Subsistence Crisis
Chris Laird
A number of my readers of all backgrounds have asked me via email things like "your articles are interesting, and I agree, but what do I do about it? How can I protect myself?" I have thought a lot about this...
I will discuss this situation and recap what is happening now and what some possible alternatives are to protect ourselves. However, let me first say this, the alternatives that I see all have some problems associated with them, and I want to say that, first, the best case outcome is a substantial delay of the financial crisis for all of us who wish to make some kind of preparations for a subsistence crisis. Ultimately, a financial day of reckoning will come, and our survival will not only be in terms of some financial preservation, but will necessarily have to include measures to provide our literal shelter and food.
People who think that by having merely several million in the bank they will weather this coming disaster had better read this article....
Now, I know some people are going to think ... this guy is a survivalist! Let me say this, I am not thinking in terms of world Armageddon in terms of war, although that is always possible unfortunately these days. What I am talking about is an economic catastrophe so bad that our usual ways of living will not work, our usual ways of getting food will not work, and if this thing lasts as long as I suspect (over ten years) that we will live though a time where mere subsistence is the primary consideration, and we look back on these days of plenty wistfully, while making plans to get todays paltry meal for our family.
Basically the issue that I will outline here is this: Our economic life is so dependent on active commerce, that when the financial worldwide panic happens, commerce will die off so fast that many of the things we need will simply become unavailable. I outlined some of the reasons for this in my GE editorial called the time value of money. Basically, largely due to just in time manufacturing and economic commerce, when this conflagration happens, all of the production buffers of inventory and liquidity are absent, and we will have almost immediate shortages of everything, combined with the shutdown of factories and production centers all over the world. This means simply that the things you use everyday will become largely unavailable. This is what a subsistence crisis is.
Also, it does not matter if the result is inflationary collapse or deflationary. Fekete argues that inflation and deflation result in similar outcomes vis-a-vis ultimate survival. In inflationary Germany, people found out that, in a very short time, they could not obtain what they needed to survive because the money was not accepted. In deflationary US in the great depression, people found out they could not obtain what they needed to survive because they could not purchase anything, lost their jobs etc. The outcome is the same in inflationary collapse and or deflationary. It is all about a subsistence crisis.
In this coming time of a subsistence crisis, we Americans, as well as the rest of the world, will find it almost impossible to find things like paper towels, fresh food, processed food, money for rent or mortgage payments. We will have to make our cars last. No more new cars. No more shopping sprees, sad Christmases. Batteries for cell phones will be hard to get. Wal mart will have shortages daily of many things. It will become cold, and you will find like I just did that the electric heaters are sold out at Target. This was a little shortage, easily rectified at Target, but it was illuminating. I had to drive around looking for a heater. My usual on demand shopping spree failed and made me wonder about how it could happen in these days. But this little episode is nothing. I did get the heater in an hour or two.
The progression from financial crisis to subsistence crisis will be very swift. It will only take the amount of time that the worldwide inventory of goods is exhausted, since many factories and production centers will become embroiled in payment disputes with their customers and suppliers, so that deliveries are delayed first, then canceled. Then the factories start closing rapidly. Just in time manufacturing assures us that we only have a couple of DAYS of goods at inventory depots. People will initially think the Fed will fix things, but the Fed will find out that it cannot replace the money that was to clear here there and everywhere fast enough to prevent the death of that money, and hence find the money DIED. It rapidly becomes a worthless notional amount tied up in disputes, large and small, effectively serving to paralyze commerce.
Now then....
What can we do to plan for this?
Let me comment for a moment on using gold or silver as a solution. First, this kind of thing serves best to restart a person's financial life AFTER a subsistence crisis, when there is some normalization of things, IE it is mainly a post crisis restart. Granted you can use it if you have to buy the scarce overpriced goods you need to survive, but, would you really want to use up all your metal just to survive another year, when you still will have nine more years to live through the crisis? What of the next year and the next and the next? Therefore, if your plans for this nightmare merely consist of storing metal, you may find yourself using it up rather fast. (I definitely believe in having lots of metal though)...
Let me give you an example. There is a smallish town I know of that lived through the depression of the 30's. They lived on rabbits, and potatoes I recall. When the depression hit, they didn't know of it immediately, but what they did notice was, the trains eventually stopped coming. The stores emptied. Eventually they got together and worked up a system where everybody worked at making food stuff, and rabbit hunts... Nobody starved, but they had to work very hard to live, and everybody was thin. They lived like this for what , ten years... eight years. Eventually, after WW2, trains started coming back, stores started getting goods, and life returned to normal... and that generation survived.
Now in the great depression, let me compare this story to big cities and what happened there...People were evicted from apartments, walked the streets... families were nomads in the city, the cities tried creating soup lines for all the people. They rapidly ran out of money. They pleaded with the Federal government to send money, the govt couldn't do much. Then crime started, but not anything like what I think will happen this time, people starved. Their fate was far worse than the small city I just described...
Another example... the small farmers, in the depression many of them lost their farms because the commerce system was so screwed up they could not sell their goods. A lot of food was simply destroyed. Food was destroyed in the country, while people in the cities starved...The small farmers became the nomads described in Steinbeck's Grapes of Wrath. the story of the Joad family who lost their farm, and headed to California, and never did get any work worth mentioning, and starved the whole time. The people who hired the Joads were taking advantage of them, basically barely giving them enough to feed themselves...(May such exploiters rot in hell forever!)
In other parts of the world, the depression was just as severe, the whole system of international commerce collapsed, trade wars started and killed off what trade remained...People starved everywhere. The only ones who didn't were some tribe in the remote jungle who never heard of the modern world... and went on as before gathering berries.
Now, what kind of things will our plans for this coming subsistence nightmare have to achieve?
Provision of food and shelter for a period of years, where most ways of making money are absent.
Plans to not have to rely on the electronic life we are accustomed to.
Plans to avoid using expensive fuel and commuting.
Plans to deal with a constant lack of money or income.
Plans to deal with obtaining scarce and costly manufactured goods that remain.
Some kind of plans to deal with personal security.
Plans for essential medications? etc.
IE plans to live a very simple life of daily subsistence.
Now, I have racked my brains to come up with solutions to this, and frankly, the best one I have seen is the example of the town that got together and worked it out. I think that plans of just sitting on a private island are not practical, and that any solution will have to involve people cooperating somewhere, where they can obtain some food and shelter. Basically, if you plan to buy your way out, you will find that when you are found to have gold and silver they'll rob u blind somehow. You'd better make it appear as if your starving too... and god help you if you show up at a store with metal because they are going to go after you... so as I said, just having metal isn't a very good answer, though it is one of the best things to have, but as in all things if you do have it, you had better be wise with it. Any mistake in this regard will prove fatal.
Let me conclude with an explanation as to why this type of crisis could happen, and compare it to the 1930's.Basically we live in a time where commerce is so intense that all goods are cheaply made and hence our standard of living is so far ahead of where we were that should that standard drop there will be mass starvation.
The century of the 1900's saw a huge increase in the use of energy and mass production, so that everything we use right now is associated with low cost inputs. We live very highly on cheap goods, and mass commerce. This is made possible by cheap energy. Now, what happens if energy is no longer cheap, and this is combined with a world wide financial collapse? Essentially, everything becomes dear, hard to get and costly. Work is unavailable, and the economic system cannot sustain our accustomed way of life, be it a middle class family or a welfare recipient.
What this means theoretically is that, when this system breaks, we are SO FAR REMOVED from the source of production of all things, including food, that the interruption of the system means we will struggle just to get what we need. We are net even close to being self sufficient for anything the family needs today. Therefore any preparation for this coming catastrophe will have to address how we get the usual things we use everyday.
Some scenarios:
For a working family:
Get out of debt, and if possible live in a paid off house. Keep that older car. Make your kids learn to live with what they have and stop buying the expensive electronic presents. If you have a garage, and your house is paid off, consider buying some simple stuff you need for a period of several years. And don't tell anyone about your plans!
For a retired family:
Take some of your nest egg and get some practicals you need. Don't take that next fancy trip. Get rid of your wasteful toys. Check the situation of your pension investments, put some into gold and energy funds. Make plans for a drop in your retirement income. Be brave.
For a young couple:
Don't buy a new house today, real estate is ready to crash. Don't buy new cars. Don't get jobs that require long commutes. Don't invest money in the stock market now. Buy some gold. DO NOT TELL anyone of your metal purchases.
For all, get some gold and silver while you still can, but don't go overboard on this. And don't tell anyone what you are doing, because you may get your stuff stolen....don't be a dummy!
Lastly a spiritual comment:
In times such as are coming you need to have faith in God because you will not be able to take care of everything you will need. Read your Bible and get in contact with God our creator. Self reliance is good, but faith in God will be what ultimately sustains us in great trial. Don't be afraid to pray, because I have had many of my prayers answered, and God does answer prayers I can attest.
Well this is all for now... I hope that this helps some people out, since I don't have simple answers, at least I can pose some of the problems we will face and hope that some of us are able to make preparations they see fit...
December 12, 2004
Chris Laird
gold-eagle.com |
