By: Tom Chatham
The prosperity we once knew as a nation was made possible because of cheap oil. When the EROI, Energy Returned On Invested, was at 30/1 we had unprecedented prosperity. The EROI is now falling below 10/1 and is taking prosperity with it. The EROI is the amount of energy we expend to get energy, in this case oil, out of the ground. We are getting 10 units of energy for every unit we expend to get it. Shale oil production results in 5 units of energy for every unit we expend.
This matters because everything we use depends on cheap energy to maintain the status quo. An EROI of 10/1 is necessary to maintain our current standard of living. The Hills Group project oil will drop to $11.76 by 2020. This may sound good on the surface but cheap oil will not mean much if you have no job and no money to buy it. As the next depression sets in many more people will lose their job and as a result prices will collapse. They project by 2020 we will have 75% fewer gas stations as a result of collapsing oil.
Today most of our population lives in the city. When jobs see their final collapse those people will have no way to survive. Living in the city requires stuff being brought in from other places. Those living in the city must pay for this stuff with the pay they earn. No jobs mean no pay and no goods.
During the last great depression many city dwellers had family in the country to move back in with to stay fed but most city dwellers today are several generations removed from the country life and no longer have living family members in the country to move in with.
Many of the farms that were left to city dwelling children after the parents died were sold and the money either spent or put into paper assets for retirement. When those paper assets evaporate those people will have nothing to fall back on.
I have said before that when this next depression hits it will devastate everyone and the only way people will be able to get by is if they produce most of their basic goods themselves. This will require a small farm and a family to help run it.
The U.S labor department has reported that productivity has declined for the third straight quarter. The real hourly wage increase reported in the first quarter at 4.2% has been revised to a decrease of .4%. GDP growth annualized for the first two quarters is 1%. S&P 500 companies are reporting declining earnings for the fifth quarter in a row. Economic growth is at its weakest rate since 1949. Gold is up 25% this year so far. All of these metrics are indicative of a stagnant or declining economy at a time when we are told everything is doing great.
The massive amount of money being printed is the only thing holding the economy in place right now but we are now moving beyond the point where that is even effective. From here on out more money will only cause more damage and it will compound the effects when the economy finally fails in earnest. Those that do not see this train wreck coming will still be sitting calmly as everything falls apart around them. They will be lucky to survive the impact and will be totally helpless in the days following. Those that see the danger will have gotten off a long way back and will be in a better position to help themselves and their family.
It is good to help others but you can only do so after you have taken steps to help yourself. The carnage we are about to see in world markets will affect everyone in some way. The best way to help is to understand what is coming and be prepared to deal with the realities that will follow. Global markets will revert back to local markets and those prepared for these changes will survive the initial collapse and thrive in the aftermath.
You can read more about EROI at https://srsroccoreport.com/the-coming-breakdown-of-u-s-global-markets-explained-what-most-analysts-missed/
By: Tom Chatham
Should you dig in or bug out? That is a question many people will have to ask themselves at some point in the future. That answer will be different for many people due to a range of circumstances and conditions.
What is right for one person and location may be lethal for someone else in another location. That is why you need to have situational awareness and critical thinking ability. You need to analyze the threats and determine the best course of action in that time and place. What once was a safe location could quickly become a death trap if you fail to see the changing situation. This is why normalcy bias kills.
Just like a person who loses their job and decides to stay where they are and continue life as normal while watching their savings quickly depleting. They fail to look ahead and contemplate the dangers if they take no action. If they did an honest assessment and determined they probably will not find a new job before they run out of money and lose their home, they would come to that conclusion while they still had resources to work with and determine a safer course of action.
Your knowledge, location and preparedness level will largely determine what you should do at any given time. When disaster arrives what you do and when you do it will determine how well you overcome the problems and make it to the end.
If you live in a large city and something happens that destroys basic services and the ability to care for your family, you may not have much time to act. In some situations you must act before the disaster strikes if you are to have any chance of getting through it. Hurricane Katrina is a good example. Martial law that cuts off cities from surrounding areas is another.
In most survival situations your chances of survival in a rural area is about 10 times better than in a city. That is because you have lower population density and you are surrounded by the resources you need to survive. That means fewer people competing for those resources. You also have the space to produce more resources that you need over time.
Even in the country you will face dangers and have to determine if you should stay in place or move to another location. Fires, floods or roving bands of survivors from other places may make a rural location unsafe. You need to see those dangers coming before they happen and decide your best course of action.
In the end, your knowledge, location and preparedness level will help you decide what you should do before you find yourself in a situation you cannot get out of. There are many unknowns when a disaster happens. Being prepared and having thought through some of those potential problems reduces some of those unknowns so that you can make good decisions. The better informed that you are, the better your decisions will be.
The decision to dig in or bug out will be a pivotal moment in your life because it will have serious repercussions on future events. You need to make decisions that greatly enhance your chances to survive not put you in more danger. You need to expand your comfort zone to allow you to think outside of normal situations and doing so will help eliminate your normalcy bias and give you the best chance to make good decisions in a timely manner. When the worst happens, you may not have the benefit of someone else telling you what to do, it will be up to you to make those decisions. Once you make a decision you will have to live with it.
By: Tom Chatham
We all like to think that even if something catastrophic happens we will still have at least some access to electricity to run some of our most critical items. It is in our nature to be optimistic when it comes to our well being. Unfortunately the universe has no limit to the ways it can harm us. Whether through natural or manmade occurrences, we are subject to crisis at any time.
It is this potential for hardship that we are required as thinking persons to take due diligence and insure we can overcome potential events at least to some degree. Preparedness allows us to exert a certain amount of control over what happens to us.
It does not matter if it is a hurricane, earthquake, CME or war. How well we cope with the event is entirely up to us. When the worst of events happen we are forced back onto our own resources until things stabilize and resupply of basic needs is restored. In some cases it could be weeks or even years before this stabilization happens and distribution systems are reestablished. This will depend on the type of event and its damaging effects.
When the worst happens and society as a whole is stripped of its modern conveniences, only those that can cope with the new reality will likely survive. This means knowing how to use the ways of past generations to get by from day to day. Survival will depend on how prepared you are to revert to these older techniques to fulfill logistical needs. Here are some of the major items you will need to deal with when the worst happens.
Water sources and pumping –
Finding and retrieving clean water is a critical need when services are cut off for extended durations. Knowing where to go locally to find clean water and having a way to collect it and carry it home become life saving measures. Having the means to filter water or knowing how to build devices to do so becomes priceless knowledge.
Growing food –
Having food stores is essential to staying alive following an event until distribution and production systems are working again. Storable food gives you the time to find new sources of food or to begin growing your own food. The ability to grow your own food provides you with a sustainable source of food for indefinite periods of time. Extra food production also gives you a product to trade with.
Storing food –
Once you have food you must have a way to store it until you use it. Different foods have different storage requirements and shelf life. You may need several types of storage to satisfy all of your needs. Root cellars, dehydration, canning and salting are some of the most popular methods that do not require electricity to maintain food supplies.
Providing heat and light –
Providing heat and light without electricity will require primitive methods to some extent. Wood stoves for heating and cooking are necessities over long periods of time. Some stoves with glass doors will even provide some light. Oil lamps and candles are the most basic types of home lighting. In desperate situations it is possible to make additional candles and produce liquids to burn in lamps.
When modern types of transportation no longer work you must cultivate older systems to fulfill your needs. Bicycles, horses, boats and walking will be the fallback systems most will use when modern systems fail.
Without electricity to send and receive signals from afar, older more local systems will be required. Bike or horse messengers will become standard again. For more technical minded people like ham radio operators, Morse code can still be utilized with the use of signal mirrors or signal lamps. Message boards at central locations will be useful for dispersion of information to local populations.
Poor sanitation has the ability to kill more people than anything else on Earth. We see it all the time following major disasters. Whatever your living situation is now, it could drastically change within minutes. Understanding proper sanitation methods such as how to build an outhouse in your yard can mean the difference between life and death. You need to know how you will dispose of waste safely if your current system stops working. This is especially true if you live in a city where your options may be limited.
In the old days before telephones, the sheriff was a long ride away. Any imminent threats had to be dealt with by you. That can happen again and does following some disasters. Being able to keep your surroundings safe following some event will allow you to start the rebuilding process. Lack of a safe area makes survival much harder especially long term.
Long ago when a person got sick they either sent for the doctor or carried the sick person to him. This usually required actual horse power in either case meaning it was slow. When this happens today we have the advantage of having modern medicines and equipment to keep people alive when they would have likely died in the past. Many of these modern techniques and medicines can be maintained by individuals to insure they are available to injured persons if help cannot come. Knowledge of medical procedures and organic medicines would be necessary if a long term disaster occurred.
The possibility of total loss of electrical production and electrical devices is very small but not impossible. The only way to be fully prepared for any type of event is to assume the worst case will happen and have a plan to deal with the needs of the community. It is good to have back up equipment to satisfy your needs but some natural disasters can destroy that equipment leaving you only the most basic means to work with. When that happens what you know becomes very important.
Knowing how to take care of basic needs for long durations without the aid of modern conveniences becomes more critical as the world around us becomes more automated and technologically based. Many people today cannot function when something as simple as a power outage or communication outage occurs. They have forgotten how to think for themselves and think through the most simple problems.
If the worst should happen such as an earthquake or major war, leaving you cut off from modern services, it will be up to you to work through the problems you face with the tools available to you. Help may not come for a very long time and if that happens your life will be in your hands.
By: Tom Chatham
It has been a long wait for the silver bugs but the future may indeed see them richly rewarded for all of their patience. Those that have held on are now about to see the end game unfold.
There have been many projections on the highs that silver could hit in the future ranging from a low of $100 to highs of $1,000.
It should be noted that much of the above ground silver has been used in the past few decades for industrial purposes that leave most of that silver not reclaimed due to the small amounts used in individual products. The plans of China to increase solar production will take a great deal of future silver production to power their energy grid.
The current production has silver at about a 10 to 1 ratio of gold. On the surface this means that silver should be valued at least at the 10/1 ratio. The current disproportionate ratio of 78/1 will insure silver rises at a higher percentage than gold during the current bull market.
If current projections of $10,000 gold are anywhere near correct that would put silver in the $1,000 range. Regardless of the ultimate price, gold and silver will rise substantially as chaos enters the markets. It is this chaos that will also require people to store the necessary resources to care for their families until the chaos subsides. Gold and silver holdings do not insure access to resources during chaos but will be valuable afterward to take advantage of good deals due to revaluations in the economy.
In times like this when most people are at risk of losing much of their wealth, the current low price of silver can help the average person not only preserve what little wealth they have but even increase it many fold to offset the failure of incomes to keep up with real inflation over the past few decades.
This is a once in a lifetime opportunity to beat the bankers at their own game. When the economic leverage shifts back from the paper wealth to real money those holding real money will reap the benefits. Even small holdings of silver will help individuals to insure their wealth will remain in tact after this economic cycle comes to an end.
Gold and silver are a form of escape hatch in the banker controlled economic system we are forced to play in. When they pull the plug on the current paper wealth, those that know no better will cling to those worthless paper assets to the very end never dreaming they will someday be totally worthless. The very few that understand what is taking place will use that escape hatch to save what they have so they can continue to prosper in the future.
The bankers know of this escape hatch but they have few ways to close it without alerting the people so they use their position and trust to convince the population this doorway is dangerous. They call it a barbarous relic that has no place in a modern society. They do this because they know the truth. If they can convince the people long enough, by the time people know the truth it will be too late to exit this door.
Those that have already taken this door out of the system are now looking in at the fire that is about to burn the house down. When the rush to the exits happen, many will not make it out. There is still time to get out ahead of the crowd but time is now very short. Any more procrastination on your part will likely be lethal to your economic health. On this Independence day free yourself from the banker controlled system by purchasing some real money and renew your declaration of freedom.
By: Tom Chatham
With the economic conditions becoming ever worse around the world every day it is becoming harder for the average person to build or buy large homes that make their owners feel successful. In recent decades it has become the norm to keep up with the neighbors in consumer spending. Nobody wants to be the neighbor that has the smaller home, the older car or an older phone. Competition has gone to extreme limits and now those limits are becoming unsustainable as people find themselves working lower wage jobs part time.
A home used to be a shelter for your family and nothing more but now they are seen as a savings vessel and a trophy to hold up to society as a whole. This mantra is coming to a catastrophic end very soon as those that still have a good job will soon find they can no longer keep up with the payments as society becomes mired in massive inflation and later deflation destroying everything not fully owned that can be protected from theft by politicians and bandits alike.
The more you have and the bigger it is the harder it will be to protect it in the future. You cannot simply pick up your 2,000sq.ft. home and move it when necessary in a turbulent environment. That elephant becomes a ball and chain. That’s even if you own it outright which most people do not. All of the years of payments you put into it could easily be lost through no fault of your own even though you did everything right.
When everything goes wrong in the economy you will still need a place to call home to provide shelter for your family. Being comfortable does not mean being big. A small home can provide everything a family needs to get by whether times are good or bad. It will be less costly to build, to maintain and cost less in taxes every year.
Most people can not fathom having to live in the small homes that many of our grandparents called home. That mentality will have to change and will be for the better as it will allow people to relearn the difference between needs and wants.
A small cottage or cabin can provide everything a family needs to have a good life. When times are good and they have extra money they will be able to save it rather than pour it into an asset that can go down faster than it goes up. Having actual savings is very important especially if credit is difficult to obtain.
A small home of only a few hundred square feet can be used as a vacation spot, a primary residence or an opportunity to rent it out for additional income. It can also provide a struggling millennial with a low wage job the ability to actually own a home now. This last fact will become more important as time goes on. Not only that but the ability for you to own a home free and clear will alleviate the anxiety if you come on hard times and risk losing your primary home. Knowing you still have a place to go that you can afford to maintain will be worth a great deal to you and your family.
Most people do not realize how cheap a small home can be built for. A great deal of the expense of a home comes from the size, the zoning regulations and the cost of labor to build it. Not to mention the cost of land in certain markets. A small home that can be built by you from kit form is a poor persons dream. It only requires a person to think in terms of function rather than size and looks.
A small home is a way for people that are marginally getting by to survive until they can improve their situation. Small cabin kits can be found for as little as $7,000 that two people can assemble in a few days. Imagine being able to buy a small piece of rural land, put in a well and septic system and build a livable home on it all for less than the cost of a modern luxury car. It’s possible in many areas.
Here is just one place where you can find prefab cabin kits for very little. Getaway Prefab Wooden Cabin Kit bzbcabinsandoutdoors.net
Even if you decide to build from scratch yourself these kits can give you some good ideas to start from.
In the coming months having a fully owned shelter you can depend on will become harder as the economy gets worse and people lose much of the money they think they have. It only takes a second for all of those digits in your banks computer to disappear forever.
Even if you have a good shelter now a cabin can provide you with an income producing opportunity that should not be overlooked. Also for those that have collage aged kids that are probably having a hard time in today’s economy, you can help them get a good start by helping to provide them with a small paid for home like a cabin that they can call their own. Having a paid for home starting out in life can open up many opportunities for a young adult. The money they can save even over a few years can be very helpful.
A small home provides a stepping stone to better things in the future but if things go terribly wrong in the economy you will have a place to go no matter what. Starting out small and working up is the way people have lived for centuries. It is only recently that people have been exposed to easy credit that has allowed them to live beyond their means and the future collapse of this credit will force people to return to a saner, more reality based existence. Start small, live within your means and follow your dreams and you may someday have the mansion on the hill to show for all of your effort.
By: Tom Chatham
The forces are mounting that will eventually overwhelm most Americans and send their standard of living to unknown depths. Americans that have only known the post WWII prosperity are ill equipped and educated to deal with depression level living. Easy credit and instant gratification have created a nation of whining, self absorbed, entitlement minded people with no moral or mental toughness.
Doug Casey believes we are headed for what he calls a super depression created by the ending of a debt super cycle. The bigger the debt cycle the bigger the depression that follows. That’s how reality works and most people are not prepared for reality.
When this depression, which has already started, gets momentum, it will overwhelm the plans of a society that is expecting to get things like social security, pensions and payouts from retirement plans they have paid into for many years. All of those things will disappear almost overnight and leave society gasping and stupefied over what to do. Their reactions will be to yell and scream and try to identify who to blame but the only person they should blame is the one in the mirror.
Many very smart people have raised the alarm and done their best to warn the sleeping public, but those slumbering masses have ignored the warnings and hit the snooze button one more time. The masses do not understand economics, do not want to understand economics and they will pay dearly for that ignorance in the coming days.
When the real unemployment rate becomes common knowledge as it increases substantially, people will be left to survive on what resources they have saved up outside the banking system that cannot be stolen by the politicians and bankers. That is a key point here. The assets you have outside the system that cannot be stolen from you with a few key strokes on some computer.
Those hoping for some miraculous event that will send the U.S. back to the days of manufacturing might and jobs for all will never see it happen. Those days are gone. The west line theory tells us our economy will slow down and become more modest as the shipping center of the world moves west to the next powerhouse region which is Asia. This is what history teaches us.
When people suddenly wake up one morning and they have no job, their retirement is gone and they need to care for their family, what will they do? When government services have collapsed and they suddenly realize they are now living in a third world country with few government services, what will they do? When the banks are closed and only a select few connected people have any type of money or access to goods, what will they do?
This is the reality that many people will face in the future and they have no idea how bad it can get. They refuse to contemplate the harsh reality they will be living in and take steps to mitigate the effects. To do so would be to acknowledge it could happen and they are taking personal responsibility. Personal responsibility is a dirty phrase in today’s entitlement society. To see some of the effects one only has to look at the collapse of society in Venezuela today to see what awaits.
When it happens it will all fall back to you to take responsibility for your family and take care of them for the duration. To do that you need to plan now for that eventuality and build up the resources you will need to provide food, shelter, clothing and security when the system fails to do it for you. You need to be Noah on his ark not the people watching as he floated away.
Having resources stored up is a must but it may not get you all the way through if the situation lasts for many years. That is why you need some type of plan to replace those resources as time goes by and have some way to generate some type of income or at least items to trade. Usable goods are for the short term and things like gold ,silver and production equipment are for the long term to help you get through the crisis with the least amount of pain.
Even with proper planning the days ahead will not be easy as the standard of living of society will fall substantially to levels only seen in failed third world countries or old pictures. The assets actually owned by people today is very small compared to how they live. They will default on their home loan, their car loan, and their credit card debt leaving them with very few real possessions and few ways to move what they have left even if they have some place to go. Ultimately these people will become the new serfs to the wealthy class that will take possession of anything of value. Feudalism will once again rule.
The lack of planning by society will make this a reality if it is allowed. What will you do when everything you have worked a lifetime for is suddenly taken away? Do you have a plan to keep what you have? Do you have a plan to make money when you cannot find a job? Do you have a way to take care of your family until things stabilize? Do you have a home you will not lose if the whole system breaks down? What will you do if electricity or fuel is too expensive to buy or not available to the general population? These are the questions you should be asking yourself now and you better have a good answer because your family will be asking them when the greater depression sets in.
By: Tom Chatham
The purchasing power of Americans has been unequalled for the past several decades. This has been made possible by the high paying jobs created by our manufacturing sector. These jobs insured a wealthy middle class that could buy anything they wanted.
These high paying jobs meant that some of the wealth created by making things went to the workers. Before long, corporations began working on ways to keep more of that wealth. Enter the free trade agreement. By drafting and passing a number of free trade agreements, the corporations created a way to make their goods cheaper with overseas labor and keep more of the profit for themselves and their Wall Street owners. The deep pockets of the middle class began to dry up.
A thinking person might eventually come to the conclusion that destroying middle class jobs and the purchasing power of the middle class would be shooting themselves in the foot. With less income and purchasing power, the corporations would create a shrinking American market for themselves eventually. That is what we are seeing now.
So, what do you do when your cash cow begins to dry up? You turn it into hamburger. Just like all of the other third world countries that provided raw materials for these corporations to prosper, America will now become a supplier of raw materials for the next rising power to use. That rising power will likely be China with its large untapped populace. They have the gold and the manufacturing capability now. All they need is a good supply of raw materials and they can develop their own middle class and the corporations will be in the clover once again.
America is in debt up to its eyeballs but we still have large amounts of natural resources. Multinational corporations are chomping at the bit to get their hands on these resources so they can renew their ponzi economic model with another rising economy.
Between here and there they must break the American consumer and take everything they have and then get them out of the way so the strip mining can begin in earnest. When you look at the larger picture that is taking shape, that is where we are headed. Chinese corporations are gobbling up everything they can get their hands on right now all over the world including in America.
Those who say the U.S. will be invaded are a little late. The invasion has already started and the invaders have taken the form of corporations. If anything gets in the way of this resource extraction, that is when you will see the troops arrive under some pretence to help the people. Actually their main goal will be to secure the resources.
When troops start arriving that is when Americans will start fighting back by any means at their disposal. For all intents and purposes it will be an all out war on American soil. Regardless of what people perceive the reasons for this war to be it will ultimately be for resources.
You may ask why they do not just keep America prosperous and continue the gravy train. The main reason is that entitlement programs have gotten out of control. They are now spending too much money supporting people who do not work or produce any value in society. To simply take this money away would cause the same chaos that will erupt by destroying the economy but economic destruction will enable them to secure the resources with few people realizing what is really happening. Its all about controlling the amount of blowback from the people and the best way to redirect and contain it.
In the end America will become a third world economy or something worse. The people have the means to retain control of the nation and someday rebuild some of our infrastructure but that depends on the people and how much they want to remain free and in control of their future. As long as half of the population can get paid to sit at home and do nothing we will not change the course we are on. Change will only come when it is forced on the people and they decide to set a new course. Unfortunately, many may elect to do as they are told by the government and hope the free stuff will once again start to flow. Those people will be very disappointed, at least as long as they remain alive.
By: Tom Chatham
When a national currency collapses, the government goes into survival mode and does what is necessary to insure its continued existence. The state power becomes all important and citizens become expendable. The state exists for it’s own fulfillment.
When the monetary system collapses along with the banks, the government will still need a way to pay government employees to insure they continue enforcing the governments will. If all government employees suddenly decided to stay home the few officials that remained at their desk would be ordering 300 million people around with no way to enforce their orders. To maintain control of the population it is necessary for government minions to continue doing their job of enforcement.
This means the government would need the means to continue fulfilling the needs of government employees to insure their compliance and obedience. As long as people get the things they need to survive day to day they will continue to do as ordered to continue that supply.
The government would need to insure that a payment system and banking system would remain functioning after a collapse. The banking system may not look like the current one but something would have to take it’s place. Once the currency has failed it would be necessary for the government to issue a new currency. It may not be accepted by the majority but it is only necessary for it to be accepted by the government minions. This would allow the government to remain in control.
If the government employees know they will still be able to get food, clothing, gas and other items they need when normal citizens cannot, they will be inclined to stay on the job and do the governments bidding in order to maintain their standard of living. This would be a necessary control mechanism in the event of a collapse.
Once the banks collapse along with the currency, the FED could take over any bank branches necessary under the control of the Fed and issue the new currency through them. There may be some form of physical currency or it could be digital. Either way the government would have control over who gets any in the beginning.
The government would likely confiscate any resources it needed to fill “government stores” for the purpose of supplying government employees. The rest of the population would be left to get by on their own. In this event EO 13603 becomes more clear as the mechanism to take whatever the government needs to fill these stores and keep their people supplied. In a collapse physical goods become the only thing that matters.
Those that have the things government needs will likely be sent to camps and their property taken for government use. Those with special skills that are needed to continue the supply functions would fall under the control of government agencies and be subject to internment if they fail to do their jobs. Once government has control of critical infrastructure they can let the remainder of the country fight among themselves and do the governments job for them. The few who remain after a few weeks will be easy prey for the government.
I do not claim this will happen, only that it is one possibility in the event of a total banking collapse. Those in power will do whatever they must to stay in power. That much is born out in history. This is not meant to scare you but to make you think about the possibility of this event and plan accordingly should the worst happen. Should the government confiscate resources following a collapse, you will need to be two steps ahead of them and the general population in order to get through the events in one piece.
Many feel a collapse of any kind is impossible in the mighty USA but times change and anyone that fails to heed the warnings will pay dearly when events unfold and they find it is to late to get the supplies they need. People buy many types of insurance just in case. They save for retirement just to make sure. Then they ignore economic warnings that make all those things useless. The government helps people when it is convenient for them. The government has also shown its willingness and ability to take from people when it suits them. Any government big enough to give you anything you want is also big enough to take everything you have. And, they will eventually.