Posts Tagged ‘MONEY’

Over the last so many thousands of years, the system of commerce in this world has changed, and grown to a place where we no longer think in terms of bartering for our needs and wants, but in terms of currency for our wants and needs. When we want a bushel of corn and twenty pound of ground beef for the family reunion’s cookout, we think of what it will cost us in cash. We do not need to look around for somebody that is willing to trade for that corn and beef by accepting something we have to trade for that commodity, such as a new hoe for the farmer that grew the corn, etc. We simply give the seller whatever cash he requests for the goods, and the trade is complete.

There is great benefit to society as a whole in these changes, as we know what we need to be able to “purchase” these good beforehand. We can save up for the impending purchase, or put it on a credit card and pay for the food later. Today, cash is what makes the world go round. Nobody wants to barter something that you made in your woodshop for a gallon of milk sitting in the cooler at the back of the store. If you do not believe me, try it sometime.

However, cash will not always be king, and even now some of the luster of this medium we call currency is waning. People are using plastic more and more. At some point, the frequency of use of actual cash we decline to the point whereby governments will no longer want to print paper currency and stamp coinage. It will become too costly for the return they receive on that currency.

Already we see the trend towards this new reality of commerce often called the “cashless society.” Debit cards, automated deposits, EFTs and other means of electronically moving funds from one person to another are becoming commonplace. In fact, most large employers now all but require you to receive your paycheck as a direct deposit into your bank account. The government (mostly) now issues welfare funds by way of electronic benefit transfer (EBT) cards. No actual cash changes hands unless you take the trouble to go to a bank or an ATM to withdraw your electronic credits as cash.

Scripture tells us that in the end times the beast will have a system in place that prohibits anyone from buying and selling unless the possess the mark of the beast (Rev. 13:17 And that no man might buy or sell, save he that had the mark, or the name of the beast, or the number of his name. KJV) I believe that this new system of trade will result in the Beast’s victory over the world’s economic system.

Therefore, it is to our advantage to learn how to survive in an era where we have two choices to make. Choice one is to give in to the system of cashless transactions, thus lending your support, however unwillingly it may be. The second choice is to learn how to work around the system and deal with the ages old system of bartering for commodities directly. Of course, working around the governments prescribed method of acceptable operations is fraught with danger, but at some point in time, we have to either make a stand for what is right, or be a lemming and comfortably follow the crowd off the edge of a cliff.

One of the problems with bartering is determining the acceptable value of the two commodities to be bartered. Under normal circumstances, and we will use coffee as an example here, a bag of coffee costs X number of dollars, priced at so much per pound. Most of the time, coffee is available in either a fine ground state for drip coffeemakers, or as a whole bean, roasted for your convenience. The best way to obtain and store coffee beans is in the green state, so that you can roast it at your convenience.

The problem is going to be in placing a value on that coffee you have to barter in comparison to the item or service that you intend to trade that coffee for. It is best all around that you begin now to think of your belongings, especially excess items you may have standing in reserve for the strict purpose of bartering. Naturally, the other party will also be giving the same careful consideration to whatever he has to trade to you for your coffee. The trick is to make adjustments fast enough that an equitable trade can be made, so that both parties can be satisfied. Good luck with that.

I wish I could give you a simple formula to determine value, but there isn’t any. Value of any commodity or service is something that changes without warning, and rarely stays constant for very long. Prices rise and fall based upon a myriad of reasons, with the biggest being that of supply and demand. Too much of any commodity, with a low demand for it lowers the price. Not enough of a commodity in relation to a high demand increases the price.

We will soon be entering a period of time where any financial planning we can do now will make things much easier for the long haul for us. Start stocking up on commodities that can be stored long term, and when push comes to shove, you will be able to get those hard to find items by bartering these same goods that you have saved today for use in the future. Things like tobacco, coffee, salt and sugar, candles, matches, fuel oils such as paraffin and kerosene, etc. all of these things will only increase in value as the availability declines.

Austerity is coming, no matter who gets elected in the fall, the only question will be how soon will it enter the picture, and how hard will the powers that be try to hide the fact that today’s federalist lawmakers are bankrupting this nation, driving to a position of servitude to the world’s wealthiest progressive leaders. They will do all they can to enslave you, and they will accomplish this most easily through your increasing use of credit, and your adherence to the cashless payment systems of the world.

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There seems to be a lot of pressure today to invest in gold and silver for the coming times. Ostensibly, this investment will tide you through the rough times a comin’ down the road. But the question begs to be asked, will gold and silver really help me survive the coming times? The answer to that question is unfortunately a two edged sword. A sword that can not only lop off an arm on the for-swing, but take your head off on the back-swing as well. We have become too accustomed to taking wealth for granted here in the United States, and the rest of the world is following suite, unfortunately.

We base all of our transactions on a dollar bill, and as long as that dollar bills value holds true, we can survive. Or so we believe. I’ve made mention time and again that the value of any currency is based upon an arbitrary figure, set by governing officials. Currency traders further drive the value of that currency being traded by creating demand for it, while the governing officials create the supply. The old adage of supply and demand exists only so long as the two entities exist. What happens when the governing officials no longer create a supply of currencies for the traders to trade in? Simply put, your currency is worthless.

Most people are aware of that fact, and preppers and survivalists are acutely aware of that fact. And because of that many are now stocking up on gold and silver bullion and coinage, or what many consider to be the currency of the future. It’s a nice picture, but it isn’t necessarily the picture that tells the truth. Precious metals dealers want you to believe that their products will indemnify you from the coming collapse of society, the coming depression, the rising tide of inflation, and on and on, ad nauseum. But will gold and silver really save you in the future?

That all depend upon what you want it to be used for.

Generally, most buyers of precious metals invest for one of two purposes. In the first case, gold and silver, or other precious metals are purchased simply as an investment tool. Buy low and sell high. Profit is the name of the game, and today, those who have purchased in the past, are raking in the cash by selling today. But once you’ve sold your investment, what then? You no longer have the gold and silver jingling in your pockets, so to speak. Used wisely, precious metals can be an excellent investment tool, and I encourage you to look into the market as part of your portfolio. It can pay off really well in the long run. However, just like any investment, you can lose your shirt, pants and even your undies should the market collapse.

The price of everything can go up, or it can go down.

The second common reason to invest in precious metals is for the investment to be used as a hedge, or buffer against the rising cost of living in the coming times. We buy gold and silver because we can use it when currency as we know it today no longer exists. We hold onto the thought of buying a loaf of bread with gold or silver just like we hold onto a fistful of dollars at the store. We want to buy, we have the cash, but we hate to part with it. You know the feeling.

Inflation is already here, and we feel the effects of it every time we look at the receipt for this week’s groceries. Prices are going up, but our paycheck isn’t keeping up with the rising costs. If you think things are bad now, wait until hyperinflation sets in, or worse, suppose the ultimate calamity does occur and the government has vanished, eliminating currency as we know it today.

Then we have a few problems with our scheme to survive the coming times based upon our stockpile of gold and silver bullion and coinage.

For one, what value does an ounce of gold have when there is no currency to value it against? Secondly, what mechanism will be in place to assure that this standard will be adhered to by all parties? Just because we say an ounce of gold has a value of $1400.00 today, who’s to say what it will be worth tomorrow? Nobody knows, and in fact, value will be set purely between the buyer and the seller of these commodities. And I can guarantee that the results won’t be truly satisfactory for all parties involved.

When the crap hits the fan, all bets are off, and the value of any precious metal will be set by the seller of what you wish to buy with that gold or silver coin. There will, if the crap really hits the fan, come a time when there will be things of much greater value than coin and bullion. There will come a time when a pound of silver may buy you an ounce of coffee.

As an example we can look back into the annals of history and look at an ancient time when exactly what I am suggesting occurred.

We read in 2 Kings 6:24 that; Later,
Ben-Hadad king of Aram gathered his whole army and surrounded and attacked Samaria. Samaria was surrounded, besieged, put into a place of ultimate hardship where economy had no place. The crap hit the fan, and as can be expected what happened? Verse 25 tells us that; There was a shortage of food in Samaria. Aha! That’s exactly why we need to stockpile gold and silver. We can use that to buy provisions when society as we know it collapses. This is all well and true, but the other end of 2 Kings 6:25 says that; It was so bad that a donkey’s head sold for about two pounds of silver, and half of a pint of dove’s dung sold for about two ounces of silver.

And that’s the truth of investing for the future. Those who had much wealth in gold and silver paid through the nose to barely survive with food that wasn’t fit for the hogs. We always exist in a state where the haves and have-nots battle betwixt and between each other, and the haves always win out in the end. The problem here is that we need to determine what we want to have in the future as preppers an survivalists.

History tells us one thing about wealth; those who have land always come out ahead of those who do not.

Those who can provide commodities, such as food, implements etc, to those who cannot, but have the wealth to buy those commodities, can make a huge killing by setting their own prices.

Therefore, if you wish to invest in gold and silver as an investment tool for today, go right to town with the idea. Just remember that when, and if, the crap really hits the fan, the value of that gold and silver may well plummet to near zero in value. Your better investment will be in long term storage foods, land, seeds and equipment on which to grow more food, and other skills, supplies and investments that you can trade and barter with those who haven’t the sense to prepare for the coming times today.

Value of anything is purely an arbitrary term, don’t place your future on the altar of today’s wealth and expect it to be a bed of roses in the coming times.

One of the “Oh Boy!” things we have to look forward to as preppers and survivalists is the coming cashless future we will all inevitably be forced to endure. In some aspects this can be a good thing, but in reality it means that we will no longer have individual sovereignty over our own finances. We won’t be able to spend as we wish without somebody else keeping track of our spending habits.

Current statistics indicate that approximately 60% of monetary transactions in 2010 were made by plastic of one sort or another, with cash and checks, or paper transactions dropping to just 40% of all transactions. The lure of the convenience plastic provides makes using it too easy. Whether you use a debit or a credit card, it is still an electronic transaction, or a paperless deal. Why will the loss of paper, both cash and check variety be such a blow to our society? In simple terms it means we will have given our freedom to choose over to a nameless computerized system of wealth redistribution. We will no longer be the proud owner of a pile of money, but merely the manager of our own bank account that uses electronic credits to transfer a payment to somebody instead of paying them with our money.

Credits will be still valued in dollar amounts, but we won’t have any dollars to use. And that’s where we will get burned in the future.

Many of us are storing up gold and silver in both coins and bullion as a hedge against the future collapse of the U.S. dollar even though that collapse has already begun. But in the future, where all transactions will be required to be conducted electronically, how do you expect to use this commodity to pay your bills? You won’t be able to drive up to a gas station and fill your car up with $15.00 a gallon gas and expect to pay the attendant with a gold coin. He won’t be able to accept it, at least not legally.

You may think I’m kidding and that there will always be money, and you’re right, there will always be money, just not the type we’re accustomed to using. As the ease and convenience of plastic catches on, more and more people use their cards, and as more and more people use plastic, the cost of processing these transactions continues to decline, in turn making plastic more desirable by retailers and others collecting payments for services or products.

Already we see a growing number of businesses refusing to accept cash for transactions, such as many cab companies and restaurants. Try buying something online with a bundle of cash or a check. And yes, checks are accepted for some online transactions, but that is only because those checks are processed as electronic transactions. Many stores will give you your check back with your receipt for the same reason. Social Security recipients get paid through either a government issued EBM or direct deposit into their bank account. Welfare recipients and the unemployed receive their benefits through EBM cards as well. Checks are becoming less and less necessary with the increase of electronic payment technology.

Cash is becoming risky to carry with the rise in violent crimes. As it becomes scarce, people that do still carry large sums of cash become walking targets, and the same goes for businesses. The huge sums of cash traded by the drug cartels lead government officials to agree that getting rid of cash would be of great benefit in fighting crime. It only makes sense to see the trend towards cashless that we are seeing today.

What this means for us, meaning preppers and survivalists, is that we need to be able to sail through life without the need to accumulate cash for our transactions, and that will cause no end of problems down the road. The government wants your money, and they will collect it in one way or another as taxes and fees. But if you don’t have a bank account, how will you pay your taxes?

That’s a question you’ll have to answer in the future. But for now, be aware of the fact that things will be radically different in the future, and unfortunately, most people prepare today for the future under the false assumption that things will carry on as usual, no matter what happens. This will not be the case. We are approaching the crossroads even today, and the decisions we make while developing our preparedness plans cannot be undone after the fact. That’s why careful research and consideration of the facts are so important as you do develop your long range plans.

Plan now to accommodate a future where barter will be the main source of transactional business in the future between like minded people. Cash is always good to have on hand, but it won’t always be useful. You can by a brick of 22LR’s for a few dollars today, but what about when there are no more 22LR’s on the market? If a man has one spare brick, but no food, how much gold will it take to get that brick from him? Suppose you had a 2 ½ pound can of coffee? Wouldn’t that make the deal sweeter than a few silver rounds?

Think of some things with a long shelf life that will become hard to get in the coming times. How much work can you get done around the homestead in exchange for a case of instant coffee? Have you ever thought of stocking up on simple hand tools such as saws, knives or axes to use as barter goods for other things you may need?

And then there are many useful skills that have become forgotten in today’s hurry up world of technology that you could use as a barter tool as well. After all, how many glaziers do you know?

The point here is that things are changing. The world is becoming a different place right before our very eyes. The things people told me would never happen when I was a kid have become reality, and that reality makes me very nervous for our future. Learn today to be prepared for those coming times when all will be different. Learn the fine art of barter, and learn how to weave that skill seamlessly into your lifestyle. The day when you may need those skills may not be so very far away as we want it to be.

One of the aspects of preparedness and survival revolves around the monetary world, but unfortunately for too many of us neglect to keep tabs on what is happening in the money arena. This article from Money and Markets explains some of the issues the latest European tragedy to occur, the falling Euro. Claus Vogt makes some good points, and as far as application towards preparedness, I would suggest if you have been waiting for the right time to begin preparing, you’ve waited too long. While I do not advocate relying upon gold as a survival plan, it does make for a good, relatively reliable investment tool.

Nothing but food and water, tools, seeds and other supplies and equipment will help you get through the coming times, but having a good investment can help you to afford the things you will need to get through the coming times when the cashless world comes to reign. If you like the article and want to learn more about this aspect of preparedness, please follow the Money and Markets link at the bottom and sign up for their free email newsletter.

The Euro Is Washed Up — But the Dollar Is No Better

by Claus Vogt   06-02-10

Greece has made it obvious: The euro is doomed. This fact had been obvious to all the euro critics from the very beginning. All the arguments against the possibility of a common currency for very disparate countries had been raised, but brushed away by overzealous politicians.

They’ll learn their monetary lesson the hard way in the coming years.

Unfortunately the current discussion about Greece, Spain and all the other PIIGS countries is very superficial … Greece is everywhere!

In fact, the whole western world and Japan are over indebted …

You’ve likely read in the press about debt to GDP figures like 200 percent for Japan, 115 percent for Italy, 113 percent for Greece, 85 percent for the U.S., 76 percent for France, 73 percent for Germany, or 70 percent for the UK.

These are dangerous levels, although not outrageous ones. But government officials don’t tell the whole story; they sugarcoat the real dimension of the over indebtedness.

That’s why you need to understand …

Explicit Versus Implicit Debt Levels

Explicit debt leaves out important obligations like pensions and social security. If you add these in, you get what economists call the implicit government debt.

And if you use the implicit government debt to GDP ratio, the picture is much bleaker. Look for yourself:

Germany: 255 percent

France: 255 percent

UK: 530 percent

U.S.: 570 percent

This is frightening, indeed. These obligations are unbearable. Which means governments all over the world will have to break many of the promises their predecessors have made to get elected.

There are ways to get out of too much debt. The first is by …

Default

When you default, you sit down with your creditors, and restructure the debt. Creditors have to take the losses, and rightly so. They consciously took on this risk to earn a profit. Yes, they made bad decisions. But that’s the way capital markets function.

Governments around the world will inflate their way out of debt.

And tinkering with this process leads to bad capital allocation, an inefficient economy and less growth.

Another way out is to …

Crank Up the Printing Press!

Most modern governments have a trump card many ancient governments would have died for. They reign over fiat currencies, which can be created by the stroke of a computer key. As Ben Bernanke once said so famously:

“But the U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost.”

Therefore, modern governments with a printing press can bail themselves out of all debt problems. And I believe they can and probably will inflate their way out of today’s debt problem. They’ll pay back their debts nominally, with money that’s worth less. But they will not have to default.

Unfortunately, at the end of this road, the bond market and the currency will be destroyed. I don’t know how far our politicians will go in the coming years. Although I fear they will go this bitter way to its very end.

They Will Inflate in Lockstep

What I am nearly sure of is that the U.S. with its Fed and the EU with its ECB will inflate more or less in lockstep — like they have in the past.

Now euro bashing is all the rage. A short six months ago dollar bashing was en vogue. Have a look at a long-term dollar/euro chart below.


Source:www.decisionpoint.com

If you take this perspective, it really looks like not much has happened during the last few months. Yes, the euro is down to levels seen in 2004-2006 or 1995-1997 (when the euro was not yet an official currency). But at the same time the euro is much higher than it was in 1999-2003. So it has a long way to fall.

Sure, the euro is doomed. But so is the dollar! Both fiat currencies have lost massively against gold in the last few years. And as long as the bad fiscal and monetary policies prevail, gold will keep rising.

Best wishes,

Claus

This investment news is brought to you by Money and Markets. Money and Markets is a free daily investment newsletter from Martin D. Weiss and Weiss Research analysts offering the latest investing news and financial insights for the stock market, including tips and advice on investing in gold, energy and oil. Dr. Weiss is a leader in the fields of investing, interest rates, financial safety and economic forecasting. To view archives or subscribe, visit http://www.moneyandmarkets.com.

As the economy continues to decline and we start to realize what lays ahead for us, a discussion keeps cropping up over what kind of investment should we make for the coming times. We know that we will have to buy some sort of supplies or other needs, but will we be able to simply pull out that little piece of plastic, or will hard currency be required? To be sure, only time will tell, but based on history and comparing it to what I see today, I have a couple of predictions to make regarding the question.

Before we get going down the road to buy a loaf of bread, let me clarify money, and its relationship to emergency preparedness planning. First of all, there are several different ways to look at the issue of hard money. One of them is as an investment instrument. People can trade and deal in currencies just like any other stock, and buy when a value is low, then sell when the value is high and make a profit from the sale of those holdings. It’s not a sure fire way to make an income, but if you are savvy in the ways of the market, the potential is there to make a proverbial killing in the markets.

The problem here is that if the ultimate meltdown does occur, will you be able to cash in on your investments, and use those funds to obtain needed supplies and equipment? In reality, I don’t believe so. You will most likely not be able to recoup on any of your investments, and in fact, you will not be able to get back the cash you initially invested, either. Why is that, you wonder? Because if in fact the ultimate melt down does occur, there will be no financial infrastructure available to process your request. There will be no bank to give you any of your money back to you. That’s if the ultimate meltdown occurs, that is. There are varying levels of collapse that will affect your investments to varying degrees. For that reason, I would suggest that you only deal in these sorts of investments if you can afford to lose everything you’ve invested into the game.

For purposes of emergency preparedness planning, we need to look at money a little differently. We need to look at money as it was initially developed. Money, in its basic precept is a tool for barter, and nothing more. If you need to hire a handyman to rake your yard, you trade a bit of cash in trade for his time. The handyman takes that cash and trades it for groceries or gas for his truck at the C-store. The store owner uses that cash to pay his employees and buy new gas and groceries. And the cycle continues on and on, dollar bills trading from hand to hand until you go to the bank and cash your paycheck so you can give that cash to others in exchange for what you need.

However, should this cycle become interrupted, how much value will that cash you hold have to those who possess what you desire? The so called leaders of this country are determined to implement what is called ‘smart grid’ technology in this country. That smart grid can very easily, according to some, be disrupted. Should this occur our entire financial infrastructure would come to a standstill. Banks would be unable to open. ATM would cease to function, and retailers would not be able to process credit card payments.

Your only option at this point would be cash. However, as a society we have become so entrenched in the security and convenience that little plastic card has that few of us carry much cash today. Some people I know carry just enough cash to get a couple of snacks and that’s it. Next time you are visiting a fast food joint, watch the number of people that pay for their meal with plastic. It’s amazing how many people do that. I’ve even seen people pay for a cup of coffee with a card. Granted, most of these transactions are via a debit charge rather than a credit charge, but it’s still an electronic transfer of funds. Paper checks are processed the same way today in larger chains as well. The money is taken from your account immediately rather than days later as the check goes through its processing routine.

Stores and gas stations may stay open in the event of a catastrophe, depending upon the severity and type, but if they cannot process credit and debit transactions, the only option is cash. Some may take paper checks, but that possibility is iffy at best. For the long term, you need to be prepared to live without that little piece of plastic. To do that, you’ll need to figure out an amount of ready cash you think you may need for a short duration when the infrastructure may be down. And remember that more than likely; we will see a sharp increase in the price of goods as those goods availability dwindles in the markets. Plan on at least three times what you would spend for goods today as an inflation buffer.

And then, as retailers find that their own credit lines are gone, and they cannot get any more products for their shelves, cash will become less and less meaningful. At some point we will find ourselves living in Bartertown, of which I have written on before. You’ll either need to have some product, or a skill that can be traded to get what you need.

Buffers against that time will only be what your preparedness plans have provided for you. For the most part, food will be a standard trade good, so try to have sufficient stocks of food with which to trade with. And just as a suggestion, you may want to use that as an opportunity to unload some of the shorter term foods that are either coming to their use by date or have gone past it. Desperate people won’t bother with dates, and if the food is safe, there’s nothing wrong with using it to barter.

Skills will eventually become barter tools, provided you have a marketable skill in the coming times. That being the case, I would suggest you learn how to do something that you don’t do now. Working for twenty bucks an hour in a call center may be good money, but if there is no infrastructure, as would be the case in a nationwide EMP attack, then there is no job, and no income. What will you do to provide for your family?

Remember that cash will be the only way of conducting business when the collapse finally begins, so make sure you’ve plenty on hand. But don’t flaunt it. Hide it and hide it well. There are dozens of ways of hiding what you’ve got, but I won’t describe them here as it would make for easy pickings by those with criminal intent. Pay attention to my writing and you’ll be able to pick out the clues as to what you should do.

The revolution has just begun, and it will be years before it comes to an end. We’ll have lots of distress in the meantime, and by developing your plans now, you’ll have an easier time of it later.