Preparing for Economic Disaster

Civil Defense Perspectives July 2012, Vol. 28 No. 5

An obscure 1984 newsletter than I unearthed while cleaning out a filing cabinet predicted fiscal armageddon, followed by a world government, because of a Third World debt crisis.

It was said that a default would collapse the entire international banking system. At the time, the total debt of the four largest Latin American countries was: Argentina, $38 billion; Brazil, $88 billion; Mexico, $82 billion; and Venezuela, $31 billion.

Somehow disaster was averted then. And now we have Greece, Spain, Italy,… France, and the U.S. The U.S. federal debt ceiling is around $16,000 billion ($16 trillion). The total unfunded liabilities (promises with no apparent means of payment) are not included (http://tinyurl.com/9ayeeds). These have been variously estimated, from $50 trillion to as high as $222 trillion.

In the recent movie 2016, Dinesh D’Souza calls debt “a weapon of mass destruction.” This term is used by others for the hundreds of trillions of dollars in “derivatives” held by major financial institutions.

With the housing crash, we see the effects of debt based on collateral of less value than the loan. What is the value of the “full faith and credit of the United States”?

Holders of U.S. debt can trade it for our devalued assets. The Chinese are buying vast amounts of distressed commercial real estate. Toledo, Ohio, may become the first major Chinese-owned city in America (http://tinyurl.com/7oeebk4).

The ultimate collateral for U.S. government debt, states Art Robinson, is the labor of the American people.

Many Americans have also mortgaged their own future. Student loans now total $1 trillion; ObamaCare puts the student loan business completely in the hands of the federal government. These loans cannot be discharged by bankruptcy. To obtain what is often a worthless college degree, students have effectively signed up for an indefinite term of indentured servitude.

Fiscal Cliff Ahead

Americans will stand at the edge of a fiscal cliff on Jan 1, 2013—just after the election—of spending cuts, tax increases, and draconian regulations.

The Budget Control Act of 2011 imposed spending cuts of $109 billion per year for 9 years, almost 50% from the defense budget. Hundreds of thousands of layoff notices to military personnel and employees of defense contractors are expected in November. Some predict a loss of 2 million jobs throughout the economy, writes Martin Weiss (Money and Markets 9/3/12). This is at a time when the real unemployment rate, including underemployed and discouraged workers is nearly 23% and rising, according to Shadow Government Statistics.

The expiration of tax cuts is the functional equivalent of a tax increase. About 96% of middle-income earners will see federal taxes go up an average $1,800 per year, according to the Tax Policy Center (ibid.).

New taxes in the Affordable Care Act (“ObamaCare”) amount to $525 billion or more between 2010 and 2019. Middle-class Americans and small businesses will pay 75% of it. The individual insurance mandate by itself, if a tax, would be the largest tax increase in U.S. history (http://tinyurl.com/cj6obf2).

The hidden tax burden called regulation, carried by rich and poor alike, increased by $236 billion over the past two years. The Environmental Protection Agency (EPA) is in the process of promulgating new “anti-pollution” rules that will enable Barack Obama to keep his promise to bankrupt the coal industry and cause the price of electricity to “skyrocket.”

The Federal Energy Regulatory Commission (FERC) estimated that up to 8.5 percent of nationwide power generation (81,000 MW) is “likely” or “very likely” to be retired because of EPA rules (http://tinyurl.com/ccoe57r). The Mercury and Air Toxics Standards (MATS, see p 2) alone could shut down 17% of our most affordable electricity generators within 5 years.

What Will Happen to the Dollar?

According to Richard Maybury’s Early Warning Report, the velocity of the dollar is still very low (www.chaostan.com). But it has been said that “there are only two kinds of paper money in the world. Those which are already worthless, and those that are going to be.” Since the start of Operation Twist in September, 2011, the Fed has been buying 90% of long-term Treasury debt.

Art Robinson notes that interest is the price of renting money. Now near 0%, it suggests the perceived value of fiat money. Will it increase wildly, as many predict? Maybe not.

What has already happened to the dollar is that in 2008 it was worth 8.66 cents in 1947 dollars. The hidden tax of inflation has robbed savers of $19 trillion (http://tinyurl.com/9l8gja6).

Remember the Eternal Basics, the “4 G’s”

Though investment newsletters suggest some ploys,  I doubt that many could profit from world or national financial collapse. It’s about survival. Watch the fundamentals, and do not be misled by rosy, self-serving forecasts. Diversification is probably wise; owning a share of something with tangible assets is better than owning debt denominated in dollars. Money, however, now seems to be fleeing to sovereign debt for safety. It is likely to be the last to default—by destroying the currency.

The current economy, using sophisticated computer technology, runs on a “just in time” basis. Inventory and stockpiles largely don’t exist, so if supply lines and transportation are impeded, stores will run out of everything quickly. If people lose faith in the financial system, expect bank holidays and empty ATMs. Some cash on hand may be needed for rent or utility bills.

My grandfather’s “4 G’s” were: ground, grub, gold, and guns.

We hope that no readers of this newsletters are planning to survive by looting. But it is said that agencies of the federal government have ordered a billion rounds of hollow-point ammunition. Perhaps in anticipation of widespread civil disorder? What precautions can you take to improve your family’s security?

In Weimar, high inflation lasted 2 years, and hyperinflation for 2 more. To pay monthly expenses of $1,000 for 5 years would take an estimated 38 oz of gold or 2,150 oz of silver, estimates Jeff Clark (http://tinyurl.com/9bo7gsq).

Cresson Kearny’s Nuclear War Survival Skills remains the best single source on prudent preparedness. If you don’t already have it, download it and print it out now.

Social Security No Longer a Good Deal

New retirees are the first to likely collect less in Social Security benefits than they paid in taxes, writes Stephen Ohlemacher (AP 8/6/12). Those who retired in 1960 got back about 7 times what they paid in. A married couple retiring last year could anticipate a total of $556,000 in lifetime benefits after paying $598,000 in Social Security taxes—unadjusted for inflation.

More Americans Get Disability than a Job

Between April and June 2012, about 246,000 Americans were added to Social Security disability rolls, while only 225,000 found jobs. Between January 2009 and June 2012, 3.6 million were added to disability rolls, while a net 1.3 million jobs were lost (http://tinyurl.com/cvs93nf).

The EPA MATS Job Killer

The MATS is the main part of the Utility MACT Rule, which sets maximum achievable control technology standards for hazardous air pollutants (HAPs) from power plants. Through one of the most expensive rules in history, EPA will try to reduce the level of mercury in power plant emissions below natural levels. Technicians need to wear special protective clothing when measuring levels, not to protect themselves but to ensure accurate measurements, since even breathing on a sample can triple the level, write Willie Soon and Paul Driessen.

U.S. power plants emit 41-48 tons of mercury per year, compared with 44 tons from U.S. forest fires, 400 tons from Chinese power plants, and up to 10,000 tons from volcanoes, geysers, subsea vents, and other natural sources. Speaking on this issue at the DDP annual meeting (http://tinyurl.com/8dexrrw), Willie Soon noted there are 2,000 ppm mercury in lunar soil.

The EPA estimates that new rules will prevent the loss of 0.00209 IQ points per child in a guesstimated population of 240,000 subsistence fishing households. This “statistical figment,” by EPA math, is supposed to save as much as $6 million at a cost of $9.6 billion in 2016. It effectively bans any new coal-fired plants, so job creation from the rules will be “not statistically different from zero.” It will reduce average disposable household income by $34 billion between 2012 and 2020 (Forbes 6/12/12, http://tinyurl.com/coc6dbb). For a map of power plants to be closed, see  http://tinyurl.com/bnz2rzm.

Economic News Briefs

Iran’s gold imports surged by $1.2 billion in April alone. Central banks added 456 tones in the past year, the most in 5 decades. Nations that are adding significantly to gold reserves include the Philippines, Turkey, Mexico, Kazakhstan, Sri Lanka, and Russia (http://tinyurl.com/98v3agc).

About one-third of deposits have been pulled from Greek banks since 2009. In July 2012, Spaniards withdrew a record 75 billion euros ($94 billion), 7% of the country’s total economic output (http://tinyurl.com/8t4oqeg). At this pace, 40% of Spain’s GDP could be sent abroad by year’s end.

Governments of Germany and Switzerland announced that they will no longer store their gold in London or New York (McAlvaney Intelligence Advisor, April 2012).

The Optimistic Scenario

Some say we have already passed the event horizon, beyond which hyperinflation is inevitable. James Cook writes: “Public and private debt, runaway government spending and fiat money have hit the wall.” In the ferocious crisis, “the handouts will have to go. No more green energy, farm and corporate subsidies. No more food stamps, housing, welfare, unemployment and disability. Reduced veterans’ benefits, Social Security and Medicare are certain. Student loans are no more….” When the government’s lifeline runs dry, bankruptcies explode, and crony capitalism dies. “Underfunded lobbyists,… government consultants, trial lawyers and political demonstrators disappear.”

The result could be a better work ethic, self-reliance, stronger character, and restored morality. If the people rally, “American exceptionalism overturns the naysayers” (James Cook Market Update, late June 2012).

Extravagances such as Rio +20, and the hypocrisy displayed at http://tinyurl.com/9pyfrhr, might also end.

Hottest Temperatures on Record?

In 1832, Charles Darwin measured the air temperature at noon daily in Rio de Janeiro. The mean was 75.9 °F (±3.9). In June 2010, it was a statistically significant 2 degrees cooler, 73.9 °F (±2.75) (TWTW 6/23/12). However, there were many record highs in the U.S. in the summer of 2012. The former proves nothing; the latter, everything, according to climate alarmists.

Media personalities such as Hal Ginsberg of KRXA 540 AM demands that we “deniers” of the claim that “we are burning up our mother” recant because “former skeptic” Richard Muller did so, based on the BEST study (see September 2011 issue).

Muller has been called a “pretend skeptic.” His daughter Elizabeth Muller, founder and director of the Berkeley Earth Team, registered GreenGov in 2008, and advises governments how to implement “green” policies and reduce their carbon footprints (http://tinyurl.com/blv4snr).

Links to critiques of the surface temperature record and of Muller’s argument are collected in TWTW 8/4/12 on sepp.org. For example, “Müller Lite: Why Every Scientist Needs a Classical Training” by Christopher Monckton, details logical fallacies such as the argumentum ad ignorantium. Ross McKitrick criticizes the statistical methods. Anthony Watts identifies bias from the misclassification of weather stations. Willis Eschenbach shows that cooling attributed to volcanic eruptions often precedes the eruption. Other critics include Roger Pielke and Andrew Montford.

Kirk Paradise and Henry Lamb, R.I.P.

American civil defense has lost one of its most capable advocates, Kirk Paradise, who revitalized the fallout shelter and radiologic monitoring programs in Huntsville, Alabama. Huntsville remains the only county with civil defense in action. See videos at www.physiciansforcivildefense.org/huntsville.php.

Henry Lamb was the first to call attention to Agenda 21. Subsisting on cheap foodstuffs such as crackers, he broadcast reports from many UN conferences. He traveled the U.S., sleeping in his van. His 2002 talk at DDP, “Global Governance and the Future of the United States” is available at http://www. ddponline.org/ddp-audio-2002.php. An archive of his work is at www.freedom21.org.

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