“Any doubt that we’re officially in a recession can be put aside.” –Anthony Karydakis, former Chief U.S. Economist for JP Morgan Asset Management
Americans have been reluctant to admit that the U.S. is entering a recession. Perhaps the average citizen enjoys his ignorance and doesn’t want to hear the truth. Perhaps he has been brainwashed by patriotism and believes he must always be bullish on America. Or perhaps he simply believes that the U.S. is too big to fail.
No matter what beliefs lurk under the murky surface of America’s collective psyche, most folks want to continue believing the illusion that they can spend their way to prosperity.
And yet it seems we’ve reached the end of the line. The day of reckoning is finally upon us.
Personally, I think it’s hard to argue that the recession isn’t here, or that it’s only a temporary slump. For evidence, look no further than these inconvenient facts:
- Circuit City has filed bankruptcy and is closing 155 stores by Dec 31, 2008. [source]
- Starbucks profit is down 97%. [source]
- Retailers have closed about 6,000 stores this year. [source]
- General Motors is out of cash, on the verge of bankruptcy, and may not make it. If they go under, it could result in the loss of 2.5 million jobs. [source]
- Freddie Mac lost $25.3 Billion in the 3rd quarter. The company is valued at negative $13.7 Billion. [source]
- Unemployment assistance is at a 25-year high. [source]
- U.S. home sales plunged 19 percent in one month, from Sep to Oct 2008. [source]
- Retail sales fell by a record amount in October 2008. [source]
- Hedge funds are set to implode as early as Monday, November 17, triggering a massive financial meltdown. [source1, source2]
You get the point. The economy is not looking good. Every major sector of the economy is being deeply affected — from home sales to auto sales, from mega-banks to small mom-and-pop shops.
The Associated Press article linked above writes: “The decline in sales was led by a huge drop in auto purchases, but sales of all types of products from furniture to clothing fell as consumers retrenched.”
So, in light of all this, should we simply hunker down and wait for “the end”?
No, I don’t believe so. I believe there are proactive things we can be doing right now to prepare, most of which will cost you nothing. But first, let’s look at…
Damaging Beliefs to Avoid
1. Stop believing that all you need is an “abundance mindset” to make things better.
It ain’t gonna work.
I’m not a fan of the Law of Attraction or abundance thinking. They are the mental equivalents of a get-rick-quick scheme.
Thinking positively won’t make the recession go away or save you from hard times — although thinking positively may certainly help you to weather the financial storm.
2. Don’t become paralyzed by fear.
In a time like this, drowning in fear and doing nothing may be a natural response, but neither are helpful.
If you are a believer, it is helpful to remember that “There is no fear in love; but perfect love casts out fear” (1 John 4:18); and “God causes all things to work together for good to those who love God.” (Romans 8:28)
Do you really believe this?
If so, you can rest easy knowing that God is going to work all of this out for your ultimate good.
3. Resist the temptation of believing the economy will rebound “in early 2009.”
All over the news, the talking heads are proclaiming that the economy will rebound “in early 2009″ or, at the very latest, “the second half of 2009.”
While I would like to believe that’s true, I don’t believe it for an instant. And if you fall for it, you will be less likely to prepare for what’s ahead. Or worse, you might dismiss the current downturn as an aberration and keep going along your merry way, oblivious that destruction is right around bend.
So, for now, I encourage you to view the recession as something that is going to get worse — and then prepare accordingly.
Alas, Babylon the Great Has Fallen
What began in mid-September is no ordinary recession. And while comparisons to the The Great Depression have been floating around, it’s not even as good as that.
I personally believe we are witnessing the collapse of economic Babylon — that world system that has kept people in bondage for so long.
“And he cried with a mighty voice, saying,
‘Fallen, fallen is Babylon the great!.'”
-The Apostle John, writing in Revelation 18:2
As we examine the current situation, it is important to note:
- All fiat currencies eventually collapse. The dollar is one of the longest-lasting fiat currencies in existence today. Translation: A collapse is not a remote possibility; it is a probability.
- All world empires eventually collapse. The U.S. is the biggest world empire to ever exist. Its reach extends around the globe. Again, a collapse of the American empire is not a remote possibility; history tells us it is a strong probability.
- When the U.S. falls, it will bring the world down with it. The U.S. economy forms the backbone of the world economy. When the financial spine breaks, it will cause worldwide paralysis.
- Will we see Nazi America? Conditions in the U.S. are just like those that preceded Hitler’s rise to power in post-war Germany. Once the currency collapses and Americans are fully disillusioned, they will be more likely to turn over all their rights to a delusional political savior. With nuclear war looming, martial law may soon be coming to a city near you.
Step 1: Physical Preparation
Here are five simple strategies to implement when the American empire collapses and the dollar becomes worthless. (Remember: It’s not a matter of “if”… all major fiat currency collapses at some point, and America is due for a big one.)
The strategies are based not only on my own insight, but on how people handled currency collapses throughout history. Just think about Rome. Or post World War II Germany. What did those people do? I will tell you.
Let’s dive right in…
Strategy #1: Develop a skill of tangible value.
When there is no currency, people start to trade. It’s also called bartering. You have a physical item that I want. I have a physical item that you want. And so we trade item for item.
I cannot pay you with money if money has no value. For instance, the dollar has no real value. It is not backed by gold. Its value is the faith the American people place in the dollar. Once that faith is gone, the currency no longer has value.
So that’s why it’s important to have skills of tangible value. Let me explain what I mean when I say that…
Tangible means “real or actual.” It also means “material or substantial.” Also “capable of being touched; a tangible asset.”
Many white collar workers today have few skills of tangible value. They cannot fix things. They cannot build things. They cannot grow or harvest food.
All of these things have tangible value. Value that can be seen, touched, and felt.
If money becomes worthless, would you rather have a pile of money or a car? Of course, you’d want the car. What about a bike? Or even something as simple as a spoon?
A spoon would be worth more than all the money in your 401(k) if dollars become worthless… unless of course you needed heat, and you had the bills to burn.
So strategy #1 for surviving and thriving during the collapse of a currency is to develop new skills that have tangible value. For instance:
- Metal smithing
- Mechanical repair
- Jewelry making
- Pottery (making)
- Distribution supply
- Manual labor
Notice a pattern? All of the skills require manual labor. They are not “white collar” activities for the most part.
Of all of them, gardening will become the most important of all. How will you acquire food without money to pay for it? What will you trade for food? Why not grow your own food so you’re prepared for just such a time?
Unfortunately, most folks have little space for a garden. Much less space to farm. It may make sense in some cases to acquire a home with some acreage so that you will have space to grow fruit and vegetables and prepare for the future.
A question on a lot of readers’ minds will be, “How do I acquire these skills?”
My answer is simple. Go to your library and begin reading books that help you acquire new skills. There are many books on gardening, home repair, how to make crafts, etc. These are the real skills you’re going to need to survive in a barter-based economy.
Strategy #2: Exchange your money for physical goods.
I have a recurring vision in which years of labor (counted in dollars) evaporate overnight. As it is, Americans do not save much money. But save they do. Right now there are literally billions of dollars in 401(k) plans and other retirement vehicles.
Do you believe me when I say that it can all go away in single moment — one sudden flash of economic destruction?
Believe it, because it’s true.
When that happens, your 401(k) won’t be able to save you. It won’t even be able to provide you with a cup of cold water to drink.
This is why it’s so important not to put your trust in currency. All currency is is a convenient way for measuring value… to facilitate the trading of goods and services. It is not a fortress to trust in.
Why hoard dollar bills if they’re all going to go up in smoke? The answer is… you shouldn’t. Much better to exchange the dollars you earn for physical goods.
For instance, put some shelves in your house or basement where you can store canned food items. These items are cheap. But they’ll be worth far more to you later, after the dollar collapses, than they cost now.
As Thayer Watkins writes in his economic history of Germany, the results of post World War II collapse and recovery were not pretty: “The net result was an economic disaster and the creation of near-famine conditions.”
My advice: Get a good food collection going so you’ll have food enough to last for 6 months or a year. This is an affordable way to give yourself a nice time buffer to recover and figure out how you will live in the new barter-based economy.
Oh, and don’t forget drinking water. You never know what might happen to our drinking supplies in a major dollar collapse. You can live on water for about 40 days without food. But you can only live about three days without water. If I had to have one or the other, I’d pick water every time.
Another thing: Make sure you have modes of transportation apart from your car. If dollars are worthless, America will not be able to acquire oil, and many Americans will quickly run out of gas. How will they get around?
Answer: bicycles, inline skates, scooters… basically anything with wheels that is powered by a human.
Do you have a good bicycle? Would you be able to ride it if you had to? If you answered no to the first question, then get a bike. You’ll need one. If you answered no to the second question, then you might consider getting into shape… enough that you can ride a bike for a few miles if you had to.
If you don’t like to ride a bike, then get a pair of inline skates (Rollerblades). These can get you around quickly, even if you have a bag slung over your shoulder to carry things.
Have plenty of blankets and warm clothing if you live in an area that experiences cold weather. It’s possible that our traditional methods of heating will go away in the wake of a dollar crash. That means no natural gas to fuel furnaces. And that means cold houses. And that means you better have some thick blankets and warm clothing available. You might freeze without it.
It is possible I have overlooked some things. In case I have, simply review in your mind what you’d like to have in case money became worthless. Then, use your money to buy those items now so you’ll have them for later.
Remember: money in a bank or retirement vehicle that you intend to use for a comfortable lifestyle in your old age may not be worth anything at all after a currency collapse. Better to have real tangible goods on hand that can actually support and improve your daily living.
One last recommendation…
Exchange some of your paper money for precious metals like gold and silver. Historically, these investments do well when an economy collapses. You can then use your gold or silver to buy items you didn’t think to get before the collapse.
Strategy #3: Develop sources of income not dependent on U.S. buyers.
This strategy will be simple for some, harder for others. The idea being that you should diversify your income.
Instead of collecting a paycheck from one U.S.-based employer, become self-employed so that you have many clients supporting you.
Seek to do something that attracts clients from different countries, not just the U.S. Since I became a freelance copywriter, I’ve picked up many clients in Canada, and a handful abroad. This gives me a greater diversity of income than most people.
Even better than self-employment is to sell products (preferably information products) on the Internet. That way you can attract English-speaking customers from all parts of the world, including Canada, the U.K., Australia, Europe, Asia, and Africa.
With your income not tied to any one country, and diversified among hundreds of different customers, you’ll be more prepared in the case of an economic collapse in America.
Easy ways to get started are to sell products on Ebay, Clickbank, and Commission Junction. Or you can sell products directly without using these intermediary sites. All you need is a PayPal account to collect the funds.
Strategy #4: Get back to the basics of living.
This is somewhat related to Strategy #1, which is to develop a skill of tangible value. But this is more focused on the essentials of living, not the skills you need to survive in a barter-based economy.
The basics of living include food, water, clothing, and shelter. These are the physical essentials. They do not include intangibles like relationships or spirituality.
Let’s start with water. Where is the closest natural source of water to you? How far away is it? Do you have the right purification tools for cleaning the water and making it drinkable?
REI and other outdoor stores carry inexpensive water purifiers that are operated by hand. It would be good to have one available. Typically, one purifier is enough for two or three people. If you have a large family, get two.
Also, iodine tablets or droplets kill harmful bacteria in water. You may also want to have iodine on hand in case a purifier breaks.
Next, food. Do you know how to fish or hunt? Do you know what berries and roots are edible? Do you know how to dress a deer or gut a fish? Do you know how to grow common garden vegetables?
These are all important skills to have, especially if you’ve not stocked up on food. Look for a survival handbook of some kind and have it available. There are many in print, and they are extremely helpful for anyone, regardless of whether you’ve had survival training in your past.
How about clothing? Do you have garments for every season? More importantly, do you have quality shoes for walking… and quality hiking boots for long hikes? These will be indispensable in a world without cars.
Lastly, shelter. If you have a house, you’re probably in an okay position. If you’re renting, you may be more vulnerable. Even if you have a house, your mortgage could compromise your security. A bank could tell you to leave if your payments aren’t being made.
Assuming you cannot stay in your apartment or house, you ought to have some decent tents available. Perhaps just some small two-man tents for easy carrying, or perhaps a larger tent to sleep 4 to 6 people.
Even if you never use the tents, it will be good to have them.
Strategy #5: Have a plan for the worst-case scenario.
This may sound like a no-brainer, but it’s easy to overlook. You need to have a plan for what you will do in a worst-case scenario where the dollar becomes absolutely worthless.
That means no oil, no natural gas, no electricity. Assume that all the natural resources you depend on every day are cut off. Then figure out how you will live without them, at least for a while, until everything works its way out.
This is how you prepare for catastrophe. You anticipate what might happen and prepare a plan for how to deal with it. It doesn’t mean the catastrophe will happen… or that it will happen in the way you imagine it will… but at least you won’t get caught flat-footed, as so many unsuspecting Americans will.
Do you have relatives in town or a different state? How will you communicate with them? Will you join forces by living together… to take advantage of economies of scale?
What about entertainment… or otherwise occupying yourself when you have nothing else to do? If TV is no longer available, what will you do? Do you have books to read? Can you play a physical instrument? Do you even have a physical instrument that can be played?
I apologize if my questions seem too extreme. They are simply the questions you need to ask to be as prepared as possible.
Earlier I mentioned the possibility of a nuclear attack in the near future. Such an event would certainly upset the entire world, and could be the catalyst that sends America down the road to economic destruction.
In the case of a nuclear attack, no matter where on earth it happens, you will want to be prepared. How? By getting a supply of Potassium Iodate tablets.
In nuclear fall-out, it is of utmost importance that you protect your thyroid. It absorbs radiation quickly. To prevent that, you take Potassium Iodate tablets. These flood your thyroid with non-radioactive potassium so it cannot absorb the radioactive junk floating around in the air.
I purchased a supply for my family, plus a little extra, more than a year ago. I purchased the tablets at CampingSurvival.com. You can read their article about potassium iodate and buy some of your own here.
Step 2: Spiritual Preparation
More important than physical preparation is spiritual preparation. That’s because nobody knows what’s going to happen in the future. We can speculate; but we can’t foretell.
Furthermore, even if we knew what the future held, we wouldn’t know exactly how to prepare. We wouldn’t be able to anticipate every possible scenario and circumstance. You see, “There is a way which seems right to a man, but its end is the way of death.” (Proverbs 14:12)
That’s why I feel it’s so important to ask yourself: “Am I tuned in to God? Can I hear His voice and obey?”
The way I see it, nothing will be more important in the years to come than an intimate relationship with God. Only He has the vision, strength, and wisdom to see you through.
As Solomon wrote, “Trust in the Lord with all your heart and do not lean on your own understanding. In all your ways acknowledge Him, and He will make your paths straight.” (Provers 3:5,6)
Take some time to get to know your Creator on a more intimate level. The more you get to know Him, the more you’ll trust Him — and the more you’ll understand how completely He knows what He’s doing.
More Articles About the Recession
If you’d like to participate in this group writing project, and get a bunch of free links to your site, read the announcement here. (Deadline is Sunday, November 16.)
Here are links to all those who’ve participated so far:
- How the Recession Has Affected Me
- And I Thought I Was Immune from the Recession
- How Will the Economy Impact Your Business? However You Let It…
- 10 Ways to Prepare for a Post-Oil Society (This article is so good, I just had to include it.)
P.S. Please visit my brand new survival blog: SurvivalJoe.net