Letter Re: Estimate on the Likelihood of an Economic Depression or Full-Scale Collapse?

Jim,
I know you get a lot of mail so I’ll be brief. I highly value your information and input on the current economy. I also have read your book “Patriots”, and your current assessment of our economy’s future terrifies me.

What are the probable chances of this turning into a worse case scale as seen in your novel? Even if it is not worse case, I have no idea
what a Moderate case would look like. Your wisdom would be greatly appreciated. Thank You.- William

JWR Replies: In the context of America’s current economic situation (namely, the implosion of the Debt Bubble), I think that the “Moderate” outcome would be a depression of the same severity and duration as the Great Depression of the 1930s. It is hard to assign percentage chances, because there are umpteen variables in play. But we are definitely now in a very volatile cycle.
Don’t panic, but do what you can to limit your US dollar exposure, get shed of rental properties, minimize your stock portfolio, diversify into precious metals, and be well-prepared, logistically. (Beans. bullets and Band-Aids). If you don’t know exactly what supplies to lay in, then get a copy of my “Rawles Gets You Ready” preparedness course. Above all, pray hard!

Letter Re: Les Stroud (aka “Survivorman”) Off-Grid Living Videos

James,
I’m not sure if you’ve mentioned this series before, but on YouTube there is a video series called “Off the Grid” hosted by Les Stroud of Survivorman fame. He moves his family out of the city and into the country in search of an off-the-grid home and lifestyle. It’s a fairly realistic look and (I think) good introduction to what it would take to make the jump to living in the country and self-sufficiently.

The other videos in the series can be found linked from the first page, or just search for “Off the Grid”. Hope you enjoy this, and I think many of the SurvivalBlog readers would too.
I hope you and your family are well, – Jason U.

The Memsahib Replies: Been there, done that. Got a few scars to prove it.

Letter Re: The Versatile Propane-Fired Turkey Deep Fryer

James:
So here is a cheap, useful item for your preparations: The “turkey deep fryer” kits that sell for around $100 as [the U.S.] Thanksgiving [holiday] gets closer are perfect for all kinds of disaster-related tasks. They often sell for even less on the day after the holiday.

The typical kit comes with a large, high-powered propane burner with stand, a 5 gallon stainless kettle, lid, a large thermometer, and often and assortment of pans and perforated steaming/frying inserts.
You can boil 5 gallons of water in about 20 minutes with one of these, and they are perfect for steaming large quantities of veggies, making gumbo, etc.
As a further bonus, they are perfect for rendering soap or smelting lead. (Use dedicated [and specially marked] pans for these tasks!)
Pick up a few large utensils at a restaurant supply store, and you’ve got the basics for a Red Cross-style soup line. – JN-EMT

JWR Replies: Use the standard safety precautions whenever melting lead, as previously described in SurvivalBlog.

Odds ‘n Sods:

According to Bill Bonner, editor of The Daily Reckoning, house price over-valuation is not unique to the US. In the U.K., Bonner said, house prices are 20% overvalued. He opines that Britain is one of the three most vulnerable to a house price crash/correction (after New Zealand and Denmark).

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By way of SHTF Daily come this article from Australia: US rate cut decried as ‘socialism for Wall Street’

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Reader Dave F. told us about an interesting new bullpup stock available for M1A and M14 rifles. If they provide a decent trigger pull (which, from what I have seen, is one of the most common failings of bullpup stock conversions), then this stock might be worth the price.

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T.A. in Indiana found a video on how to take apart a lantern battery which typically sells for $5 or $6 and get 32 AA batteries out of it.

The Fed’s Monetization Madness: A Word of Warning

I’m sure that most of you remember back in the first week of August when CNBC market analyst Jim Cramer was screaming hysterically: “Open the discount window!” Well, it seems that Bernanke and Company have done exactly what he asked. As of the past week, commercial banks are now taking $2.7 billion in loans per day from the Federal Reserve discount window. With just this lending from the discount window, the increase in the U.S. money supply has jumped to an annualized rate of more than 50%! I’ve said this before: The biggest red flag imaginable for pending economic catastrophe is the Fed massively monetizing the debt. (Much like I described in the opening chapter of my novel “Patriots”.) This is a highly inflationary measure. And this is exactly what the Federal Reserve is presently doing. If the discount window stays open for an extended period of time, then be prepared for at least double digit inflation, and possibly hyperinflation. I’m not saying this in jest.

Let’s face it, inflation is already upon us, at least for commodities. The prices of consumer goods are bound to follow. My good friend Fred the Valmet-meister recently sent us a link to a web page that shows the upright spike in Uranium prices. Where is the top? Who knows? The run up in the prices of base metals, precious metals, and the exotics (such as uranium) are indicative of a primary bull market in commodities. As confirmation, we observe that the price of wheat has tripled to $9+ per bushel, gold has zoomed up to $730+ per ounce, silver at $13.25+ per ounce, and oil is at $82+ per barrel. In times like these, all un-backed paper currencies are trash, and all useful tangibles are treasure.

The Schumer could start to fly very soon, folks. Be ready. If you have any unfinished pre-WTSHTF shopping, then now is the time to make that trip to Costco, and to place those mail orders. (I’m sure that our loyal advertisers would appreciate your business.) And if you are an urbanite or suburbanite that has been delaying buying your “Hidey Hole”, then this may be your last chance to make your move to the country before the coming winter. There is a storm coming…

Letter Re: Build-it-Yourself Reflux Alcohol Still Plans Available Online

Mr. Rawles

I’ve found the discussion of alcohol power and stills very interesting. Building a still has been something on my list of things to do, but I never seem to get around to making it happen. Here’s a link to [a PDF of] the [still building] plans I’d like to follow.

The plans are concise, relatively simple and, best of all, free. I think the web site says you can build one of these for about $65, less if you have access to an inexpensive stainless steel milk can.- Tim R.

Weekly Survival Real Estate Market Update

The window is opening, but only for a short time.
Consider the life expectancy of King and the Peasant, in times of great peril. Does it really matter who you are, financially? Sure, but not if you’re on the Titanic. You see, there are those out there both rich and poor that take their preparedness seriously, whether they research skills and topics till dawn’s early light or proactively practice with their supplies and equipment, but it will be all for not, because they are sailing on the Titanic. The only difference is the cost of their cabin! But either way the ship is slowly heading towards that proverbial iceberg.
The Titanic represents the lack of action relating to actually purchasing either a retreat or a secure storage property to pre-position supplies, and the iceberg is the possible global collapse of the US Dollar that is about to rear its’ ugly head along with a ‘not if, but when’ incident/disaster. I can’t tell you how many fellow preparedness folks I know that are simply going down with the ship! As JWR has stated many times in SurvivalBlog that you may not be taking anything but your B.O.B. with you should a major incident happen in CONUS. Wake up folks! Trust me, I know making the ‘break’ is hard, it took me almost three years to turn away from the ‘fairytale’ land (the People’s Republic of California) where ‘Everything would be okay, I’d make it somehow’ dream had a hold of me. King or Peasant, your money means nothing in times of great peril, only your will to survive and hard work will pay off and I’ll bet your life you’ll never make it a 100 miles in that 28 foot trailer with all your stuff. It’ll be ‘Ambush on Irish’ for you my dear friend. Good luck.

Now that we have passed the normal lemming’s attention span, let’s save your bacon shall we? The opening window, ah yes! I was on a phone call today with some confidential clients and their mortgage broker (thanks for the Titanic analogy MK!) and he had an amazing analysis for not only these clients but for some of you out there as well. No matter your financial resolve (King or Peasant) and as long as you have some equity still in your property (congratulations, I might add) the idea behind taking advantage of the opening window is simple: The Fed just took action that has huge short term benefits for those smart enough to pull the trigger (take advantage of lower interest rates on some fixed rate mortgages), but will most likely and ultimately end in the collapse of the US Dollar and rapid inflation of some proportion.

The key to the strategy MK spoke of is this: Refinance a property and take cash out to purchase your retreat or land/ storage bunker. Don’t encumber the refinanced property more than you feel the market will fall and be prepared to ride out the storm, should it take 10 years for the market to recover. Remember, equity unused is no security at all. Unfortunately, most of us do not abide by Biblical financial principles; otherwise we would not be in this situation in the first place, of ‘owe no man’ and live debt free.
The idea at this point is to transfer equity to your safe haven by using your equity as a tool and have your retreat paid free and clear, if possible. Obviously this will be a more viable option for those financially capable of carrying a larger mortgage on the refinance property for a time, but the satisfaction will come when the retreat needs to be activated and, as in JWR’s novel “Patriots”, you mail off a few years of property tax one day and go on about surviving. If you are blessed with a job that allows you to telecommute each day and maybe fly to the ‘office’ once a month or so I have one question for you: Why are you still living in your current locale? Make the break! Wake up in the morning and hear the song birds sing as you sip your coffee and your mate slowly loads your next magazine for your morning defensive drills. (Oh, I’m sorry I must digress, that’s my life, get yours quick!), not the roar of commuter traffic and shots from the local gang member doing a drive-by occurring at the local stop and rob!
For those folks with smaller portions of equity the advice is similar, but instead of purchasing your retreat, simply buy a few acres and have a secure storage facility built for your supplies. I hear that JWR has a friend that is selling some five acre parcels with secure storage. [See below.]
As we wrap up this week’s update I want to remind you to cancel your seat on the Titanic, research, think, plan, then make your move. Do not hesitate! Whatever you do, do something! Hope to see you here! – T.S.

Huckleberry Ridge: Modestly-Priced Five Acre Retreat Properties Located in North Idaho–between Sandpoint and Coeur d’Alene
I have good friend that is selling some very desirable retreat property. Here is the description: Very unique location and terrain yield maximum privacy yet easy access. You won’t find a better combination of affordability, suitability and accessibility anywhere in North Idaho. Grid power and phone available. Defensible features. Very pretty location. Perc tests certified. These three parcels are the only properties located on a well-engineered private fire-code-rated road. All three properties have a nice seasonal creek, lots of trees, and abundant wildlife. Two of the three lots have year-round springs. Lots are also within walking distance of an elementary school and two miles from a fire station. The fire station proximity is very, very rare for retreat properties and means that you will actually be able to insure your home — and at good rates! There is also a very nice public boat ramp only four miles away, for summer fun on the lake.

From these lots you have a lovely view of a forested valley. As far as the eye can see you can’t see another manmade structure — no houses, roads, wires, telephone poles, antennas — nada. Even though these properties are so remote, you can leave your house and be on Highway 95 in less than 5 minutes, in Sandpoint in 15 minutes, and in Coeur d’Alene in 30 minutes.
These lots are available as raw land with prices from $79,500 to $84,500. They’re also available with a secure underground 8’x10′ storage facility; and a private tactical shooting range so you can begin to pre-position your supplies; and begin/continue your firearms training. Prices including secure underground storage facilities and tactical range are from $129,500 to $134,500. On-site security services for your storage facility available. Contact keith@huckleberryridge.com. If you don’t have a local agent, Keith can recommend one. The property is not yet up on the SurvivalRealty.com web site, so for now, here are links to some photographs: Five Acre Parcel #2 – Spring at Five Acre Parcel #3 – Spring at Five Acre Parcel #4 – Road Design – Rock Wall on Road – The Local Firehouse – The Local Boat Ramp – JWR

Odds ‘n Sods:

Joe. P. picked up (via The Drudge Report) an interesting article about the ongoing oil drama that predicts crude oil at perhaps $100 per barrel

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Stephen in Iraq flagged this one: Morgan Stanley Profit Drops After Losses on LBO Loan

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After seeing my recent reference in the blog about the implications of the declining dollar, reader S.K. e-mailed me to mention that CDNN Sports recently received a large shipment of both Kahles scopes and binoculars, which are made in the Swarovski plant. Luckily, the pricing was set before the recent dollar exchange rate declines, so at least for now their prices have not changed. I suspect that the prices will increase substantially at the end of the year, so stock up!

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RBS spotted this: Soaring gold price forces U.S. Mint to pull American Gold Eagles from the market

Jim’s Quote of the Day:

“Once a nation parts with the control of its currency and credit, it matters not who makes the nations laws. Usury, once in control, will wreck any nation. Until the control of the issue of currency and credit is restored to government and recognized as its most sacred responsibility, all talk of the sovereignty of parliament and of democracy is idle and futile.” – William Lyon Mackenzie King (1874-1950) Prime Minister of Canada, 1935

Note from JWR:

If you are currently doing your web browsing through a typical web browser without a cookie/history blocker then you are leaving behind a trail of “cookie crumbs” that might come back to haunt you decades from now. I strongly recommend that all SurvivalBlog readers do their web browsing through Anonymizer.

Two Letters Re: Bank Runs — Implications for Prepared Families

Jim,
Re the bank runs in the UK and warning about similar actions in the US: I don’t deal much with banks so I have a rather silly question to ask about this situation. If there is a run on a particular US bank that I happen to have accounts/cash in, what actually happens at the bank? Do they close the bank up completely? Can you still access your safe deposit box or is everything shut down? The reason I ask is that if I moved physical cash from my “electronic accounts” to a safe deposit box, will I have access to that box when the bank is closed in a “run” scenario? I realize inflation will go crazy and cash will be worthless, but having some is better than not be able to get to it at all. At least I would have potential access to the cold, hard cash in a safe deposit box. I would also consider moving cash out to other “safe” locations, but I am not really confident about security. There is also the problem with the $10,000.00 cash in/out “restrictions” by the Feds. I already have junk silver coins but I don’t want to convert more of my cash to coin or tangibles in the short term. Any advice? Thanks, – Russ in Georgia

JWR Replies: In the event of a bank run, your local banks’s doors would probably remain open, and you would probably still have access to you safe deposit box. But I still consider leaving precious metals in a bank safe deposit box an unacceptable risk. You never know when a financial crisis could inspire a “banking holiday” (a la 1933) or another ban on private gold bullion ownership. Then, when banks do re-open, there could be some extra scrutiny–most notably an IRS agent (or a delegated bank employee) looking over your shoulder when you access your safe deposit box.

Here are a couple of alternatives a bank safe deposit box:

1.) Hide your precious metals at home, preferably in two well-hidden caches–one small and one large. The small cache would be the one that you could reveal if someone is ever pointing a gun to your head. (Say, for example, a home invasion robbers wearing black ski masks, or perhaps someone else wearing black ski masks.)

2.) A private non-bank safe deposit box company. These are fairly common in the suburbs, but I’ve heard of them in major metropolitan areas. You might have to do some searching to find one near you. This is a poor second choice, because even these firms may be subject to IRS scrutiny in the event of a national financial crisis.

With all that said, I should mention that the likelihood of bank runs in the US is lower than in England. Here is why:

Unlike here in the States, where any deposit up to $100,000 USD is 100% insured (and $200,000 for husband-and-wife joint accounts), England’s deposit insurance system has two tiers. Their Financial Service Authority (the rough equivalent of the FDIC) guarantees 100% of deposits up to £2,000 GBP, and 90% of anything over £2,000 but under £32,000, and, zero for anything above £32,000. So it is safe to assume that most of the people “in the queues” in front of Northern Rock bank branches are people with more than £2,000 GBP on deposit. They are at risk of losing perhaps 10% of their deposits.

Bank runs are largely a psychological phenomenon. There is one apocryphal story about a bank in the midwestern US that placed a newspaper ad offering a free set of dishes for anyone that opened a new savings account. The offer was so good that a line formed and started to extend out the front door of the bank. Seeing the line, passersby assumed that there was a run on the bank, so they quickly extended the queue, intent on extracting their deposits. By the time that the line reached the end of the block, wild rumors had circulated among those in the queue. Some of these rumors reached the head of the line, where at least one early-comer decided to forget opening a savings account and instead asked to close his existing checking account.

Don’t underestimate the ability of people to get panicky. These things can take on a life of their own. Bank runs tend to spread to other institutions, when people start making “just in case”-style decisions. If there are further bank runs in England, I woudln’t be surprised to similar runs in Ireland, Australia, Canada, New Zealand, and perhaps even the United States. And, needless to say, it is the banks most closely associated with home mortgage lending are the most likely to have such problems in the next two years.

Letter Re: Counting the Potential EMP Attack Casualties

Jim,
I don’t understand why the discussion on your blog regarding EMP assumes only ground based and aircraft altitude detonations. It seems to me an equally likely attempt will be a ballistic missile detonation at maximum altitude, such as with a Scud or Chinese one, launched from a freighter off the east or west coast of the US. Al Qaeda is known to own a fleet of freighters which are not well tracked (stolen in hijacks or even purchased outright). Iran, North Korea, Syria, and [Dr. A.Q.] Khan’s rogue network are all working hard to develop a nuclear capability and are hostile to the US. China has advanced nuclear capabilities and is gearing up to attack Taiwan by 2030, Wouldn’t it be convenient if a third party such as Al Qaeda, were to launch an EMP strike at 200 mile altitude of the US just prior to their invasion of Taiwan? China has actively assisted Islamic nations and groups hostile to the US with missile, communication technology, supplies and infrastructure. Those same Islamic countries have a long record of aiding and abetting Al Qaeda and other Islamic terrorist organizations.

While EMP detonations at ground level or in aircraft are also possibilities, a high altitude missile detonation is also highly likely and would have far worse impact. A single detonation at 300 mile altitude or more would inflict damage across most of the continental US and even parts of Canada and Mexico . This worse case scenario would seem to be of great interest to survival minded folks. Limiting discussion to 200 mile radius [of effect] seems unwise.

I enjoy your blog and 99% of your writing is prescient and spot on. This one assumptions therefore stands out as a big gap in risk assessment. Yours truly, – JB in Oregon

JWR Replies: Let’s start with your “terrorists with a Scud” scenario: From what I have read, the maximum altitude of a typical R-11 Scud missile in a parabolic trajectory (vertical or near vertical flight path) is just 78 kilometers (48.5 miles), with a time of flight of 5.4 minutes. The maximum velocity at the time of booster burnout is 1.43 kilometers per second. That is far short of achieving the near-orbital velocity of an ICBM (which if I recall correctly is roughly 6 to 7 kilometers per second). Let’s suppose that a terrorist group gets hold of an operational Scud missile and a compact nuke (with a weight within the Scud’s payload limit and sufficiently small dimensions to fit the Scud’s payload parameters). Even then, the only way that they could achieve the potential maximum 48.5 mile altitude over the Continental United States (CONUS) would be if they launched it within our territory. That isn’t very likely. If they launched a Scud from a barge or a ship say 30 miles off the coast with a depressed trajectory, it might be at most 15 miles up, at apogee, over our territory.

For details on how to calculate line of sight (and hence EMP footprint dimensions), see some of my previous SurvivalBlog posts. (Wherein I also discuss beyond line-of-sight EMP coupling through power and telephone lines.) I’m not a rocket scientist (my name after all, is Jim Rawles, not Jim Oberg), so I don’t claim to be an expert. But I do have a rudimentary understanding of how these things work.

There are only a few nation states that have ICBM technology, and that is essentially what would be required to put an EMP-producing nuke at 200+ mile altitude over the CONUS. It is much more realistic to assume that a Third World nation or a terrorist group would use a jet aircraft (or perhaps, if they were quite clever, a large radiosonde-type balloon) at high altitude in an attempt to maximize EMP line of sight. And, as I’ve previously stated, even the highest flying aircraft would give line of sight to produce an EMP footprint of at the very most a 280 mile radius. It would take 30+ such blasts to blanket the CONUS with EMP.

Yes, nation states like North Korea and China have ICBM technology, but the most likely near-future scenarios involve Osama bin-Laden, not Kim Jong Il.

Odds ‘n Sods:

Thanks to RBS for sending this: U.S. Home Foreclosures Soar in August, Up 36 Percent From July, and Prepare for prolonged turmoil, says US Treasury Secretary. A comment from RBS: “Once again, we have to go aboard to get any [substantive] economic news.”

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Chuck, Joe, and Nathaniel all forwarded us this one: Fears of dollar collapse as Saudis take fright. The article begins: “Saudi Arabia has refused to cut interest rates in lockstep with the US Federal Reserve for the first time, signaling that the oil-rich Gulf kingdom is preparing to break the dollar currency peg in a move that risks setting off a stampede out of the dollar across the Middle East”

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From eFinance.com (by way of SHTF Daily): National Association of Realtors Admits to Initiating Bush’s Mortgage Bailout Plan

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Countrytek recommended this set of web posts from someone that housed 30 refugees in the days following Hurricane Katrina. It has some interesting “lessons learned.”