Thursday, August 19, 2010

There will be Poor... dont be one of them.

Today I came across a very good article by Survival Mom. Her blog is a good example of the new generation of survivalists that prepare for things that happen, not crazy delusions of events that will most likely never take place.

In it I found a link to an article on American Thinker, “An Argentina-like Economic Crisis”. The similarities between the measures taken in Argentina that had such disastrous consequences and the ones taken by the current U.S. administration keep surprising me. Don’t they read? Can’t they see that what they are doing HAS been done before and it didn’t work? I can only assume now that they know well enough that it wont work, they are just doing so to stay in power and make as much money as possible while they still can.
No wonder, Spain is doing the same thing with the expected results. In provinces such as Canarias, unemployment has gone up to 30%. There’s already Argentines that had moved there after the crisis considering moving back, some already doing so, and mentioning the similarities to what they’ve already experiences (people eating out of the trash in restaurants and supermarkets)
As the crisis in USA keeps evolving, its time to get real folks. The household budget has to be reconsidered, the non essentials weighted and objectively reviewed.

You have to understand that what’s happening in USA right now isn’t even the tip of the iceberg. You don’t have significant inflation yet. You don’t have a new generation of poor establishing itself in the society. You’re not suffering the full extent of the consequence of what’s already going on, mostly when it translates into class hatred and fighting which will bring along a wave of crime that includes senseless violence like you’ve never seen before. Something similar to what we saw here a couple week ago after a pregnant women was robbed after taking some money out of the bank. She already gave up the money, what’s the logic behind shooting a defenseless, harmless 9 month pregnant woman in the face when she already gave the robber what he went after? None. None at all, just pure hatred towards those that have a bit more than the rest. (Isidro died a few days ago, by the way, mother Caroline remains in critical condition)
When you have 50% poor and 20% of the population below the poverty line, these things happen. Of the remaining 30%, 25% is a redefined middle class that closely resembles pre-2001 poor. That leaves 5% of the population that has managed to adapt, survive and maintain their old middle class or high class life standards. The disparity is huge, and the political stance is that poor=good, guy with money=bad. There’s always someone that has to take the blame, and its a rare occasion when those that are truly guilty are held responsible for what they’ve done.

Its not a time to panic but a time to sit down for a second and understand where things are going. Its not going to be the end of the world but they are going to be tough times. Very few people will sail through this without being affected.
As for the measures to be taken, you could break them down into three:

1) Ensure the basics to survive a worst case scenario as well as intermediate ones. This means have at the very least a couple months worth of food and two weeks worth of water (a gallon per person per day, minimum) As finances allow, work up that food stockpile (preferably canned, long shelf life food and easy to cook or that requires no cooking) Make sure you have the basic for a survival/emergency kit. This has been discussed in this blog more than enough, just check the “gear” tab on the lower left column.
Among the top of your priorities, make sure you have at the very least one big bore handgun for self defense and the basic training to at the very least handle it safely, the minimums being 9mm for pistol and 38 special/357 magnum for revolver as well as two 50-round boxes of defensive JHP ammunition. Everyone runs to the gunstore when they see the hordes looting, and its usually too late to do you any good. I’ve seen it before, after our economy collapsed in 2001. Its usually too later to wish for a fire extinguisher that you don’t have when you’re in a burning building! Same thing with a gun. Before buying yet another gun, I'd get at least one piece of body armor. Even if its cheaper surplus, when the chips are down wearing armor will do you 1000x  good than an extra gun in the safe. Its only during good, safe times that having 30 firearms and not a single piece of armor makes any sense at all. Often when law abbiding citizens end up shooting someone, they do it against an armed  bad guy. Expect to get some lead yourself for your efforts.
Do lots of research and just buy what you need. If I write 20 posts about knives, 30 about flashlights and 10 about fire starters, its not because you need every single thing I review, its just so that you can make an informed decision when buying one, one that fits you circumstances and budget the best. Be an adult about this and only buy what you need.

2) Redo your budget. Power bill, rent or taxes and other fixed monthly expenses + food+ medical insurance+ gas. Internet may or may not be needed depending on your line of work. These days it usually is. Check your cell phone plan. Are you paying for a phone that isn’t getting much use? Millions get by with pre paid ones, only use texting and only use the actual phone when absolutely needed. Add a small amount for entertainment, the amount will depend on your financial situation of course. To that, ad another 20% that will cover unexpected events (car accidents, fridge that just died ). That’s your monthly budget. Now you start and Excel spreadsheet and write down every expense you make per day, every night after supper. You wont believe how much money doing this will save. The spreadsheet will tell you if you’re doing ok and avoid nasty surprises at the end of the month. Try it for one month, you’ll see how well it works.

3) Make more money. This will be a key factor when inflation hits, and will be mandatory if you want to maintain any glimpse of the life quality standards you want for your family. Some jobs are more time consuming than others but most of the time either one parent (or adult kids) has a few extra hours to work with. Start a home business, something you enjoy and start with bare minimum expenses to begin with. Start taking clients for yourself if your line of work allows it. Give classes, this could be math, music, first aid, shooting, everyone has something he enjoys and is good at. Teaching can be done as little or as much as you want if you find a student that can work around your schedule, its just a matter of finding him. If nothing else, start by cleaning the house and selling all that extra amount of items you just don’t need. People throw away things that could be sold for a few 20 dollar bills every day. I’m 31 and still remember the time when we lived in USA, I must have been 3 years old. We had just moved to the company house and while driving around my father saw a 21 speed bicycle that was layed there with the trash. It only needed a new chain. I still remember the conversation my parents had: “ Are these people crazy? Throwing away something that could be so easily fixed?” My father had a top managing position in an importnat bank, we moved with all expenses taken care of and a nice salary. We sure did not need to pick anyone's trash. It simply didn't compute in his brain to allow sometihng that could be repaired to be thrown in  a garbage truck. Still happens all the time in 1st world countries like US. That’s a line of work on its own right there, you’ll see none of that in Argentina or most South American countries.

Its not the time to go nuts running scared, but it is a time to make a down to Earth evaluation of your personal situation and take action.
Tae care folks.

FerFAL

29 comments:

TheSurvivalMom said...

A lot of Americans feel we are right on the verge of that tipping point. Thanks for the insights of what the future may hold for us. I'd rather know the ugly truth than be deluded, or delude MYSELF, into thinking our lives will never change and it's Disneyland forever! Woo-hoo!

Anonymous said...

Been to a US garage sale lately? Held one? Prices are down to 1970s levels, in absolute dollars. Yes there's a lot being thrown away, but it's not the rich pickins of even a couple of years ago.

Anonymous said...

Quite a number of us in US cities live in areas where a large segment of the population is exactly like you describe: poor, addicted to welfare (food, utilities, rent,education, medical). Multiple generations have existed in this state and, neighborhoods where they are the majority are just as those you describe in your country. I shudder to think what will occur when this expected largess ceases.

Anonymous said...

This is quite simply the best post you've put up that I've read in the last year + or so that I've been reading your blog. It's clearly heartfelt, and within the sweet spot of your scope of knowledge. Coming from a military background, enlisted and as an officer, and with extensive knowledge in macroeconomics and security (an odd mix I know) I read some posts with a grain of salt. This message however is absolutely correct and should be pounded into anyone who will listen. Posts like this ring with a sound of truth that keeps me reading this blog.

Thanks,

Black six

DaShui said...

FerFal, Amigo Mio,

You should say to do something not for money. Last few weeks I have been drilling a local Chinese restaurateur
for his citizenship test, for free(he does give me free food). Things like that tend to open up opportunity. If I needed to make some extra cash, he would let me run his cash register, making some $150 a day tax free. Not bad.
Beyond that, over emphasizing money cheapens human relationships, that you might need someday.

Shambhala said...

Absolutely agree.
At this point only the willfully blind will be caught unaware.

Even my wife - bless her non-survivalist heart - asks if we have enough stored in the basement.

Apartment Prepper said...

Good post, your advise, having witnessed this yourself is most welcome and helpful. We live in an urban environment with limited space and funds for supplies, but feel the need to prepare is greater than ever. Thanks for the good information.

FerFAL said...

Thanks Survivalmom, really like your blog :-)
"Anonymous said...

Been to a US garage sale lately? Held one? Prices are down to 1970s levels, in absolute dollars. Yes there's a lot being thrown away, but it's not the rich pickins of even a couple of years ago.

August 19, 2010 12:06 PM"

Been in a small town Texan pawshop tihs May 2001 with a couple friends of mine. Among other things and on that one visit alone, we found a rather rare gun that could have been sold for a 200 USD profit. One of my friends bought an old Ford truck for 60 USD, the man just wanted it out of his lawn, a new battery, plugs and some gas had it running in no time. 60 bucks for a car! Yes, I still think there are lots of terrific deal in USA. You'll find none of that in Argentina or most other latin countries for that matter.

Thanks Black Six, much appreciated.
;-)

DaShui indeed. You'll need friends as times get more complicated. Still I'm not one of those that say that money isn't important, I beleive it is, even if there are of course things much more important like moral character, health, our loved ones. Do notice though that you didn't miss the potential 150 buck a day opportunity. ;-)

FerFAL

David said...

At the risk of beating a dead horse, my advice is to expect deflation to accelerate and save "preparing for inflation" for when you've "survived deflation."

Prices for everything in the US are starting to drop. Real estate is down 20-50% with bank credit drying up like mad. Banks don't want to lend and demand for loans is disappearing. The Commodities Research Bureau index is down by half from 2 years ago and looks ready to plunge again. People are taking lower paying jobs as unemployment mounts.

For more seek out the free resources linked from this site:
http://www.elliottwave.com/freeupdates/archives/2010/08/17/A-Safe-Bridge-Over--Troubled-Financial-Waters-.aspx

Anonymous said...

watch Craigslist USA diligently. In the last year and a half I have gotten for free a half dozen iron window gates and a door gate(all about $2500 worth). a tent for $35. Car cargo carrier, coal stove, AC, and other misc. for free. From reading Ferfal's blog I also decided I needed a 4 wheel drive. Couldn't afford it and asked around and a friend gave me a 91 Nissan Pathfinder SE for free. Only 100,000 orig. miles. Put new brakes and shocks on it before he gave me. Runs perfect. Looks great. Ask cab drivers if they know someone who can do a compressed gas conversion. Then it will only cost you a few hundred dollars.

FerFAL said...

David said... People are taking lower paying jobs as unemployment mounts.

Deflation usually lasts a bit before hyperinflation strikes. We had it for a few weeks after banks closed, but only on certain products, then infaltion went out of control. About people taking lower paying jobs, even accepting salary cuts, that's called desperation. We saw a lot of that too, even people that would work for food.

FerFAL

David said...

Fernando, I understand that desperation is driving cuts in pay; what I'm saying is that the steps one takes to prepare for inflation/hyperinflation (buy gold, raw land, etc.) and credit collapse deflation (eliminate debt, move savings into either cash or short-term gov't debt) are very different.

Today far too many people think the govt is "printing money." This is an inversion of fact. The central bank doubled its monetary base and prices barely held where they were. If Argentina's central bank did that your prices would skyrocket. For a time, things are simply different here in the US (mostly due to the fact that there is more dollar-denominated debt, IOU's, in the world than any other).

It is highly likely that prices will drop 90% or more for many things (houses, land, stocks, etc.) and if that happens then the value of dollars will be the inverse, a tenfold or more increase in purchasing power.

Is this a sure thing? Only death and taxes are. But the USA has already HAD its inflation. It lasted far longer than Argentina's ever did, about 75 years. We have to have a 1930's style deflation, only worse, before a true inflationary wave can muster again.

People will pay their money and take their chances. Most will prepare for inflation; I think they'll regret it.

FerFAL said...

Thanks for your comments David. Its really impossible to guess for certain what will happen, but at least in my opinon, this is yet another text book collapse (with its few personal touches as always becasue of country, culture, historic context) but the textbook would indicate inflation being much more of a problem and much more severe. Keep in mind that inflation is basically either money being printed as crazy or people simply losing faith in that piece of paper. I see the possibility of such thing happening. Already in Spain, inflation is doing its damage. Again, thnaks for sharing your perspective.

Fer

Anonymous said...

David, even though I disagree with your conclusion about deflation (the Fed will print to avoid this, its what they do, it's all they can do) your input would've been great on a few threads over at Grab The Apple, stop by sometime if you haven't already.
Other than deflation, it seems we agree on many things.

IF gold drops in price - and with it - everything else, isn't it a wash? An ounce of gold has always bought a new mens suit, for thousands of years.

To Anon 12:04PM,
I have been to far too many garage sales in the U.S. this year than I should.
It seems to me that the reason garage sale prices are so low and the pickin's are slim is because the high priced or quality stuff is being sold on ebay and other places online beforehand or not put up for sale at all.

Not only that, but the early birds often scoop up anything of value before the crowds show up.

What's left are trinkets, junk and used couches. At least that's the way it appears in my neck of the woods.

And with many people still able to buy new couches, there's little demand for the old and that leads to low prices for used couches and such. Just my opinion.

I don't want to be one of the poor.

I don't want my neighbors to be one of the poor.

I don't think the banksters & politicians care about any of that.

Anonymous said...

There you go, FerFal, talking sense again instead of helping us flesh out our Mad Max fantasies.

Sid (who does live in an actual third world country)

Anonymous said...

Ok, so I was thinking about body armor and checked out your link. They said they cooperate with the police and help them if the person buying it commits a, "crime" and by buying their product you agree not to be a criminal, or some such. I have no intention of being a criminal. But after reading the article, "How Many Laws Have You Broken Today?" I feel just a slight bit leery of them because of their T.O.S. and all the crazy stuff going on in the world anymore. Can't trust anyone. I don't mean to pick on these people, but I'm trying to be wary.

Here's the link for the article:

http://www.lewrockwell.com/orig11/nestmann2.1.1.html

Maldek said...

@David

A bit more detailed explanation for you.

When you say "you have had 75 years of inflation" than that is correct.
The cause for inflation is NOT higher prices (as many esp. socialists believe) it is a higher monetary base. You could simply call it "more dollars".

Now we have different kinds of "dollars" today - the dollar bills are only ~3% (if that much) of the total amount of dollars.

The biggest amount is stored in "bits and bytes". Now what we have today is a deflation of those other 97%.

For Joe average -> house prices will decline, stocks will fall (overdue), the bonds - even the T-bills will devalue and so on.

When this happens a lot of "bit and bytes" dollars will go byebye and the "dollar bill" will improve in value exactly as you say.

But it wont stop there (btw this process is running NOW!) - the FED and other central banks are pumping new money into the economy every day. This effect has been outlined in detail by "the austrian shool of macroeconomics" decades ago.

For Joe average this mechanism is crushing him. "What you have is going to be worth less - and what you need is going to cost more."

Don Williams said...

Hey, Ferfal, is Christina going to flip your Off Switch?

http://www.breitbart.com/article.php?id=D9HNEC680&show_article=1

"BUENOS AIRES, Argentina (AP) - Argentina's government on Friday ordered the closure one of the nation's three leading Internet providers, demanding that Grupo Clarin immediately inform "each and every one" of its more than 1 million customers that they have 90 days to find new ways of getting online. "

heh heh

Anonymous said...

"...more than 1 million customers that they have 90 days to find new ways of getting online."

It's a terrible way for it to happen (Bastiat's broken window fallacy in action) but there is opportunity for someone to be a new ISP. The quote didn't say, "That's it, fineto." It said, "find new ways."

Just like the old Ma Bell in the U.S.?

David said...

@Maldek,
The definition for inflation I'm using is an increase in money and available credit, resulting in a rise in prices for goods, services, or assets (as the case may be).

Increases in M1 only result in rising prices if banks use the increase reserves in the system to multiply loans. This worked continuously from about 1933 until 2007. Now, an increase in the monetary base is NOT resulting in inflation. [Anyone who claims inflation is a big problem in the USA needs to point to something that's rising in price.]

What does that tell you?
Mike Shedlock shows you here:
http://globaleconomicanalysis.blogspot.com/2009/12/fictional-reserve-lending-and-myth-of.html

The Fed cannot cause prices to rise in a market economy if people aren't borrowing and spending. Joe 6-pack is not getting squeezed. He's going broke because his balance sheet is massively negative and debt is deadly in a deflation. Jobs and pay decline, bills stay the same. Dollars get scarcer.

The Fed is a paper tiger, just as it was in 1930-32. Central bank power is a myth.

David said...

@ Maldek
I disagree with a few of your statements.
1) T-bills are unlikely to "decline." They are the nearest thing to cash in existence. Only if the USG does something weird, like unilaterally extending their maturities, will they be at risk.
2) Other than cash, it's not about "bits and bytes." It's about IOUs. The rest of the money supply is debt of various issuers and maturities. Even bank deposits are nothing but IOU's.

Deflation occurs either when productivity far outstrips money/credit growth (see the PC industry) or when credit disappears and with it goes purchasing power so prices decline. The former of these mechanisms is the salutary deflation Austrian Economists speak of, the latter is the rare catastrophe of the 1930's.

People who think the Fed can simply "print" do not grasp how large is the mountain of dollar-denominated IOU's or how fast they will implode if the Fed actually attempted to PRINT BANKNOTES (which it does to a very limited amount).

First we get deflation; THEN we probably will get a Wiemar Republic style currency inflation, but expect to see $1,000 bills appear first.

Anonymous said...

@David:

. [Anyone who claims inflation is a big problem in the USA needs to point to something that's rising in price.]


- groceries (milk, eggs, diapers, fruit, bread, vegetables, soups, etc.)
- tuition anywhere (college, HS, daycare, camp)
- gasoline
- automobile repairs and parts (tires, oil, replacement for worn out belts and hoses)
- electricity ($.22/kWh)
- cable/internet bill
- car insurance
- health insurance
- house insurance
- healthcare ($268 for a doc to just take a look at my kid, say she has a fever and go home, she's fine!?!?)

Yes, the price of gee-gaws from China is going down, but many items in my monthly "nut" are going UP in price.

So cheaper...

+ clothes
+ electronic doo-dads

Pretty funny about the Fed being a paper tiger. Good pun!

David said...

@ Anon,
Price increases for food?
Not where I live.
Gas? Compared to 2008? No Way.
Tires, car parts, etc. Not where I live.
Car and home insurance? My prices have gone down. Are you shopping?
Your kid's $200+ visit to the doc? I'll bet it was a "Convenient Care" and yes, they charge through the nose. Convenience costs and medical regulations prevent most competition in that industry.

Health Insurance? Yes, but that is because anything the govt pays for (or heavily impacts) is still rising in price.

Overall, prices are declining. People's ability to pay for things is dropping faster, however, as unemployment rises. This is how people get poorer even as a deflationary depression crushes prices. Prices dropped 90% for most things during the early 1930's. People got poorer, however.

As Ayn Rand answered when Phil Donahue asked her, "But what about the poor?"

"Don't be one of them."

Anonymous said...

@David

What year are you comparing? 2008 - the brink of collapse of the entire financial system? Think of other years if you're old enough. 2008 was a one-off year. It it like saying the average price of gold or silver through the 20th century was $850 and $50 when they simply represented peak prices.

Where do you live?

It was the EMERGENCY ROOM and we left in the middle of the night. You assume too much.

Prices going down for food? Milk? OJ? Eggs? You may see SALE prices of those items down slightly, but not, for example, baked goods and bread, not compared to 2008, and certainly not cheaper than 2005, 2000, 1995, 1990, 1985 or prior.

Where do you shop? It can't be Wal-Mart b/c I hear shoppers saying that the prices have gone up there as well, especially on food.

In the regular supermarket the portions/packagings/portions are getting smaller and the prices are going up.

I try to live well... I buy organic foods and high quality as much as possible. No highly processed or high fructose corn syrup. Some of these organic foods are dropping in price as people move to eat better, there are now "store brand" organic items and wider selections.

Want to get a cake? Bagel? Slice of pizza? Those prices have moved up. The same for take out be it Chinese, Greek, Italian, Tex-Mex or Thai. The old menus are in the trash and new, higher prices have remained in effect. I sure hope the prices ease off a bit.

Want to take your kids to a private park? Prices are up.

Town park or beach? Prices are up.

State park or beach? Prices are up.

Ski resort? Prices are up.

Boat ride? Ferry ride? Prices are up.

Boy Scout Camp? Prices are up.

Tuitions? Prices are up.

Books? Prices are up.

Shipping Fedex, UPS, USPS? Prices up consistently. When they don't "raise prices" they add fees instead, just like the airlines.


Tire prices going down? Are yours made of RUBBER?
The first replacement set of Pirellis on my car was $260 installed in. The next set of tires (Goodyears) was $550 or $600 installed.

Car parts DEFINITELY went up. 10% this year alone on my parts. Synthetic oil? Up. Coolant? Up. I do my own work on my import.

Same for my other car (semi-domestic).

2008... what about 2000? what about 1990?

Try buying gold or silver lately? Just a LITTLE more expensive than 2/3/4/5/6/7/8/9/10 years ago. Of course gold and silver are responding to incredible money creation (inflation) from the Fed and the weakening buying power of the dollar.

Our insurance broker told us we was paying the absolute low of our auto insurance price (GEICO) which he cannot offer, so not to change. (That was the night of the expensive emergency room visit, ironically, during a dinner together) And yes, GEICO goes up year after year with NO accidents and NO tickets.

Healthcare prices are going up b/c of gov't meddling, OK, but then why isn't housing going up since the government meddles intensely in the housing market? Or with autos, also meddling there. And clothing/textiles?

Anonymous said...

@David

What year are you comparing? 2008 - the brink of collapse of the entire financial system? Think of other years if you're old enough. 2008 was a one-off year. It it like saying the average price of gold or silver through the 20th century was $850 and $50 when they simply represented peak prices.

Where do you live?

It was the EMERGENCY ROOM and we left in the middle of the night. You assume too much.

Prices going down for food? Milk? OJ? Eggs? You may see SALE prices of those items down slightly, but not, for example, baked goods and bread, not compared to 2008, and certainly not cheaper than 2005, 2000, 1995, 1990, 1985 or prior.

Where do you shop? It can't be Wal-Mart b/c I hear shoppers saying that the prices have gone up there as well, especially on food.

In the regular supermarket the portions/packagings/portions are getting smaller and the prices are going up.

I try to live well... I buy organic foods and high quality as much as possible. No highly processed or high fructose corn syrup. Some of these organic foods are dropping in price as people move to eat better, there are now "store brand" organic items and wider selections.

Want to get a cake? Bagel? Slice of pizza? Those prices have moved up. The same for take out be it Chinese, Greek, Italian, Tex-Mex or Thai. The old menus are in the trash and new, higher prices have remained in effect. I sure hope the prices ease off a bit.

Want to take your kids to a private park? Prices are up.

Town park or beach? Prices are up.

State park or beach? Prices are up.

Ski resort? Prices are up.

Boat ride? Ferry ride? Prices are up.

Boy Scout Camp? Prices are up.

Tuitions? Prices are up.

Books? Prices are up.

Shipping Fedex, UPS, USPS? Prices up consistently. When they don't "raise prices" they add fees instead, just like the airlines.


Tire prices going down? Are yours made of RUBBER?
The first replacement set of Pirellis on my car was $260 installed in. The next set of tires (Goodyears) was $550 or $600 installed.

Car parts DEFINITELY went up. 10% this year alone on my parts. Synthetic oil? Up. Coolant? Up. I do my own work on my import.

Same for my other car (semi-domestic).

2008... what about 2000? what about 1990?

Try buying gold or silver lately? Just a LITTLE more expensive than 2/3/4/5/6/7/8/9/10 years ago. Of course gold and silver are responding to incredible money creation (inflation) from the Fed and the weakening buying power of the dollar.

Our insurance broker told us we was paying the absolute low of our auto insurance price (GEICO) which he cannot offer, so not to change. (That was the night of the expensive emergency room visit, ironically, during a dinner together) And yes, GEICO goes up year after year with NO accidents and NO tickets.

Healthcare prices are going up b/c of gov't meddling, OK, but then why isn't housing going up since the government meddles intensely in the housing market? Or with autos, also meddling there. And clothing/textiles?

Anonymous said...

Want to buy an AK? Compare in price to 5/10/15/20 years ago. Same for an AR. What about ammo prices? Through the roof.

What about building materials? Paint, brushes, sheetrock, tiles? Nails, screws and lumber have become painfully expensive.

Try buying a door... or PVC fittings. Some 3 and 4" PVC fittings cost over 5 bucks... for a piece of plastic! That is contractor pricing.

How about bathroom fittings and fixtures? American Standard, Kohler, Toto. Still expensive. People that want to get rid of their #2 want Toto and they're still costly.

Good appliances for your home? A nice fridge washer or dryer will cost you.

Rent tools? Prices up.
Landscaping? Prices up.
Rocks/turf/mulch/fertilizer/gravel? Prices up.
Fencing? Still very costly despite efficient, modern production and distribution.

Flowers for your home? Flowers for your church? Flowers for your girl? Prices way up unless you grow them yourself or cross into Mexico.

Holding a wedding or catering? Up. Wedding prices have become extortionate.

Beer? Up.
Wine? Up.

Baseball game? Prices up.
Parking at game? Price up.
Hot dog/sausage beer at game? Up

Tolls on highways to get to the game?
Bridges? way up

Mass transit: Way up.

Bank fees and fines?

PROPERTY TAXES?

Docking for boats? Launch and tender service?

Schools/fire departments? Police?

Garbage / waste disposal?

Increases in efficiency in production often bring lower prices (like with gee-gaws, TVs, cars). Yay!

A glut of housing also means housing has to go down or the dollar so watered down that while a $600,000 McMansion keeps its value, a hamburger will be $20.

Where I live RE is down 10% (good neighborhood) and in surrounding areas 20 or even 25%. Will be interesting to see if we go to 50%, but quality land is at a premium here and builder/remodelers either have to fold or do something else b/c materials have become so expensive and they can't cut labor costs any more.

A lot of my response is anecdotal based on my yearly budget, and I'll throw in one more since I know more than one person that works at the Treasury and the FED: The numbers (CPI, historical data) are COMPLETELY baked. These guys are called in to work early, late and on weekends to manipulate the data.

Going to be interesting times going forward. A good friend of mine working in DC is fairly panicked at what we're going to see going forward, and it ain't pretty. To say who knows exactly what's going on: Jim Puplava, Bob Prechtor, John Mauldin, Frank Barbera, Doug Casey, Jim Dines, Richard Russell, Siggeruud, (sp), ... it certainly isn't clear and their opinions vary but for one thing: It is going to be challenging. Getting out of debt is probably going to be important this time around as is having your assets spread around and certainly being ready for emergencies (famine, drought, cold, electrical, riot).

Good luck all. I don't have the answers either so a lot of my thoughts are simply rhetorical. If all else fails, fall on meditation to keep your head together and ask the saints for help, they act and listen.

David said...

@ anon:
Home prices temporarily ceased a vertical dive due to a (temporary) reflation off the March '09 lows.

We're arguing about nothing. Very shortly we'll know which "-flation" is occurring (or if it it's a mix), infl- or defl-.

In the meantime all I see are people losing their jobs. Are prices going to rise when people aren't buying? Will retailers raise their prices?

I think not. http://www.nytimes.com/2010/08/19/business/media/19adco.html?src=busln

As for gasoline, go here and click to open a chart, then make it a monthly chart. Dec 2010 Gasoline futures hit $3.50/gal two years ago, are now $1.88 and look poised to break down below $1.80 going south.
http://www.cmegroup.com/trading/energy/refined-products/rbob-gasoline.html

I'm not citing anecdotes. These are the market prices. I expect prices to fall for most things in coming months, possibly a couple years. You're free to expect something different, but only one of us will turn out to be right.

Anonymous said...

I wonder,... instead of lowering prices in response to populations with lower disposable income, will many companies simply go out of business or stop offering so many options?

What good are low prices if the shelves are bare?

Not that low prices are a bad thing, they're great, and a necessary part of the correction. It's the adjustment period and the response of producers that might bite, for awhile. Especially for those who are unprepared.

Look at G.M. One of the unions refuses to accept lower wages. With the cost to produce automobiles staying the same (or going higher) do you think the company will lower prices anyway? I guess that's up to the shareholders, er I mean the owners in the White House?

Lots of manipulation and games being played upon the little people and those who think they're, "in" with the ruling class.

Could it be that the response by some in the U.S. to the border with Mexico is the modern day equivalent of this sign?:

http://i491.photobucket.com/albums/rr280/FoundingFather1776/economic-collapse.jpg

I wonder if there are signs similar to that in Argentina today?

Whatever happens, I think perhaps business will be brisk for Pinkerton's men.

Anonymous said...

"In the meantime all I see are people losing their jobs. Are prices going to rise when people aren't buying? Will retailers raise their prices?"

I'm not certain, but I think in the U.S. during the 1970's (1973 especially) prices rose in the face of falling or stagnant income.

People responded by buying less, but they still bought, which allowed the producer to sell at the ever increasing prices - with lower profits - but they had profits none the less.

If gasoline went to U.S. $10.00 per gallon, I would still buy it only I would buy less of it and use less, even if I had less income.

I think we're just finally seeing a resolution of that time period finally catching up to us.

It's like a beach ball being held under water since 1971 when Nixon took the world off the gold standard. It wasn't just the U.S. that was affected by Nixon's actions, the world followed the leader.

Just a thought.