Economy Would Collapse Right Now – Today’s Quote

The world economy would collapse right now if markets were truly free [of manipulation]…and gold and silver would [shoot the ] moon…

P.I.G., The Prepper Investment Guru

Hendrickson on Economic History Rhymes – Today’s Quote

Now that Barack Obama has won re-election, the parallels … to him and FDR seem stronger than ever. In terms of government spending, George W. Bush’s second term can now be viewed as Herbert Hoover redux, and Obama’s additional ramping up of the Bush spending explosion eerily mimics FDR’s post-Hoover strategy. Perhaps the most breathtaking parallel between FDR’s and Obama’s Big Government agendas is this: In his first five years in office, FDR spent more than the previous 31 presidents combined; in eight years as president, Obama will have doubled the national debt accumulated by all 43 of his predecessors (unless, of course, Uncle Sam’s farcical finances blow up before then).

Economist, Dr. Mark Hendrickson via Obama: The Second FDR Rather Than the Second Carter | Forbes

REALITY CHECK Preparing For The National Debt-saster

As you have probably read in the mainstream media or noticed in the left column of this website, the U.S. National Debt has now surpassed $16,000,000,000,000!!  Yes, that’s 16 TRILLION dollars, 16 followed by 12 zeros!!  The number itself is staggering but the collective “shrug” of the populace concerning this outrageous profligacy is appalling and indicative of two things.  First, it demonstrates how utterly incapable a very sizable majority of the populace is with fundamental mathematical and economic principles.  Second, it emblazons the entitlement mentality across the sky in astronomical proportions!

A million seconds is 13 days.

A billion seconds is 31 years.

A trillion seconds is 31,688 years.

via Million, Billion, Trillion.

My conversations with a wide variety of people concerning federal spending make it abundantly and infuriatingly clear how pathetically inept people are with rudimentary mathematical concepts such as (gasp!) multiplication and exponents.  Far too many “citizens” and “voters” the seem to think that the primary difference between a million, billion and trillion is merely a spelling issue involving the letters ‘M’, ‘B’, and ‘T’.  There is little comprehension; much less appreciation, for the Reality of the thousand times each is multiplied to change that one little letter!  Most people can grasp the impact that winning ‘The Lottery’ (Definition:  a self imposed tax operating as a long-odds gambling scheme disguised as a ‘game’ to the “math challenged with the odds of winning roughly equivalent to the odds of being struck by a meteor) would have on their lives.  However, very few comprehend that 16 BILLION equals 1,000 winners of such a jackpot.  Assuming a two week cycle to reach a 16 million plus jackpot it would take ~40 years to have 1,000 jackpot winners in any game and pay out 16 billion.  For our hypothetical winners to collectively win 16 Trillion dollars the game would have to go on for an additional ~40,000 years.  This is just one way of trying to conceive of the number representing our current national debt.  These are numbers that the “average voter” cannot comprehend and therefore has little concern about. (more…)

Why Prep, Part 3 Triggers & Stressors

This entry is part 3 of 3 in the series Why Prep

Note from Andrew: The complete Why Prep Series has now been consolidated HERE.

Today we present the third article in our series on why to prepare for disaster.  In the first article, ‘Why Prep, The Introduction’ we asked and answered the following question:

Question:  Why Prep…why become more self-reliant?

Answer:  Because it’s the only reasonable and logical response to an unknown future and even a cursory study of history.

In the second article, ‘Why Prep, Historical and Current Examples’ we discussed examples of places and periods where preparedness could have made the difference between survival and suffering (or worse) for you and your family.  In this third installment we’ll discuss stressors and triggers for potential The End Of The World As We Know It (TEOTWAWKI) situations.

Today we’re going to talk about stressor events and triggers.  A stressor event is an occurrence that has the potential to change a system or society.  Stressor events happen all the time and can vary dramatically in the amount of stress or influence they place on a system.  Some examples of stressor events are election outcomes, legislation, trade wars, disease outbreaks, government spending programs, wars, acts of terror, social movements, development or loss of key infrastructure (like the internet you’re browsing), information releases (like the Watergate scandal) or changes to the physical environment (like drought or natural disasters).  From a societal standpoint, stressors often manifest themselves in multiples and if significant enough disruption occurs…they can create a situation that cascades out of control.  While it’s an overly simplified model think of these stressors from the last century:

  1. Germany loses World War I and a large percentage of its reproductive age males
  2. War damage and reparations create severe economic hardship
  3. Rise of the National Socialism in Germany bringing Adolf Hitler and his Brownshirts to power (were the Brownshirts easier to recruit due to a lack of fatherly guidance?)
  4. Election of 1933 gives Hitler enough power in the Reichstag to pass the Enabling Act and assume dictatorial powers

This example from history led to TEOTWAWKI for much of the world from the mid 1930’s to the mid 1940’s and eventually ushered in the atomic age.

(more…)

The Conceit of Centralized Planning

One goal of U.S. policy is to create stable, democratic societies — but it is a fatal conceit to believe that we as foreign central planners can build nations. Bureaucrats can’t design real societies. The best outcomes bubble up from free decisions made by local people. They, not the planners, have more relevant information about their own lives and incentives. When they don’t get the decision right, they adjust. But when central planners — be they kings, viceroys, bureaucrats or democratically elected politicians — try to create something as complicated as a new social order, they usually fail.

via Romney must get real about what America spends on defense | Fox News.

Let’s start our ‘nation building’ at home…the first step is to get rid of excessive legislation and regulation and let the business of America become business again…the business of American was never intended to be government…and with government spending approaching 50% of Gross Domestic Product that’s certainly one way to describe it.

Consider the following figures from USGovernmentSpending.com:

Fiscal Year 2012 Total Government Spending in the United States Federal, State, & Local

  • 7% of GDP is spent on Government Pensions
  • 7% of GDP is spent on Government Health Care
  • 6% of GDP is spent on Government Education
  • 6% of GDP is spent on National Defense
  • 4% of GDP is spent on Government Welfare
  • 11% of GDP is spent on All Other Spending
  • 40% of GDP is spent on Total Government Spending
  • 9% of GDP is spent on Federal Deficit

Self reliance is much more difficult to achieve without individual liberty and the freedom to pursue our own economic dreams.

A Nice Hot Cup of Survivability

Andrew’s Note:  Today we present another article by guest writer, Jay (Just Jay).  Jay is a combat veteran, a knowledge manager by day and serial inventor by night.  He’s had a number of interesting jobs through the years including collecting war trophies (like armored personnel carriers) in Iraq and a stint as a confidence course manager at a facility that used physical activity to build confidence in welfare recipients… to encourage them to work their way out of poverty.  Yeah, that worked.  Jay brings a sense of humor and a mug of coffee to everything he does including a discussion of the collapse of civilization and building a survival network.  Enjoy.

Sometimes, as we develop and refine our preparedness plans, we can fall into the trap of isolationism and paranoia.  While I’m a big fan of getting away from ‘them all’ (Paranoia=situational awareness), eschewing connections to others can be detrimental to your long-term survival.   No, I’m not talking about using social media.  I’m talking about the drinking habits of the Cahokia civilization about 900 years ago. (more…)

Your Share is $51,349.21

As you can see from the Gross National Debt Counter to the left of this post (just under the Tags) the U.S. is rapidly approaching $16 Trillion in debt.  That’s $16,000,000,000,000!  If we take the National Debt and divide it by the population of the U.S. (311,591,917) then we have debt per capita of $51,349.21.  That’s over a quarter million dollars owed for a family of five.

Incidentally, with a Gross Domestic Product of just over $15 Trillion (2011) so we now owe more than every man, woman and child (allowed to work on the family farm once again) produces in a year.

Don’t Take Any Wooden Tally Sticks!

Governments are interested in unlimited spending. Bankers are interested in unlimited income. Understanding the first two sentences of this paragraph explains everything…What few of us have understood is that this has been the most profitable wealth creating mechanism in the history of the world.

via A Clash of Two Systems On A Global & Historic Scale |King World News – Blog.

My friend and investment guru, “L” suggested this interview with Robert Fitzwilson, founder of The Portola Group.  It’s a short, very quick read on the development of the fractional reserve banking system and its relationship with government.

Fitzwilson goes on to say that because the “demands of debt are vastly outstripping the supply of labor and resources” the current system will eventually fail… and be replaced by a similar system.  I guess the goal is to not be holding the financial ‘hot potato’ when the music stops.

Note:  Tally Sticks were pieces of wood used as early currency.  Click on the hyperlink above to read the entire article and learn more.

 

Can We Really Spend our Way out of Poverty?

For most of American history, government was tiny. But since Lyndon Johnson’s Great Society and the promise that government would cure poverty, spending has gone up nonstop. This is not sustainable.

 Progressives say: If you’re so worried about the deficit, raise taxes! But it’s a fantasy to imagine that taxing the rich will solve our deficit problem. If the IRS grabbed 100 percent of income over $1 million, the take would be just $616 billion. That’s only a third of this year’s deficit.

 It’s the spending, stupid.

 Even if you could balance the budget by taxing the rich, it wouldn’t be right. Progressives say it’s wrong for the rich to be “given” more money. But money earned belongs to those who earn it, not to government. Lower taxes are not a handout.

 That’s the moral side of the matter. There’s a practical side, too. Taxes discourage wealth creation.

 Even if you think — despite all evidence — that government spends money more usefully than people in the private sector, there is a limit to how much government can tax before people work less or flee.

Progressives claim a small increase in tax rates won’t stop the wealthy from producing. But some would stop. When the top marginal rate was 90 percent, actor Ronald Reagan worked just half the year. He said that woke him up to the damage that high taxes impose.

Higher taxes give rich people and politicians more reasons to collude. The rich make contributions, and politicians pay the rich back by giving them tax loopholes.

That’s a big loss to America. That money and creative energy spent on figuring out taxes might have gone to build new products, make music, cure cancer or … who knows what?

via Budget Insanity by John Stossel on Creators.com – A Syndicate Of Talent.

There’s an economics principle I learned in college called ‘Opportunity Cost.’  Simply put the opportunity cost of an economic activity is the next best use you would have put that money to if you had not spent your money on that activity.  For example, if you spend $100 fixing your car that you would have rather spend going to a baseball game than the opportunity cost of fixing your car was going to the game.

Whenever I hear politicians talking about increasing taxes I think of the opportunity cost of all that money.  Don’t get me wrong, I don’t mind paying my fair share but the more our government spending has gone out of control in relation to our tax and fee income the more I resent calls for more taxes…on anybody.  That money spent on taxes to fund increased government spending could have been spent on education (improving someone’s ability to create, build, teach or earn), consumer products or vacations (improving our economy), invested (funding further growth) or convinced an older worker that she had enough saved to retire (opening up a job for someone currently out of work).  The true cost of taxes can only be measured in the opportunity cost of lost benefits that tax money would have been spent on as John Stossel describes in the last sentence of the quote above.

In my small business the recent and proposed tax increases have kept me from hiring additional full time workers that we desperately need to cover the workload and I hear the same story over and over from my friends who are entrepreneurs.

In the article I quoted above Stossel added:

Amazingly, we could grow our way out of debt if Congress simply froze spending at today’s levels. That would balance the budget by 2017. If spending growth were limited to just 2 percent per year, the budget would balance by 2020!

Not a bad start…but how about we actually pass a budget, freeze spending for the remainder of this year and begin reducing the budget by 5% per year (5% of government spending not GDP) until we go from spending 49% of our GDP on the federal, state & local government down to a more manageable 20%.  Can you imagine what our economy would be capable of  if only 20% was siphoned off for essential (arguably) but non-productive government services…before we knew it our economy would grow to the extent that our 20% in real dollar terms would be as big or bigger than our economy stifling 49% of GDP spending is now.  I know…it’s an election year and the devil’s in the details…but if we don’t start taking dramatic steps we’re going to have a federal government going the way of Stockton, CA or Detroit, MI…broke.

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