Thursday, March 11, 2010

A Reader's Experience with SurvivalBlog / A Question‏

Dear Ferfal:

I'm a high school student who started looking into preparedness about nine months ago when the swine flu hit the news.  I immediately discovered the precariousness of the U.S. economic situation.  I am now looking into what I and my family can do to prepare ourselves for an economic collapse here.  We have begun to buy some extra canned goods, are planting a small garden this year in our suburban backyard, and are looking into buying gold very soon.  (Not to mention we bought your book, which so far I love for its "eyewitness" practicality.)  We cannot afford the retreat in the mountains, and as of right now I am still working out the "on-the-ground" consequences of an economic collapse, aided by the writings of people who know much more than me.

Like so many others, the first site I found was SurvivalBlog.  (Later I found your site linked from a letter there.)  Since there was a post on your site not long ago about SurvivalBlog, I thought I'd relate my experience with that site.

First of all, let me make it clear that I think Jim Rawles is a good man who only wants to help people, and I have an enormous amount of sympathy for him as he recently lost his wife.  I don't think he would ever lie to his readers or downplay the severity of a situation to "soften the blow" (after all, that's why he has a survivalist blog!).  He has received letters from people asking whether he thought the economic situation would get as bad as in his book (a "fighting off the hordes"-style work), and he said that he did not.  I can track statements from him for about two years now that he thinks we will experience Great Depression II with "inflation in the Zimbabwean sense of the word."  (See also these quotes:  "complete societal collapse is not very likely";  "[my book] portrays circumstances that are far worse than I actually anticipate (at least with any likelihood).")  But then in other places he makes it sound like it will be worse, or possibly precipitate TEOTWAWKI.

Overall, though, he seems like he thinks it will not get as bad as "head for the hills."  Other than that, I check the site every day, mostly for economic news, although occasionally there is an article that's useful for someone who doesn't live in a castle-gas station-farm.  Most of them, however, are along the lines of "How to Perform a Root Canal at Home by Candlelight Using Medieval Dental Tools."  Not a real article, but you get the idea.  : )  I balance the site with a daily dose of your blog.

I also had some questions about currency use after an economic collapse, i.e. alternative currencies that still hold value after the main one has collapsed or devalued.  Specifically, I am afraid that the dollar will collapse here, which might not be so catastrophic except that it's the world reserve currency.  In Argentina, if the peso devalued, you could always fall back on the dollar, but what happens here if our currency collapses and mass inflates (or worse, hyperinflates)?  We don't have another currency to fall back on.  The only one I can think of off the top of my head is Canadian currency.  I live in Connecticut so I see Canadian coins a lot, but they're just about gone once you get south of Pennsylvania or Maryland.  I'm afraid that if our currency collapses and our economy screeches to a halt like yours did in 2001, we won't have any alternative ways to pay for things, and that this will precipitate TEOTWAWKI or some mini-version thereof.

(I wanted to just put something out there that has always confused me about survival barter topics.  They always say that we'll pay for everything with gold and silver coins.  Where are the 99% of people who didn't prepare, have scant savings and no precious metals, getting these coins...?)

I hate the thought that my country's economy is headed for a collapse.  I hate the thought that I might have to see riots and looting here on my television (or out my front window).  I hate the thought that I might have to look at homeless and starving people on the street.  I'm afraid that it could devolve into something much, much worse than the Great Depression.  But whatever happens, I'm going to have to get through it right where I am, in a normal suburban American household.  Thanks for your blog and your book, and for being a survivalist who's not obsessed with Mad Max!

Hi Katy,
We are all different people and all have different experiences and points of view… and that’s just the way it should be.
In my opinion (which is just another point of view) I believe that a common mistake made in preparedness is thinking that, if you prepare for the worst, you cover everything in between. Doesn’t work that way actually.
You may have a farm/cabin/home a gas tank away from the nearest city,  next to a source of water, a couple years worth of food and the ability to produce more, and it probably wont be a solution to your problems.
Today we are seeing survivalists telling their real world SHTF problems: I’m unemployed and no matter how hard I try, I cant find another job. 

Trying to make a living by becoming a farmer is pretty much suicide since experienced farmers themselves are having problems making a living. During the 30’s many farmers lost their land to taxes alone.
A couple years ago when a documentary producer called me she asked “What we want to know in America is where do people put their money in Argentina” That was the question the mass was asking back then.
Today the question is replaced by a more urgent need “How do I make money!?”

Today, wise business strategy and marketing may be one of your most useful survival traits.
The world just doesn’t end as some people were hoping for. You just get fired. (which I suppose it’s the end of the world as some people know it)
“OK, I’m young, smart, I have a degree, I’ll find another job… no wait, I’ll find a better job”
And it just doesn’t happen.
And the lucky ones that have a job, end up finding out that the money they make slowly loses its purchasing power.
“That’s right! Money is just poor tinder after SHTF! Lets quit our jobs and head to the retreat!”
Hold your horses my friend. You’ll get to your retreat and do exactly what? Watch DVDs and eat popcorn? Wait for the raiders to arrive?
Its not going to happen. No raiders, no zombies, no brave new world, just the same old crappy one that just keeps getting worse.
Guys, it’s a thing that goes on for YEARS. 

As of right now, here in Argentina private companies estimate a 40% inflation rate per year. Official numbers don’t matter any more. Do you have any idea what this means?
These days, people in USA are noticing a bit of inflation. I sometimes get email from people telling me “You are right FerFAL, bottles, containers and packages in general are getting smaller but costing almost the same”.
I’m not right. I never said it would happen in USA. I just said it happened here, and told people to keep an eye opened if they saw the same pattern.
The pattern is unfortunately repeating itself, and even worse, its repeating itself politically as well: Redistribution of wealth, social plans, more taxes, more socialist brain washing, a media that just has to be forced to cooperate with the government, something we once called censorship. 

Official statistics? Ok, lets talk inflation. Maybe meat, milk and bread went up in price, but what about that nice cheap Chinese sauce that is 10 cents a gallon, or that Brazilian chocolate substitute food? Lets take those into account instead. A particular bad month in terms of inflation? Lets just waiver that one, shall we?
In the end this all just means what I constantly write about in this blog:
More people simply fall from middle class to poor, other go from poor to indigence (def.). This doesn’t sound like much but it’s a brutal reality once you see it all around you. It means people walking into your nice neighborhood to eat out of your trash. After a few years, it means a generation of pre teenagers that wont even blink as they shoot you in the head. Some because they are too wasted with Paco or epoxy glue inhalation to notice, but even worse, some simply don’t care even without the drugs.

Adapting to all this is a new way of living. Its not simply a situation that lasts x amount of weeks or months, it’s the way life will be for you as of right now, slowly changing to worse.
Heading to the hills wont fix it, you can’t escape reality. You have to earn a living, you have to send the kids to school (both of you have to get jobs now if you want to pay for privileges such as food, water, power, gasoline, clothes, insurance, parking, or medical care, and you can only grow one of those. For the rest cash will be required.

About your question, I don’t think the dollar will collapse. I do believe there’s a chance of seeing worse inflation, maybe even hyperinflation. No one can say for sure, but it could happen, specially if they continue with these political strategies that are almost carbon copies of Peron.
If something like that happens, Canadian money is likely to go along with it. Most likely Euros will keep its value or grow a bit stronger as the dollar weakens, bust you best bet is precious metals. Silver is still affordable if you want to buy small quantities, and even if gold is “expensive” right now, you still have x amount of gold and it wont lose any weight. If the dollar collapses in such a way, expect an exponential increase of the price of gold and silver.

Katy, what happens is that now you need 3 dollars to buy bubblegum or a sandwich instead of 1. “Oh, that’s outrageous!” people will say. Well yes it is, but it’s the way it is.
Maybe you don’t buy the bubblegum but you’ll buy the sandwich, food, pay for services, pay the 50% increased taxes, pay for the 50% increased gasoline price and such. In the end it boils down to your purchasing power going down and you becoming a bit more poor.
Either you find a way to make more money or you end up being poor or worse. There’s no way around this, there’s no shortcut or growing new headlight on your garden. You buy all of it with money.
You will be able to pay for things, you’ll just be doing it with currency that has much less value.

You're young, if I were you I'd buy the minimum supplies (start with food and storing lots of water) and buy silver Americn Eagle coins, slowly building up an emergency stash. Dont worry, its money just the same. Unlike your other supplies, you can change it back to dollars when you need it, most likely for more than you got it. Stay in shape, kill two birds with one stone and learn self defense skills. SHTF or not, you'll have a better life becuase of it.

"(I wanted to just put something out there that has always confused me about survival barter topics.  They always say that we'll pay for everything with gold and silver coins.  Where are the 99% of people who didn't prepare, have scant savings and no precious metals, getting these coins...?)"

At least here in Argentina, people that were already in a delicate financial situation eded up living under a bridge, eating out of the trash and living in shanty towns, a shack made of pieces of trash, wood, and a piece of plastic covering the mess. Pretty miserable situation but thousands still live that way all over Argentina.

Regarding barter, the best and only “barter” item I recommend is precious metals. That’s the only item I can assure you will be worth just as much as its worth now, very likely much more after a financial collapse. Other than that, ignore 100% the idea of buying this or that item because it will be “worth its weight in gold” supposedly after SHTF. Keep it simple and stick to silver and gold if you have extra funds to put into post SHTF “barter”.
Of course people here didn’t have much gold. I can assure you many spent countless nights unable to sleep, wishing they had emptied their accounts and put that money into gold. It’s a fantasy any Argentine with a buck in the bank before 2001 had at least once!
What many ended up doing was selling the jewelry gold they had, something that boomed after 2001 as I often mention. Gold business went up 500% the years after 2001.

"I hate the thought that my country's economy is headed for a collapse.  I hate the thought that I might have to see riots and looting here on my television (or out my front window)."

Lets hope it doesn’t get that bad. Just in case, do get a firearm when you are old enough, and learn to use it Try getting your parents to take you to shooting classes. I did that when I was 15 and it was one of teh best things I did back then. When I turned 21 I bought my first gun and laready had the traning. Before that I had my father's 1911 for defense at home.
A greedy thug can kill you just as dead as a band of looters can, and as the economy gets worse violent crime will follow.

"I hate the thought that I might have to look at homeless and starving people on the street."

That’s something that feels like an invisible hand is grabbing and jerking my heart. It crushes my soul when I see a family sitting around an opened garage bag, parents and the little kids, talking while they eat as I do with my own family over our dinner table, but with a garbage bag instead. I’ve seen messy corpses and I had no trouble sleeping at night, but that sight is something else. It’s the worst kind of degradation, just a step away of actually starving to death on the sidewalk.

 "But whatever happens, I'm going to have to get through it right where I am, in a normal suburban American household.  Thanks for your blog and your book, and for being a survivalist who's not obsessed with Mad Max!"

Do your best and you’ll do just fine.
 I doubt many high school students are asking themselves this kind of questions. You sound like a clever person and that sure helps a lot. Finding new ways to get by, being good at whatever it is you decide to do makes a big difference. Take all this into account when deciding what to do after leaving college. Some careers wont make as much money as others. 
Given that your generation will have to deal with the bailout taxes and God knows what else, being good at your job and making a living will be one of the greatest challenge you’ll face.
Other than that, preparing as you seem to be doing, keeping strong family bonds so as to help one another, praying, and hoping for the best. Things will probably not get to that bad.
Just remember to live and have fun while preparing.
Take care!



Pat M. said...

Excellent post

David said...

Katy highlights the folly of the "prepper-for-apocalypse" mindset. She senses that preparing for TEOTWAWKI is self-defeating but appears not to know why.

She's right- Mad Max is fiction! So is a currency collapse in the US.

If an Argentine citizen had withdrawn all his money from the bank before the withdrawal limits, he would have had pesos (good) or converted to U.S. dollars because of the peso-dollar peg (better). Yes, converting to gold, in dollar terms, would have been even better but ONLY BECAUSE 2001 WAS A DOLLAR LOW FOR GOLD. If Argentina's 2001 trouble had occurred instead in the early 1980's, holding gold (in dollar terms) would have gotten you killed financially. Gold is not a panacea.

Having withdrawn something that would actually be accepted for purchases, that person would see the value of that "something" (pesos or dollars) SOAR in purchasing power as everyone else was unable to access what they THOUGHT was their "money" and prices declined due to collapsing demand.

This is exactly what the USA faces. Not hyperinflation (no credit economy in history has had one, it is almost certainly impossible) but credit collapse deflation. Only after deflation has wiped away the trillions of $US in excess debt can there be talk of the clowns managing the government actually trying to physically print currency to "reflate" the economy. For hyperinflation to happen we will have to see much larger denominations of currency.

For more on this, there is no substitute for either reading Bob Prechter's "Conquer the Crash" book or going to, signing up for their free "club ewi" and getting access for free to the deflation survival guide here:

Lamb said...

Great post---good advice you gave the writer.
However, one thing I would advise her to do is to learn some good, basic skills. Besides a shooting class, she should learn how to bake bread, can and preserve food.
Improving ones "skill sets" can be a persons most valuable investment.
Doesn't matter if you are young or old...learning something new is enjoyable and can lead to employment opportunities. As a teen, I learned to *doctor* on animals we owned by following the vet around when he treated our livestock, that led to a job as his assistant! My employment as his assistant led to other employment later, on farms and ranches.
I own no gold or silver, but my carpentry skills earned me 50 dollars last week for installing a hand-railing on a neighbors porch.
My quilting skills have stood me in good stead, besides providing my family with warmth in the winter!
I am not an *expert* in anything...but my basic skills and the knowledge I have gained through employment and my efforts to learn something new as much as possible have proved to be my most valuable assets.

Anonymous said...

Mr. Prechter is like a clock, correct twice a day. If you predict something long enough, it might happen.

The conceptual battle of inflation/deflation is being argues all over the U.s. blogosphere. It currently appears that things you, energy, etc..everything conveniently left out of the "cost of living" going up. The price of needless crap is deflating.


Anonymous said...

Well if she is indeed a high school girl, she is quite articulate and mature beyond her years.

My 1st exposure to prepping was reading Patriots. It was packed with info and fascinating, but I felt demoralized b/c I have never served in the armed forces or had extensive weapons training. Further, I was unable to buy a cheap farm hours from home with a dozen like minded individuals.

After much thought, I decided against leaving Canada for Michigan or Idaho.

I came across this blog, bought your book then started reading the GTA forumns and felt empowered. If the worst case scenario happens, its only a matter of time before society/we end up in a scenario like THE ROAD or The Book of ELI (disaster porn?). In that case, would it matter what you did to prepare?

The whole time I read Patriots, I thought, what is the motivation for these people to live on? They were living like rats, scurrying about, in a state of constant warfare and vigilance.

If its similar to Argentina, there are things one can do to lessen the blow. Thank you for helping in that regard, Ferfal. Knowledge is power.


David said...

"The price of needless crap is deflating."

Like your house?

Credit inflation has ground to a halt after 78 uninterrupted years. Will it just resume climbing? Or will it finally reverse? Place your bets, pal.

As to stopped clocks, who would have said 12 years ago that stocks would go nowhere for over a decade and that with the main indexes still down 30% from their highs that people would now be as giddy bullish as they were at top tick? Do you remember what it was like from Nov. 1998 to March 2000? How about housing in 2004/5, or stocks again in 2007?

I remember.

If you think the future brings more inflation, by all means trade all your FRNs for Gold Eagles and farmland, borrowing as much as you need because you expect to repay in cheaper, inflated dollars.
I'll leave the Maginot Line's construction to you.

DaShui said...

Hmmm, the girl seems more mature than me in high school.
If her high school as a JROTC class, maybe a cheap way to learn gun skills. If not even a airsoft CQB team could teach sight alignment, trigger control....

The dollar might collapse? It has collapsed. Until Nixon gold was $35 an ounce, and what is it today? So it has collapsed some 95% in 40 years. The US inflation has averaged 8% since Reagan, which means that the buying power of the dollar is halved every 9 years.
The girl should think about in the future a secure government job, or some cash business that can avoid taxes.

David said...

Once again, people who predict that inflation is about to shoot to the moon and the dollar implode must confront how well the Long Bond (30 year treasury) is doing.

If the Fed was about to drop cash from helicopters, who is stupid enough to loan Uncle Deadbeat Sammy for a 30 year period?

The bond market combined with residential and commercial real estate markets are all signaling that credit inflation is exhausted. Across-the-board deflation is off-stage, warming up and awaiting its cue.

Preparing for deflation is entirely different than for hyperinflation. Getting that wrong will hurt, so (as the old Crusader said in the 3rd Indiana Jones movie) "choose wisely."

Anonymous said...

I AM exchanging my FRNs for gold and silver as fast as my schedule allows.

In the future I'll have my gold or silver, the FRNs will just be paper...lots and lots of paper. Of course, I may then end up exchanging my metals for barrels of the paper (like Ferfal) to buy daily goods.

I'll take the (hyper)inflation bet.

I've also acquired the other necessities to survive and to protect myself.

What's the longest any fiat currency has survived?


Anonymous said...

"...confront how well the Long Bond (30 year treasury) is doing."

Gary North does a pretty good job of that here:

Antal in Wonderland: Antal Fekete's Theory of Monetary Hyperinflation That Creates a Boom in Bonds and a Falling CPI.

This other quote is interesting too:

"People blame either the government..or the speculators, black and white, forgetting that in many cases the speculators ARE the governments…in the sense that they’re in collusion with some of the banks that have their functionaries creating government policies, and have their advocates in the media, influencing public opinion as they wish."

...And, I wouldn't go so far as to say TEOTWAWKI/MAd-Max is a, "fiction!" there are quite a few very real and sudden actions that could lead to such, however; an economic collapse doesn't appear to be one of them.

Anonymous said...

"What's the longest any fiat currency has survived?"

In all my readings, the number has always been 70 years.

That seems to be the average too.

Dave said...

In 1814, Thomas Jefferson wrote:

"The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered."

Here's my prediction:

Phase 1: Borrowing (that's where we are now).
Democrats and RINOs spend as dogs bark; it's simply their nature. Deficits in excess of 200 billion dollars per month are seen as normal and necessary.

Phase 2: Inflation
As the debt grows, worried bondholders start demanding higher interest rates on government debt. The Fed tries to artificially lower rates by creating new money and lending it to the Treasury. Soon the Fed is the only bond buyer, as no one wants to be locked into a falling dollar.

Phase 3: Deflation
As markets dump the dollar and prices shoot up across the board, the Fed slams on the brakes. Suddenly the Treasury can't pay tax refunds, government wages, pensions, unemployment benefits, or interest on the debt. Millions of families and businesses go bankrupt and hundreds of banks close or limit their depositors to very small withdrawals.

Phase 4: Back and forth
The Fed flips unpredictably between inflation and deflation as investors flip between cash and precious metal. Meanwhile, real GDP plunges because no one dares to make long-term investments or consume more than the bare necessities.

Phase 5: Sanity
The Government finally realizes that it cannot spend more than it collects in taxes. The Constitution is amended so that only privately employed, tax-paying citizens can vote. The Federal Reserve is abolished and the Government shrinks to well under 10% of GDP. This new Republic enjoys a century of prosperity, giving birth to new generations of Americans who dream of giving socialism one more try...

Anonymous said...

Hey FerFal, your blog was mentioned on the "Coast to Coast with George Noory" show tonight here in the U.S.

hopefully you will get lots of traffic to your site....good luck...

David said...

Be my guest to follow Gary North's prescriptions. He had his subscribers fully committed to gold all through the 1980-2001 period, during which gold lost 80% of it's inflation-adjusted value while stocks rose 10-fold in real terms.

I don't know what measure of inflation was used for this chart, but here's one guy's inflation-adjusted chart of gold:

People who choose a financial strategy based on ideology are apt to sustain big losses. Even when oil was $147/bl Harrod's was not selling bottles in their store. With vending machines selling gold too, anyone with much experience in speculation is leery of gold being near a peak.

Anonymous said...

Anyone who listened to Precther over the past decade would be eating out of garbage cans today. His calls for a collapse in gold price and huge increased in value of the USD are probably the worst calls ever made.

KeithC said...

One small piece of advice for Katy (which you may have already given but I've overlooked): Whatever you do, do it in silence.

Especially in the social atmosphere of high school, differences are noted, often exposed and sometimes exploited. Not only don't you want to be "the crazy survivalist chick", you *certainly* don't want to be "the kid with gold and silver" if money starts getting tight. Not only might the kids themselves be a threat, they might make a passing comment to their parents, et cetera.

It's not paranoia so much as discretion. :)

Anonymous said...

This was a very helpful post. My family lives near downtown Houston. I read survivalblog and get discouraged b/c we might be part of the city horde, even though we're city preppers. There's just not enough in survival blog world on how to survive in the city.

We've thought about getting a spot of land to escape, but too many downsides. Property tax and how do you keep it maintained and stocked when you live within a middleclass budget. And if there's not a total collapse and we lose a job, then we really can't afford a 'retreat'. This solution is just not practical.

However, if we have a major depression (not total collapse) our location might have benefits. Any corp jobs to be had will prob be downtown and we'll be able to commute w/o a tank of gasoline a day. I don't think ExxonMobil, Shell, etc. will go out of business, so there will be a few city jobs in our area.

The hard part will be security. We don't live in the rich part of town. Our grocery stores already have many people just standing around the parking lot. And many people are just walking around the city... not homeless but they don't look employed. Many are here illegally and can't find work now that building houses has almost stopped.

I've not been robbed, but these people have nothing to do and are just waiting for the right time/victim. It will get much worse.

However, when it gets really really bad... the burbs will be just as bad. And I predict the rural areas around the cities will not be safe either. To get a really secure spot.... you've got to be very isolated.

We're in for a ride. It will not be pretty. Most people in the city aren't thinking about this. They are still eating out and shopping. Tough times ahead.

Thanks again, your response to Katy's questions were very helpful.

Anonymous said...

Katy punches well above her weight She'll be fine in the future and maybe there's hope for our education system after all!

Anonymous said...

Ohhh I wish I had been fully committed to gold all through the 1980-2001 period - I'd be so stinkin... secure, as opposed to all those people who lost everything or most of everything in the housing bubble or some other paper-bug scheme.

How to survive in the city... i thought there was quite a bit of that over on the GTA forum:

... and of course, in Ferfal's book.

Specifics might not be as important as generalities, i.e. maintain situational awareness over trying to pre-plan every possible scenario.

russell1200 said...

Western Rome is a popular time period for "colapsers" to site. But most empires that have "collapsed" did so because of succession disputes/civil war, and invasion. In the case of Rome, they did both.

Where countries collapse economically they seem to do it in some form like our blogs author describes.

My advise would be to keep your cost of living as low as possible. Avoid debt, or at the very least, be very strategic in the use of debt.

At whatever you decide to do, work hard. Success in life is not always fairly distributed, but hard work does go a long way toward stacking the odds in your favor.

Finally, As Taleb, noted in his advise at the back of the Black Swan "Go to cocktail parties" (meet people-network within friendly settings) and when an opportunity does present itself do not assume that you have the luxury to wait for a more opportune time. Opportunity is often a fleeting and fickle mistress.

Anonymous said...

I see where Ferfal is coming from. I also think the average joe will lose money farming. For example, the average income for a poultry farmer is 18 grand a year. Keep in mind they continually take out hundreds of thousands in loans because big corporations make them else they lose the contract. Side point - many big companies are nasty to deal with.

I do think there are great opportunities in farming though. Legendary investor Jim Rogers often says farmers will be driving Lamborghini's in the future. This recent article talks about new super rich farmers in India.

Some of them got rich selling farm land much the way suppliers got rich selling to prospectors during the Gold Rush. BTW, I've also heard most prospectors never hit it rich either. So maybe some aspect of the farming business will be very profitable to venture into.