Inflation, Shortages and Starvation
In the last six months many important events have transpired. The credit crisis intensified with CIT, Dubai and looming sovereign defaults. Commercial real estate is still frozen and about $600B needs to be refinanced during 2010. Massive fraud is being revealed on a grand scale such as with the 2,000+ page report on Lehman brothers. Greece is holding the Euro-zone hostage while Russia, as usual, most likely mass executed their political opposition. The spread between 2 and 10 year Treasuries has been getting omnious at highs not seen since the early 1980’s. Haiti and Chile rocked out. Civil unrest is increasing throughout the world from Bangkok to Paris. And to cap it off the CFTC gold and silver hearings led to some amazing convergence of opinions between Mr. Jeffrey Christian and GATA.
Jeffrey Christian’s Dangerous Idioicy
Zero Hedge did an excellent analysis of Jeffery Christian’s interview on Financial Sense Newshour. Because Whiskey & Gunpowder recently featured my article “Survivalism in the Suburbs” and it stirred up some good discussion I thought I would hone in on some of Christian’s comments that have been lost in the kerfuffle.
Mr. Christian said, “If you look at fishes and loaves of bread, the ratio of derivatives transactions to physical underlying it’s 5 to 1; if you look at aluminum or copper it is about 15 to 1.” During his CFTC testimony he downplayed the implications of shortages, “Another thing is that there are any number of mechanisms allowing for cash settlements”.
Cash Settlements and Empty Bellies
Using Mr. Christian’s logic about always being able to use cash settlements instead of delivery is ludicrous. How helpful is cash settlement of commodities for the people in Haiti and Chile? But then again, Mr. Christian is from Goldman Sachs and their CEO thinks they are ‘doing God’s work’. But last I checked while one can eat cash, like they can eat gold, neither are very nutritious.
Government deficits are generally funded by inflation. Inflation is used as a weak excuse for ineffective price controls. Price controls lead to shortages. These artificial, yet real, shortages lead to rationing. If shortages are too acute and in this case if the Federal Reserve is unable to turn their colored coupons or derivatives into actual physical loaves and fishes, like Jesus did, then the shortages can and will lead to starvation and death.
The attempt by government to disable the chief numeraire to mask the effects of inflation indirectly acts as a price control on all goods and services; particularly raw materials such as commodities which should be viewed as competing currencies. This treasonous policy is fraught with tremendous societal risk. While no one knows precisely how it will play out; my gold chips are on the outcome that it will not end well.
GATA warned about this in the WSJ advertisement:
The objective of this manipulation is to conceal the mismanagement of the U.S. dollar so that it might retain its function as the world’s reserve currency. But to suppress the price of gold is to disable the barometer of the international financial system so that all markets may be more easily manipulated. This manipulation has been a primary cause of the catastrophic excesses in the markets that now threaten the whole world.
A Life Hedge
As a basic life hedge I recommend a three month supply of food and a 72 hour kit. These will provide protection against the vast majority of probable scenarios. Just to be clear, for the extremely dense ones, I recommend taking physical possession of the food and not relying on another institution who engages in fractional reserve food storage at a 100:1 or even 5:1 ratio. When I am hungry I do not appreciate a waiter’s promise of cash settlement instead of my giant steak.
For the truly risk averse who want to ensure the safety of their family then what is the 72 hour kit for? To get somewhere else; like a cabin…or for the lazy and social: La Estancia De Cafayate. As with everything just weigh the risk and probability, perform your value calculation and implement your decision. We all have different risk preferences; for example some people want meteorite insurance but I do not.
Conclusion
The entire worldwide financial and economic system is a Ponzi scam and will evaporate. No one knows how this will play out but those who are farsighted and understand the Austrian school of economics know this is extremely serious. I was in Chile a few weeks before the massive earthquake. Upon small hinges the wide arc of our lives turn.
The massive imbalances in the gold and silver markets and the entire worldwide economy will not be quickly corrected nor easily played for profit. Too many adhere to the cult of government for that to happen quickly and without too much disruption. But “Daybreakers” is a good primer so simply be prepared with every needful thing. Tell me, what do you think?
Disclosures: Long physical gold, silver and platinum with no interest in the problematic SLV, Streettracks Gold ETF Trust Shares or the platinum ETFs.
Regards,
Trace Mayer, RunToGold.com
for Whiskey & Gunpowder
April 13, 2010
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Ain’t “kerfluffle” a wonderous word? I hope to get it to spread worldwide, LOL.
Superb article, by the way. You’re clearly among the sharpest-tacks-in-the-sack, dear. And handsome to boot!
Trace,
Thanks for the great article, it serves us well and reminds us of what is important; family and their protection. It’s funny (funny wierd not funny ha ha) how fast the leaders of our once great nation in their head long endeavor to make things better for us all have over shot their bounds to collapse and ruin our society.
All moral bounds for debt have been far exceeded by everyone. And by everyone I mean National Governments, State and Local Governments, consumers and businesses. Everyone seems to have bought off on the theory that lower savings and higher spending creates more jobs and wealth, and that leverage is good and more leverage is better. It’s all bad news if you ask me. Our great nation has passed the point of no return and will collapse under the mountain of debt it’s created in the next year or two, that there is no doubt.
I think it will become clear later this year that the Federal Reserve is buying the majority of all the US debt being issued month after month and countries like China and Japan will start to sell their holdings. Interest rates will rise very high, the dollar will fall hard, and we’ll see very high inflation then likely hyperinflation.
This will not end well, I just have a very bad feeling about it.
Thanks again for the great article, I look forward to reading more, it keeps me focused on the end game.
David
Like my momma always said “If you can’t hold it. You don’t own it”.
I hear ya, Lynne. I always used to wonder how when we could darned near feed the entire world on what was raised in the US and how it made any sense and could jibe with well-known coments warning how much…barley…and wheat…would one day cost peeps. It seemed so…unbelievable, those ‘predictions’, even a few short years ago. But stir in some ‘intent’ and ‘invervention’ and it can occur with ease, dagnabit! So whose gonna…feed the starving? RAVENS? I heard it said many a time, “Nevermore, quoth the Raven, nevermore.” Uh..okeydokey. Storing is goooooood.
Exploring the fact that Man Does Not Live By Bread Alone even more important.
A little Essie Parable, LOL. Pure foolishness to some. Eureka Moment Wisdom to Others.
Mr. Mayer and others of the Casey/Agora conglomeration give specifics to what for me has been just a gut feeling for twenty-some years. It hasn’t been difficult to see what was going on. They make the whys and wherefores understandable.
So, thanks. Thank you very much.
Essie, “kerfuffle” is a fine old Scots word meaning an “uproar,” or “a big fuss.” Very apt here, isn’t it? I started slightly when I saw Desert Rat’s comment about having been concerned for twenty-odd years, until I recalled that my first clue that All Will Not Be Well came in ’92, when the interest rate fell to 5%. Yes, we can all laugh hysterically with current rates so low it isn’t worth tying money up for a return of 1.45%. Without a stable currency and a stable economy it is impossible for most people to accumulate enough to be secure in their old ages, far less do that and pass any accumulated “wealth” to their children. The Statists fail to realize that many of us can plan longer than the day after tomorrow. We can SEE what will come of tripling our health insurance costs and doubling our energy bills under Cap & Trade, alone. What we’re going to see is much like the planned demolition of an old hotel in a big city: the charges are laid, and we’re going to hear whumpf, whumpf, whumpf, whumpf, thud. The difference is that the neighboring buildings will not be unharmed, even if a little dusty. When it comes down, everything will come down. The survivors will be those with sustainable sources of food with trade goods and the means to protect them.
Peeps think that a month’s supply will do them pretty good. What happens when the world wakes up and figures out that the US Gov is not going to repay it’s debts, except perhaps, if they’re lucky, in recently printed trillion dollar bills that won’t buy a Snickers bar? When the US Dollar finally goes kaboom, most countries around the world will no longer accept it, and the shelves at your local WalMart will be mostly empty. Forget that a large chunk of what WalMart sells comes from places like China? We import beef from Brazil. Canned hams from Europe. Tomatoes from Mexico rigtht now. And the list goes on. A lot of food will no longer be available to Americans, unless you pay by gold, silver, or whatever then passes for the new hard currency. Hmmmmmm maybe a years food, or more, should be stored away? Along with anything else now imported that would cause heartburn if ya lost it?
Maybe we should all goad poor ol overworked Gary into helping us set up local groups………
Naa, this is all just fanciful thinking. Think lower. The clueless bunch in D.C. will sell out, just like the French government in WW2. Where are you going to hide 3 months of food in the cities or even the berbs?
I would expect some strip harvesting by the Chinese, our largest creditors, maybe some farms too like Rhodesia. Maybe China will manage like Rhodesia to feed the continent, not starve like Zimbabuwe USA.
Expect the divisions in this country to be exacerbated to the extent that we end up with a Haitian style civil war, the enduring kind. Tories should never have been allowed to return after the Revolution.
Yes, our inspired leadership is leading the charge to change from wealth to poverty, from domestic peace to civil war. You were too civilized to mention weapons, you must be planning to leave the country.
I have said you need at least 6 months of food on hand rather than just 3 months. My reasoning is that is based on watching others prep and how attitudes changed based on how much you store. For example: At the 1-3 month group of folks often store and forget. Everything stays packed up and it’s ready for the “emergency”, but it’s not used or rotated. Almost everything has an expiration date from medication to food. So before you know it everything is “bad” or out of date.
3-6 month group This seems to be the point where you get to be a little nuts. You are past dealing with just local disasters and are learning more and more about our food supply and how government or financial actions by the “Big Boys” can cause a major incident. Or you are noticing how DHS has misplaced 300 Somali terrorists or Obama saying if you are nuked the Feds won’t be there to help. Trust me the paranoia passes and you are getting ready to move the next stage, self reliance.
6-12 month group This seems to be the tipping point into long term thinking. You shop at home first! You are now buying to stock your “pantry” then you use those items day to day. I noticed I was low on aspirin in my pantry so I start looking for sales, I restock my pantry and not my medicine cabinet.
12-months and beyond Now you are thinking about long-term items. Such as how do you sustain and secure your future. It might be PM, or bartering. Maybe getting chickens, some fruit trees or bushes growing. Looking at Off the grid power, or an alternate source of heat and cooking.
Now of these are pretty broad generalizations, and based on how much you have on hand not how long you have been a prepper. I have noticed them in myself and others it seem pretty constant.
Dear Brendgard: Goading Gary isn’t the best solution. This is something we have to do ourselves. A while back I agitated W&G readers to organize ourselves and will repeat: if you’re a prepper and live in Texas, drop me a line at http://www.thetexasring.com. We have to start somewhere, so let’s get cracking. The new luxury will be sustainable supplies of food and energy and the ability to protect or at least hide them. Anything less than three months’ food is dangerous and six months’ may not be enough.
Robert, you little bundle of sunshine…it isn’t the Tories we’re having trouble with, it’s the Whigs! This is the same old battle, we Cavaliers vs. the Roundheads, and they’re winning again.
It always amazes me how folks will poo poo the idea of self-reliance. All the negatives of; it makes no difference some will just rob you or the gubermint will take it away…..
Well I choose to be a wolf and not 1 of the sheep. I will do my best to survive and thrive not because there is a garuntee I will suceed, but because if I do nothing I know I will fail/die.
I think we need to work away from what the idea of what the politicians will do to us and start working towards the idea of what we will do to the politicians. I maybe wrong, and I come from a long line of losers. But we are persistent. I pledged 31 years ago to fight and defend the Constitution against all enemies foreign and domestic. Some remember those oaths. Wash. DC. is not the USA and NY is not the USA. They want a fight, bring it. We win. Simple as that, we’ll get hurt but our country is on a road to ruin anyways. We have nothing to lose. I want more time to get folks preped and ready for it.
You tell ‘em, Lynne. I’m a very nice wolf who chooses to fulfill my needs politely in a civilized world, but comes teotwawki it, it’s every prepper for himself.
I know you are one bad ass kitty Linda, or maybe an Alpha wolf. I will win is your attitude. Not nice and I will make folks win. You are the baddest female wolf in the valley. That makes you the alpha female and the baddest “bitch” in the valley. I mean this with the utmost in respect in saying this. But we ain’t here to be popular, just trying to give folks tools to survive.
Linda, you are a nice gal and I know you got fire in your guts. I will no longer be nice. Come with me and you may live? If you want to believe in the US government. Fine on you but it comes down to dependency on your self or the government. Will they plant your garden?
Think about it you hare set yourselves as being a supporter of veterans. not a good grey man argument. I do believe you will support all veterans. You need cut outs, Please tell them I am a “disgruntled vet” if any one asks. It is the truth Talk big stuff about me. I don’t like this attitude I never thought I’d see it in the USA.
I’ll be back
I’ve tried being nice. I find my liberty rather critical to my well being. I won’t be player again. Now I will be nasty. And Linda or Essie will be holding my sign. Gosh my momma an me never thought we could find nasty women to represent us.
I’ve tried being nice. I find my liberty rather critical to my well being. I won’t be player again. Now I will be nasty. And Linda or Essie will be holding my sign. Gosh my momma an me never thought we could find nasty women to represent us.
No longer about being polite, We are very annoyed. Our congress and our president no longer represents us as average Americans. We have a mission now as stated in the Declaration of the Independence.
Lynne, dear, we have just spent our usual couple of hours admiring the sunset over the lake and the cattle and goats grazing and being nibbled gently by bottle-fed goat girls wanting to be patted and have their heads scratched, so I’m pretty mellow. All I ever asked was civility, strictly constitutional law, and laissez faire. I am fed to the gills with Statists and the politics of envy, and the time is coming–due entirely to “entitlements” and liberal politics–when the bill will have to be paid and it is every man for himself. I am the widow, daughter, daughter-in-law, sister, cousin, aunt, and niece (many times for the last three) of career military officers and any vet in my area is welcome to come apply for a job. I haven’t much talent for “nasty,” but I am implacable when I know I’m right.
Linda, shhhhhhhh, don’t let him read that. Giving him a hard time is fun, and cheap entertainment.
Sorry, not even close to Texas, or I would take you up on that. Did reg and leave a couple comments though, looks like a right nice place.
I’ve a website in the back of my mind, working on the mechanics of it, to let peeps find like minded folks near to them. But the fun part is going to be how to work it so that it’s anonymous as possible so as not to leave an invite to those who would come and spoil the party: gov agents once they outlaw “hoarding”, those late for the party, etc. How does one get the word out without giving out too much? lol. Me thinks one person will need to coordinate, with a hotkey combo to run a DOD grade wipe of their hard drive at a given second’s notice or something.
And I believe that for many, a year’s worth won’t be enough. I know what’s coming. It’s far worse than most people in here imagine
Lynne, dear, THANK YOU for the compliment. Nasty wimmen, indeed, lol. Just that ol’ Pioneer Spirit that built this country. Behind every GOOD MAN is a great, even gracious woman, with her head screwed on correctly, and a super-dooper “b.s. detector”. Men deal in facts – women deal in ‘feelings’ and don’t ever underestimate the power of womens’ intutiation. II can be as sweet as sweet as sweet can be…and your best friend…or someone’s worst enemy, lyin’ awake at night figgering out ‘the perfect way” to get someone “where they live” to make ‘er hurt, and not even leave “fingerprints’. What they get is what they sought and by their own behavior ‘unleashed’ upon themselves. In Redneck USA we are…umm..LEGION!
Yes, sometimes I do get fired up. I think what I said needed to be said but I’m in your house and I may have went to far. It’s not yor job or mine to slap done folks that don’t believe. Those with ears will hear. I did go to far, I’m sorry. I do hope I can still post. I will try to restrain my ardor.
Gosh you won’t believe the posts I had saved up for folks attacking y’all. But you handled it.
I’m dawg tired and logy tonight, Lynnie-the-Pooh. Hope you didn’t think I looked askance at your last input. Not ME, LOL. And too tired to reread and see to whom your words might be addressed. You’re aces with me, Sister Dear.
No I lost my mind a bit Essie, I tried to convince folks agaist thier will. I may not like it but I have to wait for folks to be open to the idea of being prepared. I do much better on attack than bringing folks into the fold and what we need is folks that see stuff with a clear mind and clear hear heart.
I was wrong as well, we need folks to see this is in their best intrest. If they can’t then we must cast them aside. Damn I’m sorry for that, Perhaps they will remember us and all we talked about. I do tend to get a bit strident on prepping and being positive. I do hope I can learn to be bit more subtle in the future.
well those men in our lives are very smart. Now we are building a fire brake. We have food and groceries, not a bad thing. But those ladies are good as well.
No matter what politicians say we need to meld all positives not negatives.
Brendgard, in res #21…great thinking. I suggest you consult Michael Rough, Publisher of The Texas Ring. Mike is a terrific guy and knows innumerable things that would probably help. Why, oh why, don’t any of you great people ever live near Aggieland?!
Lynn and Essie…the two of you are marvelous. I prefer “alpha” to b-itch, but the time will come when the men who cherish us will be even more grateful for our strength. When life is serene, absolutely, I don’t spread soft butter on a hot roll if there is a man within smiling distance who will do it for me, but I could have handled the invasion of Normandy with a lot less fuss, expense, delay, and death than Ike did. Viscount Montgomery would have been putty in my soft hands and Patton would have adored me. Shucks, I could have handled another of my heroes, Erwin Rommel, easily. (Well, not when my age was in low single digits, but now.) Lynnie-the-Pooh (I like that), start writing articles for me, baby. A big part of why we started http://www.thetexasring.com was to develop talent. Title whatever it is “submission” and send it to Mike or me at the same address. Hey, the worst we can say is “too long,” “too short,” or “you wandered off the subject.” Vote, guys? Who else thinks Lynne has talent? Hugs to all, Linda
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well those men in our lives are very smart. Now we are building a fire brake. We have food and groceries, not a bad thing. But those ladies are good as well.
No matter what politicians say we need to meld all positives not negatives.