hyperinflation

Profitable Assets, Professions In Germany’s Hyperinflation Of The 1920s

Since I started being concerned back in 2004 about the prospect of a U.S. financial crash, I’ve been interested in reading about the everyday lives of the people who lived through economic collapses.

Why? Because I believe there are valuable lessons to be learned for what I think is coming down the road for us here in America.

I haven’t really come across any good Great Depression accounts yet (if you know of one- shoot me over a suggestion). But the other night, I happened to stumble upon a rather lengthy article on the website of Der Spiegel (Germany) that provided a great deal of insight of what went on in Germany during their devastating bout with hyperinflation in the 1920s. Alexander Jung even went so far as to identify the financial “winners” and “losers” during that period of time. Jung wrote back on August 14, 2009:

The only objects of real value were tangible assets: diamonds and coins, antiques, pianos and art. The works of contemporary artists like Lyonel Feininger, Paul Klee, Max Pechstein and Karl Schmidt-Rottluff were in especially high demand. And if you had foreign currency, you lived like a king

The stupid ones were those who had nest eggs: the thrifty, holders of government bonds, but primarily the country’s pensioners. In other words, those who received money without having to work for it, who lived on their pensions or the interest on their savings. Large sections of the middle classes saw themselves stripped of their assets, losing almost everything they had set aside for years. Banks, savings banks, and insurance companies suffered huge losses and were left with nothing but their paper money. As a result, they had to start the majority of their businesses from scratch in 1924.

By perverse contrast, the winners of the hyperinflation were those with massive debts; first and foremost the state, but also private individuals who had borrowed money to buy houses, construction land or farmland, and whose loans were slashed by the switch to the rentenmark.

Some industrialists made huge gains from the period of hyperinflation. Hugo Stinnes, whom Time magazine crowned “Germany’s new Kaiser,” built up an immense corporate empire comprising heavy industry, newspapers, ships and hotels — all based on a mountain of debt. As late as the summer of 1922, Stinnes was recommending that people continue capitalizing on “the weapon of inflation.” Indeed manufacturers and craftsmen in general profited from the crisis since they possessed plants and buildings — that is, tangible assets that outlived the currency switch.

Most farmers also did extremely well. “They had money to burn, and spent it willy-nilly,” writer Lion Feuchtwanger recalled. Some bought themselves entire stables of racehorses, others expensive cars. “Farmer Greindlberger drove from the grimy village street of Englschalking to Munich in an elegant limousine complete with a liveried chauffeur, while he himself was dressed in a brown velvet jacket and a green chamois-tufted hat,” Feuchtwanger wrote of the rural rich…

(Editor’s note: Bold added for emphasis)

That last bit about farmers buying expensive cars reminds me of what “crash prophet” Jim Rogers has been telling anyone who will listen:

The farmers are going to be driving Lamborghinis and Maseratis.

Anyway, the quote doesn’t do the piece justice. I recommend you read the entire article on the Der Spiegel site here.

By Christopher E. Hill
Survival And Prosperity (www.survivalandprosperity.com)

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Peter Schiff: U.S. Will Become Either Greece Or Weimar Germany

“It’s hard to imagine what the country will look like when the dollar crashes. But one thing is certain; it will bear little resemblance to the America we know today.”

-Peter Schiff, CEO and Chief Global Strategist of Euro Pacific Capital, in an interview posted on The Daily Caller website, October 17, 2013

Yesterday we heard from two “crash prophets”- Dr. Marc Faber and Jim Rogers on finance and investing. Today, I want to bring up a third “prophet”- Euro Pacific Capital’s Peter Schiff- and talk about an interview he just did with Faith Braverman over at The Daily Caller website. Posted last Thursday, Braverman asked Schiff- who correctly predicted the U.S. housing crash and “Panic of ’08″- about what Americans should be on the lookout for as the real U.S. financial crash draws closer. Schiff advised:

You gotta follow the foreign exchange market, the value of the dollar vs. foreign currencies. The Federal Reserve keeps buying bonds to keep interest rates from rising. We have no choice but to default if creditors want their money back. If interest rates go up, we can’t afford that. That is why the Fed feels that it has to keep interest rates down at all costs. So the Federal Reserve prints more money to buy up bonds. That puts pressure on the dollar. Foreign central banks than buy those dollars to prevent their currencies form rising, which imposes costs on their own population, as they are forced to absorb our inflation.

There will be big spikes in commodity prices, like energy and food. Ultimately, we will be forced to make even bigger cuts than the ones we would have made now had the debt ceiling not been raised. Then we’ll be Greece, essentially. If we refuse, and keep spending, and the Fed prints even more money to buy the bonds no one else will buy, we’ll destroy the dollar and then we’ll be Weimar Germany. When the dollar collapses, what does that mean? Hyperinflation means you will have nothing. Your life savings will be worth nothing. We’re celebrating solving the debt ceiling, but we’ve only kicked the can down the road and removed the barrier between us and fiscal responsibility.

Later on in the exchange, the former U.S. Senate candidate suggested Americans should “get gold, silver, foreign assets, and buy up things that will have value after the dollar crashes.”

Braverman did a nice job on this interview, which can be read in its entirety on The Daily Caller website here.

By Christopher E. Hill, Editor
Survival And Prosperity (www.survivalandprosperity.com)

(Editor’s notes: Info added to “Crash Prophets” page; I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein.)

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Post Number 1,000

Well here we are.

Post number 1,000 on Survival And Prosperity, “Protecting and Growing Self and Wealth in These Uncertain Times.”

It feels like it was only yesterday when I launched this successor to Boom2Bust.com, “The Most Hated Blog On Wall Street.” In fact, it’s been almost 22 months since its debut. My how time flies. Especially when bad economic news keeps piling on. The Pollyanna gang might argue that Keynesian strategies pursued by Washington and the Fed successfully ended the “Great Recession” and have put the United States on a sustainable path to recovery. I’m of the approach that when a lot of money is poured into the financial system you’re bound to see some sort of pick-up in activity. At least initially. And, as we’ve witnessed, only temporarily, as more “stimulus” is required to keep the whole thing afloat.

But where has that left the country? As of last week, over $16 trillion in debt. And on the verge of yet another “quantitative easing.” And anyone who really believes debt doesn’t matter is in for a rude awakening when the nation’s “financial reckoning day” finally does arrives.

Since the launch of Boom2Bust.com back in May 2007, I’ve been warning about a coming U.S. financial crash. As much as some might credit me for calling it, the maelstrom that blew through the U.S. and global economies back in the fall of 2008 was only a part of the collapse that I still see heading our way. Somewhat surprisingly, Washington and the Fed have managed to “kick the can down the road” for the time being. But the road only goes so far. Will the crash happen all it once, or will it be drawn out over several years? I don’t know. I just know that my interpretation of the available data leads me to believe its coming.

To complicate matters, these days Americans must take into account other threats besides an economic crash. Depending on what one believes, these could include:

• Global warming
• Nuclear terrorism
• Overpopulation
• Pandemic
• Peak oil production
• Resource shortages
• Solar flares

There are others. Nevertheless, a lot of threats exist these days which endanger our survival and prosperity.

So in 2012, are we looking at the end of the world? Probably not. But most likely the end of the world as we know it (TEOTWAWKI), particularly as it relates to the U.S. economy and larger financial system. Accordingly, life in America is about to get a whole lot tougher for most (if it already hasn’t). A number of really smart individuals who predicted the 2008 global economic crisis and “Great Recession” suggest we could see:

• Civil strife, including rioting and looting
• Currency controls
• Hyperinflation
• Martial law
• Much higher taxes and fees
• Rampant crime
• “Second Great Depression”

There’s more, but I think you get the picture.

Despite all this, I must remind you that I’m not talking about the end of the world here. Remember, even at its worst unemployment during the Great Depression ran somewhere around 25 percent. While that really sucked for those without a job, not everyone found themselves in a soup kitchen line. The economy and society, though hobbled, still functioned.

I’m a big believer that, despite the coming crash, things will turn out okay for America in the long-run.

I also believe that focusing on one’s personal and financial safety and growth right now will go a long way in helping you and your loved ones come out on the other side of the approaching storm in reasonably good shape.

Wishing you all the best now, and down the rocky road I see in store for us,

Christopher E. Hill
Editor

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Polleit-ly Put, A Depression Is ‘An Inevitable Outcome’

Thorsten Polleit is Chief Economist of precious metals firm Degussa Goldhandel GmbH. And what the former Chief German Economist for Barclays Capital (2000-2012) and Chief German Economist for ABN AMRO told CNBC viewers Wednesday may unsettle many. Framed by the discussion of potential European Central Bank action, Polleit warned:

I think it’s very important to start with an analysis of the underlying cause of the trouble. We live in a fiat money system, or paper money system, and paper money has been expanded for decades. And a whole pyramid of debt has been heaped-up, and this is now coming crashing-down. And I would say a depression is inevitable.

The only question is, whether the ECB and other central banks take recourse to kind of hyperinflation first, followed by depression, or whether they would allow the economy to adjust through a deep recession.

Polleit added later:

Once you start a fiat money boom, it will be followed by bust, by depression. And this is an inevitable outcome, because it’s a kind of “cleaning the slate.” If you intervene in that process by printing up ever greater amounts of money, you may succeed in postponing the trouble- a bit- but this comes at the price of an even bigger crisis in the future.


“A Depression Is an Inevitable Outcome: Chief Economist”
CNBC Video

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The Utility Of Gold WTSHTF

This morning, I found the latest issue of Peter Schiff’s Gold Report- which I chose as my “Resource Of The Week” back on July 6, 2011- in my e-mail inbox. The free monthly e-newsletter comes from Euro Pacific Precious Metals, of which Schiff is the CEO. While reading about the contents of this month’s issue, my attention was drawn to the following:

Mark Motive argues that we shouldn’t laugh at the ‘preppers’ who prepare for disaster – it might be time to learn from them instead.

Inside the May 2012 edition I found the article by Mark Motive, which is the pen name of an investment strategist/journalist who is also the chief author and editor at Plan B Economics (planbeconomics.com), a source for alternative insights into finance and economics. In “Gold and Financial Preparedness,” Motive talks about preppers and the debate over the utility of gold when the poop hits the fan. Motive wrote:

For example, if the dollar were destroyed by hyperinflation, a new currency would eventually be formed because the barter system is extremely inefficient. (The need for coincidence of wants creates a very high hurdle for the barter system.) Because they are fungible, divisible, portable, and non-perishable, currencies significantly improve societal wealth by reducing transaction costs, enabling lending, storing surpluses, etc.

Because it is the universal language of commerce, gold could be the new currency, but eventually a more flexible paper-based system would once again arise. Here’s the critical idea: whether or not that system is convertible into gold, gold could be used to transition wealth from the old currency system to the new. As a store of wealth, gold serves as a way to transition assets from one monetary regime to another.

Throughout history, gold has been used as a means to manage these types of transitions. During times of distress, people have converted their wealth into compact chunks of gold to take with them as they escaped a dictatorship or endured a failing currency. Gold is universally accepted as a store of wealth, meaning that it can endure what other stores of wealth (stocks, bonds, paper money… even land) cannot. This is why gold can help preserve wealth across economic transitions. Arable land, and the food that it produces, may not have the same benefits.

Motive acknowledges that “there is no single, simple answer for protecting wealth and preserving life during an economic collapse.” But the discussion of preppers and gold in the article is an interesting one nevertheless.

If you already receive Peter Schiff’s Gold Report, look for the latest issue- and this article- in your e-mail inbox. If you don’t already get it, you can subscribe to it for free here.

(Editor’s note: I am not responsible for any personal liability, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any information presented herein)

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Quote For The Week

Recently, money manager Jim Puplava of the Financial Sense Newshour and economist John Williams, Executive Editor at Shadow Government Statistics, discussed the prospects of inflation/deflation for the United States. Williams believes hyperinflation is inevitable by 2014. From the March 20 FSN broadcast:

PUPLAVA: John, why do you think we have not seen hyperinflation up until this point? Is it because we’ve had a deleveraging on the debt side that has been offsetting the effects of monetary and fiscal stimulus?

WILLIAMS: No, it’s pretty much on track with what I’d expected. I haven’t been forecasting hyperinflation every month here that it’s going to happen in the next month. Initially, I thought it would be out at the end of this decade because of the long-term insolvency of the government. The way this financial crisis broke and the way things were handled, has accelerated that- I put it around 2014- and there’s risk that it could break any time once you start to see massive selling pressure on the dollar. All that massive selling pressure on the dollar and all ? from the financial panic and what’s happened the last couple years, which has made things worse. What the Fed has done in the way of creating money here generally has been aimed at propping up the banking system. They talk out of both sides of their mouth. They talk, “Oh, we want to stimulate the economy. Keep inflation contained.” Then they do whatever they have to do to keep the banking system afloat. We’re still in a crisis mode. We have a systemic solvency crisis. All the money the Fed created went into the money supply. You would have had a hyperinflation, but it didn’t. The banks put it into excess reserves on deposit with the Fed. They didn’t have the ability to lend it. But it will happen because the long-term insolvency that we were faced with- now it’s being accelerated by everything that the government’s doing. And I expect it all to come to a head by 2014…

2014. First, Jim Rogers showed concern about the year. Now, John Williams. Who next?

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On TV: Doomsday Preppers, Episode 4

Getting back on track with my reviews, on Tuesday, February 21, episode 4 of the new National Geographic Channel TV series Doomsday Preppers aired. In “It’s All Gonna Hit The Fan,” three prepper groups were assessed. In order of appearance:

Martin and Sarah Colvill, “mobile preppers”
“I’m preparing to survive the next great depression caused by a worldwide economic collapse”

Donna Nash and family, Alpine, Utah
“I am preparing for a worldwide pandemic”

Kevin O’Brien and family, formerly of Jacksonville, Florida; now somewhere in the Tennessee mountains
“Kevin believes that a 2012 polar shift will cause the earth to move on its axis, resulting in an onslaught of natural disasters… and since Florida is a low-lying coastal peninsula, Kevin believes that his home state will be completely devastated by a polar shift.”

Here are my thoughts about episode 4 of Doomsday Preppers, broken down by prepper group:

Martin and Sarah Colvill

Martin Colvill is a retired police officer who is now a big-rig trucker. After they lost their home to foreclosure, Martin and his wife Sarah, who is battling cancer, live in their truck. As stated above, Martin fears a U.S. economic collapse and the turmoil associated with it, such as hyperinflation. He anticipates delivery trucks having problems making deliveries in such a scenario. Colvill said:

My long term goal is to help America become the nation that it should be again. And the biggest way I can do that is to make a delivery in a safe and timely manner. If I can help other drivers survive, then our nation will be able to rebuild itself. With truckers, we have a chance.

The Colvills prep in the 53 square foot sleeper cabin of their truck. The couple has amassed a 4 to 6 month food supply, which includes dehydrated food. Along with dehydrated food, freeze-dried food is very popular in the prepper/survivalist communities. What’s the difference between the two? Well, from what I understand, dehydrated. or dried food, is made by slowly removing the water from the food through the use of heat. Freeze-dried food is a fresh or cooked food item that’s been frozen- then had the water removed. Each process has it pluses and minuses, so research is recommended before going out and buying food in these forms. One of the advertisers I partner with, Nitro-Pak Preparedness Center (see sidebar ad), offers both dehydrated and freeze-dried foods.

In addition to what they have stored on the truck, the Colvills also have a network of supply caches all over the country. For those readers that have or are planning to acquire a place of refuge, or “bug-out location,” in the event they need to flee from a catastrophe, having hidden stashes of supplies pre-positioned along primary and alternate routes to a BOL is something worth exploring.

When TSHTF, the couple plans on driving to a “safe zone.” However, one of their concerns is not having enough fuel for the truck. Martin said that they do have the ability to siphon fuel, should it come to that. Siphons are inexpensive, and might be a worthy addition to one’s preps.

During those times when they’re not on the road, Martin wants to camouflage the truck. In the episode, the prepper is shown purchasing camouflage netting from an outfitter to spread over his rig. However, once back at the truck he realizes he’s going to need a lot more of it to complete the job. Camouflage nets- and by extension, camo tarps- can be used for a variety of tasks, in both good times and bad. They’re also worth looking into.

In a societal collapse, Colvill fears the bad guys might try to seize his rig and its contents. The retired law enforcement officer pointed out:

Something that most people don’t think about- modern prisons use electronic locks. When the grid goes down, electricity is no longer around, prisons around the nation will suddenly open up. All of a sudden you’re going to have a flood of angry men and women, and they’re going to come flooding out.

The Colvills are subsequently shown training to deal with potential truck hijackers.

At a time when prisons across the county suffer from overcrowding and government budgets keep tightening, the temptation exists to release portions of the prison population back into the general populace before their term is served to completion. California and Illinois come to mind here. From the Los Angeles Times on December 10, 2011:

The early release of inmates in some parts of California is accelerating as officials at county jails struggle to accommodate state prisoners flowing into their facilities…

And from The Herald-News, a Chicago Sun-Times publication serving Will County, Illinois, communities, this appeared on their website yesterday:

The governor also plans to close a super-maximum security prison in downstate Tamms; a second youth-detention center; and six secure halfway houses, the latter of which could result in the early release of as many as 1,000 inmates into the general public, the state government’s largest employee union predicted Tuesday…

Martin Colvill left viewers with something worth thinking about. He said:

A lot of it is left up to us- what choices we make. When I see someone in need, or someone being bullied, I will step in and say, “NO.” And if it means taking a risk, there are those of us that are willing to do that. All that evil needs to propagate is for good men to do nothing.

In the “The Odds” portion of the segment, the show says:

While hyperinflation and severe depressions have occurred in major economies of the past, economists do not believe the United States is currently at risk of such disasters.

Other “doomsday preppers” concerned about hyperinflation include Dennis Evers in episode 2 and Pat and Lynette Brabble in episode 3. As I said in my last review:

Some of the same people who predicted the 2008 global economic crisis are warning that the nation is heading for hyperinflation. Recent examples of such rapid inflation include Argentina a decade ago and Zimbabwe.

As well-known investor Jim Rogers pointed out recently, the Federal Reserve has the printing press going at full-speed these days. And some real smart people who were way ahead of the pack when it came to identifying the housing bubble, the economic crisis, and the “Great Recession” think the United States will eventually opt to print its way out of its massive debt obligations. “Would you like some fries with that $1,000 Big Mac?” That’s what it might come to.

By the way, these same parties also don’t discount the likelihood of a severe depression taking place either. The fact is, most economists and other financial types didn’t see the recent financial carnage coming until it pretty much sat on their faces. Therefore, take what they have to say with a grain of salt.

Donna Nash and family

Donna Nash is prepping for a worldwide pandemic. From the show:

The World Health Organization believes that a devastating influenza pandemic is almost inevitable. Even conservative estimates suggest as many as 100 million people worldwide may be infected, and millions will die.

On Tuesday, the U.S. News & World Report website ran the following:

A paper published Tuesday by scientists at the Centers for Disease Control suggests a new swine flu virus has the potential to cause an outbreak.

The A(H3N2)v swine flu strain that has infected at least 18 Americans since Sept. 2010 has shown the potential for human-to-human transmission. According to the paper, which was published in the Proceedings of the National Academy of Sciences, the H3N2 strains “resemble viruses with pandemic potential.” Terrence Tumpey, one of the authors of the study, says the current seasonal flu vaccine won’t protect against this swine flu strain…

In 2009, we were given a glimpse of how devastating pandemics could be with the spread of H1N1 influenza.

Getting back to the episode, Donna is shown stockpiling supplies and putting together pandemic survival kits. She said she plans on helping immediate neighbors, and footage is shot of her visiting some of them with her kits. I wonder if she gives these away, or charges/asks for donations for them. A little research revealed that the “Pandemic Lady,” as the show called her, is also the owner of Ark Ready, a company which sells preparedness products. Like Tim Ralston in episode 3, Donna is a “prepper entrepreneur.” I have to point out that the “About” section of Ark Ready’s website really grabbed my attention. It says:

As a girl, Ark Ready Founder and Chief Evangelist Donna Nash recalls her mother handing her a canister of mace and telling her to have a nice evening. Nine boyfriends and 16 canisters later, Donna was committed to the importance of preparedness…

(Editor’s note: Italics added for emphasis)

By the sound of it, I’m guessing those canisters weren’t disposed of because they were past their expiration dates.

Like a number of other “doomsday preppers,” the Nash family realizes the importance of training. In the episode, Donna and her family members are shown conducting a family pandemic drill where they donned their pandemic protection supplies as fast as they could and mustered on the front lawn. The neighbor’s quizzical look was classic.

Another priceless moment was when Donna’s daughter-in-law showed up late to the drill and was quarantined- along with her child- in a room adjacent to the home’s dining area. As the rest of the family sat down to share a meal, the young mother and child could only look on behind transparent plastic sheeting.

Kevin O’Brien and family

Kevin O’Brien, his wife Amie, and their kids are relocating from Jacksonville, Florida, to the mountains of Tennessee because they’re concerned about a coming pole shift which results in Florida becoming submerged underwater. To be clear, what the O’Briens fear isn’t a magnetic pole shift, but rather true polar wander, which is a solid-body rotation of the Earth with respect to its spin axis, causing the geographic locations of the North and South Poles to change, or “wander.” Some theorize that rapid TPW could lead to scores of natural disasters taking place across the world over a small period of time.

After years of research and planning, the O’Brien family are shown moving to their new home in Tennessee: 130 acres located on geologically-stable rock at an elevation of 1,800 feet. Kevin said:

Our land is secure and defendable, there’s a forest and timber there for firewood, we can grow own vegetables there. There’s a source of water. We can raise our own livestock there.

On the design of their future residence, Kevin added:

We’d like to build a really solid home, probably out of reinforced concrete. Bullet-proof, water-proof, fire-proof, earthquake-proof, and ultimately, pole shift-proof.

The O’Briens intend to utilize alternative energy at their new homestead, including solar panels and large black plastic barrels filled with water for passive solar heating. Interesting.

Kevin O’Brien brought an assortment of firearms and 5,000 rounds of ammunition to Tennessee for protecting the retreat and its inhabitants. 5,000 rounds might sound like an awful lot of ammo to some. However, well-known survival blogger and author James Wesley, Rawles recommends 2,000 rounds per battle rifle, 500 per hunting rifle, 800 per primary handgun, 2,000 per .22 rimfire, and 500 per riot gun in his 2009 book How to Survive the End of the World as We Know Iticon. And those are minimum recommendations.

In “The Odds” portion of this segment, the show said:

There is some scientific evidence that a true pole shift occurred 800 million years ago when the earth’s land masses formed a super-continent. But scientists believe that because our continents are now separated, such an event is almost geologically-impossible.

What they might be referring to is a study in which the magnetic composition of ancient sediments found in the remote Norwegian archipelago of Svalbard was analyzed by Dr. Adam Maloof of Princeton University. From an accompanying news release dated August 25, 2006:

“If a true polar wander event has occurred in our planet’s history, it’s likely been when the continents formed a single mass on one side of the Earth,” he said. “We don’t expect there to be another event in the foreseeable future, though. The Earth’s surface is pretty well balanced today.”

Another good episode. More ideas worth looking into. Again, I wish all these prepper groups success in their endeavors.

New episodes of Doomsday Preppers air on the National Geographic Channel Tuesday nights at 9 PM Eastern/Pacific Time. For more information, go to the Nat Geo Channel website here.

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On TV: Doomsday Preppers, Episode 3

On Tuesday, February 14, episode 3 of the new National Geographic Channel TV series Doomsday Preppers aired (I blogged about the first two episodes here). In “Back to the Stone Age,” four prepper groups were assessed. In order of appearance:

Tim Ralston and family, suburb of Phoenix, Arizona
“My major concern is an electromagnetic pulse, or EMP.”

Jason Charles and family, New York City, New York
“I’m preparing for the Yellowstone National Park supervolcano to explode.”

Jules Dervaes and family, Pasadena, California
“We’re prepping for the catastrophic collapse of the modern food system.”

Patrick and Lynette Brabble, small town somewhere in North Carolina
“I’m preparing for the downfall of society through hyperinflation.”

Here are my thoughts about episode 3 of Doomsday Preppers, broken down by prepper group:

Tim Ralston and family

Tim is prepping along with his wife and three kids. Ralston informed viewers that at first, his spouse “really wasn’t on the same page” as him when it came to prepping. This situation is something I’ve come across a number of times in my research. Ralston reacted by doing two things. First, he became a “closet prepper,” taking grocery money and keeping a couple dollars back, for example (probably not the greatest idea- if you get caught, the significant other could wonder what else you’re hiding from them). Second, Tim shared information with his wife. He said:

The more information I started to give to her, then it opened her eyes to the potential threats that are out there.

Gradually taking the time to discuss the hazards that exist out there in the world these days, and explaining how prepping is like an insurance policy that aims to protect your current lifestyle in case something real bad happens, may be a more effective way to get a partner and/or family members on board with the program than bombarding them all at once with scarier-than-hell images.

Tim considers himself a “prepper entrepreneur,” in that he and his business partners invent survival tools. One of their inventions featured on the episode is the Crovel, which combines thirteen different tools into a five pound package. Besides being a multifunction tool, it can also serve as a weapon, as Tim and his partners demonstrated on a deceased pig during the show. The shovel and crowbar multi-tool looks real promising.

Tim and his family are constructing a “secret desert bunker” as a “bug-out” location. He is building the shelter out of shipping containers. He explained:

The reason I chose a shipping container is it’s already got all the reinforced walls. We don’t have much time, so it’s already pre-fabbed for us. All we’re doing is building up the insides.

According to the show, these containers cost around $2,500 each. In addition, they’re also thought to be EMP-proof, which is important to Ralston. Like the Crovel, the shipping container also seems worth exploring.

Every couple of weeks, the Ralston family practices “bugging out” to their desert bunker. In the episode, the Ralstons are shown loading up a trailer behind what looks to be a late-model Jeep Wrangler, and then departing. Should that vehicle be hit by an electromagnetic pulse of the magnitude Tim fears, I’m not so sure how EMP-resistant it will be. Perhaps they’ve had some work done to it, if that’s possible.

Something that plenty of viewers probably weren’t expecting was Tim Ralston suffering an accidental gunshot wound during firearm training in the desert with his sons. Did he shoot himself, or was it the result of a misfire/something else? Ralston said:

It was one of those malfunctions. My thumb went in front of the barrel, and it went off.

Regardless, I wish him a complete recovery. Others might shy away from firearms after an incident like this, but Tim proclaims a prepper/survivalist mentality, as evidenced by the following statement:

As a prepper, the most important tool is your mind. We have a survivor’s mindset. Things like this, you can persevere, you can push through.

Jason Charles and family

Jason is prepping because he believes the Yellowstone National Park supervolcano is going to explode and New York City will be negatively-impacted by the event. He is worried about the resulting ash cloud falling back down to earth in NYC, clogging lungs and the water system, among other things. However, significant ash fallout from such an eruption is not expected on the East Coast. Historic fallout maps from past Yellowstone supervolcano events show the volcanic debris zone stopping just short and west of the Mississippi River.

Jason revealed he has ten bladed weapons. On firearms, the New York City firefighter says:

Why do I have so many knives? Well, you can’t have a gun. So, this is as good as it gets.

From what I understand, since it’s pretty difficult to get a handgun license in New York City, residents take the easier route and apply for a rifle/shotgun permit. As many of you probably already know, shotguns are an effective home defense firearm.

As part of their “bug-in” strategy for their urban apartment, the Charles family is shown dispersing crushed glass in front of their unit’s door. Jason said:

For a bug-in situation, I keep a box of crushed glass by the door for security.

I’m guessing the reason for this is two-fold:

1. The noise made when the glass shards are stepped on will alert the Charles family that someone is approaching the door of their apartment.

2. The broken glass makes it look like their apartment has already been looted.

Am I missing anything else?

The family also fills up a WaterBOB in their bathroom. Looks like a neat piece of equipment. From the WaterBOB website:

The waterBOB is a water containment system that holds up to 100 gallons of fresh drinking water in any standard bathtub in the event of an emergency. Constructed of heavy duty food grade plastic, the waterBOB keeps water fresh and clean for drinking, cooking, washing and flushing.

Jason left viewers with some pretty good advice when it comes to prepping:

My advice for everybody who’s unprepared, to start preparing, for any disaster that might happen. You never know when you’re going to need that food supply, that water supply. And I’ll do what I have to do to protect my family.

Jules Dervaes and family

Jules Dervaes said that he and his three grown children prep because they fear the “catastrophic collapse of the modern food system.” Dervaes talked about farmers moving to genetically-modified crops, which were created to weaken pests that destroy the crop. He thinks this is a “disaster waiting to happen.” Dervaes claimed superpests are adapting to the GM crops, and are becoming stronger. He points to the example of the corn rootworm. Last year, an Iowa State University entomologist Aaron Gassmann reported that Western corn rootworms in four Iowa fields had evolved to resist the natural pesticide in the genetically-modified corn plants. However, Monsanto, the maker of the GM crop, argues there’s no scientific confirmation of pest resistance to its Bt corn and claim less than 0.2 per cent of acres planted with the corn were affected by rootworm damage last year. In addition, some scientists believe the problem could be partly the result of farmers who are planting Bt corn year after year in the same fields.

Regardless, the Dervaes family became determined to grow as much of their own food as possible, and by the looks of their lush backyard food garden, they’ve come a long way. In fact, the show revealed the food the family produces makes up 90 percent of their diet during summer months. Impressive.

Jules said that their Pasadena, California, property is 100 feet from an 11-lane interstate highway. In certain SHTF situations, highways could become jammed with refugees. A number of these will almost certainly try to scavenge food and other items, possibly threatening the garden. I hope the family is taking this into consideration- and preparing accordingly.

Taking full advantage of their suburban garden, the Dervaes family trades flowers, vegetables, and fruit for waste vegetable oil from a local fast food restaurant. They take the used oil and utilize a biodiesel processor to produce clean biodiesel fuel for their diesel-powered Mercedes-Benz station wagon. According to the show, the family saves up to 80 percent on regular gas prices. Something else that might be worth looking into, especially if you suspect higher gas prices are on the horizon.

In the “Expert Assessment” portion of this segment, Practical Preppers recommended the family purchase a diesel generator, “so that in a blackout, you can use the biodiesel you make to help power your home.” Great suggestion, because in a situation where regular gasoline becomes harder to obtain, having both a biodiesel processor and diesel generator on hand allows a family like the Dervaeses to trade for waste vegetable oil, refine it, and use it to power their vehicle and home.

Near the end of the segment, Jules said something that probably struck home with a lot of viewers. He pointed out:

Everybody else seems looking to be dependent on government, dependent on corporations, dependent on the banks, dependent on others. But we are providing for ourselves and living a self-sustaining life here.

Pat and Lynette Brabble

Pat Brabble and his wife Lynette live in a small North Carolina town, prepping for the “downfall of society through hyperinflation.” You may recall that Dennis Evers, the “Godfather Prepper” out in rural Colorado, voiced the same concern back in episode 2 (blogged about here). Some of the same people who predicted the 2008 global economic crisis are warning that the nation is heading for hyperinflation. Recent examples of such rapid inflation include Argentina a decade ago and Zimbabwe.

At one point in the segment, Lynette Brabble asks here husband if he could go to the barn and get her a jar of peanut butter. Pat walks out to another building and proceeds to access a false wall while the show says:

Pat follows the preppers’ rule of operational security. He keeps his preps in a secret location on his property. Only family members, and close friends, know its whereabouts.

I really hope the Brabbles purposely misled viewers as to the actual whereabouts of their preps, because based on the footage shown, some are probably thinking they have a pretty good idea where all this stuff might be located on their property. I’m not saying the Brabbles are guilty of violating operational security, but now is as good as any other time to remind everyone about the importance of OPSEC.

Continuing on, the show asked:

But what would happen if his home, and all of his preparations, came under assault?

Pat responds that the couple has 60 or 70 firearms in their safes. Viewers are then shown a variety of guns the Brabbles own. After watching this, the term “gun nut” might come to the minds of those not familiar with firearms. However, I’ve learned that firearms are considered tools by many gun owners, where a specific tool (gun) is called upon to complete a certain task. For example, you wouldn’t use a sledgehammer to nail two small pieces of wood together. Likewise, a rural property owner wouldn’t (normally) use a .50 caliber Barrett gun for pest control. And with the realities that come with rural living, different types of guns may be carried and used on a regular basis. Keeping this in mind, along with the prepper mindset that “two is one, and one is none,” and 60 or 70 firearms no longer sounds so extreme.

In “The Odds” portion of this segment, the show said:

What are the odds of catastrophic hyperinflation occurring? While the Fed considers a sustained rise in commodity prices a threat in the coming years, they project only modest inflation rates of about 2 percent over the next several years.

Now, the Federal Reserve doesn’t have the best record when it comes to forecasting. The central bank under both Alan Greenspan and Ben Bernanke didn’t see the U.S. housing bubble, the 2008 financial crisis, or the “Great Recession” coming. In fact, one can argue that the Fed actually helped create the conditions that led to these events by taking the federal funds rate (interests rates) down as far, and as long, as they did after the dot-com crash and 9/11, resulting in people who couldn’t afford to buy a TV set somehow ending up as proud “owners” of a McMansion.

All in all, a real good episode. Plenty of ideas worth looking into. I wish all these prepper groups success in their endeavors.

I hope to have the next review out a lot sooner.

New episodes of Doomsday Preppers will air on the National Geographic Channel Tuesday nights at 9 PM Eastern/Pacific Time. For more information, go to the Nat Geo Channel website here.

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On TV: Doomsday Preppers TV Series

Back on August 3, 2011, I wrote about a show called Doomsday Preppers that appeared on the National Geographic Channel that prior Sunday. Little did I know at that time that the one-hour special was really a pilot for a new series that goes by the same name and which debuted on Nat Geo last night. From their website:

About the Show

Doomsday Preppers explores the lives of otherwise ordinary Americans who are preparing for the end of the world as we know it. Unique in their beliefs, motivations, and strategies, preppers will go to whatever lengths they can to make sure they are prepared for any of life’s uncertainties. And with our expert’s assessment, they will find out their chances of survival if their worst fears become a reality.

The first two episodes of the new series were broadcast Tuesday night, and a total of seven “prepper” individuals/groups were assessed, including (in order of appearance):

Paul and Gloria Range, the “Retiree Preppers,” outside of Floresville, Texas
“We’re preparing for a polar shift that will cause a sudden climate change and change life as we know it forever.”

Christopher Nyerges, the “Street Survivor,” Los Angeles, California
“I’m prepping for a killer earthquake that could completely flatten the city of L.A.”

Megan Hurwitt, the “Young Urban Prepper,” Houston, Texas
“I’m prepping to survive a catastrophic oil crisis.”

David Sarti, the “Hillbilly Prepper,” outside of Nashville, Tennessee
“I’m prepping to survive an EMP detonation that will wipe out our nation’s transportation system.”

Kellene (and Scott) Bishop, the “Gourmet Prepper,” Orem, Utah
“I’m prepping for a collapse of our financial system that will mean the end of the world as we know it.”

Kathy (and Bruce) Harrison, the “Doris Day of Doom,” somewhere in New England
“I’m preparing for a black swan event like a catastrophic New Madrid earthquake.”

Dennis Evers, the “Godfather Prepper,” rural Colorado
“I’m prepping to protect my family against global chaos caused by hyperinflation.”

Watching these first two episodes of the new television series, I thought back to something I wrote last year regarding the 2011 pilot:

Watching Doomsday Preppers, one soon realizes that the use of the term “doomsday preppers” is somewhat misleading. None of these families indicated they believe the end of the word is at hand. Instead, they plan and prepare for anticipated large-scale, near-term disasters, natural (CME) and man-made (EMP strike, financial crash). This use of “doomsday” reminds me of the situation with Apocalypse PA, in which I suspected having “apocalypse” in the title was merely a marketing ploy.

And which worked, in my case.

That same situation applies here. None of these seven prepper individuals/groups believes the actual end of the world is at hand- or at least it wasn’t said on camera. Otherwise, what would be the purpose of prepping? Their reasons for preparing are best illustrated in quotes attributed to them on the Nat Geo Channel website and which I listed above.

I also picked-on something else from the pilot. I wrote back on August 3 last year:

My only beef with the National Geographic Channel in Doomsday Preppers was their not identifying who their prepper “expert” was. I run across a lot of “experts” in my research, and it’s highly-debatable whether a good number of these individuals are deserving of such a title.

This time around, Nat Geo did identify those conducting the assessments of the preppers. Who are they? In the original pilot, one of the groups assessed were the Kobler and Hunt families out of South Carolina, who formed a prepper community in anticipation of a global economic collapse. I wrote last year:

And David Kobler and Scott Hunt not only have their own YouTube channels, southernprepper1 and engineer775 respectively, but are also prepping consultants, heading up Practical Preppers LLC, “Providing tactical and technical solutions for all your prepping needs.”

The experts assessing the preppers in the new series? Practical Preppers. From their website:

National Geographic Project

Practical Prepper’s Scott Hunt and David Kobler were featured on the pilot episode of “Doomsday Preppers”, on the National Geographic Channel.

Then, they were asked to be the experts for 10 episodes of that series on prepping.

Four to six families are profiled on each show. After each family’s segment, the experts — Practical Preppers — evaluate the family’s level of preparedness, on several different scales. They also suggest approaches for improving their plan.

Congratulations Practical Preppers LLC on the sweet gig.

Some other thoughts about the new Doomsday Preppers TV series include:

Operational Security, or OPSEC- Obviously, I wasn’t the only individual contacted about casting for the new series. Others blogged about it last year, and one of the concerns brought up was the violation of operational security, or OPSEC, by appearing in such a production. The thought being, once the show airs, the “world” now knows you are sitting on valuable equipment and supplies, and should the poop hit the fan, you will find plenty of people, both good and bad, at your doorstep. Even without a major crisis, you may have unwillingly set yourself up as an attractive target for thieves. I was surprised that one prepper went so far as to reveal that the cost of her and her husband’s preps amounted to six-figures. Shhhh!

Firearms- Which brings me to my next thought, which is about guns. One prepper said in episode 2:

It’s easy to feel a little left out of the prepper community if you live in New England and if you’re not fairly right-wing and conservative politically. But I just don’t spend my time worrying about storing guns and ammunition. Because our security comes not from stockpiling weapons but from having a community that respects each other, supports each other, and we have each other’s backs.

While the right of the law-abiding individual to keep and bear arms is enshrined in the Bill of Rights under the Second Amendment, I understand that owning a gun may not be right for everyone. However, keep in mind that in a SHTF situation, there are individuals/groups this prepper and her community could very well come into contact with who have come out and said (future post) they don’t bother stockpiling food, water, and other supplies because they intend to take these items away from others under threat of force (guns). Firearms are without a doubt one of the most effective tools for self-defense, and with the proper training and tactics, our prepper and her beloved community might actually have a chance of keeping their preps safe against these roving bands of human parasites.

“The Odds”- At the end of episode 1 and each section of episode 2 (refinement is often a good thing), there’s a part of the show called “The Odds” in which the likelihood of a particular prepper’s overriding concern (earthquake flattening Los Angeles, for example) is addressed. At the end of Kellene and Scott Bishop’s segment, viewers are told:

What are the odds of a financial collapse actually occurring? While hyperinflation and severe depressions have occurred in major economies in the past, most economists do not believe the United States is currently at risk.

At the end of Dennis Evers’ segment? We’re informed, once again:

What are the odds of hyperinflation actually occurring? While hyperinflation and severe depressions have occurred in major economies in the past, most economists do not believe the United States is currently at risk.

Then again, most economists didn’t see the 2008 global financial crisis coming. And the housing bubble. And the the dot-com bubble. The list goes on. And on.

In fact, quite a few economists and other financial-types who correctly-called the 2008 event now warn of a coming hyperinflation, severe depression, and a financial collapse. Not too surprisingly, those who didn’t spot the crisis three-and-a-half years ago are the ones claiming the U.S. economy is on a sustainable path to recovery. Who’s got the street cred here?

So does all this mean I didn’t like the first two episodes of the new Doomsday Preppers TV series? Actually, I’m rather kind of impressed. The production company could have taken the easy way out and cast some of the more eccentric members of the prepping community to attract an audience through shock value. Instead, the preppers introduced in these episodes didn’t seem much different than people I’d run into on the street in 2012. Then again, I’m from Chicago, soooo… All kidding aside, I do like the show. I especially liked how a number of themes emphasized in the prepper community- skill development, innovation, redundancy- made it into the first two installments. At times I found myself jotting down ideas gleaned from the show. Overall, I found the new Doomsday Preppers TV series interesting, informative, and even humorous at times. The production company succeeded in taking what is a scary subject for many and making it more palatable for the masses- without diluting the more serious aspects of the show.

New episodes of Doomsday Preppers will be on the National Geographic Channel Tuesday nights at 9 PM Eastern/Pacific Time. From the Practical Preppers’ website, it looks like viewers can expect at least 10 episodes in this new series. For more information, go to the Nat Geo Channel site here.

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On TV: Doomsday Preppers

Prepper(s) (noun): An individual or group that prepares or makes preparations in advance of or prior to any change in normal circumstances or lifestyle without significant reliance on other persons (i.e., being self-reliant) or without substantial assistance from outside resources (govt., etc.) in order to minimize the effects of that change on their current lifestyle.

-Definition of prepper at the Stealth Survival blog

While scrolling through my satellite TV’s on-screen guide Sunday night I noticed a show called Doomsday Preppers was playing on the National Geographic Channel. From the Nat Geo Channel website:

Unique in their beliefs, motivations and strategies, explore the lives of four families preparing for the end of the world as we know it. From bunkers to fortified off-the-grid locations, these doomsday preppers will go to whatever lengths they can to make sure they are prepared for any of life’s uncertainties. And with our expert’s assessment, they will find out their chances of survival if their worst fears became a reality.

The four families assessed included:

• The McClung family- Dennis and Danielle McClung and their two kids live in a suburb of Phoenix, Arizona. They are billed as “a typical middle class family” by National Geographic. The McClungs fear a coronal mass ejection (CME) is coming in 2012. According to the show, coronal mass ejections are “powerful eruptions on the sun that break free of the solar atmosphere. If these masses of plasma reach the earth, it could destroy our electrical grid, which touches every facet of modern life.”

• The Bedford family- Lisa Bedford, her spouse, and two children also live in a Phoenix suburb. They fear a collapse of the U.S. economy will bring on hyperinflation.

• The Kobler and Hunt families- David Kobler and Scott Hunt live with their families in rural South Carolina. Along with other families, they’ve formed a prepper community in anticipation of a global economic collapse.

• The Larson family- Peter Larson lives with his wife, children, and grandchildren in a suburb of Salt Lake City, Utah. Fearing a nuclear strike (it looks as if Peter is describing an electromagnetic pulse attack in the show), the Larsons have constructed a Rocky Mountain retreat for twelve. For those of you who don’t know what an EMP attack is, it’s when a nuclear device is detonated in the atmosphere, where it’s theorized the resulting electromagnetic pulse generated by the blast will “fry” microchips at the heart of electronic devices, rendering them useless.


“Wood Powered Car”
National Geographic Channel Video

Watching Doomsday Preppers, one soon realizes that the use of the term “doomsday preppers” is somewhat misleading. None of these families indicated they believe the end of the word is at hand. Instead, they plan and prepare for anticipated large-scale, near-term disasters, natural (CME) and man-made (EMP strike, financial crash). This use of “doomsday” reminds me of the situation with Apocalypse PA, in which I suspected having “apocalypse” in the title was merely a marketing ploy.

And which worked, in my case.

I’ve come across a few comments on the Internet calling these preppers “nuts.” The American writer Charles Simmons once said, “ridicule is the first and last argument of a fool.” Well, that applies here. After all, we protect ourselves in the event of an accident or other nasty situation by purchasing insurance. Auto, health, dental, renter’s, home, the list goes on. Prepping is yet another form of insurance, where time and money is spent acquiring knowledge and “preps” in hopes of maintaining one’s current lifestyle should some major destabilizing event ever materialize. Now, not only is this activity completely rational (what kind of insurance do you have?), but totally admirable in that their foresight and efforts might free up scarce resources for others who are in need of assistance- and who, for one reason or another, did not undertake the same preparations- in the event of an emergency. As such, which competent government and public safety agencies wouldn’t want more of these so-called “nuts” in their communities? After all, that may mean less households to worry about in a major crisis.

Now, one might get discouraged of how far along the families in Doomsday Preppers are with their preparations. However, keep in mind these aren’t exactly your typical preppers. While National Geographic identified Dennis McClung as a web designer, they didn’t mention he also runs 2012Supplies.com. From that site:

2012Supplies.com, online since March 2007, offers survival and sustainable living information and supplies for, what many believe to be, the possible end of the world as we know it in the year 2012. 2012Supplies.com is owned and operated by the married couple Dennis and Danielle McClung.

And Lisa Bedford? Well, she’s The Survival Mom. From the National Geographic Channel web page for the show:

She has not only been preparing for the end of the world but also guides other mothers on prepping with her popular blog The Survival Mom, which she established in 2009. She now has over 60,000 readers a month at thesurivalmom.com.

And David Kobler and Scott Hunt not only have their own YouTube channels, southernprepper1 and engineer775 respectively, but are also prepping consultants, heading up Practical Preppers LLC, “Providing tactical and technical solutions for all your prepping needs.”

Like Judge Reinhold said in Fast Times at Ridgemont High, “Learn it. Know it. Live it.”

Now, most preppers may never acquire the same degree of knowledge or levels of preparedness the families featured on Doomsday Preppers have, but that doesn’t mean the same accomplishments aren’t worth aspiring to and working towards. The advice I encounter most often on a number of prepping sites is to work at it a little each day. And since there’s much more material on prepping out on the Internet as compared to a few years ago, there’s a good chance one won’t need to “reinvent the wheel” for many projects.

My only beef with the National Geographic Channel in Doomsday Preppers was their not identifying who their prepper “expert” was. I run across a lot of “experts” in my research, and it’s highly-debatable whether a good number of these individuals are deserving of such a title.

If you’re a prepper, I highly-recommend this show. I think you’ll find it interesting to learn about the motivations, the strategies, and the preps of other like-minded individuals. If you’re thinking about getting started in prepping, this is a good primer as to what it’s all about. Just remember to take that “doomsday” and “end of the world” stuff with a grain of salt. Unless you really believe in it, of course.

Keep an eye out for Doomsday Preppers on the National Geographic Channel.

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U.S. Needs China To Go Down To Survive

Speaking of China, is this America’s future?

“Chinese Professor”
YouTube Video Link

Andy Xie, the former Morgan Stanley star chief Asia-Pacific economist who accurately predicted the 1997 Asian financial crisis, the 1999 dotcom bubble, and the recent global financial crisis, might argue such a scenario might not be set in stone. The Shanghai-based independent economist, whose bearish calls on China have led some Chinese government economists to label him an “American Parrot,” said in a piece on Caixin Online last week that today’s global economy can be thought of as a contest for survival between the United States and China. Xie explained:

The global economy may be coming up for a breach of fresh air in 2011. Fiscal and monetary policies around the world have been highly stimulated for three years. The additional monetary and fiscal stimulus measures by the U.S. could generate an upside surprise to its 2011 growth rate. Most emerging economies continue to grow rapidly. By the middle of 2011, most analysts may declare that the world has finally put the financial crisis behind.

The reality is quite different. The global economy is kept afloat by massive monetary and fiscal stimulus around the world. The main problem in the global economy – high costs and declining competitiveness in the developed world, and inflation plus asset bubbles in the developing world continue unabated. Either inflation in the developing world or unsustainable sovereign debt in the developed world will spark the next crisis.

The economist believes that the next global crisis will come from either the United States or China. From the piece:

The most likely candidates to trigger the next global crisis are the U.S.’s sovereign debt or China’s inflation. When one goes down first, the other can prolong its economic cycle. China may have won the last race. To win the next one, China must tackle its inflation problem, which is ultimately a political and structural issue, in 2011. If China does, the U.S. will again be the cause for the next global crisis. China will suffer from declining exports but benefit from lower oil prices.

On the other hand, if China has a hard landing, the U.S.’s trade deficit can drop dramatically, maybe by 50 percent, due to lower import prices. It would boost the dollar’s value and bring down the U.S.’s treasury yield. The U.S. can have lower financing costs and lower expenditures. The combination allows the U.S. to enjoy a period of good growth.

One could describe the global economy as a race between the U.S. and China, to see who goes down first.

Xie talked about recent actions by Washington and the Federal Reserve, and the strategy that may be used by the United States in an attempt to save its economy:

I have argued several times before why the U.S.’s stimulus won’t bring lasting growth. I’m not sure that the stimulus advocates in the U.S. believe what they say. The real intention for the new Obama tax cut is to get him re-elected in 2012. The mid-term election this year shows that, unless the U.S.’s unemployment rate drops significantly, he will lose his re-election bid then.

The Fed’s intention, I think, is to inflate away the U.S.’s debts. The U.S.’s household sector needs to cut its leverage by half to become normal again. If it is done through saving more, the U.S. economy will be weak for a long time, which would keep the fiscal revenue low and the government deficit out of control. The U.S. could slide into a vicious spiral. If the Fed manages to bring it down through inflation, the U.S. economy may escape such a fate.

Inflation is good for the U.S., because foreigners own nearly 100 percent of its GDP in financial assets. With its massive U.S. debt holdings, China will suffer especially hard. Indeed, if China’s foreign exchange reserves evaporate in value, it becomes very vulnerable, unless its structural problems are solved.

The flipside of the American strategy? Xie said:

The U.S. is dealing with its consequences of its financial crisis by running up government debt. It is doing what some European countries have been doing. Of course, the Fed can monetize the government debt, i.e., the U.S. doesn’t have to beg for help to deal with its public debt in the future. But, printing money on such a scale will likely lead to the total collapse of the dollar’s value, like the Russian ruble in 1998, and result in hyperinflation. While hyperinflation is beneficial to the U.S. by wiping clean its foreign debt, the dollar will forever lose its reserve currency status that might be worth three percent of GDP per annum and over half of GDP in present value. The U.S. may not gain from such a solution.

Source:

Xie, Andy. “Good Tidings in 2011.” Caixin Online. 23 Dec. 2010. (http://english.caing.com/2010-12-23/100210360.html). 28 Dec. 2010.

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Christopher E. Hill, Editor
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