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Frankly, unless Washington prints money and bails out every state that needs capital, including California, federal power will decline amidst this severe economic recession, and the process of a soft American devolution will begin. If you think this idea is outrageous, then you’ve still not come to terms with a core reality of our current situation: the structure of this financial crisis is wholly different than any in our post-war era. This isn’t a recession. This is collapse.
In Recession vs. Collapse published in March, this blog explained that in a normal recession existing savings are used to support government debt issuance and that those who remain employed increase their savings to also support government debt issuance.
Neither phenomenon is at work today. Yes, the savings rate has soared in the US. But this has not resulted in any actual accrued savings. Because private sector debt came to define the internal structure of the US system, savings currently is little more than debt service. Also, bank purchases of US Treasuries are really just a result of the circularity of monetization. It’s just money from the FED being recycled into Treasuries. There is no privately driven growth of bank deposits, in the aggregate. Americans as a class are broke. What the savings rate more accurately measures is a collapse of consumer spending.
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This is correct. Everything you stated is correct.
ReplyDeleteCan someone please answer something for me? When I hear advice to conserve your cash and that cash is king, I am unclear: Do they mean literal cash, as in cash under the mattress in a fireproof safe or a safety deposit box? Or do they mean cash as in some sort of cash investment instruments? I am not familiar with much of the investment options and do not know if one of those is considered cash.
ReplyDeleteIf not, where is the best place for literal cash? In a savings account? In a regular bank or credit union? Or in a fireproof safe at home?
Please someone help answer this one question about cash.
(this is aside from the recommendation to invest in precious metals)
#2, they mean cash in hand, like under the mattress or in a safe. Not in a bank, because if they declare a bank holiday and you can't get access to your money, then you're out of luck.
ReplyDeleteIt really means to be in a "cash" position. Get rid of your real estate, stocks, bonds etc. In other words be liquid, sell your assets they will be worth NOTHING. Your art, boat, camper, stuff that cost too much in the first place. I sold everything 2 yrs ago and put it into SILVER GOLD and some cash.
ReplyDeleteLast post ... smart!!!
ReplyDeleteCash will not be king in this depression. It was last time around because dollars were scarce. No they are printing at a rate never before seen in history.
ReplyDeleteDollars will not be scarce.
That may or may not be true. However, if you don't have a job, you credit was canceled or curtailed, then you are not in any position to get those "abundant" dollars.
ReplyDeleteMe, again, thanks for the cash clarification. I have a meager $10k in a Dreyfus appreciation fund. It was at $12 before the crash in 2008. It went down to the lowe $9k and now is at $10.5k. I think I should sell now. this money was part of an inheritance that pre-dot com, appreciated to $15k. It sunk to $12, and now is up and down. It's useless to have it there anymore. Before I loose it all, I think I should cash it out. I do not understand investments much anyway so I am not qualified to put it into something "safer".
ReplyDeleteWhat do you all think?
If you are looking for advice here you go:
ReplyDeleteOpen an account with Apmex then cut a check to them to purchase 25% in gold Krugerands and 75% in Silver 'close to melt value' coins like the Buffalos.
Hide them away and 'forget about them' for a while.
The $10.5k you have in that cash account will definitely imo be wiped out in the next 2-3 years. The precious metals will appreciate 3x to 30x times. Just my opinion of course.
Don't leave savings in fiat currency. That worked for a long, long time by no longer.
Just make sure you hold metals in hand. No ETFs are any of that crap. If you cannot hold it, it isn't yours when you need it.
ReplyDeleteFirst of all I would open nothing, show no paper trail for any bullion purchase. Run to the nearest coin shop and pay CASH. Buy some on craigslist, visit flea markets, put an ad wanting to buy, but always pay CASH for your Gold and SILVER
ReplyDeletekeep ytour cash out of a bank... under the mattress, in a safe etc
ReplyDeleteThis is what I have done and I suggest that you do:
ReplyDelete1. Get totally out of debt.
2. Keep cash on hand (physically) equal to at least one year's living expenses. Tell no one.
3. Buy some "junk" silver (U.S. 90% silver coins) and keep those in your house in a safe place. I bought 1 bag ($1,000 face). Tell no one.
4. Buy some gold, either American Eagles or foreign government issues. Keep them in a safe place. Tell no one.
5. Realize that the silver and gold stashes are both a store of value and an inflation hedge; but, you can't run to the clothing store with a fist full of these coins. You still have to deal in cash. Therefore, do not sell your stocks. Instead, liquidate those that do all or most of their business in the United States, and re-invest that money in large-cap, dividend-paying stocks that have most of their sales outside of the U.S., that are in essential industries (food, beverages, drugs, soap, diapers, oil & gas, etc.) and have a long history of paying dividends (and increasing them regularly). For example, Coca-Cola (KO)has paid dividends every year since 1893 and does 80% of its business outside of the U.S. Therefore, this amounts to an 80% hedge on the value of the dollar. Plus, for several decades it has given annual dividend increases. Put together a basket of such stocks. I am not a financial services professional. Ask a broker to get you a list of 25-50 similar stocks. Put equal dollars in each of them.
6. Cut as much "fixed overhead" as you can out of your lifestyle and use the extra money to fund the above recommendations.
7. Buy a heavy-caliber pistol for home defense (we have 44 specials and 9 mm)and a lighter-caliber pistol for concealed carry (I use a 380). Also, I keep a pump shotgun in the master bedroom---plug out, magazine full but nothing in the chamber. Just the sound of me racking a round into the chamber would scare off most intruders. Use birdshot so as not to endanger people in adjoining rooms. Train everyone in the family, including children old enough to comprehend the danger of weapons, in their proper use and storage. Get a concealed carry permit. Stock up on ammo. Go to your local gun range and get proficient in marksmanship. Due to the high price and limited availability of ammo, I bought a 22 caliber pistol that is roughly the same size and weight as my 9 mm, and I use it to practice. 22 caliber ammo is still cheap and plentiful. Folks, this is not alarmist thinking. It may get a lot worse before it gets better, and the wheels may come off our so-called "civilization."
8. Make a home defense plan and make sure everyone in the household knows it. Part of our plan has been to equip every bedroom door with a deadbolt lock with a 1" deadbolt. We use a single-key deadbolt, which can be opened from the outside only with a key, but from the inside with a turn-knob. Had this been in place in the Elizabeth Smart home, she would not have been kidnapped.
9. Stock up on nonperishable and semi-nonperishable food, equal to at least a 3 months supply. Tell no one. Flour and rice are two essential components. To eliminate weevils, buy your flour and rice in packages small enough to fit into your freezer. Freeze each package for 1 week. Then, it will stay weevil-free forever. The weevils don't infect your flour or rice after purchase. They are already in the stuff when you buy it at the store. The freezing simply kills the minute critters before they get large enough to be visible to us! Things such as dried beans, noodles, etc., can be kept almost indefinitely---cool, dry storage is the key. Also, stock up on canned goods and rotate them so as to keep them fresh. Lots of chili, canned vegetables, canned meats of various kinds, will all look pretty good if the grocery stores experience supply interruptions.
I agree with everything but the carry permit. Getting a carry permit just means you will be the first stop when the gun grabs begin. Essentially you are saying here is my name, my address and I have a gun. Come visit me soon.
ReplyDeleteWow - the weevil advice is absolutely true - thanks a lot for that tip. I googled it and it sounds like a plan. Never wanted to store up rice because of the short storage life. Now I'll do the freezing thing and store rice, etc in food grade sealed buckets. Thanks.
ReplyDelete