning the size of the budget and what gets cut and what doesn’t. It is clear that any way you look at it, pure dollars, inflation-adjusted dollars, dollars per citizen or size of the budget as a percentage of the money we make, that there has been a gargantuan growth in the budget. Some of this is inevitable because of the aging, retirement and health care costs of a disproportionately large segment of the population, but I would still maintain that there is a huge part of this spending that has gone to

1. Services that we don’t need

2. Complete waste

3. Inefficiency and bureaucracy

4. Services that should not be part of a Federal Budget

As for myself, I plan to:

1. Advocate for cuts on the local, state and federal levels that I personally see as meaningful and appropriate and ethical

2. Re-evaluate my own personal budget to look at my own expenditures and income to see if it is consistent with my ethical and practical values

3. Keep in mind that simply making more money, or spending less, or even preparing for TEOTWAWKI won’t necessarily make me or my family happier, wiser or closer to God.

And to that end I need to work more directly on those aspects. – Mr. Bennington in Pittsburgh

Economics and Investing:

Brett G. sent this: John Hussman: Stocks Too Expensive, Correction Due

Frequent content contributor John R. recommended this analysis by Monty Pelerin: Faking Our Way to Sovereign Bankruptcy

Karl Denninger reports on the collapse of the MERS house of cards: MERS Caves

Items from The Economatrix:

Dim View of Housing Market Weighs on Economy

A Tipping Point is Nearing

Oil Prices Fall on Economy, Supply Concerns  

Bartering, Inflation & Growing A Garden