[Note: The following essay was written by "John Law," a pseudonym, and released into the public domain in 2006. Its author's web site is offline. Though it is slightly dated, the economy isn't getting any better, and the analysis presented is as relevant as ever. I disagree with small parts of it, especially with his idea of taxing gold, but overall it is an article well worth reading. Due to its length it has been split into several pages.]
The global financial system is about to collapse because the U.S. dollar is about to collapse.
The U.S. dollar is about to collapse because of a simple economic fact that no one has the power to change or conceal.
The fact is that the spontaneous remonetization of the precious metals is a Nash equilibrium.
What this means in English is that an ideal financial strategy for everyone on Earth is to buy as much gold and silver as they can, as soon as possible.
To oversimplify wildly, the reason to buy gold and silver is just that everyone else should buy gold and silver, too. There are two reasons to do it as soon as possible.
One is that anyone with an investment account can move money into gold and silver with a few mouse clicks. They trade on the U.S. markets as the stock symbols GLD and SLV.
Two is that once this information becomes widely understood, U.S. and probably global financial markets will be closed.
There is no way to know when this will happen. It could be tomorrow. It could be a year from now. It could be longer. Since the only way this kind of a financial panic meme can spread is through the Internet, history tells us nothing.
And the good news is that if governments manage the situation well, it does not have to be a global economic and political disaster. Quite the opposite, in fact.
Remonetization of precious metals is the next step in the slow, difficult reconstruction of the peaceful and prosperous liberal world that World War I destroyed. The lights are not going out. They are coming back on. The return to classical liberalism, which some call globalization, has barely started. It has already rescued hundreds of millions of people in liberalizing countries like China and India from lives of poverty and depression. Its only opposite is nationalism, which is a recipe for war and misery. It is not perfect, but nothing is, and it must continue.
These are obviously provocative assertions. I explain them below. My hope is that you will evaluate them by thinking for yourself, rather than trusting me or any other authority.
The first rule of investing is that it’s never a good idea to buy anything just because everyone else is buying it. When the price of an asset is the result of herd behavior, not fundamental value, it’s called a “bubble,” and bubbles always pop.
This rule is absolutely right — except in one case.
In English, a bubble that doesn’t pop is called “money.” Money is always fundamentally overvalued. Its purchasing power is independent of its direct physical usefulness to anyone. This is obvious for paper money, but true even for gold and silver.
For example, premodern monetary systems did not value gold above silver because gold has a higher specific gravity, because it’s harder to oxidize, because it’s yellow, etc. They valued gold higher because there is more silver than gold on earth, a fact that makes no difference to any direct user of silver or gold.
(I should note that there are some rare historical cases of fundamentally valued currency, such as tobacco in colonial Virginia. I prefer to define this as a kind of barter on steroids, but most writers disagree. And some assets that have never been used as currency, such as diamonds, fit my definition of money. All of this is just words, but words matter.)
The most important fact about money was described by economist Carl Menger in 1892: money is a consequence of its own history. Not every asset can serve as money, but not every asset that can serve as money will be used as money. As economists put it, money is “path-dependent” — it is a stable result of events that may be completely accidental.
We can call the transition from fundamental to monetary value “monetization.” Menger and other early economists analyzed monetization in a primitive barter economy. They showed that money is a market phenomenon — that it can develop spontaneously without any official seal of approval.
It’s not widely appreciated that the same monetization process Menger described can also occur in a modern financial market.
Of course, modern economies already have money, so the right word is “remonetization.” Instead of replacing barter with exchange, remonetization replaces official currency or bonds with the new monetary commodity or commodities.
The closest relative of remonetization is hyperinflation. But traditional hyperinflation is a relatively slow process. Remonetization, like any bank or currency run, is a panic. With modern financial networks to move money and the Internet to move dangerous ideas, a remonetization event can be almost instantaneous.
Remonetization has two prerequisites. One is a free public market in one or more monetizable commodities — such as gold and silver. The other is an unstable and mismanaged official currency — such as the U.S. dollar.
In theory, reversing either of these factors could prevent remonetization. In practice this is probably impossible.
Before a remonetization event, the austerity measures necessary to fix the dollar are politically unlikely. Afterward they would be too late. And any preemptive deliberalization of the gold and silver markets would have to come with a remarkably convincing excuse to avoid triggering what it sought to prevent, especially since the U.S. no longer dominates the global financial system.
The best way for the U.S. and other countries to deal with this situation is to accept remonetization and manage it wisely. This will cause a lot of short-term pain for many people. But it will rebalance the global economy, and should lead to a new period of sustainable prosperity.
All this is yet another stack of unsubstantiated assertions. Rather than quoting dead white economists or filling the water with inky clouds of mathematics, let’s work through the situation step by step and see if we agree.
Let’s start by comparing two hypothetical cases.
In case A, a million Americans decide right now to move all their savings into Dell stock, buying at the current market price no matter how high.
In case B, a million Americans decide right now to move all their savings into gold, buying at the current market price no matter how high.
In both cases, let’s say each of these test investors has an average of $10,000 in savings. So we are moving $10 billion.
Neither gold nor Dell can instantly absorb $10 billion without considerable short-term increases in price. Because it would require us to predict precisely how other investors would react, we have no way to precisely compute the effects. But we can describe them in general terms.
In case A, the conventional wisdom is right. Our test investors should expect to lose a lot of money.
This is because Dell has a stable equilibrium price which is set by the market’s estimate of the future earning power (price-to-earnings ratio) of this fine corporation. Because it is not the result of any new information about Dell’s business, the short-term surge should not affect this long-term equilibrium.
Since there will almost certainly be a short-term price spike, many of the test investors will be buying at prices well above the stable equilibrium. In fact, the more investors we add to the test, the more each one should expect to lose. Doh!
But there is no way to apply this analysis to case B.
Precious metals have no price-to-earnings ratio. With gold formally demonetized (that is, with no formal link between gold prices and currencies such as the dollar, as there was until 1971), there is no stable way to price it. There is no obvious equilibrium to which the gold price must converge.
It is true that gold has industrial uses. It can be priced on the basis of industrial supply and demand. The conventional wisdom is that it is.
Thus we can say that gold, for example, is overvalued if gold miners are selling more gold than jewelry makers and other industrial users want to buy. At present (with gold near $700), they probably are. So if you follow this reasoning, the right investing decision is not to buy gold, but to sell it short.
But this just assumes that there is no investment demand for gold. On the basis of this assumption, it shows that gold is a bad investment. Therefore there should be no demand for it.
The popularity of this logic is remarkable. However, it is a safe bet that most people who own gold do not follow it.
(In fact, most of the gold demand from the jewelry industry is actually investment demand. Women in many traditional Asian cultures, especially in India, store their savings as gold jewelry, which they buy by weight. It is difficult to guess what the price of gold would be if no one at all held it as an investment. But $100 an ounce is probably too high.)
Therefore, when our case B investors put $10 billion into gold, that money has to be used to bid gold away from its current owners, many of whom already believe that the price of gold in dollars should be much higher than it is now.
So the result of case B is that the gold price will, as in case A, rise immediately. But it has no reason to fall back.
In fact, quite the opposite. Because the gold price is largely determined by investment demand, any increase in price is evidence of increasing investment demand. Mining production, noninvestment jewelry demand, and industrial use are relatively stable. Investment demand is a consequence of investors’ opinion about the future price of gold — which is, as we’ve just noted, largely determined by investment demand.
This is not a circularity. It is a feedback loop. Austrian economists might call it a Misesian regression spiral.
Of course, the same mechanism can drive the gold price down as well as up. When savings flow out of gold, the price must drop. The reputation of gold as a volatile investment is by no means undeserved. There is a trading range within which the price of gold can fluctuate arbitrarily. The range is limited at the bottom by the industrial gold price when investment demand is zero. It’s limited at the top by… well, we’ll see in a moment.
It generally takes a significant external change to affect the long-term direction of a big feedback loop like the gold market. Thus, it is rational for the market to actually treat the price spike caused by case B as a signal that the feedback loop is accelerating, and buy more.
So the case B investors are more likely than not to profit on their trades. Obviously the trades must happen in some sequence, and the earliest will do the best. But all have a good reason to participate, even the last, because their purchase will signal other investors who are not in the case B group to enter the market after them.
Suppose you believe this. It’s all well and good. But what does it really prove? Couldn’t gold still be just another bubble?
And why should gold be a better investment because it has no earnings to price it by? This makes zero sense.
To answer these sensible objections, we need a few more tools.
The Nash equilibrium is one of the simplest and oldest concepts in game theory. (Nash is John Nash of A Beautiful Mind fame.)
In game theory jargon, a “game” is any activity in which players can win or lose — such as, of course, financial markets. And a “strategy” is just the player’s process for making decisions.
A strategy for any game is a “Nash equilibrium” if, when every player in the game follows the same strategy, no player can get better results by switching to a different strategy.
If you think about it for a moment, it should be fairly obvious that any market will tend to stabilize at a Nash equilibrium.
For example, pricing stocks and bonds by their expected future return (the standard Wall Street strategy of value investing) is a Nash equilibrium. No market is infallible, and it’s possible that one can make money by intentionally mispricing securities. But this is only possible because other players make mistakes.
(Nash equilibrium analysis of financial markets is not some great new idea. It is standard economics. The only reason you are reading a Nash equilibrium analysis of the interaction between precious metals and official currency now on the Web, not 30 years ago in the New York Times, is that the Times gets its economics from real economists, not random bloggers, and the profession of economics today is deeply tied to the institutions that manage the global economy. Real economists do not, as a rule, spend time thinking up clever new reasons why the global financial system will inevitably collapse. They’re too busy trying to prevent it from doing so.)
What Nash equilibrium analysis tells us is that the “case B” approach is interesting, but inadequate. To look for Nash equilibria in the precious metals markets, we need to look at strategies which everyone in the economy can follow.
Let’s focus for a moment on everyone’s favorite, gold. One obvious strategy — let’s call it strategy G — is to treat only gold as savings, and to value any other good either in terms of its direct personal value to you, or how much gold it is worth.
For example, if you followed strategy G, you would not think of the dollar as worthless. You would think of it as worth 45 milligrams, because that’s how much gold you can trade one for.
What would happen if everyone in the world woke up tomorrow morning, got a cup of coffee, and decided to follow strategy G?
They would probably notice that at 45mg per dollar, the broad U.S. money supply M3, at about $10 trillion, is worth about 450,000 metric tons of gold; that all the gold mined in human history is about 150,000 tons; and that official U.S. gold reserves are 8136 tons.
They would therefore conclude that, if everyone else is following strategy G, it will be difficult for everyone to obtain 45mg of gold in exchange for each dollar they own.
Fortunately, there is no need to follow the experiment further. Of course it’s not realistic that everyone in the world would switch to strategy G on the same day.
The important question is just whether strategy G is stable. In other words, is it a realistic possibility that everyone in the world could price all their savings in gold? Could all rights to dollars, euros, etc, just be converted to gold and resolved? Or would there be some pressure to revert to paper currency?
If gold atoms were the size of poppyseeds, divisibility would pose an obstacle. But measuring arbitrary small weights of gold is not a difficult technical problem.
It’s true that there are serious inefficiencies in circulating actual coins made of precious metals. Spend too much time reading financial history and you’ll be deluged with frightening facts about agio, gold points, clipped and worn coin, and so forth. Perhaps the worst problem is just that since metal coins have all these problems, there is a strong incentive to replace them with paper notes which are redeemable for actual metal on demand. Unfortunately, the note issuer then finds it very easy to print more notes than it holds metal.
These problems are all solved by the Internet. In a modern gold standard or other precious-metal monetary system, there is no reason for “money” to consist of anything but secure electronic claims to precise weights of allocated precious metals. The metal itself should stay in independently audited vaults.
This mechanism is already being used by new “digital gold currencies” such as e-gold and GoldMoney. These have only accumulated about 10 tons of gold, because they are not well-connected to existing financial networks. But the gold and silver ETFs, GLD and SLV (GLD has 350 tons of gold, more than the Bank of England; SLV has 2000 tons of silver) are similar if more primitive. Converting them to support direct payment would be a small matter of programming.
I don’t intend to get into any open-ended theological disputes on economics. But I do have to mention the 19th-century Banking School doctrine, inherited by both Keynesians and monetarists, that an expanding economy depends on an expandable currency. Please excuse me while I rant.
Gilded Age financiers did succeed in embedding this principle in the institutional DNA of the West. But it has no rational explanation. At least, if it does, I have never heard it. Of course the status quo need justify itself to no one, and it is possible that if monetary expansionism felt institutionally threatened it could present a more coherent narrative.
But to me the idea seems to rest on the understandable, but essentially numerological, connection between X% new money and X% growth, and on the indisputable fact that turning off the money printer tends to result in a recession. Since today’s economists (except of course the Austrian School) have abandoned the the apparently unfashionable concept of causality in favor of the reassuringly autistic positivism of pure statistical correlation, it has escaped their attention that when you stop shooting heroin, you feel awful.
It is also bruited about that without money-printing to dissuade savers from just hoarding cash, no one will lend or take any entrepreneurial risks. Someone should tell this to the Dutch, who ran a 100% hard-money economy for 150 years and were the most prosperous nation in Europe. Perhaps if Lord Keynes had sent wooden sailing ships on three-year trading voyages to Indonesia, he would have rethought his views on lending, interest and risk. In general, stable periods of hard money have been among the most prosperous in human history, and even Friedman and Schwartz admit it. When the value of your money grows with no risk or financial overhead, it may actually be a good thing.
So, absent of course any errors in the above polemic, strategy G is in fact a Nash equilibrium. A direct gold standard in which private citizens own allocated gold would be a viable foundation for a new global financial system. There are no market forces that would tend to destabilize it.
Or are there? Actually, it turns out that we’ve skipped a step in our little analysis.
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Ultimately, the war supporters in Congress prevailed in the vote on the resolution. Still, the vote was significant because it places every member of Congress on the record as supporting or not supporting the unconstitutional, costly, violent occupation of a country that never attacked us. This vote should serve as an important reminder to the American people of where their representatives really stand when it comes to policing the world, empire building, and war.
Gardner Goldsmith explains why claims by politicians that consumers can become "irrational" and why claims by the same politicians that government can help "fix" markets are both false and misleading. He also explains what the terms Praxeology and Epistemology mean, which is key in understanding how to place free markets in their proper place among human history.
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pickdog
Jul 10, 2008
An awesome idea. glad you found this Mike!
Bob
Jul 10, 2008
That was a long and winding read.
I just watched Ron Paul questioning Bernanke and Paulson. He didn’t seem to have many friends in that room. I think that most of them know he’s speaking the truth but I’m pretty sure they would just like him to shut up.
When he says that the Emperor has no clothes, the truth is irrelevant. They just don’t want him to cause a lack of confidence in the garment industry. Right now it’s the kingdom’s bread and butter.
Some of them are clueless and some are scared but not one of them has any idea what to do except try to make it all last a little bit longer.
I read up last night on gold confiscation in the 30’s. I see a lot of loopholes in the laws as they were(and some still are), but I don’t like it. Could happen again.
We’re crazy. Dig gold out of the ground so we can touch it and look at it, then bury it back in the ground so no one else can get it. You would think we could find better things to do.
Shawn-Earnest
Jul 10, 2008
The explained that the Federal Reserve Bank and it’s institutions world wide
are the predators devouring our wealth into wars and depressions. On the other hand Ben Bernanke
My former boss and Chair would tell you it is complicated!
I say: “Give to Caesar what is Caesar’s, and give to God what is God’s.”
Perhaps someday the answer will be given to us all and we will be shocked. It is just the Zeitgeist
in history, but will win the money pot this time? “Just turn off the chip if they do not do as we
tell them…”
I think the future is a lovely place, for the wealth affluent
Dale
Jul 11, 2008
OMG! Three more pages?
Masi
Jul 12, 2008
This essay was written two years ago and the housing market was not as bad as it is today and getting worse. This is the fault of deregulation and greed. The revolving door between lawmakers and bankers is spinning so fast it’s making most investors dizzy.
That being said, and the mention of the SEC approval of the gold and silver ETF’s, does anyone think this is the reason that Ben Bernake was in front of Congress, asking for and making a case, that the Federal Reserve take over the SEC?
I find this extremely dangerous for the average investor and even more dangerous for the current U.S. financial situation. We need more transparency not less.
Donald Ross
Jul 14, 2008
Two points.
1) Hard assets like gold are only useful as long as there is a currency of value to exchange them for. No one buys things with peices of eight any more.
2) The dollar is crashing because we keep making more of them. As Ron Paul has correctly observed there are trillions of dollars that did not exist before. Each time a new dollar is added into circulation that dollar and all the other dollars in circulation are devalued. As long as we base our economies on a fiat currency system things like this will always happen. To save the US dollar we would have to pay off all the T-bills and other financial instruments held by the Japanese, Chinese, and other forien investors with hard assets. This kind of wealth does not exist. Unless you want to give them our country and we rent it back from them.
xXRevXx
Jul 16, 2008
So now we get to see what happens next. I dropped out of this system when the system obviously needed a reboot, but instead, the system tried to boot me. I don’t work for money any more, I am a free man and I work for free doing work that I love, and my love for the work I do is unconditional (the only unconditional love I know of). I accept gifts from gracious people I call angels, unforunately there arn’t a lot of people yet accepting Liberty Dollars. That will change…
When people talk about the housing market being bad that’s like saying “I don’t understand what a market is!” Markets are only good or bad if you’re a seller or require a commodity. Yet most of the time the term market is used from the seller’s standpoint. The housing market was not as bad as it is today when everyone was making money quickly from buying and selling on margin. Now everyone (esspecially the banks and their co-colluders) wants to sell and ain’t no one buying at the inflated beyond comprehention prices homes are selling for. The market isn’t bad, the people who wish to sell are in bad investments! The credit market is getting screwed, there is no crises of credit, credit providers are making a killing as usual. There is no money but that which exists in the imagination of people engaged in trade.
Bob
Jul 17, 2008
xXRevXx. Regarding your lifestyle choice.
Your talking about trading your labor, for the things that you need in life. Things that you accept as gifts of gratitude for the work that you’ve done. That’s about as back to basics as you can get. Good for you.
The only problem I can see you running into is a shortage of people who wish to show their appreciation. Most people are looking for “something for nothing” today. Actually, they expect it. That’s the whole idea behind everything from investments to pensions and welfare. It’s an unnatural way of thinking. Nothing is free.
You are getting a head start on our future way of life but it’s probably going to get tough for you for a while, unless your work is something people really want.
People will “pay” for what they want, but they hate to pay for what they need.
May the force be with you.
GlenGary
Jul 17, 2008
Decloaking….Powering Up….
Copper Clad Lead is the best investment. Never seen anything a man can’t liberate with enough copper clad lead.
SimonRaven
Jul 19, 2008
BTW, gold is at ~1K $US now. Though I think it’s following the general trend in other minerals, like uranium, and that “investors” (I call them sheep) are bailing out of oil, and going into other things, since Peak Oil is here.
Bob
Jul 21, 2008
Red alert! Full power to the forward shields! Hard to starboard-maximum impulse! Fire photon torpedoes!
Oh, it’s just Glen. Surprised me there.
Bob
Jul 22, 2008
Pretty cool cloaking device, Glen. That would come in handy too. Where can I get one?
Tiffany
Jul 26, 2008
Hi There Bob, Glengary, and others,
I finally saw your recent postings here, is this where both of you continued your comments? I enjoyed reading both of your informative comments and your lives “surviving” on the original
“the coming economic collapse” article , and I noticed the postings stopped in March of 2008, and I panicked as I got used to reading your posts. So is this the thread where your postings continued? I want to keep your postings in order, as I learned so much. I recall another responder saying she or he learned more from your comments than Econ 1 and 2 together from college.
Please reply, as I want to find where or which article exactly where both of you continued on from that original article.
Thanks,
Tiffany
Tiffany
Jul 27, 2008
Hi Bob, and glen gary,
I read all your comments on the original article of coming economic collapse which started March of 1987, and ended in March of this year. I didn’t know if the postings ended there and is this where it continues or where is the next thread after the end of those postings in March of “87?. Just want to read your postings chronologically. I learned a lot about the economy, real life, survival etc. just reading your postings from that one article. I didn’t know if you folks are posting regularly on another thread. Please inform. Things moving quickly, aren’t they? The above posting is just a test.
Bob
Jul 27, 2008
Hey Glen, we got fans!
Tiffany. The truth, is that our group hasn’t been in touch since March and I can’t speak for the others but I really miss it. I would like to get something going again, it was fun and I learned a few things too. Maybe if Michael, Glen, Susan, Duane, Don and the rest read this and realize that we had readers, they’ll start posting again and we can figure out a place to keep it going.
Thanks for the interest and encouragement.
What’s your story? Everybody has a story.
Tiffany
Jul 27, 2008
Hi Bob!!
I’m glad to hear from you, I really had withdrawal symptoms when you guys (and gals) stopped writing in March. Lucky I found this site. Bob, I do have a story, and it is mostly a sad-mac story as of late but there were some good years. I got into reading your writings/postings last year sometime when a fellow antiques and collectibles dealer who was in the business like for 25 yrs, told me “Tiff, get two guns and two dogs” and he would keep telling me this every weekend when he saw me. he had gotten laid off from Sparkletts after 25 years and had to take a job with a British grocery co. for half pay of what he used to make. I googled coming economic depression , not recession, one night just to see, because I thought I was being original and brilliant, but whoa!! Tons of people were talking about it here on the net!! I’ve been selling collectibles, vintage Barbies, costume jewelry, and have a space at a local mall, but sales have been going down, and the writing is one the wall. Just got thru with a sale and netted like 40.00 instead of the two or three hundred. Hey
Bob, Glen, ladies, etc., I have found a good site also, maybe you folks are already subscribers, go to google, and type in : utube visionvictory. This guy is right on the money for being a younger dude. you have to really listen to a few of his videos to really get an overall picture. I tried to tell my friends and family to listen to him, as he is very knowledgeable, and all his predictions from last year have come to pass, and he isn’t trying to sell any gold or silver or cd’s. Just trying to pass the info along. Too bad I didn’t have his smarts when I was his age.
I’m a “army brat” war child as I am part Japanese,Korean, Hawaiian, and my dad is part Scottish/and authentic Southern redneck, (lots of alcohol/drinking involved). He was in the army 114th artillery div. or 102nd, I can never remember, he won a bronze medal in Vietnam, but he was never the same when he came back. Psychosis, depression, nightmares, midnight sweats, etc. My mom should have never married him, too much of a cultural difference. When she arrived in Jonesboro, Arkansas, way back when, the streets were not paved with gold, but there was a freshly skinned squirrel on the backburner ready to be “chicken fried” along with hush puppies. I think she really suffered, no kimchi or bulkoki.
After my dad died, I helped my mom out in the family grocery/liquor store business, til we sold it, mom and pop stores were on the way out, with the big chains coming in, I dropped out of college to help in the business, got married, had two girls, not necessarily in that order, my ex went thru the obligatory mid life crisis, i’m divorced, been a single parent for 12 years, my older daughter had a chronic illness for 6 years, raised her to be pretty healthy, she graduated
from Harvard and now I just have to worry about the younger one. I’ve owned a Japanese sushi restaurant way back in the mid 80’s a franchise, after 3 years of thousands of pieces of sushi making and thousands of A-F chinese/japanese fast food plates ( fried rice 30cents extra), here I am selling at swap meets. Who was to know? The point I am trying to get at is I am glad I got used to the taste of Spam (from being Korean and also for the economics of it, just keep slicing the loaf of spam thinner and thinner. Already to eat in the can!! I still remember reading your posts about Ezekiel bread and the ship store sites. I really learned a lot. And Bob your laws of nature are true …. I jokingly was telling my friends a few years ago about writing a book about “tribes” about the demise of civilization / society, and anarchy and people reverting back to survival modes, tribes. And ironically we might get there? The thing that is confusing is there is polarity to everything. Are there conspiracies? Are we masters of our own fate? Will rapture take us believers to a safe place? Are there aliens / reptilians ready to intervene?
No clear cut answers except always a feeling of waiting for the other shoe to drop. And another point I am trying to make is I lost my house because I think I really had a bad attorney in my divorce where I was forced to move from my house with my two girls, and my inlaws who were on title with me probably made up the two months back payment and sold the house and gave the proceeds to my ex. I feel for the people losing their homes but at least the government is helping them, supposedly, I guess the point I am trying to make is if anyone reading this is going thru what i went thru there is a light at the end of the tunnel, what doesn’t kill you will make you stronger. (Angry and resentful too, but I am still working on that, counting my blessings). One thing that is great advice about the coming hard times is people: get in the best physical shape as possible, and store up on prescription drugs, ask you doctor for extra dosage, I suppose they are allowed to do that, in case of hardship in getting to your doctor. I guess this is enough writing for now, Bob you asked for my story! I really hope you guys/gals will continue on with your writings on this thread. I think glen you were the one writing about the secret trap doors and
the hide out bungalows, etc. you guys should write a script!!
Anyway, I hope whoever reads this listens to the visionvictory guy on utube. He is a self made man and he really has good info. I really feel bad for my daughters living in this world (and all other children and young people too) who will never know the delight of driving down Route 66 with their parents (both of them), and eating Barbara Ann white bread with thick slabs of bologna, stopping by the Texaco gas station (what was gas back then?) and getting those sodys (Dr. Pepper) in the bottles for a dime. And remember those gallon bottles of A & W root beer with the spigots which you just put in the fridge sideways and was ready to serve. Now the kids have Mcdonalds or cup-o-noodles
and starbucks (if they’re still open) and I don’t think its nearly as fun. I guess I’ll give someone else a chance here to speak. But I will write back. ps: Bob did you make up any more new rules of nature? :}
Tiffany
Tiffany
Jul 27, 2008
Hey folks,
About the prescription drugs mentioned above I want to clarify, and say your prescriptions for whatever medical condition or disease you might have. My daughter was on prednisone for years and if she was still on it I would want to get her back up medicine in case there was a hurricane Katrina type of situation.
tiff–
p.s. I would really love to keep hearing from you strong, smart survival folks!!
Bob
Jul 28, 2008
Hey I didn’t make up those rules, I just wrote ‘em down, but if I should discover more I’ll be sure to pass them along.
I watched a bit of the youtube dude. He seems to have it figured out.
That’s quite a story you’ve got there. I too can remember sitting in a parking lot in the back of a pickup eating fresh bread. My favorite sandwich meat was some kind of macaroni and cheese loaf but I am a “baloney” fan too. I liked those big old glass bottles of Coke that you pulled out of those old coin operated coolers. Like you say, it’s too bad it’s in the past.
“That which doesn’t kill you makes you stronger. Angry and resentful maybe, but stronger”. I like that one.
Keep up the struggle and get your two guns with a bunch of ammo. One of them should be a short little shotgun. I don’t know about the two dogs. I wish I could give you my two useless dogs. I’m tired of them crapping all over the place and digging holes and rolling in stuff and they cost a fortune to feed.(But they’re always happy to see me. They think the sun shines out of my butt.) Dogs might be handy someday for packing around your supplies but there will be lots of dogs running around when that time comes. Just get a little yappy dog to wake you up if somebody is skulking around for now. That’s my advice.
You’re thinking right as far as I can tell. Thanks for telling your tale. Always good to know that there is one more person out there who is still alive.
Bob
Jul 28, 2008
Tom Petty says the waiting is the hardest part.
Tiffany
Jul 31, 2008
Bob,
In a nutshell, what does the article above say in conclusion? Too long and intense , should we buy gold and silver?
Do you think we could continue the postings on the visionvictory guy’s site? It would be great if you got your friends glen, hoyt, etc, there because the people posting there are like-minded survival econo-socio savvy type of people. some have great sense of humor too, just a thought, as this site doesn’t draw too many people. It is fun and educational just reading those people’s comments as was you all’s from the last econ. collapse article which ended in march. Thank you Bob, for reading My story, above, I live in southern Calif, and we had a small earthquake couple of days ago, and the night before, I was really nervous and agitated, knew something was going to happen. Wasn’t as big as the northridge quake which happened about 10 years ago. Indymac Bank was “rescued” by the Feds, now Wachovia and Wash. Mutual are purported to be next. Hope you will start posting there on the utube visionvictory channel. This guy is predicting the stock market to crash before Jan. of next year. I read his comments and or videos every night. He’s very well researched in his videos, and is part of a billionaire family so they must know what is going to happen right, and Christian also. Anyway, he is what I have been listening to on the net also, the site : “survivalblog.com” is cool too.
Linda
Write back or start posting on that other site, and my id name is secret orchid on that one, but I hardly ever comment.
:]
Bob
Aug 01, 2008
What does it say in a nutshell? It says that things are going to get bad one of these days. Maybe tomorrow. The rest is just a lot of technical reasons why. There is also some information about gold and silver to help you understand why these metals have a value in the first place and a lot about how that value is set.
Should you buy gold?
The answer to that depends on you and what you think.
This is my story.
I think we’re on the edge of the end of the world as we know it. I think the entire world economy is going down the tubes and when that happens, I think it will be impossible for most western governments to maintain social order.
We’ll be on our own.
I have my own life and situation, and based on that, I have a rough game plan for dealing with the future.
I’ve gained a lot of practical knowledge on how to do things that need doing when you live independently and aquired the tools to do them.
I keep myself in reasonable physical condition.
We always keep a season’s worth of food around the house.
I’m getting old and weak, so to protect myself I’ve aquired a few weapons, lots of ammo for each of them and developed a mean, ruthless disposition.
I think that mobility will be important when it gets bad(Glen preferred to fort up). That’s why I don’t keep years worth of food and truckloads of weapons and ammo. That’s why I don’t really care if my house is paid for-might have to leave anyway. And THAT is why I have gold. It’s my reserve. It won’t burn or rot or rust and it is worth something in every currency. If I lose everything else, I’ve still got my little sackful of gold that I can use to start over, and I can carry it in one hand as I run away into the brush.
Some people “invest” in gold and silver. I don’t care if their value goes up or down. All I care about is the fact that they will always be worth something and that they are portable and virtually indestructable.
Whether or not you buy gold depends on you and what you hope to gain in life by buying gold.
Life is like a game where you’re thrown out the door and given a two day head start on Mr. Death. He’s going to get you in the end, guaranteed. You can use your headstart time to build a fort to keep him out, or you can run like hell and try to put some distance between the two of you, or you can hide, whatever, but he will find you. Some people even wait outside the door and surrender right away, or jump on him and try to beat him up. Doesn’t matter, he wins.
It’s all about playing your game, your way because the judges are watching and you get a score in the end.
Does gold fit into your gameplan?
Tiffany
Aug 03, 2008
wOW BOB!! YOU can sound Nietschien/nihilistic at times! You should have been a screen writer. Are you really getting old/weak? Do you have family around to take care of you? May I ask what state you live in? How do you think all of us on these sites, came up to the conclusion of end of america as we know it, or whole global meltdown? What was the light bulb moment for you? The point I was trying to make with “my story” but it became long winded is : The masses now are kind of experiencing or starting to experiencing stress: foreclosure of home, budgeting problems, i.e.: unable to pay bills, fearing homelessness, bird flu (impending, ?) mad cow? (impending?)etc,and all my last decade after my last divorce it has been a continuous hell if not financially, then my daughter’s chronic illness, and loss of my house (that really hurt as I worked 12 years as a secretary and made the house payments, and being betrayed by my so called husband, that was just in like 3rd of my problems as I was losing my home as I had to take off from my accounting job all the time to take my daughter to the hospitals, so now I don’t have a home to lose, we lost our restaurant, my daughter got better, I pretty much lost my career, as I took so many years off “nursing my daughter back to health.” I feel like I have already cheated death as I had so much stress and different types of stress that Idon’t even know why I am still alive. But when one has faced the D___h of a child as a possibility and living everyday with that fear, after that nothing really can scare you. Like now. It is normal for me, but to other people their stress levels will be rising, but to me it is just a little more added stress .. do you understand me Bob?I guess I am babbling again. Bob, eat lots of veggies and fruits, drink lots of clean water every morning, with some natural honey and lemon, chew on the lemon skins and even eat them, and just keep your internal organs clean this way and it will greatly enhance and make you stronger and less prone to disease. Take some flax oil or eat broiled salmon/the skin too of course, you need your omega oils, and tons of tons of garlic. I eat kimchi quite often, korean salad with garlic and chili, and just now I just came from dinner with 3 friends and all 3 are hoarse and getting over colds. I have not had a cold in over 8 years. (knock on wood). I know quite a bit about alternative medicine, western medicine, reflexology, holistic medicine, as i have read hundreds of books on health, mind over matter, etc. We are always shedding our old cells and building new ones. Our cells are all different from say like 4 or 5 years ago. Some people have lived to 110 or 115 or probably even longer, in great health. I hope you get stronger, and you sound like such a great survivor. I just fear the future for my daughters as their father is a narcissistic bastard . He’s no help to them and I don’t think he will ever be if something happened to me. Like has not been kind to me and has left me with too much baggage. I’m not afraid of Death, just sad to leave with my daughters here on this earth with no one really to take care of them. I cannot really picture anarchy in the streets or rioting, etc, so even now I am still in kind of a denial, but the future is pretty much how that utube guy says, it just is so scary to admit what will happen. It seems orwellian or surreal. Just strange how everything seems to have happened or is happening at the same time, banks closing, starbucks closing, earthquake, fires here in Calif,
over 1000 fires happening at the same time? How or who is setting these fires? And Schwarzenneger is cutting 200,000
workers pay to minimum 6.55 an hour til he balances the budget, and they are protesting already. Bob, should i get ready to run, or start shoveling myself a very little underground shed?? Re: gold– I’ve been selling what little gold jewelry I’ve had at the flea markets to pay my rent. Not in a position to buy gold at all.
I enjoyed reading your life story.
more later,
kind regards,
Tiff
Bob
Aug 03, 2008
Tiffany
Thanks for worrying about my health, but I’ll be fine. I haven’t got a problem in the world after reading your latest.
I’m only 43, just not what I used to be and it makes me whiney. It’s one of my character flaws.
I’m pretty healthy over all.
I can’t remember when I started to feel like the end was near, but there is no doubt in my mind that things are going to change drastically. Too many people making a living doing nothing with just a few skinny, overworked and stressed people supporting it all. We’ve been bled dry. Used up everything we had and everything we could borrow to keep the wheels turning. Things have to change.
You sound like a good person. Tough and resourceful too. I like that a lot. But let’s talk about your empathy problem because I have it too.
You hear that I’m old and weak and I get a paragraph on how to heal myself. I read your story and I wish I could reach through the screen and help you out. Somebody should give us a slap.
Helping each other is a good thing but when things get bad, we’re going to have to get grip on our empathy and really be selective about who gets our assistance. There is going to be a lot of misery. We’re going to have to get hardened to it. Only help the people who can help you back or it will bleed you dry and use you up and the helpless will crawl over your carcass to look for another victim.
We have to learn the difference between the people who need help, the people who want help, and the people who are beyond help. Don’t feel bad if you have to step on a few necks to survive.
You’ll do okay. Thanks again.
I live quite a ways to the north of you, out in the sticks. It’s nice here. Not many people.
Anonymous
Aug 07, 2008
Hey Bob,
I just got thru reading or re-reading the comments you and Glen posted from that original article. Did you and Glen know each other before you started posting the comments to each other and other people? And why do you think women don’t post to each other on these sites? I wish really you and Glen would start posting on the guy: visionvictory’s site. As there are many like minded people, and the people reading this guy’s site really could use your input, and Gary’s and everyone elses’, if you can get a hold of them. More people need to wake up, that utube guy Daniel, he’s a self made person, and he is into economics, and gives the best honest data, coupled with that I think the public could use your wisdom and common sense. Bob, you are still young!! Anyway, thank you for answering my comments and questions. I really appreciate it. I’ve viewed the world differently since I started reading you and Glen, and couple other people’s postings from that last article. I was wondering if you guys went to another article after that last comment # 500 something. But there is a limit to how many times I can re-read your comments and sage advise. It is wonderful to know there are some real men out there who are knowledgeable in real life skills and take care of their own. Bob, would you consider making those utube videos and posting them?
Kind Regards,
Tiff
Bob
Aug 11, 2008
I don’t think I’d make a good movie star, Tiffany. I talk with my hands and make a lot of sound effects and funny faces.
I think it’s all been said anyway, we just have to wait for something to break loose. Have to stay ready.
I’ll start reading the Utube site.
Aug 22, 2008
I.O.U.S.A. - Homeland Stupidity
Bob
Sep 04, 2008
I’ve been reading various blog comments and editorials. One theme that seems to keep coming up, over and over, is people wondering why commodity prices keep going down.
The answer is simple. People need money. We have become accustomed to living beyond our means by finding ways to get free money. Investors have been desperately looking for something that they can buy that will make them gobs of money fast because they need money. They need money NOW to maintain their lifestyles! There seems to be a shortage of gold, silver and oil but people have been buying these things, not because they need them or because they want to have savings, but because they want to make fast money off of the shortage. They want to make something for nothing. Free money. When something that they buy doesn’t double or triple in value, they sell it and try to find something that will. The values of these commodities have been high because people have been buying them, in large part, with very little cash and mostly with imaginary money.
There is only so much real money(cash) in the system. Imaginary money(credit) is disappearing fast in the form of writedowns and so on. It just doesn’t exist anymore. Pretty soon, as credit disappears all that will be left is cash. If people have to pay cash for things, values will have to come down. People will only use their cash to buy things that they desperately need. As the value of the cash drops, commodities will be worth more in relation to currency values, but don’t buy gold and silver because you want to get rich. Gold and silver will always be worth something in every currency and owning them will ensure that your savings will always have some value, but what that value will be is anybody’s guess. Just be happy that you have savings.
The gravy train is coming to a halt. Soon, there will be no way to make free money. Investing, they call it. You’re going to have to produce something or provide a valuable service to your fellow man if you expect to make a living. You can try stealing, but when there is less cash to go around, I believe that there will be a lot less tolerance for thieves.
I find these thoughts refreshing and these times are long overdue.
Bob
Sep 04, 2008
I’ll try that again. Even I can’t follow that post and I wrote it.
Okay, imagine a Monopoly game that turns socialist. Nobody is allowed to lose. If you run out of money and you land in the Boardwalk Hotel, you just write an IOU and agree to make payments every time you pass GO. If you need money to build some houses and you don’t have it, you borrow it from the bank and make payments from your GO money. GO money is guaranteed because you can’t lose. JAIL isn’t as bad as it used to be. Nobody will really let you miss a turn. When the bank runs out of money because the game goes on so long, the banker just prints off some more. As a result of all the money floating around, prices and costs in the side deals start to get ridiculous. There’s no limit to the number of hotels you can put on a place. Just borrow the money. Start making new game pieces. Highrises. Scribble on the cards and come up with new rents and rates. Can’t pay when you land on Boardwalk with a highrise? Write another IOU.
But then you find out that you’ve been playing in a Monopoly tournament. There are other tables where people have been playing by the rules and now the judges want to clean up the mess on your table and find out who is really winning.
Fake money is no good, IOU’s don’t count,…. now who’s got what?
The banker didn’t keep any cash. All that’s left in the bank are IOU’s and the fake money that he’s been printing. Some players have real cash and some don’t. Some people had everything in highrises that they can’t even own anymore because if it hadn’t been for the fake money, a highrise never would have existed in the game. Some people are holding nothing but IOU’s. It’s a real mess.
If the people running the tournament were good natured, they would just give your table a stern talking to and let you play again, but these guys aren’t like that. Whoever has the most real money, real property and real assets, wins. Period.
So there, that is why commodity values are going down. We’re going back to real money. When you can’t buy gold with fake money or IOU’s, it’s value comes down because there isn’t that much real money around.
It’s still worth something if you have it.
I think I will be able to understand that one.
Barry
Sep 05, 2008
Ok guys, I have a few questions. When society crumbles, what makes you think that gold and silver will be of any value? I mean, if this is to be the end of the world as we know it? When the “economic collapse” occurs, what makes you think that you can hide in the woods and avoid the ensuing chaos? Don’t you think people will find their way into the hills to look for food? As some of you have said, the only commodities worth anything will be the basics of survival. Do you really think you can protect what you’ve stockpiled from hungry groups foraging in the woods? And how will gold or silver be worth anything if people are just trying to survive?
Bob
Sep 05, 2008
Good morning Barry.
Good questions. I’ve asked myself those questions at one time or another.
The best one is “why do gold and silver have value?”
I think the answer to that is in the human desire to cheat death. Gold is permanent. It doesn’t break down or corrode or rust. If you were to stamp your name on a piece of gold and bury it in the ground, it would still be there in 5000 years. When we are alone, with time on our hands, we think about ways to leave a mark on the world. We want to be remembered and gold is a means to do that. Silver is poor man’s gold, I guess, not quite as permanent but strong enough to make a fork out of.
You’re right. When most people are just trying to survive, they won’t put any value on gold. When social order breaks down, what you have will only be worth what it costs someone to take it from you. If it costs them too much, they will leave you alone. However, disorder never lasts forever and there will always be wealthy or powerful people willing to pay for gold and silver and sparkly things . They might even take advantage of peoples’ desperation to accumulate those treasures. When the masses suffer, the powerful will protect themselves and they will always be there as a market for your goodies.
The other questions.
Do I think I can avoid the chaos? I don’t think I can avoid it but I want to survive it and do my part to rebuild something good afterwards.
Do I think I can protect myself and what I have from the starving masses? I don’t have much choice if I want to stay alive and help the people I care about. It won’t be easy turning my back on some people, but I’ve done all I can to get the word out that this is coming. At some point, they have to take responsibility for themselves. I don’t think many of the city people will make it out far enough to give me problems. I worry more about governments and military types. I’ve done all I can to be ready, we just have to see how it plays out.
I don’t get too carried away. The Gods can leave you sick and naked with a wave of their hands if they feel like it. Then all your careful planning won’t mean squat.
Most of your preparation for something like this has to be between your ears.
It’s closer every day Barry.
Anonymous
Sep 06, 2008
Bob,
Thanks for writing to me on the other site.
I’m glad you are still posting comments.
We really are living in strange times.
T..
now I’m getting more paranoid
Anonymous
Sep 06, 2008
Hi Bob,
Glad to see you’re still posting.
Trying to see how long it takes for the comments to show up here.
Tiff
Anonymous
Sep 06, 2008
Bob,
I’m posting this comment at 11:41 am, how long does it take
to post comments? filtering? By whom?
I see on the utube guy ’s channel our comments were removed, too personal or if links to another site they remove it or what ? What do you think , Bob?
tif
Anonymous
Sep 06, 2008
Bob,
I’m posting this comment at 11:41 am, how long does it take
to post comments?
I see on the utube guy ’s channel our comments were removed, too personal or if links to another site they remove it or what ? What do you think , Bob?
Tiff
Michael Hampton
Sep 06, 2008
Will you please stop “testing”? It’s really annoying. I have to deal with all of those myself.
Bob
Oct 06, 2008
Did Michael scare you away Tiffany? He’s just a big growly teddy bear. There’s never been a better time to talk about why the economy is collapsing. Tell us more about what it’s like where you live. Is it collapsing? How are you dealing with it? Maybe you can give us ideas or get some from us.
If your post doesn’t appear right away, just let it ride. I just had one take two days to get through. If it doesn’t make it, it’s usually something technical. Glen is back on the “IOUSA. One Nation. Under Stress. In Debt.” topic.
Apr 03, 2009
Great Depression II - Homeland Stupidity
Jan 07, 2010
Spring food crisis may trigger economic collapse | Homeland Stupidity
Jan 09, 2010
Militant Libertarian » Spring food crisis may trigger economic collapse
Jan 10, 2010
FreeWestRadio.com » Blog Archive » Spring food crisis may trigger economic collapse
Yasmin Khan
Feb 19, 2010
Checkout http://www.freebase.com/view/en/yugoslav_dinar as a good alternative for global economic support and help.