Thrift, small farms, and the housing bubble

[Bret]

Rich should get night vis. goggles and maybe body armor and a .50.

This was a mistake of Europe that allowed Genghis Khan to advance more easily, by far not the only mistake but it was a big important one.  Just because you are rich does not mean you are a better shot with a .50 (which implies longer range generally).  You also may not be the best person to go on raids using the night vision and requiring the body armor.  Europe assigned military jobs based on wealth, when you have weapons held privately that will end up being the default operating method, especially when people have any shred of ego and do not want to hear that things would be better if they loaned their rifle to someone else.

At that time the fact that you may
have gold and silver will be of limited use in obtaining the staples of life and of extraordinary value
in obtaining assets that do not directly meet immediate needs.

I'm a bit doubtful of this. Gold and silver are media of trade that people trust. In hyper-inflation, this is even more so. Media of trades are useful things. These characteristics of the metals won't simply evaporate.

I think this is a maybe personally.  If it is just a collapse like Zimbabwe or the Wiemar Republic then gold will certainly have value especially for international trades.  You may even be able to trade off the market and get a better exchange rate (like trading USD for Brazillian Cruzerios in the 1980s).  In Brazil inflation was so bad people had to be paid twice daily and then rush out and immediately spend it on food and other items.  The only way to build wealth was to exchange that for something else.  It was not hard to get twice the official exchange rate when converting dollars if you did the deal on the street instead of in a bank.  I could see similar things happening with gold providing it is just an economic collapse.  Zimbabwe I am unsure if this is the case, I do know that money is/was so worthless it is cheaper to use the currency for billboards than it is to buy blank paper.

Now the other extreme of economic collapse would be a cascade effect where you end up with some dystopian society where trade is all but cut off due to raiding parties on the highways, food is scarce and people are hungry.  In that extreme case gold will have little value, people will be more concerned with things like dinner or not freezing come winter.

I think we are more likely to be on the Wiemar Republic, Brazil or Zimbabwe side of things than the mad max type side of things.  Because of this I also believe that those who plan well, who are not forced to make bad deals eg "your house for a single meal", will generally come out the other side far better than the masses who think they are prepared because they followed ready.gov's 3 days of food and water advice.

If I am right about the level of commerce that remains then those who have mortgages could pay them off with little money from today.  This is one of those things many I have spoken with over the years have not thought about but it makes perfect sense.  1 troy oz of gold is now about $1700.  If the dollar collapses 100:1 (all 3 previously cited countries saw more than that, some much much more) your one troy ounce of gold is worth $170,000.  Your mortgage is a fixed dollar amount regardless of the value of the dollar.  In a way it would be like winning the lottery, great if it happens but dont count on it.  This also means that some people would be in a position to gather great wealth by buying businesses, properties, etc.  It would not surprise me if some people did exactly that and the ones who did not prepare scream about how it is not fair.

[Terence]

At that time the fact that you may
have gold and silver will be of limited use in obtaining the staples of life and of extraordinary value
in obtaining assets that do not directly meet immediate needs.

I'm a bit doubtful of this. Gold and silver are media of trade that people trust. In hyper-inflation, this is even more so. Media of trades are useful things. These characteristics of the metals won't simply evaporate.

There was that youtube of the guy talking about the Serbian hyperinflation, did you see it? The inflation lasted for a while, then was eliminated overnight because the government created a new currency that was freely convertible to German marks. In our case, there is no superior currency to convert to, because the dollar is the reserve currency, and it will be hyperinflated (as will be all other fiat currencies). Only thing left is gold and silver.

I suspect if the government doesn't cobble together a currency freely convertable to gold, it will be done in the free market, maybe a digital currency, and the legal tender laws will simply be ignored.

I agree buying supplies is a good idea just in case my theory doesn't work out.    But still I don't see the "price" of gold dropping. I bet an ounce will still buy a good rifle, just as it has for many decades.

Sure, PMs will facilitate barter like they always have, but having a bunch of gold doesn't obviate the need to think through
what you'll need in an emergency and purchase in advance.

I say PMs will be of limited use because you can't buy what isn't there: The shelves get emptied
and aren't restocked for any number of reasons.  It's great to have some gold or silver in a crisis
but it doesn't make salt, water, whiskey, batteries, lighters and a side of beef magically appear
before the gold holder. Most of those things require someone local to have already stored more
than they need or division of labor which would have just ground to a halt.

I'll look for that Serbian video, sounds interesting.

Terence

[Bret]

It's great to have some gold or silver in a crisis but it doesn't make salt, water, whiskey, batteries, lighters and a side of beef magically appear
before the gold holder.

Then you are doing the incantation wrong.

[sambaguy]

Gary North has claimed that there is no chance that Bernanke would let the currency hyperinflate, but that he will let galloping inflation occur because hyperinflation would destroy the value of his pension (and might make him a man hunted by vigilantes). 
     My inclination is to think that hyperinflation or not, commerce is likely to be disrupted, and having a lot of non-perishable food will be a good investment.  When inflation is [more] widely recognized, investment will flee the USA, and many, many businesses will collapse.  Being prepared for a dramatic economic collapse lasting six months with beans and MREs is pretty smart, IMO.

[Bret]

     My inclination is to think that hyperinflation or not, commerce is likely to be disrupted, and having a lot of non-perishable food will be a good investment.  When inflation is [more] widely recognized, investment will flee the USA, and many, many businesses will collapse.  Being prepared for a dramatic economic collapse lasting six months with beans and MREs is pretty smart, IMO.

no doubt having food and water would be a good investment if nothing else as a hedge against inflation.  Inflation excludes food and oil while growth includes those.  We are seeing no inflation but a lot of growth which implies that much of the higher prices is coming from food and oil.  Food in the US travels an average of 1500 miles farm to dinner table, it is transported largely by oil based products.  Farmers, as a US national average, report that 60% of their costs from planting to harvest is energy related costs.  The dollar is used globally to buy oil, when Germany buys oil it does so with US dollars, as the dollar weakens those selling want more of them.  The price of food is largely based on the price of oil.

Buying now means that you are eating "cheaper food in the future" providing it is something you would eat anyway and something that is not insanely priced.  The only way you would lose money on this deal is if the dollar gets stronger before your food is consumed. 

With that said if you can afford it I do suggest that you have something for trade to get things you may run out of, things that may spoil or gotten infested, whatever.  Additionally trade items can dramatically advance you financially post recovery.  There will be a recovery at some point, it may not be this generation, it may not be the next, but at some point there will be a recovery and if you can gather things now that can be passed onto your children and so forth until there is a recovery they can take advantage of it.  Buying additional farms, houses, businesses, etc could turn you, or your children, into a bottom end wage earner into a mid to upper end post recovery.  If that is not what you want you would be able to provide assistance to others in need merely because you have surplus available to you. 

[Terence]

It's great to have some gold or silver in a crisis but it doesn't make salt, water, whiskey, batteries, lighters and a side of beef magically appear
before the gold holder.

Then you are doing the incantation wrong.

I'm glad you think so. The more people who plan in advance the
better the incantation works.  Probably part of what Paul has in mind.

Terence

[Bret]

I was just referring to it magically appearing

[Paul Bonneau]

Terence, here is that discussion about Serbian hyperinflation. It was posted here earlier somewhere:

http://www.youtube.com/watch?v=U9qr9ssUCrU

I think it is unlikely we will see that level of inflation, but there are a lot of idiots running government policy so it remains possible. And their entire model is wrong too (Keynsian "economics"). The Serbian hyperinflation was stopped by creating a new dinar completely convertible to German marks. The difference for us is that there are few marks floating around here, and anyway if the dollar is going down the mark probably is too.

The farmer still has the productivity of his farm (reduced somewhat due to input costs, but still not zero). You want to buy food from him. He can't convert the declining dollar into German marks or anything else. What will he take? Trade goods, gold and silver. If an entrepreneur creates a digital currency that people start trusting, convertible to gold and silver, maybe that too. Or if the government makes a new dollar convertible to gold or silver.

Of course if the government "fixes" this problem by collectivizing the farms, all bets are off and starvation is just around the corner.

[Terence]

Terence, here is that discussion about Serbian hyperinflation. It was posted here earlier somewhere:

http://www.youtube.com/watch?v=U9qr9ssUCrU

I think it is unlikely we will see that level of inflation, but there are a lot of idiots running government policy so it remains possible. And their entire model is wrong too (Keynsian "economics"). The Serbian hyperinflation was stopped by creating a new dinar completely convertible to German marks. The difference for us is that there are few marks floating around here, and anyway if the dollar is going down the mark probably is too.

The farmer still has the productivity of his farm (reduced somewhat due to input costs, but still not zero). You want to buy food from him. He can't convert the declining dollar into German marks or anything else. What will he take? Trade goods, gold and silver. If an entrepreneur creates a digital currency that people start trusting, convertible to gold and silver, maybe that too. Or if the government makes a new dollar convertible to gold or silver.

Of course if the government "fixes" this problem by collectivizing the farms, all bets are off and starvation is just around the corner.

It took until today to finally watch that video, Paul, and it was a very informative.

 - Initially, goods and supplies were available to holders of hard currency, but not for dinar holders.
 - Food was subsidized and available on the open market and farmers would immediately convert to hard currency
     to preserve the income.
 - Labor and many products fell in real terms but not in nominal terms (Assets collapse while prices rise exponentially).
 - People wrote bad checks to government stores obtaining 'free' goods even with 1000+% penalties (Love the irony of this one!)
 - After convertibility to German marks it took only one week for things to stabilize.
 - Stocks may hedge inflation levels below 6%.

It's too bad we can't plan for the most common solution of convertibility or we could just stock
up on whatever currencies are the most likely targets. That leaves gold & silver.

On topic is one of the latest posts from 'Selco' who seems to capture it in one paragraph:

http://shtfschool.com/trading/on-buying-gold-silver-for-survival-preparedness/

So in short instead of getting gold and silver to preserve your wealth you might consider getting useful stuff and if you like gold there is always option to get it from unprepared people in exchange for useful stuff if you think you need this for times after. If you already have everything you really think you could need then gold and silver might be good, better than just money for sure.

In an exchange of gold for food, the guy with enough food ends up with both. But, at least
the guy with the gold can eat . . . .for a while.

Terence

[4n23vl]

My take is that the Serbian situation was one of warfare where things were really out of control, snipers all over, bombs, etc. 

According to Ferfal, in Argentina precious metals were very helpful, and remain so to this day, as a store of value amidst very high (but not Zimbabwe high) inflation/devaluation.  In that environment, there were various street currency and metals dealers available.  High crime but not war.

So the usefulness of gold will depend on the situation and locale.

[EHBIV]

Out of morbid curiosity, are the climate and soil in Wyoming able to produce enough food for its current and future residents?

Has anyone on this forum done enough cultivation to speak from experience on this topic?

I ASSUME that vegetable gardens, greenhouses, etc., are quite possible in Wyoming and that open range would make cattle (or at least some kind of livestock) a viable option but are there orchards, large farms, etc., in Wyoming? If so, are they located in particular regions that I should consider for relocation? If there aren't orchards, large farms, etc., in Wyoming, is it because having them is not a viable option due to climate or soil or is simply because it's been easier to import food from outside Wyoming to date?

I have some familiy experience with small dairy farms and egg (chicken) production but in both cases the economics were crippling - although there was plenty to eat. I guess my real question is should I plan on going hungry in Wyoming WTSHTF or is it more a matter of my own industry and foresight in planting fruit trees and learning to grow plenty of food there that will make the difference?

[Don Wills]

Out of morbid curiosity, are the climate and soil in Wyoming able to produce enough food for its current and future residents?

If a population can subsist on cows and wheat and sugar made from beets then yes, Wyoming is self-sufficient, but only because there are only 500,000 mouths to feed.  In a societal collapse, pronghorn antelope and mule deer will become a major food source here, at least for a year until their numbers are decimated.  Deciduous trees and therefore orchards are a no go - too dry, too cold, too windy and most importantly, too short of a growing season.  Most of the state measures its growing season in days, not weeks or months.  You will need a greenhouse for anything else you want to grow.

Water is a major problem in most locations.  The Ogallala aquifer extends into far southeastern Wyoming (where I live) which allows for irrigation of certain row crops like pinto beans and corn, but the total amount of acreage is miniscule.  But most of the rest of the state is a desert.  Thank heavens for Snake, Green and North Platte rivers, and a few smaller creeks flowing out of the mountains.  Without them, Wyoming would be a clone of Nevada.

And when I say windy, I mean windy.  Twice in the past week I've had winds of 50mph sustained, gusts to 75mph.  And these weren't just a quick storm blowing through - these winds last for many hours, destroying plants, roofs, closing interstates, etc.  You really can't believe it until you experience it.

And the stuff they call soil here isn't soil like you are familiar with in the midwest.  It's mostly just dust, sand and clay stuck together in a cement-like hard-pan.  It has no ability to hold water or support organisms that could actually fertilize the soil.  All in all, you're going to have a tough time being self-sufficent here unless you've got a lot of money to build and operate large greenhouses.

[HCM2B]

  All in all, you're going to have a tough time being self-sufficent here unless you've got a lot of money to build and operate large greenhouses.

I really disagree Don.  Granted, greenhouses will obviously extend growing seasons and give you some degree of year-round production, but they are not absolutely necessary.  With proper gardening techniques (not requiring massive soil improvements either), one can be completely self-sufficient in *most of* Wyoming.  If people follow a simple plan for self-sustained farming, they can provide for their own family quite comfortably.  That plan includes short and long-term use root and veggie crops (stored or preserved accordingly), basic protein requirements (chickens, cows, horses, goats, fish, dairy, etc.), and basic grain products (1/2 acre of select grains can provide a family flour for a year).  The largest problem with doing this is the amount of work required.  It is extremely labor intensive.  Additionally, maintenance of seed becomes an issue long-term. 

All that said, if one has about 1 - 2 acres of land available for production, they can be food self-sufficient without green houses, even in *most of* Wyoming.  I qualify that because the band of Wyoming from Laramie over to Green River is about the worst in the state for any life to exist at all.  It would be hardest in that region. 

What has not really been covered in this thread, however, is the change in quality of life/lifestyle that will come when people are forced to become self-sufficient.  I think the necessary move away from the recreation based life, 9-5 workdays, and drive anywhere/anytime lifestyle will present more of an insurmountable problem than the difficulty of growing one's own food.  Most people will not be able to take care of themselves because we, as Americans, have become a nation of soft pussies who want everything without truly earning it for ourselves.  Some, like the people on this board, recognize the changes coming and will have little difficulty in making the change - it will still suck but we'll get 'r done.  The rest of our society will implode when their cell phones stop working, they can't tweet the color of their latest BM, and their double-chocolate, part-skim, decaf mochachino requires a 4 hour walk under threat of attack, coupled with a $4700 price tag.  I think growing food will be a small problem in the greater scheme of things.

*BTW: you can build a 15X48 hoophouse that will withstand WY weather for about $1000-$1500.  *Just because I say one doesn't "need" a greenhouse doesn't mean I'm not going to have any!

[Crappiewy]

The Red desert area that you are talking about is where I am from.
When I was a kid, we grew tomatoes, Brocoli, cauliflower, Sunflowers,Cabbage, Some small little carrots, (cant Remember the name) Spinach, and potatoes.

Yes, it was a lot of hard work.

Yes the area is a cold hell in the winter.

[Crappiewy]

We also made paper mache pots to plant some of the veggie in before spring to give them a boost. We smeared pig fat onto the interior surface. Then just burried the pots in the ground. The moisture from the soil disolved the pots and the plants flourished.