Economics | The Great Northern Prepper

Minicast Episode 16: The EU Tax Raids

May 1, 2013 by Great Northern Prepper Leave a Comment

I read 3 separate stories that I think gives us a good foreshadowing of what is to come in the U.S. While I know we are different, etc, etc, And i have never thought everything would mirror the EU when our time comes, I think it gives one a good idea of how thinks will probably resemble when we hid the skids…the big one!

Now I believe that our government is watching closely all the different ‘programs’ and things being implemented in various countries, and seeing how the people react and how they work out. This can probably give them a good idea as to how to refine it to be more “American”, or at least more “palatable” to us.

I talk about.

The Raids on the “Rich” Tax Evaders in Germany
How things always start with the rich then end up with us
How Massive Tax hikes are coming to the EU and how they may affect us
Seizure of Privately held gold in Italy
How we wont see a confiscation of Gold or Guns on a massive scale like some like to think we will and why

Minicast Episode 16: EU Tax Raids and More [ 41:17 ] Play Now | Play in Popup | Download (1122)

NOTES

SHTF Plan article on the Gold Seizure in Italy

Zero Hedge article on the Massive Tax Hikes coming to the EU

MyFOXNY article on Germany conducting raids on “tax evaders”

*UPDATE* Recent Article interviewing the head of SAXO Bank regarding the reality of wealth confiscation coming to Europe

My Blog Post on Gold Confiscation

Filed Under: Economics, Podcast, Politics Tagged With: economic collapse, government debt, liberty, monetary policy, precious metals investing

Minicast Episode 15: Boston Terror and Silver Update

April 16, 2013 by Great Northern Prepper 4 Comments

Today’s Episode is a somber one…

I wanted to speak briefly on the events of yesterday’s terrorist attack in Boston, what my fears are about this even and what comes after and most importantly to send out my thoughts and prayers to all those affected by this.

I also wanted to talk about the recent dips in the Precious metals markets. It was hard to move from something so terrible to something so mundane as precious metals, however I don’t want to dwell on the negative, to give my thoughts and prayers to the families as well as help to continue to provide information to all of you out there.

I speak about…

Why its a good time to buy
Why I don’t give financial advice, it is ultimately up to you
Where I think the markets are going

Thank you for listening, in times like these remember and be thankful for all you have and all those around you. God Bless.

Minicast Episode 15: Boston Terror and SIlver Markets [ 25:00 ] Play Now | Play in Popup | Download (1357)

Notes:

Page on Precious Metals Investing

Why Silver will be used Post Collapse

Prepper Economics Part I: A history of Money

Prepper Economics Part II: What is Inflation

Primer on Gold and Silver Coins

Filed Under: Economics, General, Podcast Tagged With: economic collapse, federal debt, federal reserve, precious metals investing

Obama goes after Retirement accounts: Whats the real story

April 9, 2013 by Great Northern Prepper 1 Comment

A recent story that just came out stated that the Obama Administration wants to limit how much money one can put into their tax-preferred retirement plans each year.

Now the main difference between say a traditional 401k and an IRA is that 401k’s allow you to put money into them, which you are not taxed on, but when you pull it out you are taxed on it then, while IRA’s tax the money now, but when you pull it out whatever you have made is Tax Free. Personally I like Self Directed IRA’s in which I am in control of and I put TAXED money into, so 30 years from now (if the money is still there) I can pull out however much i want and not have to worry about Uncle Sam.

What President Obama wants to do is to go after the “ultra-rich” who put away A LOT into these accounts, paying the taxes THIS year but reaping tax free cash years into the future. Whats the problem? they are paying the taxes on that money now, what the government wants right? Well apparently you can actually save TOO MUCH and according to a press release from the Administration…

“Under current rules, some wealthy individuals are able to accumulate many millions of dollars in these accounts, substantially more than is needed to fund reasonable levels of retirement saving.”

What they are saying is that “Well some of these guys save so much that they will be able to retire with a lot of money, well in our opinion that’s too much money to retire on, we don’t like it, so we want to stop them from saving for the future.”

Now for the average Joe like me and You this isn’t a big deal right? Screw those rich bastards right!

Well personally I have no problem with people making money, if they want to save it and retire on it, that’s their business and whenever someone talks about another person making or having “too much money” that’s just plain old jealousy, because I would love to retire on 500k a year if i could, probably wont! but hey who am I to be jealous of someone that does.

The other thing is that, they administration used the words “more than is needed to fund reasonable levels” so whats a “reasonable” number for retirement? 200k, 100k 50k? no one, knows because they leave that up to your imagination to figure out what you would consider reasonable then compare it to what the rich folks will retire on, so you can get angry.

How does this affect you?

Well Mitt Romney, Donald Trump, George Soros, etc. having millions in retirement…doesn’t effect you a bit…you aren’t poorer if they have more and in fact them investing more only helps the economy and the sectors they invest their retirement in, but hey I’m just a dumb Marine right….

How will this decision effect you? Well this isn’t law, just an opening gambit into controlling the biggest and last golden egg left in the United States…Retirement savings. Yes there are TRILLIONS of dollars in Retirement savings accounts and that is a FAT BEAUTIFUL PIG the government wants to put on the grill and dine on until its gone. They are running out of options at this point. States are considering Precious metals as legal tender (yes i know its mostly bluster at this point, but it is a foundation for the future economy in a more fragment ‘union’), foreign buyers of Treasury bonds are drying up and the Fed is buying more and more bonds with made up money every quarter.

This is what happens every time…the government stokes populist anger against the rich about something, like taxes a year ago…”Hey this isn’t going to affect you only the super rich so be angry lets get their money!” People say ” YAY SCREW THOSE RICH BASTARDS” and then what happens, they end up raising your taxes as well right? Think obamacare and how much more you paid in taxes every paycheck and just this last tax year. What will happen if this goes through is it will be a template, and sooner than later the number of what is “reasonable” will creep down, until you are forced into certain programs, i.e. ones that buy U.S. government Bonds as part of the portfolio and ones that have you pay taxes ON BOTH ENDS.

This isn’t about the rich, this is about ALL RETIREMENT.

I wrote a post back in February about how the Government was going to start going after our retirement…guess i wasn’t to far off!

Filed Under: Blog, Economics, Politics, U.S. Politics

Cyprus Dreams: The Future of America

March 26, 2013 by Great Northern Prepper Leave a Comment

Looking at the news this week coming out of Cypress we are seeing a prequel to what is going to happen to America in the near future. If you are familiar with J.R.R. Tolkien, Think of Cyprus as the “Hobbit” to the American Lord of the Rings. Its going to happen here.

Ive been saying over the past year that the problems we are seeing in the EU are the same problems we will have in America, the EU is just a more heavily socialized system that has much more capital investment in massive pensions and over-bloated social welfare programs that are dragging it down earlier.

If you aren’t up to date on what is going on there I will give you a background and move it along to this weeks issues.

2011

So during the World Financial crisis that began in the U.S. Cyprus ACTUALLY weathered the storm very well considering how the rest of the EU did.

The Cypriot domestic banking industry actually held assets that amounted to seven times the nations annual economic output, a very powerful asset holding, but also a good buffer against large shocks to their domestic banking structure.

Then in July of 2011 the EU leaders put pressure on those who held Greek Bonds to accept losses on their holdings, basically Greece was in major crisis (which is still going on today) and the EU was forcing the hand of those who held the bonds to accept large losses to help reduce the massive debts the Greek government had accumulated.

Well Cyprus banks were among the largest holders of Greek Bonds in Europe, so they got hit hard. This was combined with a major battle between the Communist led government and the Trade Unions over austerity programs to get their deficits under control. Then a disaster involving Iranian munitions being stored at the nation’s largest power plant blew up after they were confiscated.

This all resulted in massive social upheaval and the austerity measures were pretty much scrapped.

2013

Speed ahead to 2013 and the results of their internal turmoils and lack of austerity programs early on have led to a make or break moment for the country, accept the measures now imposed by the EU or go into default and upset the European Economy.

The “Haircut” imposed by the Cyprus government on its own people is up to a 9.9% levy on deposits over 100,000 Euros and 6.75% on accounts less than 100,000 Euros.

(as of 10:22 on 3/26/13 Cyprus finance minister Michael Sarris has admitted that deposits over 100,000 Euros could lose as much as 40%)

If this was imposed in the U.S. and you had 10,000 in the banks this would be $675 and up from there.

This is not a tax, where you can write off this or that to reduce that amount. Its you had X amount of dollars in the bank one day and the next you had 6.75-9.9% less than that the next. Obviously not a popular measure.

The Banks were closed so that people could not pull out their money, and ATM with-drawls have been limited to just 260 Euros at a time and then downgraded to a daily maximum of 100 Euros. Long lines have formed as people are trying to get all they can before the biggest heist in their countries history takes place.

Many business had accounts in Cyprus and it WAS considered a Tax Haven, not anymore.

Conclusions

The affects of this will be two fold, once banks open you will see a run on the banks and people and businesses will pull everything they can out of them, although the government is sure to impose daily limits on with-drawls as well to counter this. Business will no longer seek to hold their money and the once vaunted domestic banking system will slowly crumble into dust.

Businesses will also take a huge hit and have to start layoffs to make up for the losses to their accounts, you have to think that this is not a tax on income, many businesses even if you have $1 Million in your accounts, much of that is tied up in payroll, payments for services not yet rendered, etc. A hit of $99,000 out of a million will mean they will have to drop quite a few employees to make up for the losses.

Professor Hari Tsoukas of the University of Cyprus had this to say.

“This is a fascinating case study of how to turn a problem into a drama and a drama into a crisis. Things should not have escalated to this point. I fear Cyprus will exit the euro zone.”

Another thing to look at is the credibility that has been destroyed in the Euro-zone, much like the US the EU GUARANTEES deposits under 100,000 Euros if a bank collapses, like our FDIC. However they did not protect the average person and instead not only did not protect them but STOLE their money.

In the Miami Herald “Economist Reinhard Cluse at UBS says Euro-zone leaders may have to come out soon with a strong statement stressing that the (EURO)100,000 limit will be secure in the future.”

However how can anyone in the EU trust them any longer? If they come out and say “Well yes we stole that money, but from now on you don’t have to worry about that, you’re fine”

Would you believe that?

We may not see an exact play-out as was in Cyprus but you will see similar, people losing confidence fast in the banking system once our own crisis starts to hit, massive lines forming at ATM’s, Banking holidays declared will politicians try to spin it so we don’t de-fund the whole economic industry of the U.S., failing to do so and watching the country crumble and when the U.S. does, there will be no one left to bail us out, like we have the EU (to the tune of hundreds of Billions of dollars)

So what do you do?

Well you stop playing the game they are playing, I’m not saying put your money in your mattress, but start to invest in Silver, Gold and other tangible assets. These “Other tangible assets” are land you can produce on as well as any of your other preps.

Keep money on hand to pay bills as well as hedge your bets and continue to invest in your future, but invest in protecting your wealth by buying physical metal you can hold in your hands and keep safe in your home.

This is not a 100% guarantee you wont be hurt in the coming Economic Crisis(es), you will be hurt, because everyone will be. However you will be in a stronger position, one where you can survive and thrive afterward instead of crying in line at the bank because all your savings are gone.

We will see a semi/total nationalization of the retirement assets in this country as well as a destruction of our banking system. I’m not a soothsayer I don’t know when this will actually happen, but we are seeing the beginnings of it now. Could be 1 year or 3 or 5, the world is a very hard place to exactly say this will happen NOW! However it will be within the decade, and I personally am guessing 3-5 years, but that’s just for me personally and how I’m approaching my own prepping. Do you own homework and be as informed as possible.

What do you think about all of this?

Notes:

Why Silver Will be Used Post Collapse

Prepper Economics: Part 1: What is Money

Prepper Economics: Part 2: What is Inflation

Prepper Gold And Silver Coin Primer

Prepper Gold and Silver Coin Video

Filed Under: Blog, Economics Tagged With: economic collapse, Economics, federal debt, inflation

Home Economics: Smart Spending = Preparedness

February 15, 2013 by Great Northern Prepper 3 Comments

So Ive talked about this before, mostly in my NEW PREPPERS section for those who stumbled on this site and have no idea where to start, etc.

However I want to talk about this more in-depth. I know many of you have already done this or already are doing this, but many are not, or have thought about it and have not!

I was a bad spender, bad prepper and overall just a person who didn’t have his financial SH(you can figure the rest) together. I didn’t spend more than i had normally but often i was left was a nice balance of $0.0 at the end of the month. Which is fine if you never plan on retiring or having preps!

The first thing anyone who is getting into the preparedness mindset/lifestyle should do, and even if your not, Is get your financial house in order.

Budgeting

Sit down, and gather your bank statements, credit card bills, utility bills, etc from the last few months.

Get out a notepad and write down Expenses in one column and Income in another.

EXPENSES

Itemized Utilities (Water, Electric, Sewage, Trash, Phone, Cable, Internet, etc)
Cell phone
Food
Gas
Itemized Insurance (Auto, Home/renters, Life, Medical, etc.) To get this just go over the 6 month/yearly bill and divide by 12 or 6, etc.
Clothing
Entertainment (Movies/Rentals, Eating out/Order In, Bars/going out, Dates, Books, Pay per View, etc)
Alcohol/Tobacco
Kids Food/Clothing
Etc.

INCOME

Full Time Income
Social Security
VA Compensation/Education
Part Time/Secondary Income
etc.

Now these are just generalities, not a full list everyone’s list will look different but think of EVERYTHING you spend money on, look at every expense and mark it down. Something Like Post its and pens could be in Office supply category if you buy them often, 409 and Windex could be cleaning, smaller things that you don’t usually buy can be put in expenses.

The farther back you look the better picture you can get, this is also a good reason to SAVE every receipt! I save every receipt possible, a few may get lost or thrown out here and there, but about 99.9% are in a Folder marked by each month, then scanned and filed in a computer folder month by month. I have probably everything I’ve bought marked down since 2008. If you purchase it on the net, have a separate folder(s) for those, print them out and file them hard copy as well.

The reason for receipts is that you can better see your expenses, hold yourself accountable and also if you are ever audited by the IRS you will need them. IRS audits mostly are concerning write offs and deductions, so definitely keep ALL OF those, and you need to go back 7 years for those.

Once you get your numbers together you can get a better picture of your finances, where your money is going and where you can cut back.

SMART SPENDING AND CUTTING BACK

Ok now no matter who you are or how much money you make you can find areas to cut back on, because even if you make 300k a year you will still only have so much to spend on your preps, and by cutting back you will have more.

These ideas for cutting back are all situational, but the general advice works the same.

Some areas to cut back on are pretty standard and easy such as not going out to eat twice a week, but perhaps once a month or not going out to bars as much, etc.

When i looked at how much i was spending ordering in, going out to eat and drinking at bars (I was 25 and contracting so i had the money) I was astounded, I figured because I was making 100+ a year (at the time, DEFINITELY NOT ANYMORE!) I could go out whenever i wanted and not worry about it. I didn’t have to technically, but when i broke it down i realized I was an idiot. It was a BIG chunk outside of living expenses.

So I cut back, I didn’t go out as much, I stopped going to bars as often and started to cash that money away. I bought guns, silver, food preps and other things with that.

Looking at your utility bills see where you can cut back on those. Some of the suggestion may sound “extreme”, you can choose to or not to, but they are ideas! and you can fit them to you and your families life.

WATER

You can take fewer showers per day, maybe 1 instead of 2.

You can perhaps speed up the process. One way is called “Navy” Showers. You get wet, turn off the shower. Lather up and clean. Turn it back on and wash off, turn it off and get out.

The old “If its yellow let it mellow, brown flush it down” Don’t flush for pee, only #2

Hand wash dishes, and turn off the faucet between.

If you filter water Get a Berkey, over a 5 year period you will save hundreds of dollars vs Brita or PUR and it filters more and is overall A higher quality filter.

ELECTRICITY

Turn off lights when not in a room

Don’t leave the T.V. on at all times.

If you are leaving lights on for security use a timer to shut them off and turn them on instead of leaving on all the time.

Use Surge Protectors for the T.V. area (where a DVD, Gaming system etc is also located), Office (where computers, screens, speakers, etc) and when you are done and shut them off hit the surge protector as well so it doesn’t continue to draw power even when they are “off”

Unplug EVERYTHING if you are going to be gone for days, many things such as your oven and microwave, etc continue to draw power when “off”

Set the Thermostat lower if you have electric heat, or perhaps invest in a good wood stove to complement it.

HEAT/AC

If cost effective and you own the home look into replacing windows with double/triple pane. If not cover unused rooms windows in bubble wrap as I describe in the post a few days ago.

Buy door draft blocker, or just roll a towel up and tape the ends to keep it from unrolling. This will keep the cold air out and hot air in, or vice versa depending on your climate.

Use towels again to block any drafts coming in your windows.

Keep doors to unused, or rarely used rooms shut, they will be slightly cooler or warmer depending on the climate but will reduce the need for your heat/AC to kick on

If you live in a warm climate, consider a cheap swamp cooler for the garage instead of A/C. They can work in the house as well, BUT they do introduce a lot of moisture into the air which can cause mold and mildew.

CELL PHONE

Look at your plan and see what you can get ride of

Can you downgrade a portion of your plan? Do you need unlimited texts? Could you live with just calling or emailing?

Can you eliminate data? do you really need to get on the net on your lunch break or post on facebook constantly?

Could you get buy with just a “basic” phone? Smartphones often carry a $25 a month fee on top of the existing plan!

Could you just have 1 Basic cell phone for emergencies and a cheaper land line in your house instead?

Look at Companies like NET 10, TRACFONE or AT&T “Go Phone”. Many of these can cost significantly less if you are smart about your use and have no contracts. Many of these start out at around $20-$40. You can even get smart phones like the HTC EVO for around $150 and then pay just $50 a month. Overall you save a lot more money than sticking with contracted companies, but it has more upfront cost.

CABLE/SATELLITE/INTERNET

Do you need more than a basic package?

Could you get by without having more than local channels?

Look into competitors to your current company. Call them up and ask them…”Currently I am using X cable company and i get [this and this] for [this price], what can you offer me that’s better? Can you give me a better deal to switch to you?”

If you can get a deal offer from a competitor get that persons name and the details of the offer. Then call up your company, tell them you talked to X competitor company and they are willing to offer you X package for Y price. Tell them you want to stick with them because you appreciate their service thus far, etc. Then ask them to match it or to see what deal they can make for you. In the world of cell phones and cable, it is MUCH more expensive to find a new customer than to keep an old one, so if they are smart they will offer you something to keep you on-board. If they don’t take the other offer. You can also just call them up and tell them you are looking for new service at a lower price so you have been calling other competitors, dont say who or what they offered you. You can just ask them to make you an offer, a “Why should i stick with you” conversation, see if they are willing to give you a month off, or $20 off your bill a month for six months.

Smaller companies can give you good deals as well, so if they are in your area don’t ignore them.

If you have it, do you need a DVR? could you just catch the show(s) you like when they rerun?

Could you just BUY a DVR like TiVO off the internet and have a one time cost instead of a monthly add on? would that work out better financially?

Do you need that high of a speed of Internet?

Call your company ask if they have any deals going on right now for internet? See if you can switch to a higher speed for a certain time? Often they will have a “Upgrade to the Fast as a roadrunner package for nothing for 30 days, etc” Switch and set an alarm on your phone or put it on your calendar/whiteboard whatever to call and cancel. This doesn’t save you money BUT does give you something “more” for “nothing” for a short period.

Rental/Mortgage

I am not a specialist or expert in the field of mortgages and home loans so take this with a grain of salt

Check to see if you can refinance you home mortgage if you have been in the home for awhile and/or the value of your home has dropped significantly. Refinancing incurs additional charges so make sure the benefits outweigh the cost

If you are renting and planning on staying in that city/town/area for the near future 10 years+ can you afford to buy a home? Could you afford a mortgage? Rates are so low right now, and home prices are still down in most areas so its about the best time to buy in recent memory.

If you don’t have good credit start working on that, consult a free credit counselor like the National Foundation for Credit Counseling, they are non-profit and offer free or low cost credit counseling. The way upped my credit from 300 to 788 was to take out small personal loans (around 1000) and pay them off over a year. This COST me money in interest but is started to show a credit history of payments over time. I also got some credit cards AND INTELLIGENTLY used them for only GAS and part of my food bill. I then would pay about 3/4 of it off and then roll it over. I only had a $500 limit, called and set it at that SO I COULD MAKE SURE I DIDN’T DO ANYTHING STUPID. This was AFTER i made my first mistake with owning a credit card, which if you read the About Me section on the site you’ll know more. I then would make sure I never spent more than i had in the bank, and i kept enough constantly in my bank to pay if off all at once if i had to (on top of the other money i needed to pay monthly expenses, etc). I then kept paying over minimum of course but under full payment, so that it showed that i could pay monthly on debt, month after month after month. This is what I did, and is by no means a foolproof plan, but that’s my experience so I’m sharing it with you. NEVER UNDERESTIMATE THE ALLURE OF A CREDIT CARD TO SPEND BEYOND YOUR MEANS!

If you have some money socked away and can put that down for a down payment, go and see if you can at least get pre-approved for a loan, if you military look at the VA home loan that doesn’t require a down payment, however if you can make as large of a down payment as you can. Lending agencies want to get more mortgages out there, but they are still skittish after 07/08 so if you do have money to put down that could mean a lot.

If you plan on continuing to rent, and have been a good renter, paid on time consistently, no problems with any complaints than you are probably a landlords dream. If they are not a corporation like Weidner, etc. and are an individual renting out a few properties, see if you can finagle a better deal.

Ask if perhaps cable or internet could be included with the rent? See if they can reduce the rent from say 1000 to 950, if you have the money available, offer to pay X months in advance to show good faith, etc.

See if you can take over some of the maintenance duties for them, i.e. cutting the grass, shoveling the snow, misc duties. So that either “they” don’t have to do it, or “They” don’t have to hire someone else to. If you are in a winter climate, ask how much they are charged per month or per snowfall, etc to have someone clear the driveway and sidewalk areas, ask how much it costs them to hire someone to upkeep the yard, etc. If they are willing to tell you tell them you will do it for half that, 3/4 that, etc., and just to take it off the rent each month. Tell them you’ll do it for “free” for a month or two, if they like the job you do, then they prorate you those months against your rent, etc.

See if its possible to “downgrade” to a similar apartment in a similar area for less money or to a smaller one.

Look into storage units if you are downgrading. You could possibly move from a 2 bedroom to a 1 or a studio and save 350 a month, while only spending 75 to store your stuff in an storage unit, a net savings of 275 overall. This storage space can also be used to hold your preps (which if you read 299 days, “Grant” did the same to keep his prepping from his wife!)

GAS/VEHICLE

Look into getting a cheaper more fuel efficient car for working and commuting. I understand if you don’t want to give up the suburban or van for bug out uses. But look and see if the cost savings over getting a 2000 civic vs continuing to use the gas hog for commuting will save your money over the life of the vehicles.

Look into riding the bus, see if that will overall save you money vs. time. This doesn’t mean give up your car, just using it more sparingly. Lower mileage use also equals LOWER INSURANCE PREMIUMS!

Look into getting a large Fuel Tank at your home, this way you can buy half a years use of gas in one fell swoop when the price is lower. There are Winter and Summer Grade Gasoline’s. Summer grades have slightly more “energy” thus more fuel efficiency, while winter grades are cheaper. You can make your own decision.

If you don’t want to get a large fuel tank, try buying some gas cans or getting them cheap. Store them safely and securely as they are explosive and a fire hazard as well as a very valuable commodity and do get stolen (some a-holes stole a can with a few gallons in it right out of my driveway, which i stupidly left next to the truck!).

You can find gas cans for cheap or free off of craigslist or others, but nozzles (the old ones, which are the best) might run you a little bit of money. If you have reward fuel points at some grocery store then fill up your car and use the remaining gas allowed to be pumped to pump into gas cans in your car (usually a $100 or specific gallon limit, depends on location). This can mean .10, .20, .90 cents off a gallon and over time you can store a lot at this cheaper price! Fill up as needed over time out of the storage as needed. And its always good as a prepper to have Gasoline stored, you never know. Rotate the gasoline out, First in First out, so it doesn’t go bad and cause some issues with your engine, if you want to store it longer term look into getting STABIL, fuel stabilizer. Normally your gas should be used seasonally, say if you fill in the spring use by Christmas. With STABIL you can get 1-1.5 years out of it, and with PRI-G you can get 5+.

I know its a pain, but just learning how to change your own oil can save you money as well, and its not that bad. Constantly check your vehicle, keep all the fluids topped off at appropriate levels, check you belts, etc. Keep on top of regular maintenance and you WILL save money. If you have issues with the car, take it in, or find a friend who knows about cars and have them look at it. Letting that “Tick” run for six months, years can be fine and “Save” you money at the moment, but what could have been a $75 repair cost now will cost you hundreds, etc. Find a GOOD, HONEST mechanic and stick with them.

ENTERTAINMENT

Now I wont be a Teetotaller and tell you no more going out, however of all your bills, this is pretty much the easiest and most obvious cut

Eating out is on average much more expensive than dining in, however this can vary from place to place, of course if you buy quality fruits and vegetables, meats, etc. It might be a tad more expensive than a salad at the local gas station/mini mart. This is of course not an apples to apples comparison.

Try to limit yourself to a small budget every month for “entertainment” say enough to go to a dinner and a movie only once or twice a month, if you have been eating out 2-3 times a week, even fast food, you will see an immediate result in your pocket book…..and waist line.

If you rent a lot of movies from Blockbuster or other video rental chain, this can COST a lot of money, given that they will charge 3.99 for a one night rental of a new release. Get netflix for 8 bucks a month for an unlimited selection whenever you want.

Wait for new releases to come out on a REDBOX rental kiosk (if you live in/near a city/town) this can be a savings of 2.80 per rental! Plus you can sign up for promo codes (i.e. coupons) to be sent to your email/phone and get .50 off per week. Look for other promos on the Internet.

Go to the Library if you have them, often they have a great movie section, and its free!

Consider not watching movies constantly and just turning the T.V. off. There is so much information out there, start reading books, find out about the history of this country, study economics, politics, gardening, etc. Become informed. And of course read the GNP blog constantly…just kidding..or am i?

Look at getting into more “productive” things for entertainment, camping, hiking, hunting, fishing, learning new skills like sewing, crocheting, leather work, all things that can add to your preps as well as being fun for you and your family.

FOOD

Now this is something that I have had an issue with, in that I have started to try to move my family to a higher quality food intake. Organic foods and items without high fructose corn syrup can and usually are more expensive.

Consider if your bill is tight to just switch a few items here and there to higher quality organic foods and start growing your own vegetables in a garden, even if it is just window sill beds. Even just a few carrots here and there can help to teach you more as well as give you quality food to eat.

Shop at big box stores for your big items if you are able. If the $100 annual membership gives you pause consider going in with other families. One person will be the Shopper for the other families. They can chip in for the membership and you can get their lists and buy for them as well. Costco is higher quality but slightly higher in price than Sam’s club. I prefer Costco. We buy our big bags of rice and other canned goods there, as well as cheeses, meats, etc.

My wife being Gluten intolerant has given us a more limited array of food to choose from. However shopping online helps immensely. Thankfully many stores now offer Gluten free products…but they are MUCH more expensive. However I found that where we had been spending 19.99 on a 4lb bag of Gluten free bread mix I was able to find a 25lb sack on Amazon for $68 A big savings, from paying $4.99lb to $2.72!!!

Don’t buy into the EXTREME COUPONING hype, it has been pretty much found out that these stores give big breaks for these shows and drastically oversell (no pun intended) the savings you can get. That combined with the fact that these women have a full time job with a decent amount of overhead running around getting all of these handouts/newspapers to clip the coupons. That being said if you want to do it, go for it as well as i save a lot by doing a bit of hunting for matching manufacturers coupons for the things we buy often and using them with/without store sales. Take a little time to do it and you can save a little and put that into your preps, or buy stuff for your preps at a discounted price.

The choice to go for more organic or not is your choice, however I cant implore you enough to at least do a little bit here and there. Its not hippie granola propaganda, trust me I am by no stretch of the word anything close to that. However its not like going “vegan” where its a choice to NOT eat meat because of moral issues. The Chemicals pumped into our food supply is NOT good, and if you take the time to look into it you will see the same thing.

The most important thing is to look at what you have been spending on food and see what that total number is for the month. Then look at where you can save, through coupons, buying bulk, cutting out, etc. set that budget and stick to it. Just “buying what i need” is not a plan.

Alcohol/Tobacco

I wouldn’t sit in judgement of anything you do, you want to drink do it, you want to smoke, do it. Its your life. However as a prepper we want to maximize the survivability of ourselves and our families.

Tobacco is horrible for your body, but if you must, then look into rolling your own cigarettes or switching to a cheaper brand. If you have friends/family in a state like North Carolina have them bring them to you whenever they are in the area and come to visit. Unfortunately The Prevent All Cigarette Trafficking (PACT) Act, which was signed by the President on March 31, 2010 which prohibits them mailing them too you. This is so the market cant operate freely and you just buy cigarettes elsewhere and opt out of crazy high taxes in places like NY. Rolling your own tobacco can save you A LOT of money overall. Of course the taste will be different, but you can also put away unrolled tobacco in your preps if stored properly.

EXTRA INCOME

Disclaimer for this section is first that any and ALL income must be declared to the IRS and your state in regards to income tax.

Consider starting a small part time business for yourself for just a few hours on the weekends or days of the week where you aren’t as busy, etc.

This could be things as simple as mowing lawns and weeding gardens/flower beds. I have done this all my life (often I feel as though I haven’t advanced past being 14!), it does add a little to my pocket. I can often get as much as $40 for an hour of work, I usually work by the job and not hourly, however it can depend on the client.

Another good one is pet services. Put out ads on local community boards, craigslist, etc. offering to come and clean up their pets poop in their yard. Look at local companies already doing this, off your service for less as well as a “First time is free” or “if you don’t like how my work, you don’t pay” to get your foot in the door. I have done this as well and had a tiered rate depending on numbers of times a week as well as how many dogs/sizes. My biggest job was $50 a week to come by three times and spend about 20 minutes there, so basically $50 an hour, and if you are smart about it and make your route efficient you can knock out 2,3,4 within an hour on the way home!

Look at re-selling books. Now this can take a bit of homework and be time consuming for the return, its hit and miss for me. Here’s a run down on how i do it…….

I get my books from 3 places. Local Libraries. They often have bins of “free books”, most of them are in tough shape and don’t sell AT ALL, however a few gems can be gleaned on occasion. Local Universities. Across the whole campus in their libraries and various buildings there are stacks of free and extremely cheap books! Some of these don’t sell at all and some SELL BIG. I found a stack there of about 20 textbooks and other books, that ended up giving me around $250 after months sitting on Amazon. I also found a complete Encyclopedia set that i bought for $25 and sold for $320. I also look through craigslist as well, as many people sell random books when they clean out an attic, etc.

I use a smart phone and access Amazon there and check the ISBN number or book title and see what the lowest USED price is, if its over $5 Ill go for it, anything less than that, i wont. you also have to be careful I once bought a book for .25 because it said the lowest used price was $150…well that was because there was only one person selling it, and he wanted WAAAY more than it was worth, ended up dropping it down to about $35 before it sold. Yes i made a big profit, but not as much as i thought, and other circumstances like that I still have the book sitting on amazon.

Also be careful about Amazon, they have a weird system of what their “take” is, and i was once burned on a book because i listed it too low and ended up “paying” about $1.20 to send this book out….I could have canceled the order, but it was my fault so i took the hit.

Consider starting your own blog…yeah like me!….it may never be a money maker, but it could be. The key is to find a niche (that’s a small piece of a larger puzzle, say instead of blogging or starting a website about cars, which has massive competition, a niche would be 1980′s Honda Sedans, you get what i mean). You can over time through trial and error and education learn how to make money from them. Although i don’t make a lot from this site yet, its pretty much paying for itself at this point, this is a passion project. Yes i hope to one day make this a part time job with part time income, but it will always be a passion first. I do have other sites out there, one on how to get security contractor jobs and one on a guide to play a popular game on facebook. I don’t make a lot but it ranges from 150-200 extra a month.

If you have any passions outside of prepping, whatever they might be, from model trains to bicycles look through craigslist postings, ebay, flea markets etc. for those items that you know a lot about. You can make a small business based on buying and reselling these items. Now i would have no idea what to look for, you do, use that knowledge to your financial benefit.

Conclusions

This post was in no way meant to be all encompassing, but just some ideas, hints, etc that I have learned over time and have experience with.

They main thing is to figure out WHAT YOU ARE SPENDING and how to cut back, to make a budget and incorporate your preps into this budget as well as saving for the future.

Filed Under: Blog, Economics, General

The Student Loan Bubble

December 5, 2012 by Great Northern Prepper Leave a Comment

As many of you know, part of the Patient Protection and Affordable Care Act (i.e. Obamacare) nationalized the Student Loan industry, The Federal Government is now the sole issuer of Student loans!

Well except for “a new program for lenders who were chartered before July 1, 2009, and are owned by a state under the control of a board including the governor and offered guaranteed loans prior to June 30, 2010.” Which strangely only applied to one bank, the Bank of North Dakota which was all but in name a payoff to North Dakota Democrat Kurt Conrad who was the chairman of the Senate Budget Committee.

Since that time Student Loans top $1 TRILLION DOLLARS! Thats right the “T” word! And its growing at 20% a year. Oddly with uncle Barry to the rescue, tuition rates have gone up 25% in three years and the default rate is at a record 13.4% But i thought the government was here to help?

The average Student comes out of college with $29,000 in debt and their is speculation as to a bailout.

New Federal regulations have trapped students forever to this debt, you cannot escape it with bankruptcy like you can a business or mortgage debt, it follows you forever because It is NOW FEDERAL! Makes you wonder at these young kids out there complaining about student loan debt with an Obama shirt on right?

I mean the guy and the government is responsible for these things

A college degree used to mean a student would make $1 Million more in lifetime income, now its $300,000, a 2/3rd decrease
25% increase in cost
Higher Default rates
Debt follows you forever, you cant walk away

WHAT IS THE PLAN?

However even with the higher rates and the inability to walk away, the banks that currently hold this debt cannot collect, SO whats the response?

I dont agree with bailouts, for any circumstance, you chose to make risky investments, you pay the price, you go to college, you pay the bill.

However the government isnt going to “forgive the debt” as many clueless students out there think they voted for, one of the things being tossed around is to give the banks another bailout!

Thats right the government gets a twofer, pay off the paymasters and put the debt on Federal Books, so now even past students in default will be in hock to the government! Currently $74 Billion is in default, and thats only going to rise.

Another path is “The Student Loan Forgiveness Act of 2012″, its slightly different is to “Forgive” The debt, by tacking on a Trillion to the Federal Debt, however this is only prolonging the pain for this generation.

So these students who are entering the workforce now or soon, probably think this is a “great idea” however with Federal Debt interest payments rising every year and projected to be $800 Billion by 2020 (This is of course not taking into account another Trillion added to “forgive”). $800 Billion may not sound like alot nowadays with Trillions thrown around alot, but this is nearly quadruple the current payments we are making now and considering we spent $718 Billion in Defense this year, its a major, major number.

THE DEBT BUBBLE

If I havent made it clear to you before let me reiterate this now.

Interest is fickle thing, in retirement the curve can be a good thing. If you have ever talked to a financial planner and been shown a projected outcome of your retirement if you pay X every month, when you reach that age you will probably know what im talking about. If they show you a chart you will see small increase over the years from the time you start, even 10 years out it really isnt getting that much bigger, its usually within the last few years before retirement that you see the biggest increase, it goes slightly up, a little more, ok its going up, BOOM and it skyrockets!

This is just a random graph i pulled of the net, but this is what im talking about.

It works the same way when you continue to compound debt, that is continue to add more and more and more.

Here is chart showing our payments from 1936-2012

Here is another showing our projected interest payments in relation to projected GDP

To help explain this easier, lets say that the US was worth (GDP) this year, and out debt was 20% or the GDP

that would mean $20 of the $100 goes towards interest payments, and GDP IS NOT TAXES, thats EVERYTHING THE US PRODUCES THAT YEAR!

Another way to look at it is this, in 2011 the U.S. government took in 2.5 Trillion and spent 3.8, that means in 7 short years our interest on the debt will be 1/3 of EVERYTHING the government took in last year.

This is unsustainable, it really is and why i am predicting severe financial difficulty within the next 1-3 years for our country.

PREDICTIONS

My predictions on the student loan bubble are these.

The economy will continue its slide down, the mix of layoffs coming ahead of the obamacare mandate, as well as continued stagnant growth will result in less hiring and higher unemployment. With fewer jobs available, many students will be forced to not pay off their loans. Ben and the Fed will step in with the U.S. Treasury to Bail out the Banks, this will be around the 150-200 Billion in default rate. This will coincide with legislation like the “Student Loan Forgiveness Act”, and effectively nationalize the last of the remaining debt held in private hands. The current legislation has tied the hands of the banks as well as permanently welded student loan debts to the individual who has them, effectively putting into place this very situation. I dont want to sound conspiratorial, but its like that scene in “Lock Stock and Two Smoking Barrels” where the guy running the poker game makes a big bet, extends “credit” towards him at the same time a camera is watching the cards in his hand.

This is in my view a way to keep a whole generation in debt, slaves, to the government for their lifetime. This debt, that can never be gotten rid of, was incurred as a result (at least the larger amounts) due to government meddling in the loan business. This lifelong debt will be a generational carrot to be dangled in front of voters every election as a “well help you” mantra that they will continue to repeat, and if they resist, they will feel the full force of this debt affect their lives.

ENTER TODAY TO WIN

A KATADYN WATER FILTER, WISE COMPANY FOOD BUCKET, BUG OUT BAG AND MORE

IN THE GNP PREPPER CONTEST! ITS FREE!

Filed Under: Blog, Economics Tagged With: Economics, federal debt, government debt

Why Silver will be used Post-Collapse

December 4, 2012 by Great Northern Prepper 7 Comments

Okay Everyone, I have been working my butt off to get a 3 part series podcast on the economy, how it works, why some things work and some don’t, basic economic terms and what they mean/importance, etc. Precious metals were to be a section of that, why they are still “worth” something, why they always have been and always will be. However after my post on Gold and Silver Coins and individual named Andy made a few comments, and we ended up in a back and forth disagreement over a few days!

Now Andy wasn’t necessarily wrong, he is right in that you can’t eat gold, and you can’t defend yourself with Silver, and that a 2000 lbs of long-term storable food is more valuable in a survival situation than $2000 in silver. There are of course 100′s of unique scenarios and what if’s that can happen.

I want to go over a few misconceptions and “what if’s” as well as why I believe that in some ways the metals thing is overblown in the Prepper world, but also why it is also a very important aspect to have in the overall framework of your preps.

WHAT IF’S

There is this tendency in many preppers, myself included, and humanity in general to get stuck in a position, entrench yourself and then poke holes in ANY other possible scenario with the “what if” question.

WHAT IF THEY OUTLAW GOLD LIKE IN THE 1930′s?

This refers to Executive Order 6102 signed by President Franklin Delano Roosevelt in 1933 “forbidding the Hoarding of Gold Coin, Gold Bullion, and Gold Certificates within the continental United States”. Not to digress right away, but this is why executive orders are so dangerous to a free society, they allow a President to bypass Congress, when monetary policy and related issues are strictly a Congressional Legislative Issue. Anyways, this is the big Boogeyman in the room when people talk about Gold and Silver in a Collapse scenario, that the Government MIGHT “Confiscate” all our metal. Well folks there was a lot of shady stuff that went on after that executive order was signed, such as requiring people to sell it to the Fed at around $20 and once the alloted time was up Gold went up in price mysteriously, basically granting the government a pretty penny on their “investment”. However a lot of rumors still abound today, such as the government seizing safety deposit boxes, searching homes, etc. That never happened, it was strictly a voluntary (required) turn in, and as most Americans at that time trusted their government they did so. Many did not, and kept their gold and silver for a day when they would be able to openly sell it again or doing it secretly. The IRS/Treasury, etc didn’t go after grandma Jones because she still had some $20 Gold pieces in her jewelry box, They didn’t prosecute people for not turning it in, except for one rare case of an Extremely wealthy individuals who had thousands of dollars (in today’s dollars hundreds of thousands of dollars) who tried to get around it. I have yet to find ONE prosecution under this order [Correction, there was ONE prosecution (why it was hard to find!), A fellow,Frederick Barber Campbell, who had a vast amount of wealth (5,000 ounces of gold) tried to pull his gold out after the Bill was passed, and was made an example of. The prosecution failed, but his gold was taken anyways].

If the U.S. Government tried to do this today, there would be even a smaller turn in percentage wise, than before, and regardless of the “FEMA camp” talk the government can’t intern hundreds of thousands of people for something as piddly as this, they don’t have the space or the manpower.

WHAT IF NO ONE WANTS TO TRADE FOR MY SILVER/GOLD?

Well that is always possible, but so is the possibility no one wants to trade for ammo, or food, or whatever. Granted if everyone is starving and things are REALLY bad, yes you are probably right 99% of people are not going to want to trade their little food for your metals. However things dont last like that forever or even a long time, the truly dire times. People sadly, die off, food is produced, governments distribute food (or someone does in return for loyalty) whatever the case may be, things start to coalesce into a new normal, and starvation is real, but not constant. Like i talked about in my Post on THE HISTORY OF MONEY , the early humans experienced this as well. Once we became settled farmers we started to see an abundance, this abundance meant we had extra and could trade for things we needed and then things we WANTED. This is when Gold and Silver came into the picture, they were pretty, could be made into pretty things and were not easy to find, thus had an intrinsic value to many people.

WHAT IF GOLD PRICES GO DOWN?

I’m sorry, but DUH! It’s a commodity, it has intrinsic value, but it like any other product/commodity, anything is subject to market fluctuations, and it will go down as well as go up. Overall the price will continue to climb up as the economy weakens, and other factors of lessening US economic importance come into play. However If you haven’t done a lot of research and are looking to “buy low sell high” you are going to get hurt. This is a long-term investment, don’t even look at prices if you aren’t looking to buy and don’t look to sell unless it’s absolutely necessary.

WHAT IF_____?

Ok so now I hope you understand why a few of the common “What if’s” are not well founded, but also…There is a what if for any situation. Why Prep? What if nothing goes wrong? Now of course that isnt going to happen even if nothing “big” worldwide goes wrong, chances are SOMETHING will go wrong in your life or area at some point in your whole lifetime. Why do anything because there is always a scenario where things could go wrong or negate your preparation. Why Store away food, people could take it. Why store food, rats could get into it. Why build a homestead, it could burn to the ground. Why keep breathing, you could have a heart attack. Now that last one was a little extreme, but I made my point.

WHY BUY PRECIOUS METALS

The Big question, WHY? Well because it’s a prudent measure. Like I said in the first paragraph, to be fair to Andy he is right, A starving person will not trade food for silver or gold, because that would be stupid! Would you? However we can’t entrench ourselves into this mentality that just because things WILL get bad, that they will ALWAYS be bad, that bad scenario means people are starving or that even if they are that MOST will be starving for years and years and years. Even in this worst case scenario, total anarchy, road warrior, book of Eli stuff, People rebuild. If history has taught us anything is that humans are a VERY resourceful group. We always rebuild. When that happens excess appears on the traded markets, excess equals wants, wants equals symbols of wealth. Also those that travel and trade also need some form of compact wealth to trade and do business without having to haul thousands of animal pelts, or the like, they want something that holds a lot of value in a small form, that is precious metals. This is for worst case scenarios, the absolute worst, i.e. back to 18th century America Bad.

In a more likely scenario of a collapse or partial collapse of the world and US financial system, you will see a worse repeat of the depression. Food prices will skyrocket, more people will be out of work, more government regulations and “clamp downs” on crime. However most people will still be working, however making less, relatively, to what they did before. Our economy will start to mirror many economies around the world. The basics and staples will be available, but expensive and underground economies (sometimes referred to as “black markets” by governments who try to make them look evil because they can’t tax them) will start to form. Barter will be used more to get around taxes as well as to trade value for value. Andy is right in this in that most people will barter on a small-scale rice for meat, boots for bread, etc. However people will, always have and always will, take silver and gold for items, because, well other people will. He may not wish to, that is his choice and prerogative, however that doesn’t change historical fact. You will meet people who will take it, as well as those that wont take it.

“The Collapse” is always preceded by a period of instability. The collapse itself is not the “wake up and its all over” event, its the slow, or fast inflation of the prices due to devaluation of the value of the currency and the collapse of systems we have come to rely on. During this period, which will last MUCH longer than the period of “anarchy” between governance periods will be when you do the lions share of your barter and start using, dipping into or trading your preps. The dollar will still be used but will be worth less every day, and prices will go up, this may or may not be hyperinflation. I have never said DON’T BUY FOOD BUY SILVER! I have always said make it a PART of your preps, if you have your preps pretty well handled, or as well as can be and you still have disposable income, whatever you don’t need for bills and mortgage payments I would personally put into metals. Why? Because like I’ve said they continue to hold their value while the dollar drops. That silver coin your granddaddy got in 1920 still has the same value today as it did now, the 1 dollar bill, does not. So this is a Silver instead of cash prep thing, not a silver instead of food prep thing. You need to have cash available to pay bills and I’m not talking about cashing in your 401k’s to buy silver or gold either. That decision is up to you, and it would be idiotic to have no cash and all silver because come the end of the month bills need to be paid and they probably don’t take metals! However during this period of price inflation that 20 dollar bill will buy less and less of the food you need, while those silver dollars will continue to buy the same amount as they did before the collapse really takes effect (relatively). In Andy’s case he has (from what i gathered) decent food preps, etc. However why would you want to dip into those if you don’t have to? having some silver and gold will allow you to cash it in and buy the same amount of food as before this. You can still go to the store buy the beans, rice and veggies in a can like you used to and save the food preps for the truly dire times.

Silver and Gold will be of some use during a collapse but not as much as AFTER the fact. I keep harping on this as a long-term investment, because of this. Yes it can be used for trade in some or many circumstances DURING a collapse, depending on the scenario and circumstances of your area. However after is where it really starts to pay off and benefit you. During a collapse the current currency will be devalued, and may even disappear for a time. After that a new currency will appear, or the old one may reappear but be rebased (That can be a number of things, it could be rebased back on metals, wholly or partially or on say grain production or with a cap on total amount in circulation, etc.). When this rebasing happens the old currency will be exchanged for a much reduced rate, say 10-1 or even 100-1 or a everyone gets 2000 of the new bills, etc. So either way you split it your old bills will be worth MUCH MUCH LESS than before and you probably spent them already during the collapse at even higher rates for items of necessity. Gold and Silver will still be highly valued because they always are when currencies are being hit hard or are suspect. That is, if the dollar is sliding down the toilet, gold goes up, if the dollar is doing well gold goes down (generally speaking, there are other factors, but 95% of the time this holds true). If a new currency is introduced, especially after a collapse, people will not very confident in the new currency, thus metals will still hold its value or still continue to trend up.

If you have a GOOD amount of preps and years of food for you, your family, etc. and instead buy another 3 years of food, that will be of use in barter situation, but when things start to get better, farming picks up, etc. now your preps that were once worth their weight in gold literally are now worth significantly less. People have better access to food now, so they don’t want to pay the big bucks for your buckets anymore. This is a good thing overall, but this is where having gold and silver come into play, they hold their value, and will always be worth something. It doesn’t matter if you wouldn’t trade for it, or that you don’t care about silver or gold, and think that is worthless personally or philosophically. Bartering and trade, economics and supply and demand don’t care about what you think or what you think is true, it’s about society as a whole. Historically this is true, and as much as we like to think that the collapse of America will be “completely different” it’s not, it has happened before and will happen again in the future. Me pushing you to buy it doesn’t make me a penny, in fact it COSTS me money, because my time spent writing these blogs and running this site, costs me money. I do it because it’s the right move, it’s betting against a dying currency, its hedging for a mathematically necessary collapse and preparing for the recovery and rebuilding that comes afterword.

In the end its up to you, and your own decision, however if you look at other countries and societies that have collapsed, from thousands of years ago to those in the middle of it now, the lessons are the same. We don’t get to escape it just because we have a red white and blue flag, or because we have a beautifully crafted constitution that we’ve ignored, or because we’ve been to the moon. Mankind will be mankind, we continue to make the same mistakes, the same mistakes result in the same consequences and the reality is after the consequences come to pass the same basic principles and foundations are necessary for thigns to be rebuilt. And rebuilding is as guaranteed as the collapse.

ENTER TODAY TO WIN

A KATADYN WATER FILTER, WISE COMPANY FOOD BUCKET, BUG OUT BAG AND MORE

IN THE GNP PREPPER CONTEST! ITS FREE!

Filed Under: Blog, Economics, General Tagged With: economic collapse, Economics, inflation, liberty, precious metals investing, survival economics

Prepper Economics: Part 2: What is Inflation?

November 21, 2012 by Great Northern Prepper 2 Comments

If you haven’t read my first part of this series, please do so. Prepper Economics: What is Money

Ok so nowadays and especially in prepper circles we continue to see talk of “inflation” that big black cloud on our horizon, the boogeyman of the economy. Now some say that it is already here, technically it always has been and very much so since 1913 to the present, but I will explain why in a little while.

What is Inflation?

Many people think of this when they think of inflation…..

The Price Gun, that nifty little machine that goes around marking the price of items….You go to the store and see that same can of soup you bought a month ago is now .20 more or its the same price but theres 1 oz less in the can than there was before.

Technically by definition in most dictionaries and places you’ll look at on the web they define inflation as something like this…

The general increase in the price of goods and services (things you buy) over a period of time, meaning over time the amount 1 dollar can buy is less and less in relation to the price of the food. They will also give lip service to the “erosion of purchasing power” of that currency but mostly due to the fact that the price of food went up.

That is true to a certain extent, but the inflation we are worried about, the inflation that is already here and will accelerate faster and faster in the future has nothing to do directly with the price of food. Your dollar was worth 95% more in 1913 when the Federal Reserve was created than it is now, If you purchase something for around $23 today it would have only cost a buck then! Does this mean that it was cheaper to produce corn then? or get meat to your freezer? No In fact it is more efficient and cost-effective than ever before, why do you think obesity is an issue? Because its harder to make food?

No the price of food has not increased, it has decreased, it is easier to buy something now than ever before in the history of this country. This is due to inflation and not the inflation of food prices but of the devaluing of the dollar, the “erosion of purchasing power”.

Now a few caveats….

Are there times when food prices go up because of issues with the food production itself? YES

When a major drought hits, and crops go under on a large-scale, of COURSE food prices will increase, there is less to go around, thus less supply same or more demand so prices increase.

But food production has gotten so efficient we actually PAY farmers not to grow or to throw out crops so that the prices stay relatively stable, we have the ability to make so much food it would be extremely cheap to buy a bag of wheat or rice, we don’t so that prices don’t cause farms to go under…or should i say megacorps to make more money than what the market dictates…anyways wont go into that.

Now I have talked about how money is created in our modern economy, in that there is no set amount, it is decided by a private institution called the Federal Reserve, they put numbers into a computer program and that money now exists.

Now this isn’t a bad thing technically, a fiat system CAN WORK, The base of money (That is all the money in existence) needs to be expanded over time. WHY?

Because every day and every year there are more people coming into the world, more than are going out, that’s why populations increase. With that there are more people coming into the workforce, more business are created to meet that populations demand, current businesses expand, etc. with all of this there is a need for MORE currency, more money to be available to pay these new workers, so that the growing population can continue to buy things, etc. With this you can see why if we had the same amount of currency in circulation as we did in 1776, there wouldn’t be enough bills and coins for everyone to have even a little each.

Now this goes into the opposite end of the spectrum of inflation, and that is called DEFLATION, Prices go down, so instead using the same can of soup example, now what used to cost 1.50 now costs 1.25 Great thing right?

Perhaps in some cases depends on where you stand in your finances and life. Deflation can be catastrophic to people who are trying to sell a home or anyone with debt in general, because now their debt exceeds the value of the home. You have a 200k mortgage and now your house is only worth 180k, or you owe 5k in student loans and now you don’t get a raise you expected because the economy is experiencing deflation. Sellers and Debtors lose in deflation, buyers and creditors lose in inflation, you may say screw the bank, but they are going to charge you more for what you want because of it.

You can see why it is so important for there to be that fin balance between inflation and deflation for the good of the citizens and the economy.

So now you may be asking WHY HAS OUR MONEY BEEN DEVALUED SO MUCH?

Its seems strange that the U.S. instituted the Federal Reserve to keep this from happening, to keep a tighter control on the economy to not let “Bad Things Happen”, but here’s the track record

Devaluation of the U.S. Dollar by 95+%
Great Depression
16 Trillion Dollars in Debt Funded by Federal Reserve in a large part
2008 Housing Bubble (and them forecasting that they didn’t “see” a recession coming as this was unfolding)
Continued Recession despite massive printing (typing on a data sheet) of cash
Etc. Etc.

So why with giving so much control to the Fed, to keep inflation “in check” have we seen all these things happen, completely contrary to “why we needed it” in the first place.

Well for two reasons

1) It gives MASSIVE power to the government and banking industry, unimaginable power

2) They want Inflation

WHAT????

They want inflation? I thought inflation was bad?

Yes its true

But like I said expanding the supply of money is needed to keep up with growing economies and growing populations, however when you expand it further than that it leads to inflation, that is the devaluing of the currency, and eroding your purchasing power, where you have to spend more to buy the same amount, making it needed to pay you more, and the cycle continue to increase when the base is expanded to cover the “growing” economy plus some as they have continued to do.

However there is another reason, it isn’t an “accident” more is created than what is needed, this is because of DEBT.

If there’s anything I can harp on about is about how everything…everything wrong and everything behind why our economy works the way it does and why it F’s up so badly is because of debt.

We are a debtor nation, in regards to not just our government but our business and individuals. The average American carries massive debt as does our government, the reason we do is for a lot of different reasons, Home prices are so high because money is so available that prices increase because of massive demand created by debt, not because the house is really worth that much, but that’s a subject for a different day.

In regards to the government who is in an incestuous relationship with large corporations and banks as well as the Federal Reserve who is controlled by these same banks, they hold Massive debt, and not debt held by China who holds about 1.1 Trillion. Japan holds about 1 Trillion as well, but the largest amount is held by who?

You guess it the Federal Reserve and the U.S. government itself, between 6 and 8 Trillion Dollars, we owe it to ourselves.

So back to the question why does the U.S Government want inflation? Think about it if you owe someone money and if every year that dollar is worth less than you can pay off old debt which is worth more with new dollars that are worth less! Presto! You have an engine that seems to be able to work….for a while. This system has worked great for a long time, we have always been able to have people or ourselves buy more and more debt to pay off the old debt, up until now. Now we are seeing people, nations and investors shy away from our debt, so we have to buy it up ourselves in larger and larger quantities. This works for awhile as well, since there is always a demand for dollars because we are the Reserve currency for purchasing Oil.

Not to get deep into that, but in the Bretton Woods conference after WWII the U.S. economy was booming we were the best show and most stable show in town so we finaggled for ourselves to be the sole currency for purchasing oil. So if China wants to buy Oil from Saudi Arabia they have to get dollars to do that, if Mexico wants to buy oil from Venezuela they have to get dollars to do that, so on and so on. So there is high demand for dollars, with that it keeps a lot of the dollars that have been created out there, being held by foreign governments and states, which keeps the dollar’s value higher. When you have people holding onto the dollar it makes it worth more, if they all decided not to do that anymore allllllllll these dollars would come pouring back into the country flooding the world with unwanted US dollars and we would be…in deep poop.

Anyways, that s just another facet to the whole equation…kind of complicated right? In a way yes

What you really need to understand is that price increases are due to many things, but what we have been seeing and what we will see soon in the future is not inflation of prices due to food being more expensive but the fact that dollars are worth less, that is the real inflation.

There are more dollars than are needed they are printed to fund debt and the repayment of debt.

Inflation is the fact that every year we have to work more to buy the same stuff. Because you have to remember yes, wages go up but they don’t go up every day based on inflation, they may go up every year or few years to keep up but they always lag behind and when big inflation hits they lag farther behind.

Other than acts of nature or war, price increases are due to weakening currency, that is why the standard definition is not really true when it comes to what inflation really is. Inflation is the weakening of our dollar due to bad monetary policy by our government and its cohorts, that is all.

So when you hear about inflation this is not really the prices of food going up, but that dollar shrinking in your wallet.

So now you know the basics of inflation and how it affects you but now you are probably asking…how can i Protect myself and family from it?

Well if you think about it, from what you have already learned prices increase over the long term because of a devaluation of your dollar, its value goes down, so prices go up. So if the value of the dollar goes down over time, any investment you have HAS to be at the level of inflation to just keep its value and outperform the level of inflation to ‘increase’.

So if inflation is 4% you have to earn 8% to truly earn %4, etc etc.

If inflation starts to skyrocket to 10-20% no investment is going to keep pace with that, so your money is going to be devalued, in your wallet, in the bank, in you 401k, etc.

So if Inflation is 10% and your and you had $500,000 dollars in your 401k, and it made 5% that year, you 401k statement says $525,000. But in reality the value of he 401k is now $472,500 (this was a quick figure i know compounding interest through the year and everything else will come out with a slightly different number, but its a rough estimate ok!)

That’s the danger, when inflation is rampant…and it will be, EVERYTHING you have denominated in dollars will be valued less, anything that is physical will be prized more.

So that’s why preppers and myself in particular are very involved in precious metals ‘investing’

Now using the term ‘investing’ I don’t meant to look at it as you would your 401k or a day trade on the stock market, this isn’t a lets buy gold now so we can make a bundle later. It doesn’t work that way. And you shouldn’t think in that manner as a prepper.

It is an investment but an investment in preserving not increasing.

You preserve your wealth in precious metals, let me explain.

When you see articles and predictions of “Gold to hit 5,000 an ounce by 2014…Predictions of $200 Silver if Fiscal cliff isnt reached..” Etc and etc…

You probably think, WOW If i buy around $41k in gold right now I can buy a house when that happens….

Well technically..maybe in certain conditions, if you already holding the debt. But its not that gold hits 5000 an ounce and everything is relatively the same price…When gold hits 5k an ounce the dollar will be extremely diminished in value, and remember….devaluing currency=higher prices.

Prices continue to go up so roughly your gold will buy the same amount of stuff then as it does today…The dollars in your bank account however will not, that is what we are talking about
Here’s something to be able to visually see what I am talking about (Click on it to bring the image into full view to read it better)

You’re getting more of the currency per ounce but your getting the same value in goods and services.

For people with existing debt like a home, etc, this can work out in their favor ONLY IF they have sufficient savings and buffers to make it through the times until wages increase to match inflation.

So having metals will help to buffer the pain felt by having your savings and retirement destroyed.

I have a whole section on precious metals investing as well as a Blog Post on Silver and Gold Coins and what to look for.

I will repeat this here though. DO NOT LIQUIDATE YOUR RETIREMENT AND BANK ACCOUNTS AND GO OUT AND BUY A BUNCH OF GOLD AND SILVER!

I am not saying that, what i am saying is look into it, and make your own decisions, if you spend all your have on Gold and Silver how are you going to pay the bills, what happens if your have an emergency expense or vacation you want to take and gold and silver are in a dip at the moment now what?

Don’t put your eggs all in one basket, be smart, be intelligent make metals a PART of your preps, not the whole kit and caboodle, I have thought 10-15% of your net worth would be a smart play, however I think now you should increase it from there, to where…I don’t know depends on your individual situation, I am at about 22% myself, but that means 78% of my assets are in other things, whether that is a home, savings as well as retirement accounts, i plan for both the worst and the best!

Its always up to you, just don’t read this or what anyone else writes, get freaked out and make a HUGE MISTAKE, always take time to research and recognize whether or not you are making a decision based on facts and not on emotions (especially fear)

Filed Under: Blog, Economics

Episode 12: Glen Tate of the 299 Days Book Series

November 19, 2012 by Great Northern Prepper 4 Comments

Today should be a real treat for all of you, you dont have to just listen to me!

Glen Tate who has written the 299 Days Book Series is on to discuss the realities of the coming economic collapse.

We Discuss

How He got into Prepping/Why he wrote the series
What it will look like. Partial vs Total Collapse
Reluctant Spouses, how to Prep without their support and how to “Flip” Them
Prepper Philosophies
Special Needs Children and how that fits into your preps
And Much More!

Episode 12: Glen Tate Author of 299 Days [ 1:18:50 ] Play Now | Play in Popup | Download (2044)

Glen Is a great guy, down to earth and just a normal Joe like You and I, who has a unique view into the corruption and decaying structure that is our government. Many of the things mentioned in the book which were written 2 years ago are coming to pass such as the infamous “Freedom Corps” in the book seems to be realized in FEMA’S new “FEMA CORPS”. This is not to say Glen is a Nostradamus, its just taking historical examples of what Government has done and wishes to do and doing your homework.

Glen just sat down one night and started writing the series, which turned into a 10 Book Series.

I Did a review on Books 1 & 2 Last week, which you can read, and Books 3 & 4 Have already just come out.

You can Get all the books in Paperback or Kindle Format right off of Amazon, and they are published by PREPPER PRESS