Editor’s Introductory Note: Part 1 of this article on the Mexico currency devaluation was posted on Tuesday, January 29, 2019. Today, Part 2 concludes this article.
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In Part 1, I described how, while I was living and teaching in Mexico in 1982, there was a nearly 50% devaluation of the Mexican Peso, resulting in major economic hardship for the average citizen. In this installment, I would like to share a few lessons I learned from experiencing a currency devaluation –essentially an economic collapse– and how these lessons can help us prepare for a similar, or much worse collapse in the future.
I would like to start by re-visiting my Lesson #1: Rules can be broken. I thought I was safe by having my money deposited in a Mexican bank in Dollars instead of Pesos. Wrong. As I mentioned in Part 1, I was shocked to learn that in order to withdraw my dollars, according to the new rules, those dollars first had to be converted to pesos at the new exchange rate and then, I would get my Dollars. So, figuring I might as well get something instead of possibly seeing the bank closing and getting nothing, I went ahead and withdrew my money.
The Shocks Will Come in Waves
Before the Mexico currency devaluation, the exchange rate was 27 Pesos to the Dollar. After the first of two devaluations, the rate skyrocketed to 45 Pesos to the Dollar. Six months later, there was a SECOND devaluation, sending the rate to 69 pesos to the dollar. So, suppose you have $1,000 in the bank. Pre-devaluation, those dollars are equal to 27,000 Pesos. (Yes, it was common back then to carry 500 or 1,000 Peso bills around). So, in that initial devaluation, we all lost nearly 50% or our buying power, and in the later devaluation, another 20% or so. So, since rules can be, and in fact, have been broken, who do we really believe? If you have your money deposited in a bank, remember, even though you have been told your money is safe, is it really? From past experience, I would say “no.” But what about certificates of deposit (CDs) for example? So what if you can earn 2.8% interest on a six month CD? If the bank closes down, or institutes capital controls, how “safe” are you then?
Now, regarding capital controls, or limits banks place on withdrawals: Did you know that banks, including banks in the U.S., already have capital controls in place? A few years ago, my wife and I wanted to buy a used recreational vehicle (RV) from a private party. I went to my local credit union, and needed to withdraw around $9,500. The teller told me, “I’m sorry, sir, we’re going to need some time to complete this withdrawal.” I replied, “How much time?” She said they would need an extra day to transfer the cash from one of their other branches to complete the full amount. So, I waited and got my cash. But the point is, banks and credit unions don’t have all that much cash laying around at any given time. I’m sure this is in part to reduce their liability in case of a robbery, but it’s also due to the practice known as fractional reserve banking, a system in which only a fraction of bank deposits are backed by actual cash on hand and are available for withdrawal. The rest of the money is tied up in loans, and risky investments, such as derivatives (more on that later).
A Mexico currency devaluation Redux?
Imagine what things will be like in a run on the banks, which I experienced in the Mexico currency devaluation in 1982. For a while, the banks will either impose a limit on withdrawals, or will charge depositors to withdraw their money. As I mentioned in the previous article, in the Cyprus “Bail-In” crisis of 2013, depositors with more than $130,000 lost 9.9% of their money. A surcharge. Depositors with amounts less than $130,000 were clipped for 6.75% of their deposits, even if they were insured. Remember, rules can be broken, and new rules can be written at will. And you can bet the new rules won’t benefit you and me.
Do you think you’re safe with your gold and jewels in a safety deposit box? Think again. In Greece, there are plans raid bank safety deposit boxes to confiscate cash, bonds and even works of art just to pay off government debt. In Italy in 2016 and 2017, when a few key Italian banks, Veneto Banca and Banca Populare di Vicenza, were on the verge of failure, the solution was an “investor bail-in.” This is when bank stockholders and bondholders are forced to pay large amounts just to keep the bank afloat. So much for a safe and profitable investment.
Also, it’s not just your bank account that is at risk. In Greece, pension funds have been cut at least 10 times in the past few years. In California, the California Public Employees Retirement System (CalPers), one of the nation’s largest, has lost $100 BILLION dollars dating back to the 2007-08 recession. Only about 2/3 of current and future retirees are covered by current reserves. In fact, governments in several states are already reducing their previously-agreed-upon contributions for government pension funds. In Illinois in 2013, pension benefits were slashed for employees to avert failure of the fund which was facing a $100 billion shortfall. And there are many other examples. My point in describing the Mexico currency devaluation is: Rules Can be Broken. And in many cases, the rules for our government, banks, credit unions, financial institutions and pensions are already being broken and rewritten as we speak.
Time To Make Some Changes
So, you may ask, what can I do? I can understand not wanting to do anything to jeopardize your retirement contributions. However, what about your savings, and any other investments you may have? For example, if you have an annuity, you can cash it in under certain circumstances. If you have a 401K, if you are younger than 59½ years old, you can withdraw it with a 10% penalty, plus any taxes on it. To avoid penalties, some investment funds will allow you to take out a “loan” on your investment, without taxes and penalties, as long as you make minimum payments to repay it. If you have CDs, you can either wait until they mature to withdraw your funds, or pay a penalty and at least get your cash. Most CD early withdrawals will only charge a certain portion of your interest and not the principal, but check with your broker for details on this.
Now, what about stocks and bonds? We have seen some wild swings in the stock market lately. The Dow Jones hit an all-time high of 26,828 in October last year, then fell 4% the following week. The market has since gone up and down, but the key concern here is volatility. Even though the economy has mostly recovered in the past year or so, there is so much uncertainty, especially with the government shutdown, immigration, and the 800-lb. twin gorillas of the current $21.6 trillion government debt, and $1.2 QUADRILLION derivative exposure worldwide. Now, when some of those derivative deals the banks and other institutions have made start going sour, guess who will be asked to bail them out before they close their doors? That’s right! You and me!
Get Tangible
Now, some of you might ask, do I think a future collapse will be partial and/or gradual, or complete and sudden? The answer is, I have no idea. However, I have had enough experience in at least a partial collapse in the Mexico currency devaluation to have a strong desire to take action ahead of time, instead of waiting for fate to close in on me, whether gradually or suddenly. I have had enough experience from the past to know that I should take action now, buy those essentials now, before their prices skyrocket or when they become totally unavailable.
What should you buy? Buy land, buy non-perishable food, buy gold and/or silver, buy anything but keeping your money locked up in a bank or investment house where the future rules are bound to be broken, and you end up paying for it. When it comes to the government, banks and other institutions, trust no one! Take care of yourself and your family now, instead of kicking yourself later on for not taking action sooner!
And if you own property, see to it that all needed repairs get done while you can still afford to do them. Martin Armstrong sees inflation coming at the next ECM turning, as well as rising prices in commodities (food).
One good source of bulk, storable ORGANIC food is Eden Foods. It is a seriously Christian company, too. You can get dry bulk, and also canned foods. Their black soy is very good. Black soy has lots of phytochemicals, and hardly any of the bad phytoestrogens that are harmful and taste weird.
Agreed about updating maintenance. I had a new roof put on last year. No substitute for a dry living space.
This summer will see workers, local people to nourish trust with someone I might want in my corner later, tending to a few loose ends on the homestead.
Carry on
Best article I’ve read so far
Thanks for the history and personal testimony as well Bless you dude!
Convert your $$$ into products YOU will use regardless of what occurs and you are way ahead of the game. And kept in a place where you can physically reach it, vs. some protected vault – warehouse where someone else keeps it under lock and key.
Investment priority consideration:
“Land… It’s the only thing that lasts”- Scarlett’s Dad in Gone with the Wind.
Great article. Land is a very good investment, however check on taxes! Check on Ag exemptions. How many acres it takes for Ag exemption. Some say 60 acres for an AG exemption, others maybe 10 acres, not counting the homestead. Therefore, you might need 11 acres. Every state is different. Some states tax even your livestock if you don’t have enough land for Ag exemptions. Feed for the livestock is a good investment. Coastal hay prices fluctuated this year because of drought. Fencing material, pipe for gates, that tractor you want, the implements for that tractor, paper towels, toilet paper. Get the big items while you are still producing. Think about it.
Good point. My wife has an Ag exemption on her 2.5 acres in Texas. She is required to have either livestock or use it for farming – we chose livestock. The 2.5 acres are broken into three pastures, barbed wire – steel ‘T’ posts holding the strands. This allows pasture rotation, giving the grass time to grow in other two pastures.
A pair of cows and a donkey (eats invasive weeds the cows won’t touch) as well as protection from dog packs. Keep your perimeter fences tight and have two sources of water in case one goes on the fritz. Two water containers are steel bathtubs – one extending across fencing for two pasture watering, the other inside a corral where cattle chute for loading onto cattle trailers (rarely ever used).
She has a 20′ x 20′ hay shed, broke into 4 spaces. One space for hay storage (approximately 50 square bale capacity, surrounded by cattle panel fence to discourage animals from reaching through), the other quarters used for animal shelter from sun / rain.
Also has an 10′ x 10′ metal shipping container for lawn tractor / tool storage, that on railroad tie floor supports on caliche bed.
Advice – keep several cattle panels handy in case of emergency fence repair need, as well as at least a dozen steel ‘T’ posts to tie them to. A car accident along the road caused one vehicle to veer onto wife’s property, knocking down the perimeter fence for at least 20 feet. Several fence posts were broken as well – those cattle panels paid for themselves right there and then ! The driver’s insurance did pay for the repair – we made sure to document the vehicle inside property as well as the damage caused by the accident.
You must have grandfathered into the 2.5 acres. I’m pretty sure it is a minimum of 10 acres now.
By definition, fiat currencies have zero value.
By definition, tangibles carry intrinsic value.
Everything possesses value to somebody. For example, my collections of Persian rugs and samurai swords have little value to anybody else… but hold enormous value to me.
Stocks and bonds from commission salespeople?
Deposit receipts from bankers?
Federal Reserve Promissory Notes from bankers?
Stacks of scraps of papers covered in scribblings?
Not interested. The concept, the theories are ludicrous.
* * * * *
Compare to:
Foods? Skills to acquire more foods?
Clothing? Boots, coats, linens?
Hand-tools? Gloves?
A tested experienced community of boaters and their vessels with enormous capacities for stores and crews for months/years/decades of remote living == with the instant ability to relocate to new shores?
Nautical Prepper and SeaGypsyTribes. Permanent vacation.
Tangibles. Now, you have my interest!
Samurai swords have little value, What if they are the swords from the Kill Bill movies?
Those are replica swords. But they are valuable only for their movie-making provenance. Most of the really valuable Japanese swords are those that were made before 1700. Coincidentally, I have a mid-1500s wakizashi (short sword) now listed for sale on the SurvivalBlog Classifieds.
The whole takeaway on this is you better prepare and that means having it at hand if you intend to make use of it when it is most needed. There’s not going to be a lot of sympathy for anyone who hears the message (and it is everywhere now), and does not take steps to secure their own future. Everything has risks involved; living next to a cell tower, sexual promiscuity, eating foods grown in foreign lands, and there have been more than enough warnings issued that no one can legitimately claim ignorance. So if you decide to risk investing all your assets in financial institutions and then the SHTF and you can’t get to any of it, or it turns to ashes as the economy tanks, well, living at the mercy of your enemies is not a good life plan, ever.
Land is not a sound investment. It is real easy for the government to take it any time they want. You may well need land to survive. As an investment tool, it is not so practical. It is hard to find good arable or developable land for a small price, whereas a bag of junk silver or gold coins will preserve wealth through most temporary catastrophies. You can’t eat silver and gold, but it does make a good currency once some controls are in place, and it is durable. Buying an asset for survival will depend on your need; if you need to eat and the land is your source of food, then that ought to be your priority. If you need to trade or preserve wealth, then PM or even gems would be a lot better. Of course, this assumes you have all the other survival/prep bases well covered.
A fool and his money are soon parted. Trust no one you can’t lay your hands on.
Benjammin, you mentioned that land is not a sound investment, because “it is real easy for the government to take it any time they want.” I will agree with you that this could well happen. However, in a grid-down situation, a total economic collapse, with chaos in the streets, the government will not be in a position to simultaneously take land away from 327 million U.S. residents. However, having land in the country, away from the chaotic cities, is still desirable, especially to ride out the initial “golden horde” chaos. The only way massive land confiscation could happen is if order is restored months or years after the original crisis event. And even then, it is most probable the confiscations will happen in some regions more than others. The other wild cards are possible effects of EMP, invasions, tribulation events as described in the Bible, etc. All things considered, still a better bet to have land in the country, rather than the city, along with food and supplies.
Agreed. From a purely investment perspective, real estate not so much. From a purely survival perspective, fortified arable land is highly desirable. The slant on the article leans more towards investment, so I approached it from that perspective. No worries.
The government can take your cash on hand, in the bank, your stocks/bonds, 401k, silver/gold, firearms, and yes land. But as mentioned in a SHTF scenario they will take the low hanging fruit. Your money in the bank, retirement, and money in the market.
Not withstanding this, land,,, we started shortly after we were married in 1985 by getting out of apartment living and into our first “starter home” in the burbs. After moving up by buying and selling every 5-10 years or so we now have 2 homes valued at over a million each.
All our retirement is in land with a smaller portion in precious metals and firearms. Zero in any retirement market, making 1% or 2%.
Everyone has different investment thoughts, but everyone in our family has taken our advise starting with the just recently married nephews and nieces and has enjoyed the same success.
I think you can still withdraw from IRA under 59.5 with no penalty by having monthly distributions based on age. I did it from 1995 to 2015 or so.
You can withdraw from 401K IF you get layed off from your job after age 55 (I think that’s the magic number) with no 10% penalty.
Thanks for informative article. One caveat: a 401k loan is callable upon employment termination or is counted as earned income in the severance year. In other words, if you lose your job you have to immediately repay the whole loan or it’s counted as income that year. As such it’s taxed as ordinary income + 10% penalty. If the loan is large it can pop you into a high tax bracket! This could EASILY be taxed at 49%! So be careful with these loans.
@ Random Mike
Yes, you can, because the taxes are already paid.
No, Vagus. Taxes are prepaid on a ROTH IRA! Your standard IRA money is pre-tax, as is a 401(k). I know this because if you leave an employer and take your retirement money from their 401(k) it has to transfer directly to a Rollover IRA or you will be taxed on it as income, I don’t believe you can even have a check cut and sent to yourself.
Whoops, thanks for the correction, I have a Roth so evidently my brain just filled that in.
Great info… I’m a younger guy in my 30’s and I still removed my retirement. Having seen other countries of the world in the military, you would be blind to believe that the United States is the only nation that can continue to live as we do with no consequences. Though by design, it will fail. And though death is not my fear, watching my family suffer because of my choice to be ignorant is incomprehensible. I often hear people say that God will take care of them, but my Heavenly Father has never sat me down at 6:00 and put food on my plate. He gives us the means to provide through our abilities. Miracles can and do happen, but I for one choose not to tempt my God. God bless his people and may we heed his word.
Great points, Strategic! Agree, miracles happen, but the Bible, especially Proverbs, speaks many times against laziness and inaction.
Correct. I believe GOD gives us the tools or the ability to acquire the tools and occasionally nudges us in the correct direction but ultimately the choices are up to us.
The god who made iron grow
Did not want slaves;
Strategic – Good to hear a younger person in their 30’s recognize that he chooses not to tempt the Lord. In having to deal with two older couples in the past couple of years, who truly believed the Lord was coming back before they would have to deal with life’s realities, it is a blessing to know there is a younger generation out there that realizes the Lord may come back today, but we still have to prepare for our families as if he will be allowing for the Gospel to continue to be spread throughout the remainder of our lifetime.
Very well said Strategic Defense, as a self proclaimed “younger person”, you seem to have years of wisdom to offer. I agree, God will give us the means to care for ourselves, but He will not tolerate laziness. You indicate that you are a veteran, thank you for your service. God Bless.
Appreciate all the comments. To expand on the article, I mentioned having a hypothetical $1,000 in a Mexican bank. After the two devaluations in 1982, a total of about 70% was lost. So, if you wanted to withdraw that $1,000, even in dollars, you would lose 70%, or $700, and get only $300, and that’s assuming the bank has the actual dollars on hand, and/or doesn’t close down.
Lost 70%? That probably occurred to a lot of people’s 401K’s and home values in 2008/2009 right here in the USA.
There are many other avenues the government has besides raising income taxes or seizing funds from your bank accounts or investments. The federal government could say that they are cutting back or ending programs to the states thereby keeping that revenue. All the while requiring the states to continue to fund said programs to the full extent. Example: the federal government eliminates federal funding of highways thereby freeing up lots of money and at the same time telling the states that the highways MUST remain in usable condition. Guess what the states do then? Raise sales taxes and/or property taxes to continue the funding levels. Or the federal government could go directly and increase property taxes on everyone. Is that legal? I don’t know, but the federal government can make the rules as they see fit. Or the feds can institute a vehicle license tax that taxes all vehicles including bicycles on a per axle basis. Worst of all is the gov institute a value added tax (VAT). I may be wrong on a few things but you get the point and that is this gov has many ways to squeeze more money out of you than what we traditionally perceive from the banking system.
Good article. Contains the usual advice, but such advice always bears repeating. I myself will have my mortgage paid off a year from now, finally putting me in the position of being completely debt-free, which is one of the pillars of financial security.
As for all the other bits of advice being thrown into the ring by the commenters above…everything in moderation, folks. Don’t rush to put all your eggs in one basket, but instead diversify. Become debt-free, save a few months’ worth of cash for unforeseen emergencies, stockpile non-perishable foods/sundries/ammo, learn and employ multiple income streams, and spend less than you earn. And get the insurances (auto, life, health) in coverages you’ll truly need…not less, and not more. In short, hedge all your bases as you’re able. Then, live life and enjoy your time with family and friends while God allows you breath!
And of course, trust in Him and realize that you can only do so much in your power as a responsible adult to protect yourself and your loved ones. Do what you can and leave the rest in His hands, and enjoy the peace that comes with it. Because if/when the hard times come, you’ll have your fair share of struggle. Don’t rush it before it’s due.
Great post Guesty. I agree wholeheartedly, having a paid off mortgage and being debt free are the pillars of financial freedom. Thanks for sharing.
Great post. I agree also! Im working towards that goal as well. Who cares if the world burns down tommorrow. Its the between times that concern me. If there is no mortgage to pay hyper inflation can b better covered in crisis.
so even though you LOST your money, you still survived and went on living. this is a key lesson to learn. if/when we lose everything, we can still go on if our hearts are not set on our wealth/property.
invest in YOURSELF. education that is able to create TANGIBLE results. My engineering degrees are valuable in a fiat-based world, but my ability to repair my vehicles, weld, and grow my own food are TANGIBLE. i have the ability to gather firewood to heat and cook with.
yeah, gold/silver and tangible items are a good way to try to grasp onto what you have, but in the end thieves can and WILL break in and steal them. Moth and rust WILL corrupt. your food in cans only lasts so long. have you GROWN and developed the FAITH that you can survive and THRIVE in confidence, losing everything.
ok, enough preaching. last TANGIBLE to invest in: FAMILY. blood family, neighborhood family, like-minded “family”. investing in them will always pay out and hedge your future “bets”.
nuf said 😉
I so agree with you, wildbillb. Our author says: When it comes to the government, banks and other institutions, trust no one! All in on that. At the end of the year, I gave a lot of the money I had in the bank to local charities. Building alliances with people who are already working with folks who have experienced their own personal TEOTWAWKI.
Mutual trust with neighbors nearby and almost nearby is an intangible asset which may lead to tangible results later. At any rate, I consider it a worthwhile investment.
Carry on
I have gone through dollar devaluations in Europe. The banks closed…sometimes for days. All were expected to just chug along with what was in your pocket. They are not manipulated in same way Mexico is. I worked in banking. I got “wind” of possible big dollar devaluation forthcoming and took dollars out of savings in local branch of American bank as marks(German currency at that time) and went to separate German bank to setup account and deposited those funds in it-effectively, insulating myself from the devaluation that did happen.
When dollar devalues and you are paid in dollars everything locally in another currency becomes instantly more expensive to you. You are constantly aware of exchange rates.
The lesson are be prepared and know how to move as comfortably as possible with flow.
As an old person who has seen much, I suggest all readers remember the basics starting with God then work your way down from there. He does help those smart enough to dwell in Him and His words. Solomon, the richest and smartest man ever, said ( I deny that I was there at the time) divide your assets into several parts you never know which will prosper but then again take the reverse caution as well: you never know what trouble will happen- and when it will happen. Ask yourselves”what lasts?” Paper money? Want some Pan Am stock, or Enron or Arthur Anderson? Get debt free so that the cash flow you have is yours. Remember the songs’ words “You load 16 tons and what do you get–? Pick your enemies carefully. Don’t cross swords with the IRS, FBI or anyone you can’t pay an attorney to defeat for yourself. Trust in God and work like hell He does share our burdens without us feeling their weight. Speaking of weights, as of today, one troy ounce of silver, Eagle, is $15.93. Paper and ink are reverting to its real value. Remember the farce of “federal reserve” currency has devalued our currency so that a 1913 dollar is now buying about Three Cents worth of food, ammo, medicine, vehicles, housing, etc. Plan for the worst and pray for the best. This life is only comparable to a test garden; He wants to know who will produce what for Him. Soros is not aking any money with him but we all should take our faith and works for Him as proof of our value to have an eternal home in Heaven.
Laus Deo
overbore
The peso continued to fall, down to 3,300:1. Guys went to Mexican banks and bought coins with US $; brought the coins back and sold them to scrap dealers for a profit.
The government moved the decimal to 3.3:1. The peso has been in the 19:1/20:1 for a good while, now.
I was working in Mexico when the ratio was between 11:1 and 12:1. That was in 2009 and their oil production was dropping then and along with the turmoil I knew it was a matter of time before their currency would continue to devalue versus the dollar.
Of course, an out-of-control government is capable of doing just about anything, but they probably wouldn’t take privately owned land during an economic collapse or depression. No real reason to. I could see them taking over buildings for “public purposes” in cities… for homeless housing or soup kitchens, but not rural land.
Its possible the government might take control of the giant corporate Mega-farms in a crisis, but I can’t see them wasting time confiscating small family farms. They might take your live stock “for the common good” (translation: the Deep State back in DC needs its steak dinners).
I would assume it would take a full Ocasio-Cortez Venezuela style Communist take over to throw you off your land. If things get that bad, well…
Now, if things get so bad that they have food riots in LA and NYC, you will see the creation of “anti-hoarding” laws. This would give the government the power to search your home and confiscate stored food, etc. Of course, who do you think they are they going to come after?
“Oh, Mr. Google, Mr. Visa, Mr. Amazon can you please tell us who has been buying freeze dried food, bulk grain, MREs, etc?… oh, and also while you’re at it, tell us who was buying ammunition so we can send in the SWAT team first and clear the building.”
They’ll want your food, your fuel and your guns. They won’t have much use for your land… they can’t haul it away to LA or DC. I could also see them confiscating gold and silver in order to “jump start” the economy (translation: pay off foreign debt holders).
I could see the fed taking private land if it is deemed in the national interest such as a mineable resource. The fed might not run the operation but instead delegate an industry to exploit that resource. Examples may include rare earth metals, PGM’s, or other strategic resources.
Over the years I have learned a few bits of wisdom from a friend in the pawn shop business.
1. ALL assets are only worth what someone is willing to pay for them at that moment in time.
2. Only purchase an asset if you can get it for one half or less of what it is really worth.
3. Druggies will sell anything for the next fix.
4. Diamonds have no street value.
I learned my lesson about banks early. When I was a child, I occasionally received a silver dollar for a birthday gift. When I had accumulated about 7 or 8 of them, my parents took me downtown to a big bank, and opened a savings account for me and told me that I would get interest on my savings and that I would have more money that way. Later, my father got a promotion and a transfer to another state, and we had to move. We went downtown to the bank to withdraw my money, and the teller gave me my money in dollar bills and change. I said “where are my silver dollars ?” and was told that they belonged to the bank now. I then saw that banks are just out to screw you and have never trusted them since.
Ohhh yeah. Just look at your change next time. You will see very few copper pennies. My experience so far is for every 10 to 15 pennies in change, there are only one to two copper pennies. What happened to all the copper pennies that were in circulation?
We are seeing Gresham’s Law, in action: “Bad money drives out good.”
haha, I’m collecting them, so they’re probably in my coin jars.
At the end of every day, I toss all my pocket change into a jar. Once it’s filled, I go through them to filter out the few clean pre-1999 coins I find (the ones most of us grew up with), including any pre-1982 copper pennies. Every once in a while I’ll find a wheat penny, or a WWII nickel, or a 1976 bicentennial quarter, or the rare 90% silver dime.
As I’m sorting the pile from my jar, the very first I get out of the way are the Obama pennies, lol. They look like tiddly-winks.
I wonder if SB’s younger readers even know what tiddly-winks were??
Ohhhh, so that’s where all the pre-1982 pennies have gone? Hehe
Speaking of tangibles, we have had a lesson in this recently. My husband used to work at a hardware store, but it is now closed. He is working on getting another job in a different area. But in the mean time, he trying to catch up on some of the projects around here. He is hanging some gates today. These particular gates didn’t have hinges, which is why they hadn’t gotten hung in so long. He decided to make some hinges. So off we go to the local hardware store to buy some bolts to weld the hinge on. Sticker shock! We’d been getting hardware at cost all this time. We had anticipated not being able to get hardware at cost anymore, and we had done our level best to cut costs everywhere else and stock up on whatever we might need. But we couldn’t anticipate everything. All that to say, stock up on any sort of hardware you might need. Through the years, we have stashed all sorts of things to use later. We are masters at buying on sale and stashing it. Hardware, hydraulic oil, engine oil, tractor parts, wire, screws, etc. All these things are extremely useful, extremely valuable as a barter item, and they hold their value and don’t go bad. So buy them in bulk. Tools of any kind are SO important. We haven’t had a vacation in years, outside of visiting family. For several generations, our family has prioritized our money into things like this. We are still using my father in law’s shovel handle stash, and we are so shocked at how little he paid for them. He would always buy stuff like that and stash it. I still need to dig into some of his stash’s. I dug into an old homestead in the family and dug out a bunch of canning jars and pry’d off the lids and washed them up. They don’t go bad. By doing this, you are able to live more sustainably and buck the modern trends in favor of being more timeless in how you live. That appeals to me.
You are my kind of people. I helped a friend move and brought home beaucoup hardware items. Then today, going to buy some homemade elderberry syrup from a friend, he mom invited me to stay and taste some homemade wine. So-o-o good.
Real value there. Gonna get me some elderberry bush roots this spring. And, learn how to make wine. Real value.
Carry on
This is such a great article. It’s also interesting to read the comments of other readers who are, I suspect, far younger than I am. I grew up hearing my elders talk about the bank failures and closings of the Great Depression. My grandmother-in-law told me how she went to the bank to take out money to pay the mortgage and they wouldn’t allow her to get any money. Many banks simply closed. The doors were locked, and no one seemed to know where the money went.
Everyone, please don’t think of a bank safety deposit box as a safe place to keep anything. My parents had one (from the 1950s), and apparently changed the rules concerning access without telling Mom and Dad. When my father died, Mom went to check on what was there and take out documents we needed. Guess what? The bank said we couldn’t access the box without a court order because one of the holders had died.
I raised &^($ and they finally gave us a letter saying they weren’t responsible for what we did; they were implying we might do something illegal. The lock box contained my fathers WWII papers, the deed to their cemetery lot, etc. There was no money or anything of cash value. We were forced to go through every piece of paper in the presence of bank officers while a secretary typed a description of what it was. After Mom died I took all our money from this bank–a fairly large chunk–and moved it elsewhere. Needless to say, Hubby and I don’t have a safety deposit box. Even if no one has died, you generally can’t access it any time you want to, so I think it’s a bad deal.
Banks can be strange about death. After my father died, the bank put an “alert” on our account, which had all three of our names on it. We didn’t know about this for several months, until we went to put more money in the account. There would be a slight delay, we were told, because of the “alert”. Of course I demanded an explanation which they badly fumbled, causing me to declare loudly to Mom, “See, I told you these people are crooks.” Everybody in the bank turned to stare; I hope they learned something.
A year later, when Mom’s death was near, I cleaned out the entire account before she died and moved it to another bank under my name only (I wasn’t married at the time). I was concerned that the @#$% bank wouldn’t let me have the money to bury her. All of you, please find out (in writing) your bank’s policy in these matters. I’ve already told Hubby that if I die, he’s to get the money out immediately, before the bank finds out I’m dead. With today’s instant communication, your time is short. If you know someone is dying, take action.
Thanks to everyone for sharing your experiences and knowledge.
So you’re still dealing with banks?
I used to have a safety deposit box upteen years ago. Just had some papers and a few coins. Nothing major of any value, just a place outside the home. When I moved, I closed the box. Fast forward many years and at a stable location, I thought about putting the stuff into a new box. Did some checking. Started seeing articles about how banks can confiscate precious metals held in safety deposit boxes. Then saw where some banks even mentioned that people should not store PM’s in boxes. So, needless to say, I never got a deposit box again even if it would only have a couple silver coins. The stuff is instead secured at an offsite secure location.
@INPrepper, there was a guy who died with no heirs a couple years ago, when the government agents went into his house to process his belongings they where surprised to find $5 million in gold hidden in the garage in an old Home Depot cardboard moving boxes amongst boxes of junk. His neighbors where surprised, they never thought he had anything. The state eventually tracked down distant relatives who had no clue who this relative was, but the state wouldn’t let them have the gold only the cash after they sold it.
The moral of the story is that it’s better to camouflage precious metals than to keep it in a bank or safe. The second is to let your heirs know about it or the government will make it disappear and your heirs will only get fiat…
I wouldn’t doubt it if the gov also deducted testing, shipping, handling, and processing fees thereby giving the relatives maybe 60 cents on the dollar for the gold value. I agree, heirs or people considered family should know even if they are not told the location but that location is disclosed upon death through a note in the will. The notes message can be overt or vague such as ‘I leave my books stored in Home Depot boxes in the garage to John Smith’. No perceived value to anyone looking at the wills details from the gov but the heir will put 2 and 2 together based on previous conversations with the recently passed.
I think the elites will get what they want through inflation. There is no need to crash the system. They can use it for decades upon decades and achieve by the stealth tax, inflation, than by purposely crashing the economy.
The other thing I noticed is the idea to have skill sets what a total crash hits. Ok, but how are you going to get paid and at what rate?
It seems a good line of work will be armed security but that will be limited since government has the best tools paid by us.
The other nations that have had economic crashes were not holders of the World Reserve Currency or the largest holder of SDR’, or have the scope of the US dollar has in most nations economy.
We also have the petrol dollar. And for people to think the Saudis will get close to Russia or China is not realistic. The Saudis are not stupid knowing those nation will just take it if need be.
I agree with the statements from Solomon about having a diverse asset strategy.
But to put all cash into tangibles like gold or silver or even food where are you going to store $200,000+ dollars of it?
If people here believe in Scripture than the anti-Christ needs high tech economy to be able to install the Mark of the Beast and control who buys and sells. A barter system built from chaos doesn’t cut it.
Hello Skip. If it is $200k in gold, it takes up a very small place if purchased in kilo bars. That is fewer than five kilo bars which does not take up hardly any space at least compared to silver which would be 16, 1,000 ounce bars.
Just a comment about fractional reserve banking. Yes, the bank loans your money out, only keeping a fraction of what you put in. That is how they make money, to pay you interest, and offset fees. If there was no fractional reserve banking, and they had to keep all the money in a vault, you would pay fees periodically in order to pay them for their service. Such places exist – called private banks in many cases. You buy the right to park money there, much as you might rent a safe deposit box. And there are safe deposit box services too, though I wouldn’t trust them to keep a greedy government out of them any more than a bank would.
Chris, I realize banks need to keep fractional reserves to do business. The problem is that many banks and financial institutions make risky investments, such as derivatives. When the derivative bubble finally bursts, someone is going to have to pay for it, namely depositors and investors. Similarly, in the Subprime Mortgage Crisis, banks and other lenders were qualifying people to buy homes who had very poor credit. At the same time, they were bundling all these mortgages into mortgage-backed securities and selling these as if they were a commodity such as gold or wheat. When interest rates went up and people who were paying adjustable rate mortgages defaulted on their home loans, these MBS investments suddenly became worthless or close to it. And banks and investment houses such as Lehman Brothers and others went broke, hence the 2008 credit crisis. Fractional banking can work if banks and investment companies make prudent investments; however, they frequently get greedy to maximize profits and the poor depositors and investors end up paying the price.
No one has mentioned the obvious fact that many people have forgotten- in 1933, the Federal government closed all the banks for a ‘Bank Holiday’ and they rifled through all safe deposit boxes and seized any gold that they contained. ALL OF IT. Did they seize anything else ? Probably. That should settle the question about ‘safe’ deposit boxes once and for all.
Don’t forget, besides the reserve requirement from the money you deposit, the bank lend a big part of the remainder to other banks which also affects their reserve requirement. I forgot where I read he article, but starting with $1,000, the money can move from bank to bank while meeting the reserve requirement to 20 different banks. It is a self feeding process so imagine if there is even a MILD run on the banks.
Land CAN be had for cheap Just gotta search hard and keep an open mind
Good article. But if you put all your money into tangibles, and NOTHING HAPPENS, you will have a lot of crap taking up space and have lost opportunity to gain important cash for flexibility later. Of course you have to know what you are doing. We started investing each month in mutual funds 30 years ago, and continued to add to our retirement savings — as well at taking advantage of 401K employer contributions — over the years. We are now looking at retirement in 3 years with a really, really nice nest egg. But here’s the thing: my husband, who manages the long-term money management in our house, has educated himself well on investing, made changes when necessary (e.g. out of mutual funds, into ETFs and individual stocks), managed paper losses, has learned who has good advice and who doesn’t. I manage the day-to-day and my job has been to keep us out of debt, pay down on the home mortgage, streamline household spending, build up emergency savings, determine appropriate preps, etc. I am also the precious metals buyer. Yes, there have been a few ” I wish I’d known” situations, even some years we missed out when we followed Doomsday predictions, but if we hadn’t invested long term, we would be super cash poor right now and have few options. The moral is DIVERSIFY, including investments, tangibles, and emergency cash. Bottom line: we will be in a good position to get the “H” out of Illinois sooner rather than later, even if our house has lost value.
Don’t blame you for wanting to get out of IL. That state is having large numbers of people fleeing every year. Wish I’d known,, if I would have known, I would have spent every extra penny on silver and palladium back in the early 90’s when silver was around $3.00 per ounce and palladium was around $110 per ounce. But as they say, hind sight is 20-20.
Ohhh, silver now is $16 per ounce and palladium is over $1,300 per ounce.
If your desire to protect yourself here is how I look at it.
Money = labor. Labor = Time which is your Life Energy. Every thing you have and do takes labor and YOUR time. This includes learning / praying / working / playing. Doing things such as consuming food, wearing out clothing, burning fuel, and using items is related to labor and time. Many of the “materials” spoken of here were made by another man. Gold / food / nails / bullets / cotton “things” you want or think you need… and some you DO need.. are all thing, which you end up trading your labor and life energy for.
Time can never be recovered. Labor can be preserved.
All men use other’s labor for there benefit. Some much more so than others. The richest use lots of others labor for there benefit. They do not do physical work. They do not fly there own planes, or drive there own tractors, or even cook there own meals. Others do it for them. They are the ruling class or what some call the “masters”. They tax or take your labor. A 25% tax rate gets them 25% of what you do for there benefit. They may tell you it is for your benefit but it is not..
IT is IMPOSSIBLE to be rich without using others people labor. Period..
Land is a very SOUND investment in YOUR ability to produce with your labor…
It can be taxed and it is. It can be taken from you and given to a better “producer”
But that is a choice you have, let it happen or stop it. Just as is Do I pay tax? or do I “give” my labor / life energy away.
We all want to preserve our labor. We all want to not be forced to work.
Here are few simple lessons to help your protect your labor and life.
Protect your interests. Do not vote for tax increases.. ever..
Dont lose what you produce to sharks…
Your local government is the shark in your face. It is the one put there to tax and regulate land, to control your moments on streets, and worst of all to control your ability to work for yourself. TO license you and stop you from working without a license. etc. To stop your ability to earn money.. But The list of sharks goes on..
You must side step them and dodge them every day…
Start by
Learning to work with your hands and Invest in your self abilities.. learn to preform life’s labors for your self. Study how to keep your own labor. This will help you avoid there control..
Example. Building a house takes 12000 man hours. If you do all this work yourself, you lose this if your sell it, unless you sell it and get something greater in return…
Would it not be better to keep the house?
Every time you purchase something ask yourself will this better my ability to perform my chosen duties. Example – buying a key board that will allow me to type faster..
Use logic and validate your choices. Think about the result of your purchase and what it might do 5 years from now.. Invest your time and money into things that have value to YOU. Learn to buy low and sell high..
Buy things that provide a “use”. Learn that older things can provide the same “use” as something new. A 100 horse power tractor 20 years old will do the same thing as a new one. Learn to repair your own items.. and further this by purchasing things you can repair YOURself..
Gold and silver mean nothing if your are 120 miles from the closest store and out of gas…
One investment no one has mentioned is in yourself. As good as the information is on SB, I have to get up and get out. I walked to a meeting this morning, 15minutes each way. Sure sub-zero.
Look up the book Sitting Kills, Moving Heals. Then get moving. If you want to keep your labor, your ability worthwhile, you have to use it. These is no substitute for being in the best physical condition you can manage. The dividends will be immense.
Carry on
A few points to ponder!
You can build a penny sorter (some work for silver etc) for less than fifty bucks. Google it!
Almost all land or property confiscations are done by local dictators and the the Federal kind.
You still need cash to pay your property taxes and don’t expect them to accept beans, bullets, bandaids, or collectables!
Back in 1985 I worked with a green card Mexican and he was so happy he had his money in the usa. He said “now I am a rich man in Mexico”. He took a bag of u.s. dollars back and bought a house with it !
Beware the push toward a cashless society. Once cash is gone along will come negative interest rates.
In a cashless society, or negative interest rate environment convert everything you earn to a commodity you use or can resale immediately. Plus pay your bills in advance.
Thank you to the author. This has been one of my favorite SB articles! Nothing beats first hand accounts of events!