The first two weeks of 2016 have been disastrous for both the commodities markets and the equities markets. Looking at the DJIA and the S&P indexes, more than $3.5 trillion has been lost on paper in just two weeks. Crude oil has dropped to around $29 per barrel. There seems to be no end in sight for the bad economic news. I expect to see further deep market declines, intraday “circuit breaker” market interventions, and perhaps even full-day trading suspensions and bank holidays. I must remind you that I’m writing this on a three-day holiday weekend. (Martin Luther King Jr. Day will be observed on Monday.) When the markets open on Tuesday, we can expect to see a continuing sell-off.
Back in 2008 I posted some economic commentary in SurvivalBlog under the headline: Are Simultaneous Inflation and Deflation Possible? In that essay, I posited that the then-heralded recession “may be deep and long enough to qualify as a bona fide depression”. It now appears that I was right. The so-called “economic recovery” in the interim years has been an illusion, created by several rounds of Quantitative Easing (monetization of the national debt) and the Federal Reserve’s fanciful Zero Interest Rate Policy (ZIRP). The real standard of living for most Americans has declined during this “recovery”. Family debt obligations (mortgages, credit card debt balances, car loans, and student loans) have grown enormously. The national debt has ballooned to $19 trillion during this “recovery”. Job creation has been stagnant during this “recovery”, and the few new jobs there were required massive Federal spending– in fact, about $600,000 in new Federal spending for each new job created. So in short, this much-vaunted “recovery” has been an artificial construct that was not at all sustainable. It was a mountain of lies built upon a mountain of debt. Instead of “unwinding” debt as they should have, the fools in D.C. and Wall Street created more debt, and by doing so, they merely forestalled the inevitable collapse and set the stage for it to be much more devastating.
The following might sound odd, given the current headlines that are screaming “deflation”: I believe that it is time to plan ahead for a mass inflation that will follow on the heels of the current deflation. When this sudden turn from deflation to inflation will occur is difficult to predict. But given our government’s long-established tendency to profligate spending and never-decreasing debt accumulation, I think that a shift into higher interest rates and mass inflation is bound to come. Take a look at a piece that I posted back in 2007 titled Coping With Inflation–Some Strategies for Investing, Bartering, Dickering, and Survival. That should give you some good starting points.
It is definitely time to readjust our preparations, folks. In the short term I recommend:
- Increase your greenback cash on hand.
- Avoid indebtedness, and do your best to pay off debts.
- If you are still in the stock market then get out: sell now!
- Put your money into practical tangibles! (Such as productive farm land, guns, long-term storage food, silver, and common caliber ammunition.)
Note: Tangibles will be some of the few reliable shelters, after the mass inflation arrives. Everything else (read: dollar-denominated) will be wiped out, in just a few months.
The unfolding panic and eventual collapse could very well be the excuse that will be used by many national governments to introduce electronic currencies (the first phase of the so-called “Mark of The Beast”). That has some huge implications for family preparedness. Get ready to barter, folks.
Bottom line: Stock up, team up, and train up. Time is short.
You’ve been warned. – JWR