[quote=idoctor]
Failed 30-Year Auction Closes Rough Week; Treasurys Fall
[/quote]If interest rates creep north the d in deficit is going to be a big D!
Here is an interesting article presenting the same theme as Chris:
governments like the US and the UK and many others will not abandon further credit expansion. They are committed to printing increasing amounts of worthless paper money in order to finance the growing deficits and the rotten financial system. Therefore there is no chance of Quantitative Easing ending but instead it will accelerate in 2010 and after. The consequence of this will be a hyperinflationary depression in many countries due to many currencies becoming worthless. No economy in the world, including China, will avoid this severe economic downturn which is likely to have a major impact on the world economy for many, many years to come.Greeting from Iceland
The chart below shows the US Federal Debt per person. In the last ten years it has gone from $ 20,000 to $ 40,000. Total US debt, including private and corporate debt as well as unfunded liabilities, comes to $430,000 per individual. It is an absolute certainty that every man, woman and child in the US cannot pay off almost half a million dollars with normal money. Only massive money printing will take care of that.
I was just listening to a podcast of David Walker speaking at the Commonwealth Club. He is the former comptroller general Chris references in the Crash Course.
http://www.commonwealthclub.org/archive/?filter=audio&sort=releasedate
He said the biggest problem is the unfunded future Medicare liabilities, and the math says not only can we not grow our way out of this debt, we can’t inflate our way out either because Medicare inflates even faster.
Thanks Woodman!
Romans 12.2
In addition to actual in your hand possession of gold and silver you can also add a bit of platinum. Beyond that you might consider buying what you will consume in the future that has a long shelf life. It becomes a bird in the hand rather than one in the bush. This can be simple little things like kitchen sponges, aluminum foil, soaps, and long life canned foods like grains. Some food related items like Tabasco sauce will keep for many years. You might take a look through your pantry and see what you use, and then estimate what a 10 year supply would be.
The disadvantages are that you have to store the stuff, and you do not earn interest on the money.
The advantages are that you for sure have the stuff, it is fairly safe as people do not normally steal 12 bottles of Tabasco sauce, you will earn the inflation rate without taxation. These items could be real barter goods in a crisis.
You can probable park $10,000 or more like this. Maybe $25,000 if you have the space, money and energy to think through your future needs, and do the shopping now.
Thank you Lionel - love your suggestions! I get it - have been stocking up on tradeable items…we are still confused about whether or not we should be totally out of our retirement investments.
I’m thinking yes and maybe we are already too late.
Love the kitchen sponges and tabasco! Shopping tomorrow.
Marc Faber on Bloomberg 2-11-2010
http://www.youtube.com/watch?v=vTs3MJUPDDU
Interesting last night watching HDTV on current Argentina. They have been thru hell & back in their economy but the cities were busy with people dressed nice & clean & nobody looked underfed LOL. Life goes on but the reset that happened to them had to be really ugly.
Chris does recommend to buy little at a time every month, something like 1/10 of the amount you feel comfortable owing in gold or other metals… if it feels uncomfortable, you can stop your purchases at any time 
Samuel
Chris,
Just checked the official government dictionary. The word “austerity” does not appear.
Larry
idoctor:
I’m from Argentina and go back to visit family about once a year. Argentina is getting ripe for another crisis. They seem to come once a decade or so. 1989: hyperinflation, 2001: run on the banks, default, 3:1 currency devaluation. You are right that people are busy again. The thing is, it’s people who make a country run, not the banking sector. The banks will try to CONvince you that they are indispensable, but I think that if the banking system suddenly exploded one day, the people would get out of bed the next day and resume life.
One comment regarding Argentina crisis versus USA crisis: people in Argentina traditionally carry very little debt (in large part because credit is so expensive). Most people either rent or own their house outright. And low or no credit card debt. What I’m getting at is that people there, as well as in many other third-world nations, are much more capable of hunkering down for a crisis than the debt-laden Americans. Also Americans are so used to a multi-decade honeymoon, that it’s more difficult to snap into “hunker down” mode.
Romans 12.2
Another thought is saving money by buying case lots of things which would in effect give you the savings as a return on investment. Might get yourself and others to think about what might have the highest barter value in a really long and tough economic let down. Probable things that are not locally produceable and have long distance transportation issues. Spices were hugely valuable during the dark ages due to the long freight cycle by camels and many intermediaries in the process.
I think it may be simple things like garden tools and garden seed and canning jars. When the herd runs in mass to the store to buy the shelves will be empty. If you have some spare land you might plant a variety of orchard tree seeds and have some small plantable fruit trees to barter.
Lionel, had a crazy day with work and sick kids - but as I was flying through grocery to buy cookies for Valentine party - I thought of you!
Imagine there it was Tobasco on sale! I bought two cases! Then I saw the Ketchup - bought 36!
The best was when the checkout girl and bagger made a joke about my purchase.
I just smiled and calmly shared how valuable tradable items will be when TSHTF…they smiled nervously and were confused.
Thanks again…shopping for kitchen sponges at the dollar store tomorrow.
Too. Much. Debt.What else would anyone expect when all the money is created as an interest bearing debt owned to the banking system? Add to that the fact that once time and interest kick in the debt grows but not the money supply. The for the grand finale when the debt is extinguished so is the money, making it impossible for there to be anything but Too. Much. Debt..
with a degree of complexity that dwarfs the Apollo moon missionI don't understand what is so hard to understand about the fact that money is created when loans are issued and debts incurred; money is extuinguished when loans are repaid, and that once time and interest kick in on that borrowed money the debt grows but the money supply does not making it impossible for everyone to get out of debt.
This whole money system is really easy to understand if you’re just willing to take the time to sit down and study the whole process of how money is created and destroyed.
Here is a very interesting discussion about current economic conditions, world wide and the likely near future scenarios, and what investments are likely to benefit. Marc Faber, Nassim Taleb, Hugh Hendry and four others. Hit the “Eng” button unless you want to hear it in Russian.
http://2010.therussiaforum.com/news/session-video3/
There is no mystery to projecting the pattern of failure engendered by any purported economy subject to interest.
As interest multiplies debt in proportion to a circulation, ever more of every existing dollar is dedicated to servicing multiplying debt, and ever less of every existing dollar can be dedicated to sustaining the commerce which is obligated to service the multiplying debt. Everything around you can be understood from the obvious consequences.
We advocate real solution:
Mathematically Perfected Economy (MPE)
www.perfecteconomy.com
Thomas,
That is precisely Chris’s point! Hence his use of the three short words - Too, Much. Debt.
DavidC
The one point that you mention in passing is HOW inflation is measured by governments. I must confess, I am deeply worried about how it is calculated. I have been looking at the numbers on bloomberg and they say that the US is currently in a deflationary state of 0.1%. Only 0.1%! How is that possible?! The government is printing money faster than the presses can go yet there is still (albeit minor) deflation!
The only answer to such preposterous numbers is the lack of true market bellweather goods in the CPI basket. CPI in times like these is completely unhelpful because governments just make sure that the excess liquidity doesn’t go to the markets that contribute heavily to CPI increases. But it doesn’t mean its not there! If the government we’re a firm, they would be sitting in the same cell as bernie madoff for investor fraud. Although I can understand why they are taking this action (to try prop-up the markets temporarily) this action is heavily damaging the functioning of the markets and creating enormas market failures. It would be wrong for me to stand on the moral high ground and judge the government on something I only have limited information about (and I’m only 20 years old on top of that) but I can’t help but sympathise with people who say the capitalist system is flawed. We are just playing a game of smoke and mirrors, and although I don’t see the catastrophic government collapse coming that many others do, I do feel abit heart-broken. I fell in love with the capitalist economic system because it provided a platform where all are equal and anybody with the will to succeed can do so. But that dream is proving to be just that, a dream. This is a system governed by higher powers (not just governments, but lobbyists etc.) that mantains the status quo. I find that a bit sad.
The government is printing money faster than the presses can go yet there is still (albeit minor) deflation!The government creates no money. Only private banks create money at this time and they do it when they issue new loans.
What is so complicated for me to understand is what the ultimate landscape (economic) will look like. How money is created and extinguished doesn’t really matter.
It is difficult to know what to do with things like IRAs and leveraged assets. It’s possible that fiscally conservative politicians will be elected and try to minimize the damage. It seems that many of you are predicting complete currency collapse. Isn’t it probable that we will come to our senses before that?
Actually that's all that matters if you're concerned with the "ultimate landscape (economic)" because there's no way to change that if we don't change how money is created. I recommend revisiting the 1st E problem in the Crash Course.
In your analysis of the fiscal condition of the US and the hyper-leverage overhanging the floating debt instrument called the US dollar, how would you propose a couple fiscal conservatives (as if there’s ever been one) could fix the situation since the government currently doesn’t govern that aspect of the country? I recommend reading this: