Monthly Archives: January 2016

Real Goods Are The Real Money

By: Tom Chatham

We have seen the massive drop in the Baltic Dry Index over the past few months indicating shipping of bulk materials around the world is slowing down to unprecedented levels. We have seen the shutdown and mothballing of hundreds of locomotive engines in the U.S. just over the past few months indicating goods and raw materials are not being shipped in the normal volume as in years past.

We are seeing hundreds of stores run by major retailers being shut down around the country indicating people are not buying goods at the same rate as in years past. Most of our manufacturing ability has been shipped overseas to lower input costs. It has been reported that as many as 15% of the farmers in the U.S. will go out of business this year.

This all means two things. People no longer have the means to buy at will and the amount of goods available will continue to fall until there are severe shortages in the system. The lack of production and distribution will insure that the standard of living of most Americans will drop in the coming months as supply is outstripped by demand in a collapsing economy. As indicated above, the collapse is not coming soon, it is here now.

When goods become scarce, it does not matter what the cost is if you have no money to get them. The lack of basic goods in the economy will be the straw that breaks the American illusion that everything is just fine. It will happen just as sure as the sun rising every morning. It will be a slow process where you notice more and more empty shelves and certain brands become out of stock for longer and longer periods. No production and no shipping carriers means no product on the shelf in time.

When this happens it will not matter to people if we are in deflation or hyperinflation, they will suffer the same in either case due to lack of goods and lack of a medium of exchange with which to maintain their living standards.

If society has the goods it needs at the local level it does not matter what mechanism people use to trade for those items. The trade will happen and living standards will be maintained. Money can be printed at will but real goods must be made from scratch with labor and raw materials. Real goods determine your standard of living and not necessarily the amount of money that exists in society.

Because of this the ability to store and produce real goods at the local level are the only solution to a collapse in the medium of exchange in a country. It is happening now. Fiat money is becoming more worthless by the day and goods are not being produced and shipped as normal. This can only end one way if nothing is done to curtail the lack of goods that people need.

It does not matter if money is little pieces of paper or plastic cards, if the goods are not available the result is the same. The ability of government entities to control either money or goods is a way to control society and force compliance from the people. This is the reason for calls for a cashless society. The government can control money all they want but if they have no control over real goods in a community they really have no control over society.

Real goods trump money of any kind when it comes to everyday living. If you have a years worth of goods stored in your home or the ability to produce them locally, it does not matter if you have a million dollars or no money at all. It does not matter if the store shelves are full or empty. It does not matter if goods are being produced and transported. If you have access to those goods you have what you actually need and not paper promises to get them at some future date for an unspecified amount.

When people think about economic collapse they almost always think about how they will get the money they need to buy stuff. They do not realize that real goods are the actual key to getting by in those dysfunctional times until it is too late. Economic collapse almost always goes hand in hand with the lack of physical goods. You can do without the money but you cannot do without the goods.

In times of monetary dysfunction, real goods become the actual currency society relies on to survive day to day. Real goods can be traded and sold when fiat money is useless. Real goods are the real currency of the world and now is the time to realize that before the monetary crisis prevents the acquisition of those resources. A pantry full of food is worth more than two million in a frozen bank account.

The Post Storm After Action Review

By: Tom Chatham

Everyone has been telling you for the past week what to do to get ready for the coming weather but you also need to think about what you need to do when it is over. There are three periods you need to think about when doing any planning.

The pre-event planning

The event actions

The post event actions

You always hear about the actions you need to take before and during any planned event but you seldom hear about what you need to do after it has passed. Your post event actions related to smaller events will result in better preparedness the next time you face a similar or larger event.

The actions you take following smaller events will ensure you are better prepared for the larger events you may face in the future. Once an event is over there are certain things you need to think about while it is fresh in your mind.

What went right during the event?

What things went wrong during the event?

What could you do differently the next time to make things better?

You also need to think about your equipment following the event. You need to service anything you used that needs regular servicing. You need to replace any supplies you used like food, batteries and fuel. You need to repackage your supplies for the next event to insure they are ready for use.

Once an event is over it is all to easy to just toss your equipment aside until you feel like putting it away properly but you never know just when another event will occur without warning and you will be caught unprepared.

It is also easy to forget what problems you faced during the event until the next time when it happens again and you suddenly remember what you failed to do this time. Having a written after action review will provide you with a learning tool to make every event better than the last. It can help you fine tune your actions during an event and determine what you are missing and things you might not need.

This AAR is something that should include input from the whole family. It only takes a few minutes to do and it will help the whole family feel like they have some control over your preparations. Since your preparations must keep everyone happy during the event their input is important.

Everyone goes through the first two actions but few if any do the necessary follow up with an AAR to resolve the problems. This is one thing that many plans lack and needs to be addressed now when the events are minor and there is the opportunity to fix the problems while you have the means to do so.

Wealth Building Habits for The Little Guy

By: Tom Chatham

Regardless of how much you earn it is always possible to save and build wealth little by little until it amounts to something substantial. Most people are in a hurry for everything. They want it right now and that mentality makes it impossible to deploy a long term plan to get where they want to be.

There are those that suddenly get rich but they are not typical of the average guy. The average guy needs a plan to get where they want to be and that plan will rely on certain habits to build wealth. The more money you save and the more wealth you build up, the more opportunities that will open up to you.

With the current economic situation threatening to get worse before it gets better it is even more important now to start utilizing some good habits that will help you . Good financial habits will help you get to the other side of any financial crisis in better shape than those around you. These habits will also allow you to see the long term picture and take advantage of opportunities that come about even in bad times.

Develop a stream of income- This is typically your primary income but it should also encompass any opportunities you come across that can increase your net worth. It can be a reoccurring payment or an occasional boost from opportunities that present themselves on occasion.

Increase ownership of productive real assets- You need to save for the future and that savings should be in real assets that will always be worth something regardless of the economy. It may be gold, silver, diamonds or real estate such as good farmland. These assets should also include ventures that produce a positive cash flow.

Save/invest some of what you make- You must save some of what you make regardless of how little that is. If you make $5,000 a week and spend $5,000 a week you are not wealthy just a highly paid broke person unless some of that money is going into fully owned real assets.

Invest in productive education- All education is not created equal. If you plan to go into debt to get a degree make sure it is necessary. Education in the medical or engineering field will likely pay for itself but going deep into debt to get a liberal arts degree may be a waste of time and money unless you already have a job waiting for you.

Read as much as possible- Reading is one of the most overlooked habits that people never think about. Most people today hate to read and that reduces their chances of identifying opportunities or solving problems. The more you read the larger your data base will be for solving problems or being creative in making money.

Don’t lose money- This seems like a no brainer but most people don’t really think about it. Making money is easy compared to holding onto it for the duration. If you are frugal but turn around and invest money in poorly thought out schemes or loan it to someone that won’t pay it back you have not accomplished anything.

Learn to read people- The failure to read peoples true intentions can cost you everything. There is always someone out there that wishes to separate you from your wealth and it is your job to prevent that from happening.

Building wealth takes time and work. To succeed everything must work properly. One bad habit can ruin all of your hard work and prevent you from reaching your planned goals. It takes planning, execution and willpower to keep it all together.

There is a saying that you can give a poor person a million dollars and they will just end up poor but you can take a million dollars from a rich person and they will just go out and make another million. I actually know a guy that inherited 50 million dollars and about 5 years later he was broke and had nothing to show for all of that wealth. Poor habits make you poor and rich habits make you wealthy.

There is another saying that if you hang out with poor people you learn how to be poor and if you hang out with rich people you learn how to be rich. This is all about learning certain habits regarding wealth and how to handle money. We learn throughout life and what we learn determines how well we do.

By learning good habits to building wealth, the average person can build an empire over time. It does not matter what your ultimate goal is. You can only achieve it if you exercise a certain amount of control over what you do. Learning what works and what does not is the key to unlocking your future wealth.