Letter Re: Greenspan, Gold, and the Safe Store of Value

Dear Mr. Rawles,
Regarding the use of gold as a store of value, it’s important to realize that gold often functions as a fiat currency. It does have intrinsic value for jewelry, electronics, rust-proofing, and some chemistry applications but the vast majority of its value comes from the shared expectation that people will accept it as being valuable in the future. The only difference from fiat dollars is that it’s harder – but not impossible – to increase or decrease the gold monetary supply, and that supply isn’t controlled by any government.
In a disaster situation things get even worse, because if the lights are out you probably don’t need gold for jewelry, electronics, or chemistry, and there are less conspicuous ways to rust-proof things than to gold plate them. The only significant value of gold in that situation will be the expectation that others will value it in the future – it will be a pure fiat currency. Contrast that to prison currencies like cigarettes, which hold truly intrinsic value but are still used as money for trading.
I’m not saying that it definitely won’t be useful – fiat currencies have worked fairly well since the late 1960s and there’s no reason to believe that gold cannot function as an unregulated fiat currency. However, all the preparedness sites I’ve read appear to see gold as having intrinsic value, where in fact only usable items and resources have truly intrinsic value. (Food, ammo, coal, whatever)
I know personally that given the choice between trading MREs for gold versus trading for bullets, I’d have a heck of a lot more use for the bullets – regardless of now or after a crash.
Thank you for the time you spend maintaining your site. When my own personal finances aren’t so dire I certainly intend to buy your books. Sincerely, – Daniel

JWR Replies: I agree that gold will have only marginal utility for barter during an economic collapse. It will only come into its own in the recovery phase. Gold can act as a “time machine”, preserving your buying power from now until the far side of a currency collapse. (When it presumably could be converted into a new, stable currency.) But don’t expect it to do you much good in the middle of a crisis. (You are right that common caliber ammunition will be a preferred barter item.) I ‘ve always considered silver preferable to gold for barter, for the reasons outlined in my novel “Patriots: Surviving the Coming Collapse”–most notably that gold coins are too compact a form of wealth for efficient barter. Silver dimes and quarters are much more practical.

From #1 Son: Proposed Expansion of Designated Wilderness Areas a Cause for Concern

The House of Representatives is currently considering H.R. 1975, the “Northern Rockies Ecosystem Protection Act.” This is of interest to survivalists because it will be converting a huge amount of public land into “designated wilderness areas.”
The affected land currently has roads and is open to public use. However, if the wilderness area expansion passes then public access use will be severely restricted. Many of you own or would like property with forest service land adjoining or nearby. With the act, all roads will be blocked off or removed, and hunting and wood cutting will be illegal. You will even need a “wilderness permit” every time you go camping or backpacking in these areas.
The act will affect more than 28,000,000 acres (45,000 square miles) in the states of Idaho, Montana, Oregon, Washington, and Wyoming. The area is more than half of the size of Idaho!
This act will severely affect our rights to public land, by removing access and restricting our activities.
Please write and/or call to the members of the House Subcommittee on National Parks, Forests, and Public Lands and your state’s congressmen. It is currently waiting for subcommittee debate, so there is only a small number of congressmen that we need to reach right now. Please write to them, even if it is only a short note. This bill is still in it’s infancy, where it can be fairly easily defeated.

Jim’s Quote of the Day:

“Never let your head hang down. Never give up and sit down and grieve. Find another way. And don’t pray when it rains if you don’t pray when the sun shines.” – Satchel Paige

Letter Re: What if I Can’t Leave WTSHTF?

Mr. Rawles:
I have been reading your blog for some time. I have found it quiet interesting and informative. I’m a former combat vet and security professional for most of the 1990s. I moved back to North Carolina and started a company. I was raised by parents and grandparents that were survivalist long before the term became popular. I have made extensive preparations for the upcoming events that will befall the United States . I read the [blog] site and I think about us folks that do live in the east, a lot will be in a sad shape. I have huge amounts of water, food, and fuel stored. I’m not talking about weeks worth but several years worth. I believe that folks that have taken the time and spent the money to prepare should hopefully try to hold up with people of like minds. All of our supplies and improvements have been done very quietly and surely not publicized, [since] most people would think we were weird or crazy. The idea of bugging out is unacceptable to me because I have a wife and two sons that are 6 and 7. We surely do not want to be refugees! I believe that the biggest problem for us will be the clans and gangs that will leave the cities (Winston Salem, Charlotte , Greensboro, and Raleigh ) and migrate to the countryside. These people live inside of city limits where their water, sewer, and social needs are taken care of, when the Schumer hits the fan, these folks will be moving to the countryside to prey upon anyone they can. I figure these roving gangs will terrorize the countryside until people start to band together and kill them. I also see the average everyday needs that people just don’t think about. I’m not talking about water, food, and shelter. I’m talking about basic needs like shoes, clothing, and coats for the winters. Can you imagine what a pair of Danner boots would be worth? I think a lot of time as we prepare, the little things are forgotten. I think that a person can never have too much food, water, ammo, firearms, fuel, shoes, clothes, and blankets. If you don’t need them, they can always be traded.

Thanks again for a great site, the book “Patriots”, your prior military service, and for the eagerness to teach and help folks get educated about the things they truly need. Sincerely, – Andy

Letter Re: Greenspan, Gold, and the Safe Store of Value

James,
While I am sure that this has been covered here before, it demands review. I was searching for information on a “safe store of value” and I came across the following. On or about 1966, Alan Greenspan wrote a lucid note entitled, “Gold and Economic Freedom.” Greenspan’s essay ends with, “This is the shabby secret of the welfare statists’ tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists’ antagonism toward the gold standard.” Awesome verbiage, for a change, from the Maestro. As a related follow-on, Gary North provided great commentary given Greenspan’s answers to Dr. Paul’s questions in 2005. In his replies to Dr. Paul, Greenspan, called on the Gold carpet, stumbles in a way that only he can. Summary: 1966, Gold is golden. 2005, What, me worry? Perhaps on a tangent, or for a biographer, how did Dr. Greenspan’s net worth change over that time period?

I urge readers to read the complete 1966 essay. It is short and unusually clear. The description of the events leading up to the Great Depression in light of today’s conditions is quite informative. I even learned that my initial search was completely in vain. Greenspan said, “In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value [emphasis added]. If there were, the government [emphasis added] would have to make its holding illegal [emphasis added], as was done in the case of gold.”

So, there is no safe store of value [in dollars]. Easy, I went out and bought more quality ammunition. Then I picked up Boston’s Gun Bible and continued reading. James, thanks again for your hard work. – The DFer

Three Letters Re: Surplus Interceptor Body Armor (IBA)

James,
I noticed the letter you posted about the man who bought his interceptor armor from eBay. Much of the Interceptor [Body] Armor on the market is stolen property.
Many times it was stolen through supply [channels] and that is one of the reasons so many troops had to buy their own.
On many of the tactical forums you have to be able to produce proof that you bought the interceptor armor legally.
The interceptor armor itself is outdated. It is very heavy and bulky. Dragonskin is also not available to civilians. You have to have a end user certificate to even get the stuff. Thanks for the great site. – Meerkat, Murfreesboro Tennessee

Dear Jim:
Dr. Richard makes a critical point about avoiding defective Zylon vests on eBay, but I must add some cautions to his suggestion about buying used Interceptor armor. For the sake of full disclosure, here at BulletProofME.com we are about to advertise a $500 special on our brand-new Interceptor Outer Tactical Vests on SurvivalBlog. But the following information is factually verifiable for any skeptics.
Beware of Stolen Interceptor Armor
Unless the armor was bought with private funds, it is U.S. government property and should have been turned in by the user. The Army criminal investigations unit has been aggressively confiscating undocumented armor from both military and non-military personnel, and prosecuting dealers who knowingly bought stolen armor. This has been such a problem, we simply won’t buy Interceptor armor without verification of it’s title – just like a car.
Beware of Damaged SAPI hard plates
Unless it has been abused, there shouldn’t be a problem with the protection level of the aramid (i.e., Kevlar) soft ballistic panels in the Interceptor. Aramid does not degrade noticeably just from age.
Be very, very careful with SAPI Rifle Plates
These Small Arms Protective Inserts (SAPIs) are made out of boron carbide and are more fragile than Ceramic Rifle Plates. Some will have hairline cracks not visible unless X-rayed. Even just improper packaging for shipping can leave them damaged (I swear a lot of the delivery drivers are former shot putters, the way they throw packages around! )
Also, unless it is an Enhanced model (E-SAPI) it is not full AP protection like Level IV Ceramic Rifle Plates, the original SAPI mil spec called for M-16 and AK-47 threats to be stopped – but not AP rounds.
Finally, regarding the “better” Dragon Skin. Well, Pinnacle has an impressive public relations machine, but they have only had the vest certified to Level III standards (to stop .308 FMJ) by the NIJ (National Institute of Justice). If I really had a superior product that was being ignored by the Army, I’d have it Level IV certified (stopping .30-06 AP) and sell it to police customers – why hasn’t Dragon Skin done this? They only have a Level III certification on file.

We have customers in The Sandbox who bought Dragon Skin, but just couldn’t take the extra weight. Just like everything else, take the time to dig below the marketing hype and know what you are buying. Thanks, – Nick, Manager, BulletProofME.com Body Armor

 

James:
I am a new reader of the your blog. (About two months now) I even submitted a story [to the SurvivalBlog non-fiction writing contest] about raising chickens for survival protein. It did not win, but hey it was fun to be published, and maybe it can help out someone else. Maybe I can try again next month I would love to have a copy of your book. It sounds good. And I am addicted to the blog. I read it almost every day.

The reason I read it is because I do most of these things any way but now I can learn to do it the right way. Thanks for all this great info. You may even see a few dollars in snail mail in a few weeks.

I was looking at the info about body armor and how some of the good stuff from Iraq is showing up on eBay. That got me thinking. Do you have any past info about body armor, what the rankings mean? What the ball park prices are and how to find used stuff. (I do love eBay) I think this would be a great Item to get a hold of but I need more info before I make any purchases. I looked over the web but all I can find is info from the sellers and some times I have trouble believing every thing the sales person tells me. Any info would be great. Thanks, – Korey

JWR Replies: A good description of the NIJ body armor protection standards numbers can be found in this primer. I have no idea about current auction pricing on IBA. Just be sure that what you buy comes with an original receipt or military Statement of Charges. (Items that are misplaced by soldiers are often paid for via Statement of Charges.)

Odds ‘n Sods:

“Yabba-dabba-do!” Hawaiian K. forwarded us a link about some transportation improvisation in Prague. (The intact bark makes me think that this was a prank rather than an economy measure.)

  o o o

Simon in England sent us this gem from the British press: a serving soldier (Private Christopher Trussler) has been charged with the illegal possession and sale of ammunition in late May. The private’s arrest followed “a three-month investigation.” His arrest followed an operation into the sale of 9mm ammunition in the Chichester area of West Sussex. The Metropolitan Police said the move followed a “proactive intelligence-led investigation into the supply of ammunition.” Detective Sergeant Neil Lennon of Operation Trident said: “The ammunition we believe this soldier was selling would have been compatible with a number of types of firearms. It would undoubtedly have the potential to have an extremely harmful effect on a number of communities, and Trident remains committed to tackling those who seek to profit from the misery of others.” So how much ammo did he have to sell? 21 rounds of 9mm. (About $2.50 USD worth.) And how much did that “three month investigation” cost the UK taxpayers? This incident is absurd and laughable, but the hoplophobic Brit officials are taking it oh-so seriously.

   o o o

More countries cut loose from the tarnished US Dollar: It started with China, in 2005. Then Iran and Venezuela followed suit. More recently, Kuwait and Syria have made similar moves. This week, Bloomberg.com reported that the UAE may be next. If this continues, I predict an “emperor, sans clothes” epiphanous global revaluation of the dollar, most likely this fall. My advice: Diversify out of dollars and into tangibles, pronto!

Note from JWR:

Two issues seem to cause the most lively debate in the SurvivalBlog: climate change and Peak Oil. (On the latter, see the following letters.) There are brilliant minds that that support both sides of these issues. I am a gratified to see that SurvivalBlog readers can debate these topics rationally, without resorting to name calling. The bottom line for you, dear reader: Regardless of where you stand on these issues, be prepared. Even if they turn out to be overblown non-issues, there is no guarantee that government over-reaction might cause just as many problems as the “crises” themselves. And if either of them indeed do the economic damage that some pundits predict, then we are in for some very tough times. Perhaps even a multi-generational TEOTWAWKI. Self sufficiency and sustainable agriculture are solutions on the micro level, and perhaps at the community level, but on the macro level, things look bad for many, many years. There is just too much population to support at the status quo. In light of all this, my advice is to stock up, especially on fuel. If stored properly, propane, diesel, and firewood can be stored for decades. The shelf life of coal is limitless. Choose your retreat locale wisely. Good soil and plentiful water will be crucial. Hard economic times will at the very least mean higher crime rates, and possibly even organized looting–as in my novel “Patriots”. So team up with several like-minded families for mutual defense. Plan ahead and proceed with prayer.

Three Letters Re: Some Good May Come From High Gas Prices

JWR,
Again, Michael Williamson brings a bit of fresh air in his letter regarding gas prices. It’s called the free market pricing mechanism and when allowed to operate it would solve most human problems in the most efficient manner. Regards, K

Dear Jim,
There is a huge difference between reserves (total resource) and the amount of the resource that can be produced each year (production flow rate per unit of time). Both Canada and Venezuela have large reserves of tar sands. However, the annual production of tar sands is limited by production constraints and has a low (but positive) energy return on energy invested. The largest limitations are the requirements for water and natural gas – these two constraints will limit Canadian production to at most about 3 million barrels per day. The tar sands production is creating an environmental disaster in Alberta and leaves the water toxic. The following quote from a Tar Sands Watch article about a recent University of Alberta study demonstrates how unsustainable the current tar sands production demand for water actually is:

“But to produce one million barrels of oil a day, industry requires withdrawals of enough water from the Athabasca River to sustain a city of two million people every year.”

Likewise, natural gas production in North America peaked in 2002 and is in steep decline. Many natural gas analysts expect annual North American production to be roughly half that achieved at the peak as early as five years from now – despite extremely aggressive drilling of new natural gas wells. Modern drilling technology typically depletes natural gas wells after about 18 months of production. We don’t have 1,000 years worth of natural gas and may not even have enough natural gas to keep pressure in the pipes for customers at the end of the pipelines and supply chain – particularly those in New England and the North Eastern portion of the United States. Simply sustaining current production levels will require the construction of nuclear power plants (deeply unpopular with many Canadians) to provide an alternative source of process heat and eliminate the need to use rapidly depleting natural gas.

Furthermore, the tar sands capital investment and production costs per barrel have been increasing every year – last year (2006) costs were in the $23 to $26 per barrel range and this year’s costs will likely be higher.

While energy independence is desperately needed, it remains extremely difficult, there are no silver bullet solutions, none of the alternatives offer the low cost and energy concentration of cheap fossil fuels, and requires capital-intensive investments with long lead times even if one has the political will to make it happen. Unfortunately, there is no political will to make the needed investments and sacrifices at this time and today’s poor decisions will lead to a future environment (economic and social collapse) where the resources needed (people, money, materials, imported technology, manufacturing capabilities) will either be partially or completely unavailable. – Dr. Richard

 

Dear Jim and Family:
With rue respect to Mr. Williamson, the Tar Sands will not save us. Neither will Corn Ethanol–a scam that benefits farmers and costs the taxpayer for a slight loss in energy return on energy invested (EROEI), Cellulosic ethanol (mostly an unscalable myth since the chemistry isn’t proven or effective), cheap solar (a scam, alas), electric cars (we’re running out of nickel so there will be no [nickel-based] batteries), biodiesel (eat for a year or drive for an hour, choose), natural gas (running out in North America, out in Europe, lacks capacity or density), coal (spreads mercury and uranium and sulphur when burned, kills plants and waterways, poisons everyone downwind and downstream, causes cancer) also lacks density, and coal [liquefaction], the best and most abundant energy we’ve got in North America but won’t scale up for liquefaction fuel supply. Just enough for the elite, but not for us.

I’ve spent the last six years daily reading and studying energy depletion. The Tar Sands are an energy sink. It will take approximately 22 full sized nuclear power plants, or 48 conventional natural gas power plants to heat the tar sands after mining them like the low density garbage they are, to produce the current output of 85 million barrels [of oil] per day. And if you did that, then natural gas would stop heating homes in the United States, leaving millions to freeze to death [rant snipped.] If you just want enough for the United States and Canada and let the rest of the world rot, you still need something like 15 nuclear power plants. And those take 10 years to build [rant snipped.] Tar sands are less dense and less efficient than coal. It takes copious amounts of water to steam the oil out of the sand and the sand itself must be mined, then disposed of in a huge slurry pond. Cambridge Energy Research Associates (CERA) doesn’t tell you that part. Neither does the USGS, who has worse numbers than NASA where oil reserve totals accuracy is concerned. Counting it two and three times does not mean that total actually exists. Furthermore, the cost per barrel of oil generated from tar sands is $55, not the $15 that certain unreliable and unscrupulous organizations like to claim. They are “greenwash” organizations shilling for Big Oil and the scams that result from it. Tar Sands are a massive waste of energy and time, and a distraction from the reality of [Peak Oil economic] collapse. They’ll probably be exploited by someone who failed basic math. 1-1 does not = 2. It equals zero, and that’s what the tar sands are worth: zero.

Please let me make this perfectly clear to all your readers: there is no alternative to [traditionally pumped] oil. None. There are energy losers, there are projects that won’t scale up beyond the elite, like biofuels. There are expensive toys like electric cars and hydrogen cars and fuel cells which require exotic components in very limited supply so also end up for the elite. There are no solutions. We are doomed.

Regarding TPD:
Some years ago (2003), Discover magazine ran a Gee Whiz article about turning Anything Into Oil using basic chemistry and steam and acids to break down complex proteins into hydrocarbons, basically refining plastics and turkey guts and old tires etc into oil. It sounded like a great idea. Alas, [we later read that] it was a scam.

The main problem is that they were trying to use a limited resource, other people’s garbage, as a fuel source for a process which doesn’t scale up, and isn’t efficient to start with, and treated it like a perpetual motion machine. Whether intentionally or not, it was obvious from the outset that there were some real concerns about the chemistry, and whether the energy output was higher than the energy input. It wasn’t efficient, so they tried scaling it up, using more money and trust from investors. If its not efficient at small scale, it sure as heck won’t be at large scale either. The model collapsed under a lesser well known law called The Law of Receding Horizons, stated as “the less efficient the process the higher inputs required, the less efficient the process, repeat.” Thermal Depolymerization (TPD) fell into this category and died a quiet death when the cost of turkey guts rose after becoming valuable to a competitor as compost or somesuch. The moral of the story is: if it sounds too good to be true, it probably is.

Conclusion:
 Buy ammo, build up your soil, stock up food for the coming famine. We’ve got at least 20 years of misery to suffer through, best case. If you live near a railroad line, you might even make it, if the train stops in your town. Trains offer cheap transit, so will have goods exchanged. If you’re in the remote boonies you get to juggle isolation from the Horde with isolation that can be exploited by organized bandits. Make sure you’ve got plenty of ammunition reloading supplies and keep your powder dry. Best, – InyoKern

JWR Replies: I agree with some of your assertions, but not all of them. For example you suggest that we are running out of natural gas. Some petroleum industry analysts estimate that North America has a 800 year supply, given aggressive exploration. Even if we were to squander most of that for creating oil from coal or tar sands, or for generating ethanol, we will still have a very long term supply. I agree that the age of cheap liquid fuels is coming to an end, and we should make arrangements to live without them. My greatest fear is not energy source depletion per se, but rather the draconian measures that governments will take if they perceive that fuels are getting short supply. One lesson that can be learned from the two world wars in the last century is: when a government feels threatened, watch out!

You also describe cheap solar energy as “a scam.” Perhaps you are right, since the cost per watt is not falling rapidly. (Too bad that it isn’t analogous to the falling cost of computers.) But for middle class consumers, even currently expensive solar panels will mean the difference between a troglodyte existence and a relatively modern life with pumped water, radios, and electric lights. If you are the one that can recharge your neighbor’s batteries, then you will be the indispensable neighbor. I strongly encourage SurvivalBlog readers to equip their retreats with at least a modest-size photovoltaic (PV) power system. The folks at Ready Made Resources can help you size your system, and source the components. It isn’t rocket science. Lastly, if there is even the chance of an economic depression and concomitant social disruption, then it is wise to strategically relocate. My book Rawles on Retreats and Relocation gives some concrete advice on the safe places to live.that are well-removed from urban population centers, and how to best stock a retreat to be ready for a long term collapse.

Forwarded Letter Re: Jericho Shall Return!

The following letter from a CBS executive comes by way of Rourke (Moderator of Yahoo’s Jericho Discussion Group):

To the Fans of Jericho:
Wow! Over the past few weeks you have put forth an impressive and probably unprecedented display of passion in support of a prime time television series. You got our attention; your emails and collective voice have been heard.
As a result, CBS has ordered seven episodes of “Jericho” for mid-season next year. In success, there is the potential for more. But, for there to be more “Jericho,” we will need more viewers. A loyal and passionate community has clearly formed around the show. But that community needs to grow. It needs to grow on the CBS Television Network, as well as on the many digital platforms where we make the show available.
We will count on you to rally around the show, to recruit new viewers with the same grass-roots energy, intensity and volume you have displayed in recent weeks.
At this time, I cannot tell you the specific date or time period that “Jericho” will return to our schedule. However, in the interim, we are working on several initiatives to help introduce the show to new audiences. This includes re-broadcasting “Jericho” on CBS this summer, streaming episodes and clips from these episodes across the CBS Audience Network (online), releasing the first season DVD on September 25 and continuing the story of Jericho in the digital world until the new episodes return. We will let you know specifics when we have them so you can pass them on.
On behalf of everyone at CBS, thank you for expressing your support of “Jericho” in such an extraordinary manner. Your protest was creative, sustained and very thoughtful and respectful in tone. You made a difference. Sincerely, – Nina Tassler, President, CBS Entertainment
P.S. Please stop sending us nuts 🙂

Jim’s Quote of the Day:

"Go to the ant, thou sluggard; consider her ways, and be wise: 7 Which having no guide, overseer, or ruler, 8 Provideth her meat in the summer, and gathereth her food in the harvest. 9 How long wilt thou sleep, O sluggard? when wilt thou arise out of thy sleep? 10 Yet a little sleep, a little slumber, a little folding of the hands to sleep: 11 So shall thy poverty come as one that travelleth, and thy want as an armed man." – Proverbs 6:6-11 (KJV)