Question From Anonymous

29 12 2008

Hello,

I’m a fellow survival-minded person, and considering your knowledge on this issue, I hope you don’t mind me asking your opinion on something I’ve been seriously mulling over for some time.

Due to the economic situation we now find ourselves in, I’ve been doing some serious thinking. We’ve watched the financial world crumble, and it concerns me. We’ve watched the stock market sputter to a halt, we’ve watched as bank after bank failed, we’ve watched as the realm of the loan and mortgage came upon rough waters. I left Washington Mutual when they began having trouble, seeing the possible outcome (which, as we witnessed, actually did occur). I moved over to Wells Fargo, feeling that that bank and Bank of America were the only two trustworthy banks. And now I see issues with Bank of America; bad loans from their Merril Lynch purchase and now the notice of layoffs. BofA may still stay alive, but in an extreme case WF may be the last man standing…. And then what if they go down, too? Yes, the government is propping these institutions up right and left, but what if they get in trouble financially? Yes, our own government, that’s what I’m saying. I’m not sure how sound my own thinking is here, but I raise the same issue many have: who’s gonna bail out Uncle Sam?

Extreme? Yes. But haven’t we been witnessing the extreme already? I do not share the tame projections of those who say next year, or maybe a year or two after that will see a return to normal. I’m afraid it will be much, much longer and much, much worse than we may yet be seeing.

I’ve wanted to invest in stocks before. I’ve wanted to “get smart” financially to earn my own living without having to answer to a boss or board. But, to be honest…I’ve lost my faith. In it all. In the stock market, in our financial system. Sure, this likely sounds completely crazy, but how can I help what I feel? I’ve simply lost faith in it.

I clearly don’t even trust my bank account anymore. Now, don’t get me wrong, I’d be willing to bet that my hard-earned cash will be just fine, but what if it isn’t? Isn’t that what survivalism is all about, preparing for the worst but hoping for the best?

My point in all this? In short, I want to know what you’d suggest. I have very seriously considered pulling my cash out and storing it in a safe, but if things really go downhill that much, will the already weak dollar be worth anything? What would you recommend? Gold? What?

In closing I’d like to say that I appreciate your time. I wish to remain anonymous.

A concerned survivalist citizen

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10 responses

29 12 2008
Rob

I’ll ring in on this, because it is something I have spent a good deal of time wondering about myself. I’ll try to be brief.

#1. Uncle Sam IS in trouble financially. In fact our nation borrows heavily from China and has for many years. One of the chief questions of the ‘smart people’ is what will happen if China stops? That question is a very real and distinct possibilitie. China has its own problems monetarily speaking, plus they are not real big fans of Amerika. They have forged an alliance with Russia, and it looks like they are going to push that direction. As an emerging economy China needs energy and Russia has boatloads. Price of oil is inconsequential, I think China will sever ties with Amerika and go with the Russians for their future.

#2. The dollar WILL plummet. It is not a matter of ‘if’ it is simply a matter of when. As the government tries to flood the market with cash to offset deflation the dollar will de-value. As this happens inflation will begin to take over at a rapid rate. In fact inflation will increase proportionately to the amount devaluation. As other countries begin to see the dollar devalue they will offload their interest in dollars causing an uncontrollable devaluation of the dollar. In fact the dollar will pretty much implode. There are some rumors floating around regarding the invention of a new currency, but right now that is still in ‘conspiracy’ channels and I don’t perceive it as a real problem yet.

#3. Banks are seriously not to be trusted regardless of ‘reported stability’. They will say anything to prevent a ‘run’.

Ok, now what do we do about it? Well, there is a different strategy for everyone and there is no two strategies that serve as a ‘one-size-fits-all’ approach to this. But here is what I personally am doing.
#1. I am developing my small acreage (I have three acres) and creating a sustainable permaculture where I can grow my own food. Garden, rabbits, pigs, a milk cow and chickens along with nut and fruit orchards and an area for growing wheat.
#2. I am only putting money in the bank that I use to pay immediate bills. Such as, electricity, gas, food costs, etc, etc. Everything else that is not absolutely intrinsic I am putting in a coffee can so to speak. I am using my cash to purchase all of my farm-related expenses. Why am I doing this? Because in 1991 Russians woke up to find that overnight the government devalued their ruple and people were shocked to find they had less than half the money they had put in the banks. We would be remiss to think it cannot happen here, especially when Russia is considered the third richest (money wise) country in the world. They actually have more billionaires than any single country.
#3. When things start escalating cash will be king for short period of time and as the credit lines start withdrawing, (my brother-in-law had his credit card limit reduced from $30,000 to something like $4,000) cash will be the only commodity worth using. However this will be very short lived as the devaluation begins to take hold. When I say short lived I believe that cash will be king for 6 months to a year. After that I don’t know. However, Gold and Silver is a very good bet. Gold is good for long term investments and has been used throughout all the annals of time. However Gold is expensive. Around $900 per ounce, give or take the spot price. You can buy half-ounce gold coins, quarter, 1/10 and 1/20. Kitco offers gold chips as well for about $40 a piece. However my personal opinion is that gold is a long term strategy and is hard to use as a medium of exchange because of its value. For buying and selling locally I recommend Silver and lots of it. Silver is around $14 an ounce spot price and can easily be used to buy milk, eggs, and other things your family might need.

#4. and finally food storage. I would invest in a very roomy root cellar or climate controlled garage to store 3-6 months worth of food. There are some rumors reaching prominence (that is to say they are now entering mainstream) that a food shortage is imminent. 3 months is conservative, and one year is if it gets really bad. There is no way to know right now. You have to be careful with this though, because of the ‘hording laws’ which apply to gold as well. You will have to do your research in your own state to find out what is allowed and keep a watchful eye on what the government starts doing regarding ‘hording’.

I want to add a final note to be extremely vigilant in watching what the government does at this point. Don’t put your ‘exit strategy’ into action without proper research and understanding. Many people are adding ‘guns and ammo’ to their strategy. I am not doing this as I do not plan to ‘arm’ myself. I am a peaceful agrarian and I have one gun for hunting purposes only. It is an ancient relic that is useless in any ‘progressive’ environment. I can hunt deer and squirrels and that is pretty much it. I am not a hunter any way and if situation arises that hunting becomes a necessity I will have to work doubly hard because I don’t like guns. However if things become hostile here in the United States (this idea is still in the realms of conspiracy) then you will need to be liquid and be able to take a goodly amount of your wealth with you in case you are in a hot zone. Getting out of cities would be the most important course of action at this point. Large cities could have some serious, serious problems if it all hits the fan.

I would add that California will be the state to watch as race relations are already starting to peak regarding un-employment and migrant workers and illegal workers are finding themselves without jobs even picking fruit on farms. If California begins to be plunged into chaos socio-economically then you know it is getting bad.

There is a lot that can be said for this but this is my opinion in a nutshell.

30 12 2008
Christopher

Good questions, Anonymous. Here’s some brief thoughts – I’m going to get right to the point so if there is anything unclear please let me know. Follow-up questions would be just fine.

Its important to not forget that God is at work, that all of this is both necessary and for our own good. God has established a kingdom “which shall never be destroyed: and the kingdom shall not be left to other people, but it shall break in pieces and consume all these kingdoms, and it shall stand for ever.” (Dan 2:44) Given the rebellion of man to God’s laws, it should not be surprising that when God shakes the kingdoms of this earth, that it will be tumultuous.

While the knowledge of God’s sovereignty in the world should give us comfort, we should not confuse comfort with complacency. The examples of scripture teach us to avoid snares, to be industrious savers and producers, to be prepared for the future, to not live only for the moment, to not presume upon the future, to not be surety for others, etc.

Thus in my opinion, if we are not living as we ought, current events and calamities do us a service by revealing that. And that’s a good thing. We don’t want to run merrily to judgment with the world.

Banks are inherently immoral, at least as they exist today. I would recommend (unless you are able to forego them entirely) obtaining an “interest-free” checking account, and only keeping enough in it to pay your regular bills as they come due. Any excess funds, keep in cash, precious metals, or tangible goods. Be as liberal and generous as you can afford to be.

Bonds, being instruments for exacting usury (see Mooney, Usury: Destroyer of Nations), are also inherently immoral. I suppose there’s a possibility one could argue their allowance if they are obtained from non-believing foreigners, but if that’s the case I would question why you’d want to invest in them anyway.

Stocks have problems for the Christian, as they represent ownership and we must take responsibility for what we own and derive profit from. The very idea of the joint-stock company and its limited liability is certainly questionable in itself (see Dabney, The Philosophy Regulating Private Corporations). Its certainly within the realm of possibility to find a company that is good to invest in. However local investment and participation in management (more of a partnership) is closer to the ideal, if there is one, for equity investments. Additionally, stocks and bonds are quite risky due to the demographic winter possibility.

Probably one of the deeper issues is our whole attitude towards work and money. The world despises work and seeks every imaginable way to make money “grow” with a minimum of effort and risk. That is quite frankly antithetical to God’s way. We ought to be hard workers who view money as a way to provide for our families, invest in God’s kingdom, and bless others. We need to begin making our homes centers of work and production, rather than merely places where we eat, sleep, and amuse ourselves.

As to specific recommendations for what to do with your money, its difficult without knowing your circumstances. Paying off debt is one of the best investments. If you have extra cash, keep a reserve in a safe, and use some for food storage. Invest time in relationships, in your community, in your church. Spread the good news and give gifts to others. Invest in tools for your home and family – for gardening, cottage industry, education. Barter or use gold/silver coins with friends, and establish the beginnings of an honest local economy.

I’ll leave it at that for now. I hope it helps stimulate your thinking.

30 12 2008
dse

Excellent post Christopher and a breath of fresh air, indeed!! Thank you very much.

30 12 2008
Anonymous

I’m back.

Thank you for your advice, everyone. Now for some follow-up questions.

Rob: For buying and selling locally I recommend Silver and lots of it. Silver is around $14 an ounce spot price and can easily be used to buy milk, eggs, and other things your family might need.

To give you some info, I live in the city…. What do you mean by “easily”? I couldn’t just go to my local grocery store and hand over silver coins at the register for my milk and eggs, right?

Christopher: Banks are inherently immoral, at least as they exist today.

Could you please elaborate?

Any excess funds, keep in cash, precious metals, or tangible goods.

What about it being useable? Cash is easy, but precious metals…not so much, correct? Or am I wrong? And what kind of goods do you recommend?
As to specific recommendations for what to do with your money, its difficult without knowing your circumstances.

I am not in debt and currently use a savings account to save my money.

And as to all that about what seems to be your views on Biblical economics, you wouldn’t by any chance have any source recommendations for me, would you? If you don’t mind…. I’m at least interested enough to take a look at what you are saying, although some if it is new to me.

A learning survivalist citizen

31 12 2008
Boyd Livingstone

Setting aside the reality of the staggering economy for a moment, a key to Christians and investment is whether or not they believe that collecting usury is sinful. Every biblical passage on the subject is negative and it is my opinion that investment should avoid forms of usury. Scott Mooney has written a couple books on this subject and I am sure that Christopher could provide some info about obtaining these books.

Because of my moral concern with usury, investing for me involves obtaining things that have intrinsic value and striving to obtain things from which I can derive an income, or at the very least, obtaining things that prevent me from having to go out and having to purchase them.

I have debt, so my present preoccupation is trying to eliminate that. For storing wealth, I think investing in precious metals, land, goods that can be bartered, tools for a trade etc are a good starting place. Some cash at hand is necessary, but given the constant threat of deflating currency, I think the amount of wealth stored in cash should be kept at a minimum.

Precious metals have generally kept up with the rate of inflation over the years. You are correct, it might be difficult at this time to take a silver coin and convert it into groceries, but precious metals can always be taken to a coin shop or a commodity broker and sold. I’ve bought and sold long distance by shipping coins to distant brokers. On the other hand, if our currency would implode, I don’t think it will take people very long to determine how to judge the value of a precious metal.

Many years ago I moved out of town and bought a rural property. I have spent money establishing gardens, fruit trees, and am now slowly adding critters to the mix. I run a part time business from my home and slowly add tools as I can for my trade. My overhead is paid for and I can turn these investments into future cash by turning over work.

I have a large family and try to keep non perishable goods on hand in bulk.

I have many children and many of my thoughts are directed toward them. I would like to establish a foundation upon which they could get a foothold without having to get into debt themselves. In some sense, you could say that I aspire to invest into a multi generational vision.

1 01 2009
Anonymous

but precious metals can always be taken to a coin shop or a commodity broker and sold

I would be concerned about that option becoming more difficult somehow. I’m not sure if it makes any sense, but if the economy goes down that far, will coin sellers be around, and will they be willing to exchange?

1 01 2009
Boyd Livingstone

While I suppose I can’t predict the future, considering that gold and silver have been a method of exchange since the origin of mankind, I would have a hard time considering that the desire to exchange gold and silver would abate in a negative economy. If you collect govt issued coins, they are recognized all over the world and maintain a certain value against all major currencies.

Perhaps a more noteworthy concern would be whether or not the United States would ever announce a gold recall as did FDR in 1933. The president can still site national emergency as a reason to suspend the ownership of gold and silver. To my knowledge, the purchase of private stores are not tracked, but if you keep metal in safety deposit box somewhere, its possible you couldn’t open it except in the presence of an IRS agent as happened in the 30’s. If such an event would unfold, obviously the exchange of precious metals would be “black market.”

I’ve always want to research the effect of those days and to what extent people resisted this recall. I would be interested in knowing whether gold and silver exchanged freely under the table, so to speak.

2 01 2009
Christopher

Anonymous,

Regarding banks being inherently immoral, at least as they exist today, my main reasons are as follows:

1. Through fractional reserve banking they are the key player in the “creation” of “money” through the monetization of debt. This results in theft via inflation and unjust scales.

2, Banks exist to exact usury from people (and give “depositors” a kickback). I believe that to be a sin and desire to avoid participating in it.

What about it being useable? Cash is easy, but precious metals…not so much, correct? Or am I wrong? And what kind of goods do you recommend?

The key thing about precious metals, especially in coin form, is that they actually *are* something of value, as opposed to cash, which is just a piece of paper (which used to *represent* gold or silver, but now represents nothing but debt, hence we call our bills notes) and only has value from the confidence of people in their ability to trade it for something else. That confidence can be shaken, but on the other hand societies ancient and modern have seemed to always value gold and silver as valuable commodities.

Therefore they are ideal for storing wealth because they actually are wealth. If you need to cash them out in the future you can easily do that. Or if any fiat currency collapses, then you are prepared for that as well because the economy will gravitate towards exchangeable commodities (silver, cigarettes, liquor, MRE’s, etc.).

As for investing in durable goods, my first recommendations would be things that can be used in your business or to produce food. Its funny, I think in Argentina people actually bought concrete blocks because the currency depreciated daily and the blocks held their value… the key is to focus not on hoarding wealth and goods but to be investing in the means of production for you and your family and community.

And as to all that about what seems to be your views on Biblical economics, you wouldn’t by any chance have any source recommendations for me, would you? If you don’t mind…. I’m at least interested enough to take a look at what you are saying, although some if it is new to me.

I will work on a list for you and anyone else that is interested.

Thanks to Anonymous and everyone else for all of your questions and comments so far. I have appreciated the conversation!

10 01 2009
Anonymous

So…reading all this talk about government regulation of gold, etc. during the depression…does anyone have a book to recommend on this subject?

11 01 2009
Christopher

Anonymous, take a look at this article: The Great Gold Robbery of 1933.

Franklin Sanders has some interesting articles posted on his website, The Moneychanger, including several on the topic of gold confiscation. Some are a bit dated but time spent poking around there and reading will be worthwhile.

Finally, the book Money: Symbol and Substance by S.C. Mooney is very helpful in developing an understanding of money itself.

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