WendyMcElroy.com
Economic self-defenseIt has been some while since I blogged on the wisdom of slowly stocking up a year's worth of food or whatever time-period's worth you can afford in terms of $ and storage space. North America has become so accustomed to cheap, diverse and plentiful food that it is now considered a birthright. The rest of the world knows better. Even prosperous Europe can recall the hunger and shortages that resulted from World War II.
No, I am not a panic-monger; I do not predict famine and pestilence will sweep the land. Indeed, and without commenting further, I feel measured optimistism about my own future and those for whom I care and, so, toward whom I feel responsible. But the economy at large is just beginning to show its cracks and the next few years will bring genuine misery to many people -- most especially to those who refuse to act in economic self-defense right now. (Hell...they should have acted years ago when signs of a hyper-inflated US $ were clear.)
No, I am not a panic-monger; I do not predict famine and pestilence will sweep the land. Indeed, and without commenting further, I feel measured optimistism about my own future and those for whom I care and, so, toward whom I feel responsible. But the economy at large is just beginning to show its cracks and the next few years will bring genuine misery to many people -- most especially to those who refuse to act in economic self-defense right now. (Hell...they should have acted years ago when signs of a hyper-inflated US $ were clear.)
The theme of this post is the wisdom of hoarding but -- as long as I'm on the subject of economic self-defense -- let me stray into a related sidebar. Governments on ALL levels (federal, state, county, township...) will be in severe and increasing need of money to keep them going for another year, another month. It is inevitable that services will be cut though those cuts may not be apparent to the general public. For example, here in Ontario, a much-heralded $-benefit for children has just passed as part of a larger tax/welfare package; when analyzed, however, the larger package substantially reduces $-benefits per child...but those reductions have received no press, leaving politicians free to beat their chests and bellow-out compassion for children. Soon such hidden cuts will not be enough; even blatant ones will not be enough.
Today's San Jose Mercury reports The city of Vallejo has taken the extraordinary step of deciding to file for federal bankruptcy protection. While the financial distress of this city of 117,000 is especially acute, its fiscal problems are fundamentally the same as those facing many California cities and counties - and, indeed, the state itself. The bankruptcy is remarkable because cities have taxing power and, so, in theory are able to simply raise taxes to cover basic expenses. The brutal truth is that the city can no longer drain any more out of taxpayers; the corpse is bled dry. Expect other cities to follow, including those outside of California.
Accordingly, government is turning to more aggressive and inventive ways to grab every last cent you own whether or not you actually 'owe' it. Case on point. A headline from ABC News (May 12): Not-So-Safe-Deposit Boxes: States Seize Citizens' Property to Balance Their Budgets. The article explains, some states aggressively seize property that isn't really unclaimed and then use the money -- your money -- to balance their budgets. State governments are seizing contents and auctioning off citizen's valuables. Unclaimed property consists of things like forgotten apartment security deposits, uncashed dividend checks and safe-deposit boxes abandoned when an elderly relative dies. Of course, this means the government has a strong disincentive to find the rightful owner of the property. Moreover, if the property is wrongfully seized, it is highly unlikely that the owner will be compensated as long as proper procedure was followed. Indeed, the ABC story features a San Francisco woman who safety deposit box was erroneously reported to be "inactive" -- that is, with unpaid rental fees -- by her bank. By the time she discovered the error, the government had shredded all her important documents and auctioned off for $1,800 family heirlooms that had been appraised at $82,500. Attorney Bill Palmer who represents the woman and otherd in a class action lawsuit against California states, "They figured the safety-deposit box was safer than keeping it under the mattress," Palmer said. "In the case of a lot of citizens, they were wrong, weren't they?"
What's the moral of this tale? The mattress is safer than any government-accessible repository of wealth. The safety comes from the private versus public nature of your mattress. This moral translates to far more than the security of your family jewels. If you own precious metals, a reserve of cash, guns, stocks of any commodity...then shut the hell up about it and, so, preserve the private nature of your 'wealth.' This is a cardinal rule of economic self-defense. It is similar to the advice "don't flash a wad of bills in a bar where you are getting drunk." To extend this parallel, the government (along with other criminals) is watching and waiting to roll you (or any other ripe target) in the back alley.
Returning to the stockpiling of durable foods... An article in the Wall Street Journal advises, Food prices are already rising here much faster than the returns you are likely to get from keeping your money in a bank or money-market fund. And there are very good reasons to believe prices on the shelves are about to start rising a lot faster. "Load up the pantry," says Manu Daftary, one of Wall Street's top investors and the manager of the Quaker Strategic Growth mutual fund. "I think prices are going higher. People are too complacent. They think it isn't going to happen here. But I don't know how the food companies can absorb higher costs."
The article is dated April 21st. Since then food prices have risen substantially. One of my favorite economic commentators Mike Shedlock (Mish) reported on his grocery bill, which is usually the envy of readers because he lives in an area with cheap food even by North American standards. Yesterday (the 17th) he wrote:
I note similar increases in the stores where I shop. The moral of this tale: Stock up on durable foods right now. And...as long as you are affording take-out coffees, cigarettes, restaurants, frozen meals, drinks after work, movies...don't use the excuse "I can't afford to buy three bags of rice or a dozen cans of vegetables." At least be honest and admit that you are chosing to ignore your own economic self-defense for the sake of convenience or fleeting satisfactions. Perhaps you think a caring government will bail you out and, so, self-defense is not an issue. If so, please go back to the start of this post and reread the section on government bankruptcies and government's increasing grab for every detected cent.
Again...I am not predicting that chunks of sky will be falling but I do think a lot of people are going to feel like they've hit by something hard and fast. It is up to you to minimize your exposure to impact.
Today's San Jose Mercury reports The city of Vallejo has taken the extraordinary step of deciding to file for federal bankruptcy protection. While the financial distress of this city of 117,000 is especially acute, its fiscal problems are fundamentally the same as those facing many California cities and counties - and, indeed, the state itself. The bankruptcy is remarkable because cities have taxing power and, so, in theory are able to simply raise taxes to cover basic expenses. The brutal truth is that the city can no longer drain any more out of taxpayers; the corpse is bled dry. Expect other cities to follow, including those outside of California.
Accordingly, government is turning to more aggressive and inventive ways to grab every last cent you own whether or not you actually 'owe' it. Case on point. A headline from ABC News (May 12): Not-So-Safe-Deposit Boxes: States Seize Citizens' Property to Balance Their Budgets. The article explains, some states aggressively seize property that isn't really unclaimed and then use the money -- your money -- to balance their budgets. State governments are seizing contents and auctioning off citizen's valuables. Unclaimed property consists of things like forgotten apartment security deposits, uncashed dividend checks and safe-deposit boxes abandoned when an elderly relative dies. Of course, this means the government has a strong disincentive to find the rightful owner of the property. Moreover, if the property is wrongfully seized, it is highly unlikely that the owner will be compensated as long as proper procedure was followed. Indeed, the ABC story features a San Francisco woman who safety deposit box was erroneously reported to be "inactive" -- that is, with unpaid rental fees -- by her bank. By the time she discovered the error, the government had shredded all her important documents and auctioned off for $1,800 family heirlooms that had been appraised at $82,500. Attorney Bill Palmer who represents the woman and otherd in a class action lawsuit against California states, "They figured the safety-deposit box was safer than keeping it under the mattress," Palmer said. "In the case of a lot of citizens, they were wrong, weren't they?"
What's the moral of this tale? The mattress is safer than any government-accessible repository of wealth. The safety comes from the private versus public nature of your mattress. This moral translates to far more than the security of your family jewels. If you own precious metals, a reserve of cash, guns, stocks of any commodity...then shut the hell up about it and, so, preserve the private nature of your 'wealth.' This is a cardinal rule of economic self-defense. It is similar to the advice "don't flash a wad of bills in a bar where you are getting drunk." To extend this parallel, the government (along with other criminals) is watching and waiting to roll you (or any other ripe target) in the back alley.
Returning to the stockpiling of durable foods... An article in the Wall Street Journal advises, Food prices are already rising here much faster than the returns you are likely to get from keeping your money in a bank or money-market fund. And there are very good reasons to believe prices on the shelves are about to start rising a lot faster. "Load up the pantry," says Manu Daftary, one of Wall Street's top investors and the manager of the Quaker Strategic Growth mutual fund. "I think prices are going higher. People are too complacent. They think it isn't going to happen here. But I don't know how the food companies can absorb higher costs."
The article is dated April 21st. Since then food prices have risen substantially. One of my favorite economic commentators Mike Shedlock (Mish) reported on his grocery bill, which is usually the envy of readers because he lives in an area with cheap food even by North American standards. Yesterday (the 17th) he wrote:
For three weeks running, either there were no sale prices or the sales prices stunk. And this was not just on meat prices. For example, I am fond of Minute Maid Light Lemonade. It has no calories, no carbonation, and no caffeine. On sale I could (but not anymore) get 4 12-packs for $10. That sale went on like clockwork every three weeks for years on end. I would literally empty the shelves of Minute Maid Light Lemonade, typically 12-16 cartons. whenever I was running low. Note that Minute Maid is a Coca-Cola product. All Coca-Cola products are usually offered at the same price. A few weeks ago the sale price on such products went to 3 12-packs for $10. Now the sales price is "buy 2 get 1 free" which amounts to 3 for $12. Yikes. 4 for $10 to 3 for $12 is an enormous jump. I did not buy any.
I note similar increases in the stores where I shop. The moral of this tale: Stock up on durable foods right now. And...as long as you are affording take-out coffees, cigarettes, restaurants, frozen meals, drinks after work, movies...don't use the excuse "I can't afford to buy three bags of rice or a dozen cans of vegetables." At least be honest and admit that you are chosing to ignore your own economic self-defense for the sake of convenience or fleeting satisfactions. Perhaps you think a caring government will bail you out and, so, self-defense is not an issue. If so, please go back to the start of this post and reread the section on government bankruptcies and government's increasing grab for every detected cent.
Again...I am not predicting that chunks of sky will be falling but I do think a lot of people are going to feel like they've hit by something hard and fast. It is up to you to minimize your exposure to impact.
| Donate with Paypal |
 | Donate Bitcoins! |
New Bitcoin address - 30 Nov 2020
1Ee7g7zAUReViPRWtLPBEgnPDRP62qxq3J
1Ee7g7zAUReViPRWtLPBEgnPDRP62qxq3J
Our news can be syndicated by using these rss feeds.
