Category Archives: Economics

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.

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.

Spend A Little, Live A Lot

By: Tom Chatham

Most people want to live a life of extravagance but their meager paychecks often fall far short of reaching that happy place. As a result they are forced to borrow their way to their imagined happiness causing them great financial stress along the way. People have been sold on the idea that newer and bigger is better.

Those that have seen through this thinly veiled sham have learned that happiness can come at much cheaper prices causing less stress and more fun. There are many ways to have a good standard of living without all of the expense. Living within your means is the key and learning not to try to keep up with everyone else is important. There are many ways to live well without all of the expense and the following are just a few of the ways to make that possible.

Buy used and save- If you find something in good shape that you like and at a great savings over a newer version why not get it. It can be furniture, toys, clothes or a car. I have a truck that I bought 15 years ago for 2 grand. Since then I have put another 2 grand into repairs and maintenance. For four thousand dollars I have had a vehicle to drive for 15 years and it still runs good. Over that time many people have bought not one but two new cars at an average cost of $20,000 dollars. This means these people have had to earn $36,000 dollars ( after taxes) more than me just to have a vehicle to drive. I can think of a lot better things to spend money on than a car.

Cook instead of order- Many people like to go out for dinner and there is nothing really wrong with that. If you work hard you deserve to treat yourself from time to time but eating out a lot can really add up over time. Cooking at home from scratch is much cheaper and healthier in most cases. This is especially true if you grow some of your own food. If you can save even one thousand dollars a year on your food bill that can add up over time.

Cheap Entertainment- One way to save a lot of money quickly is to dump the cable TV and get a HD antennae. These cost as little as $30 dollars and can pull in broadcast stations from up to 100 miles away. A typical cable or satellite bill can run $80 dollars a month. That amounts to $960 dollars a year. The antennae I have pulls in over 40 channels from two cities about 50 miles away, all for free. Many people off grid have given up TV completely but it is nice to have the ability to see the local news and weather at a minimum. There are also ways to save on family vacations. Most people live within driving distance of a park or historical site. These can make for great weekend getaways for the family and if you pack a pick-nick basket it can be a cheap way to spend time with the family. If you can add some fishing gear and basic camping gear you will have a way to spend several days away from home inexpensively as you fish, hike and explore. This type of gear also gives you equipment to use in an emergency at home where power and cooking ability are cut off.

Utility bills- One way to save on your water bill is to keep a few rain barrels by your home to use in watering your garden or lawn. This is also useful if the power goes out and you need water to flush the toilet. Having a few solar panels or a small wind turbine to charge a battery pack can help cut down on power usage. This is really helpful if the power goes out. One of the biggest power users in the home is the hot water heater. These things keep 60 or 80 gallons of water hot 24/7 just in case you need some. This is like leaving your car running 24/7 just in case you need to go somewhere. You can cut down this power usage drastically by getting a tankless water heater. These can be electric or gas and only run when the hot water faucet is on. Heat is also another big power user, especially in the northern states. Having a wood stove or fireplace insert can cut your heating bills drastically and they can be used even if the power is out which is a bonus.

Affordable housing- The single biggest expense that many people will ever have is the cost of their housing. Most people determine how much home they can buy by looking at their future expected earnings. This can have catastrophic consequences if they loose their job, home prices fall or the economy tanks. In the last few years we have seen all of these things happen. People are accustomed to buying more than they can afford just because someone is willing to lend them the money. Is it better to have a 1,400 sq. ft. home with a 30 year mortgage or a 600 sq. ft. home that is all paid for? This is something that people need to think very hard about because we are entering a new paradigm where easy money will be a thing of the past.

Ownership over debt- When you use debt to buy things you end up paying two or three times what the original price would have been if you had just saved your money and paid cash. If you go around in life paying twice as much for everything you will never have any savings to fall back on nor will you have as many hard assets that can preserve your wealth. When you think about it in these terms you come to realize that you are giving away most of your hard earned money to people that provide you with convenience and are taking advantage of the consumer mantra sold to people as the normal way to live.

I have stated before that if you have a paid for home and produce most of your own food and power, you could make $10,000 dollars a year and live as well as someone making $40,000 a year. This is because you will be saving a lot of money on interest and conveniences that the average person can provide for themselves. It is also important to understand that having a smaller home and an older car will save you a great deal of money on insurance payments and property tax every year. Reducing your necessary income will also reduce your income taxes every year as well. Why slave away every day just so you can give most of that money to someone else?

Reducing your expenses is more of a mental problem than a physical one. Once you have the right attitude about it and realize where most of your money is actually going it becomes easier to scale back your spending and start living like you should. Life does not have to be hard or expensive. Those are things we do to ourselves by not thinking things through and trying to take the path of least resistance.

Massive Railroad Shutdown Looms In 2016

By: Tom Chatham

In 2008 Congress passed Positive Train Control (PTC) legislation to reduce train collisions and over speed accidents. These new electronic control systems can activate train braking systems when dangerous conditions are detected. These new systems were to be installed by Dec. 31, 2015. After this effective date it is a violation of federal law to operate trains on certain sections of track not controlled by PTC systems.

BNSF Chief Executive Carl Ice, advised Senator John Thune (R-South Dakota) in a Sept. 9 letter that BNSF would shut down most of its network by Dec. 31 rather than violate a new law mandating that positive train control be operational by Dec. 31. CSX has also questioned whether it should violate federal law and other Class I carriers may follow suit. This presents the real possibility of a transportation shutdown at the beginning of 2016. Most of the public is unaware how much the national distribution system relies on rail transport and without it how quickly we would cease to function normally.

BNSF has spent $1.5 billion so far on the upgrades and will likely spend another $500 million to fit about half of its track that handles 85% of its traffic. Portions of both trans continental routes will not be operational by the Dec. 31 deadline set by Congress in 2008 nor will commuter zones in Chicago, Seattle and Minneapolis.

BNSF reads the law as saying no train can legally operate on a PTC mandated line after Dec 31 if the system is not operational by that time. Ice is careful in his letter to state BNSF will not refuse to run their trains in violation of the law just that he does not see how they can due to exposure to potential legal claims should an accident occur.

Everyone thought the six years given to implement the system was sufficient but implementing it has been a nightmare. Most of the system components are new, FRA was slow to issue new rules, signal engineers to build the system and make it work are few and everything was kept on hold for a year while they waited for the FCC to issue permits for the construction of new towers and antennae. They are also having problems with the new system activating braking systems unnecessarily causing rail delays. Of the 82,043 miles of track that must be equipped with the new technology only about 5,151 miles have been completed. As of 2014 only 3,376 locomotives have been equipped with the technology which is about 15% of the nationwide fleet.

The railroads have sought an extension but Congress has thus far failed to issue one. In July the Senate passed a highway funding bill that extends the deadline but so far the House has failed to pass it. If they do not act soon the bulk of the rail system will come to a screeching halt on Dec 31. A shutdown of the rail system is a critical link that can wreak havoc on the just in time delivery system which is critical to many functions in society such as food distribution and energy supplies such as coal.

There are only three possible outcomes to this problem.
– Congress will amend the law
– Congress will give an extension to the railroads
– The railroads will shut down

If the railroads shut down the majority of their rail shipments the shelves across America will start to go bare within a few months. It will take this much time for most of the durable goods currently in the distribution system to be delivered and sold to end users. Perishables such as fresh and frozen food items will be affected much faster and shortages will show up within a few weeks. It would also be a problem for the bulk agricultural products people depend on such as corn and wheat. Even if the system is only shut down for a short period it can create a dead zone in the distribution system that will take time to refill. Railroads are warning customers to prepare for a worst case scenario according to Association of American Railroads President Edward Hamberger.

In all likelihood Congress will issue an extension for the railroads but due to the dysfunctional nature of the government these days, we cannot count on that so you should plan ahead just in case the worst does happen and rail traffic stops.

Short Term Problems, Long Term Disasters

By: Tom Chatham

In the coming days we will ultimately see very many problems and disasters that take many by surprise. This article is not to diminish the potential severity of these coming events but to help you realize the more important aspects of these events.

If you are on the ocean and your boat gets a hole in it, you will likely sink eventually if you cannot prevent the boat from filling with water. That event in itself may seem like a disaster at the time but when taken in context with other events taking place, how serious is that hole?

The future will provide you with many events that you must navigate and to do so you must be able to see them clearly for what they are and determine which is the most dangerous. The question soon becomes, what requires more attention, the hole in the boat, the circling shark or the tidal wave heading in your direction?

My dad once had a boat he worked in called a Mckee craft, it is like a larger version of a Boston whaler. This type of boat is built in a special way. It is fiberglass inside and outside but in between these two fiberglass layers is a layer of Styrofoam. This gives this type of boat a lot of buoyancy to the point that you can literally fill it with water until water runs over the sides and it will not completely sink. You can even cut it into pieces and the pieces will float. It is like a boat with its own built in life preserver.

Going back to the hole in your boat, if you are in a Mckee craft and it gets a hole in it and there is a shark circling you know you will not sink completely and will be able to stay away from the shark to some extent but the tidal wave could be deadly. You are confronted with events, some of which are problems and some which are disasters. You need to be able to recognize the difference and plan accordingly.

A banking crisis or bank holiday is a problem which can be controlled by taking some of your money out of the bank or holding some of it in precious metals. A power grid shutdown can be dealt with by having alternate energy sources and knowing how to do without electricity for extended periods. A breakdown in society can be handled by having a safe place to go and having suitable weapons to protect your family.

In the future you will be confronted with short term problems that can be lessened by prudent planning and there will be disasters that you cannot avoid with any planning but you must realize which events are just problems and which are disasters so you do not develop tunnel vision and place too much emphasis on the wrong event.

There are many disasters that can and will befall society in the future and it is up to you to plan for any disasters that may affect you where you are and assume the worst case scenario when making plans to deal with these events. If you plan for the worst and something less violent happens, you will find it more of an inconvenience than a disaster because you will be ready to deal with it head on.

We could be looking at financial collapse, social collapse, climate disruptions, natural disasters, wars and food disruptions in the near future. Having a years supply of canned goods but not having a manual can opener is a problem but not having any food could be a disaster. Some of these things should only be problems for you and others will develop into disasters. You have some ability to determine which are disasters and which are just problems.

Having a boat that will float no matter what will lessen the number of problems that you will have to focus on at any given time and will make any disaster less disruptive overall. If you have not already done so, now is the time to make sure you have a good boat to weather the coming storm and get you through the violent waters ahead. Proper planning will help insure any problems are just inconveniences and disasters are just a problem.

Safe Assets In A World Gone Mad

By: Tom Chatham

Gold and silver are good assets to hold to insure the preservation of EXCESS wealth but there are other assets that are even more valuable longterm. Those things that can be used to produce a product are the elements that can be used to leverage your time, resources and talents to produce wealth. The ability to produce excess is the basis of the need for wealth preservation.

Physical goods in the form of equipment that can be used to create or produce goods needed by society are the basis of prosperity and wealth in the world. Gold and silver only become necessary when society begins to produce more products than the producer can use. This excess production is then traded for those things that can preserve the value of this excess production until it is needed by individuals.

Machines to build or repair such as saws and hammers, sewing machines, metal fabricating machines such as lathes and mills and machines to convert raw materials to value added products such as steel to I beams or pots and pans, wheat to flour or pasta, lumber to finished furniture and cotton to cloth are the assets that define how prosperous you are as a nation. A nation derives its wealth from having a product to sell. That will never change. It is true for nations as well as for individuals.

Individuals need to have the ability to produce something in excess of their needs to advance to the need to store that excess. This requires tools and equipment in most cases. You do not necessarily need to process your own resources to generate this excess. A miller can provide the equipment to grind grain for the community taking part of the production for his time and effort. This gives rise to the service economy where individual specialization is traded for other services and resources rendered. In most cases this service will require specialized equipment not possessed by the general population. This specialized equipment is an asset more valuable than gold and silver in many cases.

The goods need to exist before gold and silver can be traded for them and gold and silver need to exist to preserve this excess production for future use. Storing some of your excess production today in equipment that you can use to start a cottage industry will insure gold and silver will have useful value in the future. You cannot have one without the other.

When a person uses their wealth in such a way that allows them to employ several others, it will not only increase their wealth but insure prosperity for others. The ability to earn payment in return for their time and energy allows these employees to utilize these funds to provide income for the butcher, baker and woodsman. This is the basis for the economy small or large. The economy is what ultimately determines the value of any asset.

The ability of individuals to insure a functioning economy will determine the wealth and standard of living of everyone. A safe asset is one that contributes something to the ability of the economy to function properly. Without that, wealth is determined by what each individual can produce themselves for themselves insuring wealth will be limited for many and unequal as ability will determine what that wealth will be. Restricted access to resources and goods eventually leads to war. In war, no asset is completely safe.

When it comes to the next generation, the options are going to be very limited. If parents expect to pass on any of their hard earned wealth it must be done in a way that prevents government from devaluing or stealing it outright. The use of gold, silver, diamonds and some types of land will likely be the best options. If the government cannot find it or get their hands on it, it will make keeping it that much easier. Given the current situation even guns, ammo and reloading equipment might be seen as a good asset to hold for future use. Along these lines, tools and specialized equipment that can be used to produce some type of income will also be an advantage for youngsters that would otherwise have difficulty finding employment in the future. The greatest thing you could do for your children is to develop some type of business that can be handed down to them to give them the chance to make it in the future where government intervention has destroyed the economy and future job prospects.

One of my favorite scenarios is the development of a small diversified family farm where most or all of your needs can be met from within while selling excess on the local market for needed income. Add to this a few small cottages that can be rented out for a modest price and maybe even a small industrial plant to process fibers such as cotton, wool or flax. Mini mills are now available that makes this a possibility today. A small store on site that can sell locally produced items such as soap, candles, food, clothing or medicinal herbs will all add to income opportunities to insure a decent standard of living. The number of products that can be locally made and sold are numerous and allows for many such farms in an area without fear of duplication.

To get by in the future people are going to have to learn to be creative once again in order to take care of themselves and their families. The west line has moved meaning Americans will be forced to live in a smaller economy with a lower standard of living than in the past. If you do not adjust to that now you will be forced to later under much more difficult circumstances. The assets you preserve during the coming years will determine how well you will live and how well your children will live. Nothing is guaranteed at this point so the future is entirely on you.

What Will You Do When The Government Checks Stop?

By: Tom Chatham

Preppers talk about the day when paper currency becomes worthless and how they plan to barter when things fall apart. But, what will most people do when the government check they depend on stops forever more. Over 50% of the people in America now get some kind of government check every month. That is a question that I think many people have not come to grips with yet. At some point, the checks will stop.

Social security and Medicare are running dry fast and it is only a matter of time before they stop paying out in whole or in part. If someone relies on these payments then they likely do not have sufficient money stored away to survive on in the event payments stop.

Not only that, the many other entitlement payments sent out monthly that are keeping the population clothed, fed and housed will stop at some point as well. When that happens we already know what the result will be, especially in the cities. It is inevitable but many people still trust the government line and do not worry about it.

There are those that realize the threat but have not taken any action to mitigate the problems that will result when the fateful day comes. Many hope it will be forestalled for their lifetimes and some hope if they ignore it, it simply will not happen. If government checks stop it will also mean the destruction of retirement plans and savings accounts and if you do not hold it you will not have it.

One of the most vulnerable groups are the babyboomers that are now retiring at the rate of 10,000 per day. If this growing group suddenly looses their monthly check along with most or all of their savings, it is going to put a lot of pressure on society as these people suddenly try to return to the job market to survive.

With the job market shrinking on a daily basis it is now imperative to develop a backup plan to generate some type of income when you can no longer rely on past promises to be honored. If you can store away some real money or valuable items to utilize later that is great but that will not last you forever.

Anyone that survives the coming currency crisis will be someone that planned ahead and had some way to generate income after everything falls apart. If you can generate income to live on, be it money, food, medicine or some other item you need, you will be able to care for yourself for the duration.

That is going to be a critical element in any long range plan you come up with. This means you will need to have the ability to produce something of value that society will need on a daily basis. The first things people seek out are food, shelter and clothing. Having some abilities in one or more of these areas will be the closest thing to guaranteed sales potential that you can get.

Once these needs have been met by society other things will become important such as energy, security, transportation and medicine. Having some abilities in one or more of these areas will insure income for a long time to come as society rebuilds itself.

If you have abilities in a primary need and a secondary need, you will be way ahead of the majority of the people seeking to survive the chaos that follows the loss of jobs and a functional currency.

This plan could be as simple as growing a small garden to have vegetables and seeds to sell. At the same time it would be little trouble to add a few medicinal plants to your plot. You might be able to offer shelter in the form of a spare room or a cottage in your back yard. You could combine this with transportation or security services. In a breakdown of services, energy would be heavily affected. If you had the ability to produce electricity for refrigeration or ice production or the ability to power a vehicle with a wood gas system, you would have a valuable commodity. The ability to make small wood stoves for people without power would give you a large market for this type of appliance.

It is important to think about all of the systems we rely on every day that people take for granted. This will give you a large list of potential goods or services that you may be able to provide after these things become difficult to get. A few dozen chickens producing eggs in your backyard could be the difference between getting by and suffering terribly.

It is also important to think about the support systems you will need to supply the raw materials to produce your goods or services. Chickens need feed. Wood gas producers need a supply of wood. Making wood stoves requires steel. Growing a garden requires not only the knowledge but seeds, tools and fertilizer.

It is important to keep in mind that retirement is a relatively new invention that came about in the 20th century. Until then, people worked until they literally dropped dead. When the current financial system breaks permanently, people will be forced to go back to work and keep doing so until the day they die. That is the reality many people will have to face in the near future. It is a reality that many have not considered and do not want to think about. You can ignore reality, but you cannot ignore the consequences of ignoring reality. When the government checks stop and your savings are gone, what will you do?

Paying in a Broken World

By: Tom Chatham

It is a common reaction to ask, how much is that, when we see something we want or need. The question is answered with some monetary figure that people will recognize and use to determine if they can afford it. But what happens when the monetary system we know becomes so dysfunctional that common monetary values mean little.

This could happen due to massive inflation, currency collapse or a frozen banking system that prevents you from accessing your funds. If you have no way to pay for something, it does not matter how much or little it costs. It will be out of your reach unless you have some means to pay.

Some people keep cash on hand for just such a problem. They know they will be able to pay cash when everything else stops working. That will work for a time but eventually paper currency will be looked on as a diminishing asset as physical goods become more valuable to those that need them. Paper currency is not much different than a check you write on your account. If the account is empty your check is no good.

The same can be said for those entities that issue paper money. If they are bankrupt or shut down, the value of their printed certificates will be worth the same as the bad check. Nobody will want to accept it after they realize it may not be honored for the value it supposedly holds. While a local store may accept it out of habit, eventually businesses will figure out the truth.

In times like this alternative forms of money may become more viable to local individuals such as gold and silver. But, that may take some time and most people will not own any of these precious metals for trade. Some may resort to direct barter with some of the things they have amassed over the years to get the necessities they need and under these circumstances values will be variable and disconnected from reality at times.

Some people have stored barter items for this eventuality rather than precious metals and there is nothing wrong with that if it gives them the feeling of safety they desire. One of the reasons they desire goods instead of metals is the fear that governments will call in precious metals as they did in 1933 and that is a legitimate fear but must be taken with some reflection on the facts.

In 1933, gold and silver coinage was the circulating currency in the nation meaning most people had some in their possession. That is not the reality today as very few people have any knowledge of the value of metals and do not have them in their possession. The fact that the government can call in metals does not mean they will be able to relieve you of them.

In 1933, on the river where I grew up, there was a store on the bank of the river that did a good business with all of the ships that came by. When the gold was called in in 1933, the store owner did not want to turn it in so he kept it hidden away. At the time he had a small chest full of gold coins. He kept that chest of coins until the 1970’s when gold was legal to own again and then he sold it for a good profit. This is a true story and just one example of how hard it would be for the government to call in all of the metals in private hands.

It does not matter what you hold your savings in only that it will retain value when conventional paper currencies become a despised possession. When that happens you need the ability to buy the things you need with what you physically have on hand. The question you must answer is what will you have on hand when that day comes.

Local Production Means Jobs and Prosperity

By: Tom Chatham

With over 93 million unemployed working age adults in America and the economy beginning to go negative again, if you are fortunate enough to have a job it may not last much longer. It is easy to keep a positive attitude about the economy when you get a paycheck every week but life after the paychecks stop will change your outlook a great deal. That is the reality that is about to overtake the working class in the coming months.

The primary mechanism that has tipped the economy onto a downhill trajectory is the route that circulating money has taken in the past few decades. In the past much of the money was kept in circulation in the local economy resulting in the creation of many local jobs. With the new corporate model, most of the profit is siphoned out of the local economy and goes to wall street profiteers. This has resulted in the destruction of many local jobs while the few at the top of the wealth pyramid get richer much faster as time goes on.

The only way a nation can maintain a middle class is to keep money circulating in the local arena. The lack of this local circulation has finally caught up to the middle class and it has begun to shrink at an alarming rate. If the corporate model plays out to the end, it will mean the total destruction of the middle class and the beginnings of a two tiered system where there are a few very wealthy persons lording over a very large poverty stricken majority. That is where we are heading.

When this happens the only thing that will restore a functional middle class is the recreation of the local economy where the vast majority of the money remains in the local economy. This will require the reestablishment of local businesses and craftsmen to create the items needed by the local community.

In most cases the service sectors of the economy can only function when sufficient excess wealth exists in the hands of workers that seek to improve their living conditions. Basic needs must be met first before persons will seek any improvement in living conditions. This provides a road map of sorts for those that seek to create a stream of income in the local economy. The creation of physical goods that people need must be satisfied before the economy will demand the lesser wants of society.

As the basic needs of society are fulfilled, the income from these goods will slowly create more jobs and more demand from society. As the cycle continues it will slowly lift the economy and the living standards of the people. This is how the American economy was created from the beginning of settlement to the industrial base that we once had.

Wealth is created by raw materials, labor, skills and demand for goods. The corporate model has pushed the small businessman out of the market by utilizing mass production and cheap labor combined with cheap transportation systems to provide cheap goods to the masses. This model is destined to collapse at some point due to rising costs of labor, rising energy costs and unsustainable production systems.

Keeping these things in mind, if you need a job where one does not exist, you must create a job that produces a product that society must have to insure demand. As the basic needs of society are met, you can move into goods and services that are less of a need and more of a want by society. To become a successful independent businessman you must listen to the community and access its needs and wants to have the right products to sell.

The amount of destruction caused by the corporate model will determine where the starting point will be when a reset is required. It is also important to keep in mind that the lack of a rebuilt local economy will lead to a feudal type of society where the poor become serfs controlled by the few wealthy lords that control the wealth.

When a community lacks the ability to provide the things people need, they become easy prey for those that can get the goods society needs. People today are held captive by the financial system created by those with wealth. Debt is the control mechanism and when the current debt based system fails those with the remaining wealth will create another system to keep the poor subdued. It is inevitable unless communities do the hard work of creating their own economy and goods to maintain individual freedoms and keep the wealthy in their proper place.

For a community to recreate the local economy it must determine what resources it has, what resources it must get and what skilled labor they have in order to devise a functional system they can control. Much of this will be done on the individual level as people seek to use the resources and skills they have to provide for their families. This is the foundation of free market capitalism.

In 1776 America about 40% of men worked their own farm. Another 30% worked as laborers on farms. About 20% owned large farms or plantations. The remaining 10% or so who were professional businessmen frequently owned modest farms where they might raise a cow, some chickens and have a garden to provide for the home table. Even those townspeople that had no farm usually had a cow, some chickens and a kitchen garden for home use.

In those days nobody was completely self sufficient. Some people worked metal. Some grew fiber crops and others turned the fibers into cloth. In the process of providing for their families and selling any excess they produced, these people created the local economy. In early America unemployment was an almost unknown concept. Now, the social programs available to people make unemployment not only possible for the masses but it has become a socially acceptable situation. You must think in these terms if you desire to recreate the local economy not only for your benefit but for the benefit of the community as a whole.

To create your own job you must determine what skills you have that can be utilized for your benefit as well as can be sold for income. This will also entail an assessment of your available resources. To work for yourself you must also be ready to take advantage of any opportunities that present themselves.

Recently there has been an outbreak of avian flu in the poultry flocks in the upper Midwest. Millions of birds including many laying hens have been destroyed resulting in a disruption of the egg supply nationwide. As a result of this a person with even a modest layer flock might find sale in the local economy where there once was no demand. The drought conditions in California are beginning to increase prices in produce grown there providing the local producer in other sections of the nation the opportunity to fill the local demand for some of those items.

Beef cattle numbers are at a 50 year low because of the drought conditions forcing ranchers to sell their herds. Last year a disease moved through the pig population in the central U.S killing millions of hogs meant for consumption. These problems provide the small local producer the opportunity to get back into the game locally where before they were unable to compete with the corporations.

In the event that the dollar crashes as many have predicted, it will make many of the imports we depend on too expensive for persons to buy. This would allow someone with some metal working and welding ability to make items now mostly imported such as garden tools.

A good businessman looks ahead to see what is coming and takes actions to utilize that knowledge to create wealth. The problems previously listed can provide the local businessman the opportunity to create local supply and develop markets during this time of disruptions to move the production base of the nation back to the local area where it belongs.

These are only some of the business opportunities that can be taken advantage of right now locally that can provide the local economy the ability to establish local markets and production assets that will benefit the community especially if things continue to deteriorate nationally in the future.

The failure to move production back to local communities will result in foreign corporations moving in when things deteriorate and establishing their own production systems that will once again siphon wealth out of the local community and send it to overseas entities. The buying spree by the Chinese in the past few years is proof of this possibility coming to pass.

The need for local production is more relevant now than it has ever been. Only those that make the leap now will have the opportunity to make a difference when things take a turn for the worse and people become desperate.

Small Towns and Local Currency

By: Tom Chatham

The idea that life is about to take a turn for the worst is taken as a foregone conclusion by those tracking current events. It has been a long time coming and we are not at the end of the beginning yet but it is coming into view. In the days ahead two of the items you need to plan for are where you will live and what medium of exchange you will use.

Many have taken the stance that you should move to a small town to ride out the events that may unfold. This is not a bad idea but simply moving to a small town is not a cure-all for what will likely unfold. In many cases, the small towns in America are merely smaller versions of the city in many ways.

The small towns have a smaller population that allows many of the people to actually know their neighbors which in times of chaos can help due to the cohesiveness of the neighborhood. This is only one aspect that many people think of. A more serious aspect that needs to be examined is the production capability of the community.

If the distribution system stops for any reason, the small towns will lose their supplies just like the major cities will. Most small towns today are far different from the ones just a few generations ago. These small towns rely on a constant supply of goods from all over the world to maintain normalcy just as their city cousins.

Long gone are the days when many of the goods needed by the community are made in the local area. When the distribution system stops, the availability of local goods will be a primary factor in how well the community weathers the emergency.

Because of this, it is necessary to not only look for a small town but one that has a host of local production assets that will allow the citizens to maintain a certain degree of commerce of necessary items such as food, clothing, energy and medical care. Just because there are a lot of farms in an area it is not an indicator of sufficient local production. Many farmers rely on the grocery store for most of their food needs because many farms are mono crop farms now not the small diversified farms of yesterday.

A town may be surrounded by thousands of acres of wheat but what is their capability to convert that wheat into flour. This can be said for any type of grain produced in the area. Butchering a deer during hunting season is one thing but how about a few dozen beef cattle per week? Are there any chicken houses in the area and what is their ability to provide enough chicken and eggs to the community? Are there any dairy farms around and what is their production ability? Can the local farmers produce another crop after supplies are cut off? Do they have the capability to produce their own seeds and fertilizer? These are just some of the things a small town will need the ability to do to be a good place to stay after something happens.

The other issue is what medium of exchange you will use. It is now evident that banks and government entities are pushing us towards a cashless society. Chase will begin to charge large depositors a 1% fee for bank deposits in the near future. Some smaller banks around the country have sent notices to their business customers informing them that they will be charged a fee for bank deposits in the near future.

Negative interest rates are now here and it will only get worse. When banks start charging their customers for the privilege of holding their money, the system is seriously broken. This is one way the bankers are trying to induce spending into the broken economy. People will be forced to spend their money as fast as possible to avoid bank charges.

At the same time cash is becoming the new threat. Remember the alerts from the government implying people that use cash may be terrorists. This is the set up for removing cash from the system. That will allow the government to track all purchases you make and even freeze your account if you become a naughty person by utilizing your free speech or other rights against the government. If there is no cash to be used it will make being on the run from authorities almost impossible. It will be the end of anonymous purchases.

Because of this it will be imperative to have some type of medium of exchange to conduct business with other individuals if this comes to pass. The most obvious types of currency will be gold and silver coins. These items will be out of the reach of the government in most cases. They are not the only types of currency though. Other types of currency can take the form of local script, certain foods, salt, tea, ammo, spices and sugar to name a few. The commodity may be different from one community to another depending on the location and availability of common items.

Knowing now what types of production are available and what types of alternative mediums of exchange would work best in a particular community are two of the things you need to keep in mind as you plan alternatives to your current lifestyle. A small town will only be as good as its people and its production capability in the days to come.

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