Posted by sierra2one
By: Tom Chatham
Wheelbarrow economics become apparent when you find yourself toting a wheelbarrow full of paper money to the store to buy a loaf of bread. The loaf of bread always retains the same value, it is merely the value of the fiat currency being used that drops in value forcing you to carry ever more notes to make a purchase. Tomorrow’s version is the addition of new zeros to a bank account accessed by plastic cards. This is one reason there is a push for a cashless society. It would allow a government to simply add numbers to a bank account rather than actually printing fiat notes. Paper is far too valuable to debase it by putting numbers on it.
When currency begins to debase at a faster rate, such as weekly or monthly, by a large amount, the holder must convert it into real value as soon as possible to prevent the loss of their purchasing power. At some point the distribution system begins to break down as credit becomes more difficult for producers to utilize. The typical 30 day credit cycle that most developed societies use becomes untenable as value is lost and it becomes more profitable for producers to stop producing and selling on the open market thus preventing the loss of their work. This is where black markets begin to appear to satisfy the needs of producers and consumers.
If you do not understand the dynamics of what you just read you simply have to study the events in Venezuela over the past two years to understand. The people are on the verge of starvation and the government seems powerless to stop it. They made the age old mistake of assuming they could just print their way out of their problems. They have been selling their gold to pay for the billions of paper notes they had printed for circulation. This is the action of socialist politicians that do not understand economics. The same socialist actions are being implemented in most developed nations today in Europe and North America.
The simple cure for many of these problems would have been to simply use their gold stores to mint gold legal tender coins and the value of their monetary system would have slowly stabilized and production and distribution would have resumed in short order. Instead they have more pain to suffer as the country breaks down into chaos.
What you see happening in Venezuela will come to America and Europe if the current status quo continues. So, the question is what to do. If you understand the reality that awaits you in the near future you know you need to do something to prevent the kind of suffering you now see in Venezuela. If you knew a can of beans would cost $10 a year from now or a can of ham would cost $50 you might come to the conclusion that you should buy extra now so you wouldn’t have to spend much more later. If the money you earn in the future buys much less than today and your income does not keep up with this inflation you will slowly starve if you can even find anything to buy. So, how do you prepare for something like this?
You need to keep in mind that who you are and where you live has a lot to do with how you prepare for a situation like this. Someone living on five acres of land in the country may stock up on seeds and canning supplies while a person living in a multistory apartment in the city might want several cases of canned goods. You need to take any suggestions with a grain of salt and develop a plan that is tailored for you. Having said that there are some things you need to think about.
No matter where you are you need a supply of food and water you can depend on for a specified period of time. You need to decide what that period of time should be based on your assessment of the situation you foresee. You need to store foods you normally eat or could stand if they were the only thing available to you. They need to be shelf stable for longterm storage without refrigeration and be easy for you to prepare with minimal energy inputs, meaning heat. You need sufficient water storage for the duration just in case you cannot get any after the system breaks or at least a way to find and filter water if you have to forage for it.
When things get really bad you will have to have a way to protect yourself and those things you need to survive. There will be those that are unprepared for the events that will unfold and they will be desperate and willing to do anything they must to get what they need. This is what we are now seeing in Venezuela today. People are being robbed of the little bit they are able to get before they can get it home.
Economic problems will eventually lead to energy problems at some point. This means that if you depend on electricity for life sustaining systems you will need to have a backup system to fall back on if the power is not available off the grid. If you depend on a vehicle to get to work or someplace important you will need to have a way to get fuel if you can no longer buy it through regular channels. A few solar panels and some deep cycle batteries can go a long way to providing electrical power and a supply of fuel or alternative like a wood gassifier can keep your car running when others cannot. Just keep in mind that having power or a running car when others do not can make you a target so you need to keep that in mind.
When the system stops working properly it will be difficult to get the proper medical attention if you are sick or ill. Having some basic supplies to take care of all but the worst conditions can be a life saver and having a supply of medicine to cure viral and bacterial infections could be the difference between life and death. When urban systems begin to shut down the lack of proper sanitation can cause many of the dangers you must protect yourself from. The ability to maintain proper sanitation and hygiene will become more important as time goes on so supplies to take care of those things are very important.
Depending on where you live, the lack of heating or air conditioning may be a life threatening situation so you must have a way to provide those things or have a place to go to minimize the effects. Having a wood stove or quality sleeping bag to keep warm or having some place below ground level to keep cool will make a lot of difference when the time comes so you need a plan to deal with those problems now.
When you have satisfied yourself that you have taken reasonable precautions to deal with a situation out of your control, one final thing you need to think about is how you will preserve any wealth you have saved up for future use. No matter how well you plan there will always be something you forgot so you will need a way to buy what you need. If your only recourse is to use the quickly debasing currency that is still accepted you will be hard pressed to get what you need at any reasonable price. For this reason you will need to store that extra wealth in some form that will maintain its value. This can be in gold or silver coins or as a stockpile of easily bartered goods. A combination of the two might be the best solution. It is difficult to foresee a serious injury like an operation or broken bone that needs mending but with gold or food items that a doctor needs you will have access to those services.
Situations like we now see in Venezuela are survivable but most people suffer horribly due to the lack of understanding and preparation for situations that develop over time. Would you want to survive the crisis with very little suffering and loss of wealth or barely make it through having lost everything, possibly even your life. Those are the choices you must now consider while there is still time to affect the outcome.