Fight or flight. What is your plan?Submitted by McClarinJ on Mon, 03/17/2008 - 16:34
There is much apprehension that the frenzied efforts of the Federal Reserve to stave off a huge market plunge this week will actually exacerbate the problem. Repeated prime interest rate cuts, which electronically expand the money supply, are not working. If there is any bounce, it is only for a day or two. Confidence in the Fed's ability to stabilize the market and inflation simultaneously has been shaken by overnight jumps in commodities (oil, gold, grains, etc.) and further drops in dollar value versus, Yen, Euro, and other currencies. The prime stands at 3.5% after a first-ever *weekend* cut of .25%. Another .75% is expected on Tuesday, bringing prime down to 2.75%. This rate is a mathematical absurdity given the dollar's steep demise and is more than anything a sign of sheer panic.
How long will the decline continue? Consider that most commentators agree that the sub-prime mortgage defaults are nowhere near run out and that the secondary markets built around these bad investments are teetering and on the brink of collapse as well, including financial sector insurance companies. The problem is worldwide. It was ostensibly caused by the Fed bowing to pressures to ease interest rates so first-time home ownership would be available to more people. Easy credit makes for bad investment and now the chickens are coming home to roost, a *lot* of them! Now, as the Fed tries to put off a long-overdue market correction that's needed to clean out the bad investment, it simply makes things worse in the end by *further* easing credit and devaluing the dollar.
There are those who believe the dollar is going down for the count, that it will not be accepted in trade, first internationally, then domestically, causing vast economic dislocations, shortages, rationing, hunger, rioting, lawlessness, and ultimately a prolonged state of martial law. I have no crystal ball, but these are the conditions I have been preparing for these past three months. I tell you so that, even though you may be starting behind the curve, you will have a list of actions to pursue should you take heed of the warning signs this week is likely to yield.
Also, you might have ideas that I haven't thought of, so I'm hoping you will share them.
Here is my action list:
Move most savings out of dollar-based investments. For me this meant withdrawing the bulk of my simple IRA, buying gold and silver and a mixture of foreign currencies. (This initially included Canadian dollars but I have now switched those to Swiss francs in my Scottrade online brokerage account.) On a hunch I also bought shares of a Brazilian gold mining company that, although dollar-based, have done very well. With gold gaining about $115 an ounce since I bought in three months ago, I am beating inflation by a very wide margin while the bit of value I left in my Simple IRA is suffering badly. I do not expect the stock market to rebound for at least one year, more likely two or three, due to the dollar's woes.
Yes, I do have a large, fireproof gun safe, but my precious metals are in several off-site buried caches made of heavy PVC pipe sections capped off at each end.
Buy extra food items. I've been loading the grocery cart with extra beans, rice, and other storable foods to beef up my normal two months' reserve. I tried to buy 600 lbs of whole wheat (hard, red, winter wheat berries) last week but only 150 lbs was delivered. If I have to drive for a day to get it, I will -- this week! Meantime I'm signing up with a wholesaler so I can receive deliveries and help neighbors acquire bulk foods. See http://www.dailypaul.com/node/43013 (It's better for you if your neighbors are not starving and desperate.) I've bought a very good flour mill that can be easily mounted with a motor, cranked by hand, or adapted to pedal power (my favorite). I've bought a welder so I can fabricate these for neighbors using old bicycle or stationary exercise bike parts.
I bought garden vegetable seeds for in case the need for a garden is indicated. If I'm working regularly, I'll probably skip it because a proper garden takes a lot of time.
Store water. I live in rainy New England so I've stowed only 23 gallons of drinking water in my closet and bought a one-gallon pump garden sprayer that will serve as my shower should water service be interrupted. (Also, there's an irrigation-only well on the property that can be accessed via bucket and rope, further diminishing my storage needs.) I also purchased a roll of 20-ft.-wide heavy plastic sheeting that can be a rainwater collector as well as emergency temporary shelter. Another acquisition is my backpackers' pump-action water filter.
Alternative cooking: For in case of longterm power failures I bought two Coleman-type camp stoves and fuel supplies. Regular unleaded gasoline can be used in one of them. I also stored 55 gallons of gas for emergency relocation travel . I bought a large supply of wooden matches too.
On site electricity: If the oil furnace has no electricity for fan and pumps, it will not run. I purchased a 3kw gasoline-fueled generator for wintertime use during any longterm power failure. I plan to buy a battery bank, inverter, regulator, fold-away solar panels, and make a pedal-powered generator. (Many of my survival purchases are of items I will need in when I move to Ecuador in a few years, assuming I am going to be able to make that move.)
Security: In a worst case situation, after the stores and warehouses are mobbed and looted, armed gangs are apt to invade neighborhoods looking for food and gas. Police services will be over-taxed and probably depleted as cops stay home to protect their own families. Any security you get is likely to come from your own gun. I bought a rifle and a pistol, plus lots of ammunition. I think I might buy a shotgun next. There are a couple non-lethal security measures I want to employ but they need some R&D. Guns are an immediately available solution.
News sources: Phones, Internet and most broadcast media may suffer during an economic collapse, not to mention the electricity that powers them. I have two hand-crank radios, one with a shortwave/Air Traffic/TV/AM/FM tuner. I plan to get a CB radio and license as well.
Finally, I have prepared to leave the house and most everything in it if conditions warrant. I have an all-season "bug-out bag" or BOB, actually a backpack stuffed with survival gear, including zero-degree sleeping bag, sleeping pad, snowshoes, mosquito-netted hammock with rain fly, and a very fat first aid kit. I also have a number of survival caches containing folding money, real money (silver), rain poncho, extra socks, food, cap light, first aid supplies, and other items. These will be buried along potential escape routes should I need to flee on foot.
If the signals of economic turmoil are not strong enough yet to make an impression on you, you might logically suppose I have just succumbed to paranoid delusions. But if I am mentally sick, then I think mental illness has gotten a bum wrap because I'm enjoying every minute of my survival scheming and preparations. In earlier years I would have been motivated by fear of death. I no longer fear death. Instead, my motivation is curiosity about what it would be like to survive in chaotic times and whether an opportunity might exist to reshape American society in their aftermath, returning to the principles upon which our nation was founded. You can have a healthy attitude about it too. It should be no difficult task to meet up with other survival-minded people in your town, precinct, or neighborhood. You can trade ideas and resources and help educate others just arriving at survival awareness..
Some reject "hoarding" as a selfish act that may deprive others of the food they need. Hardly a helpful outlook to have. Consider that not only do you prevent yourself from becoming a burden on strained charitable and government food lines, you can provide food to others in exchange for their help as night watchman, garden worker, repairman, etc. In fact, the more people you can gather around you, paid in food, the more secure you will be. There is safety in numbers. So buy as much food as you can. Don't wait till it's super-costly or in short supply.