The Breakdown Draws Near

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but that the economic and logistical system that delivers goods to everyone is extremely complex, and may be more brittle than folks believe. We live in a world where there is only about 2-3 days of food on the shelves, so if anything interupts the delivery, or causes widespread concern that it could be interupted, the shelves are empty within hours. Just ask anyone in Tokyo how fast bottled water was gone. But the issue of complexity and globalization mean that our economy doesn’t “scale down” very well. if asked to scale down, systems as complex as our economic system can break instead at times. To give an example, when lehman collapsed, there was a period where letters of credit were not being issued due to the cascading problems spreading through the financial system via derivatives & other interlinkages. Without letters of credit, shipping tankers and other delivery mechanisms cannot move goods. Goods just stopped. They pumped in enough money to save it, but if the failure is triggered by sovereign debt in the banking system can they save it the same way in time? Prepping is one way to deal with “I don’t know” as the answer.Or, another way of thinking about complexity, is think of a car or airplane. We’re talking about thousands of parts from hundreds of locations that all need to be in exactly the right place at the right time to make that car in the factory. if one piece is missing from one supplier, you can’t make the car. so, if only a “few” suppliers or logistics lines are lost, in many instances the whole process fails. I’m using making a car as an example, but in our current globalized, specialized and interdependent world many to most things in our economy have this dynamic at work of complexity that fails when you try to reduce. Now, if one area fails, it’s easy to recover, but if many places fail due to a larger crisis (oil shortage, financial or currency crisis) then it’s not that hard to see larger portions of the system failing for a time.
Not a matter of people being irrational or political leaders making wrong choices, just a matter of the system we developed that it needs many many parts to keep working failures can cascade.
It’s also a point that amid a crisis, being natural disaster, financial crisis, or whatever, governments get overwhelmed, and you are on your own. it’s not because people have gone crazy, it’s just surpassed what govt were built to deal with. All that was needed was 40 people to each drive an idle school bus  from 40 miles away where they were sitting in the bus depot into New Orleans and they could have evaculated the Superdome after Katrina. Instead, we all watched on the news as families suffered through 7-8 days of chaos and horror in the superdome waiting for some way out of there. On all the news and govt looked incompetent. Govt up to the president all wanted to fix that sooner, but couldn’t. if you can’t do something as simple as drive some buses a few miles to help people, what is the governments ability to solve more complex problems if we’re in the midst of a crisis?
So i think it’s not so crazy to have a focus on preparation, or make assumptions that folks will be irrational (though they can be!) In my view it’s more like taking out an insurance policy.
Doug

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Rufanuf:  think supply chains.  Think “if the world system of credit freezes up, will suppliers ships goods [food/fuel/etc.] to consumers if they can’t get paid?”  Bear in mind that most supermarkets have ~3 days of food on hand.  What happens if that steady supply gets interrupted?
Sofistek:  vis-a-vis Dr. Chris a while back saying maybe sell some PMs to top off your preps, and now buy PMs:  to the extent we can currently trade fiat money for preps, all good.  But if one has X amount of dollars and only a fraction of X needed to spend (or able to spend) on preps, and if a currency crisis is truly looming, then it would be wise to go ahead and swap into PMs whatever part of X one cannot immediately exchange for preps – so as to avoid devaluation of X through inflation.  At least that’s how I’m rolling.  (And FWIW, Dr. Chris has also given some guidance about other places to put X other than PMs if PMs are either not an option or don’t – to a given individual – seem wise.  The big point is the US$ is tanking and putting ones money elsewhere is likely a prudent move.  Since you’re in GodZone [NZ] YMMV.)

Viva – Sager

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sofistek,
I could be mistaken but weren’t you big into cash and eschewing PMs?  Just wondering how that’s working out for you?  Also, how many “things” can you buy before you run out of things to buy?  Then what do you do?  Stockpile more things you don’t need for future thing barter?

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ao,I wasn’t big into anything. Many people were advocating PMs but I always advocate preparations. Those who bought gold years ago may be sitting pretty but I’ve never been much in favour of gambling or of gaining wealth solely through investment. If gold is meant to be a preserver of wealth then it’s failing badly since it has been a booster of wealth over the last half decade, though some “investors” must have been nervous when gold started a descent in the early stages of recession.
 
Sager,
I agree with this but it isn’t what Chris wrote. If he meant something else, he should have written something else. I don’t know why he didn’t repeat his earlier advice to redouble efforts to complete preparations (if they can ever be completed), rather than put money into PMs, which should be a lower priority.

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Here’s my take on this Martenson report - Welcome to Slaughterhouse-Finance
Keep an open mind. Swapping all of your dollars for PMs is a BIG mistake. It would be comparable to betting your life on the Miami Heat to win the NBA championship… Surprised

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I seem to recall that Dr Chris said complete preparations first, then purchase precious metals. However, some people think buying precious metals are part of the preparations. What with the extra cash that  I have now, it is all I can do to buy the things I believe my family will need most (and hard to find later), rather than money spent towards precious metals.
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You could be right, bluebird. I’m fairly sure that Chris advised selling some of your PMs, if necessary, to help finish your preparations but I could be wrong there. He certainly advised completing preparations in his March 16 alert. I’m really surprised that he didn’t repeat that advice here - unless I missed it.

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Chris is noting that not just one but ALL issuers of fiat currency have to issue more currency?     Well, how on earth did we get to this point of getting all worked up over such a trivial issue?   This is AFTER 1933?   Was that cultural memory just an alien-induced trance?here’s an another view
  only a few countries tried the gold-std, pre 1933, and it blew up in their face;
  from 1933 until 1951-Breton Woods, the entire world was on a fully fiat regime
  we went back to a fully fiat regime with Nixon in 1973, which few noticed because of the hoopla over Watergate
on a fully fiat regime:

  1. there is no such thing as fractional reserve lending (it’s been zero reserve banking now since 1933;  loans create fiat reserves)
  2. all fiat currency creation creates national fiat “debt” in name only, meaning it’s only numbers on paper; created on-demand to denominate real-asset exchanges (the assets are here & now, the “numbers” never have to be repaid, any more than the numbers put on the scoreboard at a football match must;  they’re not borrowed, they’re purely nominal & are created & used on demand;  the fiat “debt” you fear is entirely NOMINAL!)
  3. the only reason any sovereign country even issues Treasury bonds is as a completely outdated reference for bond & inter-bank interest rates;  that reference can be set by CB decree
  4. every country in the world that uses a fully fiat, non-convertible, sovereign currency with floating Fx-rates could stop Treasury bonds altogether, and absolutely no one would care;  [it’s my understanding that Australia actually did so for a few years, and mysteriously went back to the outdated practice, for completely spurious reasons]
    Answer:  “who will buy all the bonds?”  Wrong question.  Half way to the truth is to ask the right question.  “Why sell Treasury bonds?”
     
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http://www.youtube.com/watch?v=S3iCO4pHt5M

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Great video Greg.
Thanks

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[quote=Roger Erickson]Chris is noting that not just one but ALL issuers of fiat currency have to issue more currency?     Well, how on earth did we get to this point of getting all worked up over such a trivial issue?   This is AFTER 1933?   Was that cultural memory just an alien-induced trance?
here’s an another view
  only a few countries tried the gold-std, pre 1933, and it blew up in their face;
  from 1933 until 1951-Breton Woods, the entire world was on a fully fiat regime
  we went back to a fully fiat regime with Nixon in 1973, which few noticed because of the hoopla over Watergate
on a fully fiat regime:

  1. there is no such thing as fractional reserve lending (it’s been zero reserve banking now since 1933;  loans create fiat reserves)
  2. all fiat currency creation creates national fiat “debt” in name only, meaning it’s only numbers on paper; created on-demand to denominate real-asset exchanges (the assets are here & now, the “numbers” never have to be repaid, any more than the numbers put on the scoreboard at a football match must;  they’re not borrowed, they’re purely nominal & are created & used on demand;  the fiat “debt” you fear is entirely NOMINAL!)
  3. the only reason any sovereign country even issues Treasury bonds is as a completely outdated reference for bond & inter-bank interest rates;  that reference can be set by CB decree
  4. every country in the world that uses a fully fiat, non-convertible, sovereign currency with floating Fx-rates could stop Treasury bonds altogether, and absolutely no one would care;  [it’s my understanding that Australia actually did so for a few years, and mysteriously went back to the outdated practice, for completely spurious reasons]
    Answer:  “who will buy all the bonds?”  Wrong question.  Half way to the truth is to ask the right question.  “Why sell Treasury bonds?”
     
    [/quote]
    Hey Roger.
    You may be interested in this thread
    https://peakprosperity.com/forum/can-fed-really-stop-printing/56016
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So then,
What is the answer?
How do we NOT play the game?
I would guess precious few do not play the game.
C.

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NOT playing the game is difficult and that is entirely by design.

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I saw this press conference and I have been more angry than usual since. We are so blatantly manipulated with outright lies straight from the White House. At this point, how can a person believe ANYTHING that comes from DC.http://www.youtube.com/watch?v=dFiO9BrewHA
Denninger puts my thoughts into words.
http://market-ticker.org/akcs-www?post=184836
Like he, I am very tired of this.

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What is the answer?
Educate as many people as you can as to how the system works, advocate eliminating legal tender laws. Look how they jumped on Bernard von NotHauswith his Liberty Dollar.
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Just wondering I have another 6 years to pay off my house, what do you guys think will happen to our mortgages when  the shit hits the fan ? I have heard some say they will be readjusted ?! What does this mean ??

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So then,

What is the answer?

How do we NOT play the game?

I would guess precious few do not play the game.

C.

As long as you have to pay taxes then you have to play the game to some extent. I think it a matter of how much participation you are involved in. The less the better. If you had property and created your own energy, lets say you were 100% self sufficient, then you would only need to pay taxes.

Which makes me think. Those crazy homeless guys you see on the street? Maybe they are the geniuses. They don’t feed the machine at all.

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I just discovered that Ashvin Pandurangi, a frequent contributor to the Automatic Earth, has written a piece commenting on some of Chris’ statements in this blog post “The Breakdown Draws Near.”  You can find the TAE article here:
http://theautomaticearth.blogspot.com/2011/04/april-23-2011-welcome-to-slaughterhouse.html

While Ashvin praises the data Chris provided here, he challenges some of Chris’ assumptions.  Here’s an example:

Another unlikely assumption contained in Martenson’s report is the following [emphasis mine]:
With the Fed potentially backing away from the quantitative easing (QE)  programs in June, the US government will need someone to buy roughly  $130 billion of new bonds each month for the next year. So the question is, "Who will buy them all?"
I say the above question is an unlikely assumption because it seems to imply that the Fed may stop QE for another whole year after the QE-lite and QE2 programs wind down. If recent history has taught us anything, it's that a fearful deflationary environment is the perfect justification for the Fed to resume QE, and perhaps at an even larger scale than it has "monetized" in the past. Will the American people be up in arms about monetization of the federal debt or an indirect link to sociopolitical unrest, when their own finances, homes and careers are once again being beaten down by the unrelenting force of debt deflation? I really doubt they will be.  
And another:
The other major assumption involved here is that interest rates will start to rise along the curve, and this will make sovereign default much more likely, since a significant portion of Treasury debt is in notes with relatively short-term maturities. This logic is circular at best, since it relies on the fact that sovereign default and/or inflation concerns will drive short-term interest rates up in order to posit the argument that increased short-term interest burdens will lead investors to be more concerned about sovereign default or inflation (from printing). There is certainly a positive feedback involved in such dynamics, but the feedback must be rooted in some initial economic or political trigger.
 Chris, can you please comment on Ashvin's ideas?

Thanks,

Suzie

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“We are on the verge of a global transformation. All we need is the right major crisis and the nations will accept the New World Order.”
- David Rockefeller.

All you need to know about the NWO here:

NWOSurvivalGuide.com

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u all can be debt free, there is a think in u.s they give credit to them who even can not pay there debt, u.s shuld not do that, and u should not take that