Wednesday, June 16, 2010

Prepare: Survival Scenario - Economic Collapse

Read the news and get back to me...

Several European countries are in economic turmoil requiring infusions of cash from fellow EU countries, the US and international banks. Few of the EU nations want or have the stomach to make the changes neccessary to continue any version of their government funding systems.

The US national debt based upon federal deficit spending is about one trillion dollars from equaling the Gross Domestic Product of the country -  a key tipping point in economics. We will owe more than we are worth.

The physical resources needed to maintain our day to day lives are shrinking in available supplies. Fossil fuels for transportation of goods to market are going to be more in demand, harder to get and more than likely only available from volatile regions.

In short, one of three things will happen sooner or later...

1) Nothing, We will continue to plod along slapping short term economic bandaids on each crisis. The world will aspire to survivable mediocrity.

2) The world will have to make some fundamental and difficult changes to all of our economic systems and processes. Money will have intrinsic value, each entity in the chain will live within its own means and debt will be based upon physical collateral equal to the amount owed.

3) We continue to make bad decisions and the system will collapse. Dollars, pounds, euros, yuans, yens, etc will be nothing more than bookmarks and toilet paper and the world will decend into chaos.

Economic collapse will not occur a la James, Wesley Rawles "Patriots" extreme Crunch, but slowly.

Employment and spending, private and public, will curtail.  Governments will no longer be able to finance their debt and deficit spending as there will be no lenders or fincial aid available. Tax reciepts will continue to drop off and mandatory spending programs will end.  Failed theories of price and wage controls will briefly rear their ugly heads and skulk back to the economic trashcan. Governments and lenders will attempt to seize physical assets but the holders and squatter will fight back making such efforts a costly pursuit.

So how do you survive an economic collapse?

First things first. How dependent are you on an employer or a government program handing out a non-bouncing and regular check?

Second, how much do you owe and how likely is it that the holder of the debt will come after you for collection efforts including seizure of assets in the event you can no longer maintain your obligations?

Third, where are your assets? In government backed and issued non-negotiable currency, electronic, paper or metal? In physical and tangible assets with actual value based upon demand?

 Fourth, who knows how much you have, own or suspect you might have? Do you trust them? Do they live with you?

Fifth, what tangible skills do you possess that someone might need and be willing to compensate you for but does not put you at risk of involuntary servitude or slavery?

Finally, what chances do you have, on your own or in a limited community, to provide most if not all of your needs and security for a time period up to and including indefinately?

Work is cut out for you.

Here are some clues...

Don't depend upon any single source of income.

Eliminate at risk debt as soon as possible. Take money assigned to one debt once it has been retired and apply it to another debt. Don't incur more debt (this sounds like a no-brainer, but how many people celebrate paying off *something*  with a credit card financed vacation or night out?).

Have skills which pay the bills. It would be great to be able to rewire someone's home for cash, but anyone has abilities right now which make can make money. Mowing the neighbors' lawns, washing their cars, watching their children, house or pet sitting, running errands, throwing newspapers or delivering pizzas. Offer to hold garage sales for friends and neighbors for a cut of the action. Offer to clean out their garage, attic or basement with the caveat you get to sell whatever you take to the curb. The list is endless and goes on and on..

If money loses value, if goods become difficult to obtain or if the new coin of purchase is unavailable to you, how do you replicate what you need? Do you have a yard, acrage or access to a patch of land you can grow some food on? Do you have small livestock or can you get some? Did you stockpile toilet paper, diapers, tampons, aspirin, cooking oil and batteries when your currency and debit card still worked?

What do you have to barter with for more supplies? Is it limited or can you make more?

What about maintaining what you have? Do you have friends and neighbors who are likely to drop in with hand outstetched? Or arrive with evil intent?  Do you maintain a low profile and suffer along with the rest of the gang?

Physically, where are you? Rural? Suburbs? Urban? Good neighborhood or bad? A big target on the home or as non-descriept as possible?

It's a lot to think about. But here are some clues from history. As long as there are people, any economic collapse will not last permanently. People want society and place universal value on certain goods and services. Looting and slavery do not thrive long term. Humanity survived the Black Plauge, the Fall of the Roman Empire, invaders and conquerors, war and disease.

Final thought - the Roman Empire minted a coin which was comprised of a certain meaure and weight of silver. The coin was identified by the image of the Emperor featured on the obverse. Later versions of this coin were dilluted with base metals to increase their circulation and lower the cost. However, the original silver coin was used for over a thousand years and widely accepted as late as the 1400's in places such as Holland and England long after the Roman Empire was dead and buried.

Some things, minted and coined by people long dead,  have value and survive the darkest of the Dark Ages regardless of a complete lack of infrastructure or government. Even in an economic collapse, something will take the place of what is presently used or something previously used and trusted will "step up to the plate".

Keep faith and prepare for the best,


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