SHTF Plan contributor and One Handed Economist Howard Katz has written extensively on wealth protection and asset allocation during times of economic distress. Currently, he is a gold bug, but this has not always been the case. Back in the early 80’s, when most analysts were screaming about buying gold and selling the stock market, he was recommending that his subscribers by stocks. Today, while the same analysts and economists are screaming about stocks, he is advocating wealth preservation through purchasing gold and precious metals. He is no stranger to recessions, depressions and government instability.
In his most recent One Handed Economist Newsletter (Dec. 25, 2009), Mr. Katz discusses what gold bugs believe to be an inevitable result of our current economic climate going forward – the total collapse. However, you may be surprised that Mr. Katz does not share the notion that a complete systematic meltdown of our economic and political system will occur rapidly, as in days or months, or even years:
â€œGold bugs often evoke a worst-case scenario in which the entire economy of our modern world is destroyed. I have never gone along with this fear scenario because my reading of history tells me that events more very slowly. The economy of the world has only been destroyed once. This was in the 3rd to 5th centuries A.D. Fiat money caused an enormous rise in prices, and the attempt to â€œfixâ€ this by price controls caused every business in the Empire to close its doors. There was no place to buy anything, and if you wanted any economic good, you had to make it yourself.
It was a disaster. The glittering metal helmets and breastplates of the victorious Roman legions in the first century A.D. gave way to leather helmets and breastplates, and suddenly the Romans could no longer defeat the barbarians. When these latter invaded, in 406 A.D., the Romans lacked the courage to fight them. Instead they expressed their fear and anger by slaughtering women and children. Rome was sacked (and most of the western Empire overrun) in 410 A.D. However, the entire process took 3 times the lifetime of an average person. It was too big for any one person to see it all. In short, the economic collapse as envisioned by many gold bugs is not going to happen. Or, more precisely, if it does happen, it will not happen in our lifetimes.â€
This may be difficult for survivalists and preppers to stomach, but it is important to consider as a possibility as well. At SHTF Plan, we highly recommend that people be prepared for disasters and crises, but things never go exactly as planned – and that may be the case for the collapse as well.
Take hyperinflationary depression, for example. Yes, they do occur, and they have in the recent past (Weimar Germany, Zimbabwe, even Argentina), but these were not scenarios that completely destroyed the economy of the entire world. If something like this were to happen in the USA, it would literally be complete and total destruction of the world economy as we have come to know it, with significant geo-political consequences, as well. We are not suggesting this type of collapse is impossible, as any number of events like a global war or mass terrorist strike on America (think EMP) could lead to rapid destabilization. But to be perfectly frank, it is unlikely that a rapid collapse would be economically driven given thousands of years of history.
So where does this leave the worst-case scenario prepper?
To answer the question, one must ask what exactly it is they are prepping for. If you are prepping for a total collapse of the system that may never come, you may feel quite foolish 25 years from now when your thousands of dollars worth of Freeze Dried food is expiring.
Preparing for disaster should not include any single event, but a multitude of events. It should not include just stocking freeze dried food and a water filter, but involve modifying your lifestyle and consumption habits before disaster strikes.
Once the SHTF, it is going to be too late to create an evacuation plan, learn how to grow a survival garden, create alternative methods to cook food or harvest rain.
These are all things preppers should be doing before a far-from-equilibrium situation occurs.
Prepping involves not just stockpiling food, but learning to live a more sustainable life.
As Mr. Katz pointed out, events can move very slowly. Rather than a total collapse of the system as you know it tomorrow, plan on the system as you know it collapsing over the next two or three decades of your life. Depressions can last twenty years, and having freeze dried food in case of supply shortages or panic is certainly a great idea that we strongly support, but learning to live with less, especially when there is less availability of goods in the marketplace, should also be a prepping priority.
So, don’t stop your prepping habits, but consider modifying and enhancing your preparedness plan and lifestyle for a variety of scenarios that may include rapid economic collapse and the more likely scenario of a deteriorating economic conditions over many years.
Howard Katz is a SHTF Plan Contributor and publisher of the One Handed Economist, a newsletter dedicated to helping you preserve wealth in times of uncertainty.
I’m not too sure I would buy this.Â There are those factions behind the sceans “pushing” for the dollar collapse.Â What would be the fulcrum?Â We almost went to the abiss this past year.Â What is holding up the economy now?Â TARP/Stimulas, borrowed money!Â And there is always a first when it comes to history.Â I believe the fall of the dollar/western economy is a planned event, and will soon occur.Â
Regardless of this Article … “SHTF” is going to happen …
Prepare or Perish … Plain and Simple …
It’s … Â GOD , Gold & GunsÂ …
A Wise man prepares for the Storm …
Pete’s comments are thoughtful. Macro economics is always as philosophical as it is real. There still remains a “real” (private sector) base to our economy. Some manufacturing, exports, military services, etc. , provide income to our total system. The government is supporting the LEVEL of the economy with stimulus. Â Not the entire thing. There will be a significant contraction once it is removed. This is the event the administration is covering up. Many Austrian economists believe, the sooner the better. Lets get to a real economy, no matter how big or small so we can have a real recovery – ASAP. Not a cover up.
Greyson Deitrich III
Hey Mac et all, long time reader first time poster.
The problem with only looking at historical accounts of collapse is that there is no historical account that accurately portrays our current situation.Â Never before in history have economies been so intertwined. Never before have all major economies been devoid of any sort of gold standard. Never before has the world been so in debt.Â Never before have so many people been so far removed from their food supply, and lack any sort of skills to provide for themselves.Â Our current economic model is still in experiment.
Historical collapses have happened slow because everything happened slow.Â It could easily take weeks or months just to get the word out that something is amiss.Â Today an investor sitting in his home in rural Montana knows to the minute how his investment in China is doing, and can divest himself of it in another minute should he choose to. Â
I think we have built an economy like a high carbon steel.Â Incredibly strong within its limits, but push it past its limits and it fails suddenly and catastrophically.Â If that happens it will be like nothing we have seen before.
While Howard Katz may prove correct and we won’t see a collapse in our lifetimes, Pete nails the crux of the argument: we almost went over the falls in 09/08. Our Leaders, such as they are, were caught wholly unprepared. To this day no substantive correction has been made toÂ a system that was careening intoÂ a wall at breakneck speed.
I hope Katz is right, but I won’t bet on it.
Great comments all! Aaron, welcome to the discussion and thanks for reading SHTF Plan! (Thanks to everyone else who visits as well, BTW!)
All of the points made above are well taken and fully understood. I will, as I have for the last 18 months, continue to prepare for the ‘worst-case’ scenario and anything in between. Tom, I guess one could say I am bettin’ on collapse – and that it happens rapidly.
We can’t foresee the future, and I have a family that is my first and foremost concern. With that, I cannot afford to bet wrong here. I am and will continue to be diversified with my investments, both in regards to my finances and prepping.
As Aaron said, this will be like nothing we’ve ever seen before, and it can easily be argued that there is no historical precedent.
This may very well be The Big One.
Maria Simma, (rip), was visited for decades by the Suffering Souls in Purgatory.Â They told her that a “worldwide economic collapse” was ‘at the door’.Â “It will bring the rich and powerful to their knees.”Â The purpose is for the conversion of mankind to God.
Fr Eutenauer (an exorcist), recently reported that the world will suffer a ‘worldwide economic collapse’.Â Our world deserves and Old Testament chastisement.Â Storm clouds are gathering…seek shelter.Â Unfortunately, the Good Book also claims that when it rains… it rains on everyone.
Having seen Argentina during its’ collapse, I believe it is not possible to be ready for circumstances that makes food a form of currency. Gold & Silver had almost no value against necessities. Personal labor and local service became the “economy”. Becoming a vital resource was more important than money. Even with all that, there remained a social structure and mutually respected laws.
I think it might be a misplacement of resources to overload in areas of preparation that are non refundable or perishable. I have seen individuals become so single eyed towards prepping that current life circumstances were ignored. I believe America is terrified by the idea of economic meltdown. We don’t understand it. Â It is never good to be motivated by fear. Look at societies of Â the destroyed economies of our era. People found new lives. Some things were good. Political corruption was wiped out. Families were united. Materialism found a less important role.
America is blessed with resources and creativity that will overcome economic disaster. We have had four serious depressions going back to revolutionary days. Â Each time a renaissance followed. It is never only about money. Maybe our leaders and our culture could use a makeover.
Notice the part about it being impractical to learn to grow a survival garden with a snap of the fingers ? It takes years to build up a plot of healthy soil. It takes experience and a good rototiller to get anywhere. It’ll take several hundred canning jars too. If you want to actually be prepared then plant a serious garden every Spring. Seeds in a can won’t do you any good at all if its September or January.
Back to the knowledge and experience thing, many veggies do not grow well in many areas; you could starve learning what won’t grow during your first year. Learn now, start by doing, hands-on doing.
Greyson is right in my view.Â I like his candor and honesty.Â And he sounds like he is “in theÂ know”.Â Â Thinking about the suggestions for “survial” brought out on this WEB site and others, when you think about the nuts/bolts of the matter(when SHTF as put here), it comes down to surving with each others relationships(family/friends) and each others skills in the comunityÂ simular to the depression(John Boy Waltons ) days.Â I believe that is where it will soon go.Â The name of the game now is to simplify, simplify our lives by getting out if debt as much as possible and by regaining our relationships in the family and community, especially as families again(soemthing lost over the last generation or so).Â What ever happens,Â I hopeÂ best to you all on this discussion.Â
1st time blogger on this page
With all due respect to Mr. Katz and his assertion that any collapse will happen over “a lifetime,” I believe his premise is flawed in that he cites “history” as his guide in these matters.Â In most cases, history is the great teacher, and as the cliche states, is destined to be repeated…..However….
I postulate that history has never experienced a coordinated, world-wide effort to achieve World Governance.Â As a means to that end, the current system must be broken down so that this goal may be achieved, not via coersion, but rather through compliance.Â
I believe the whole game is tilted in this direction, and in spite of what you hear in the media regarding the “war on terror” or “needed stimulous packages” etc, these are tools devised and implementedÂ (in concert) to bring about the exact collapse they are professed to derail.Â
Mr. Katz’s comments represent a prudent, well thought out & lucid position but in this case, are completely undermined by a New World Order agenda that won’t stop until its goals are achieved.Â Unfortunately, history must stand idly by in this case and wait till she’s been written before she can be cited as a proof-text as to what will unfold, because it’s never happened before.
Expect a major calamity (or series of calamaties) that puts everything in motion quickly so that the NWO may step in as the “savior” of the unrest, and acheive its takeover with nary a dissent.Â
I am a believer that the system must fail spectacularly in order to reboot to a real economy. The reason is simple. If it is a slow bleed with some semblance of normalcy, more and more Americans continue to lose jobs to lower cost labor overseas in an economy that is 70% consumer driven. This is not changing anytime soon.
Who will buy things and take out loans as more and more people lose their jobs to workers in China, India, Brazil, Russia, Vietname, etc?
Only a catastrophic fail of epic proportions will wake enough people up (and also cutoff a great deal of world trade) to realize that the system mustÂ be re-engineered from the ground up. Not cutting of trade completely per se, but putting in some kind of framework to serve as a foundation for both business and our labor that is fair to both.
What’s interesting is that a direct result of globalization has been to drive world labor costs to zero. Is this what we envisioned? Could this be capitalism’s fatal flaw?
The Roman Empire did not really collapse all the way in the 3d to 5th century. It split into two. The western part indeed got overrun by barbarians and experienced a dramatic decline decline in the standards of living. The eastern part kept going, manufacturing increasingly goods.Â It lasted all the way until 1453. Some of the reasons for the collapse are similar to what is going on in the modern U.S. See http://hk.video.yahoo.com/video/video.html?id=1064410&p=%E5%B4%94%E5%A7%8B%E6%BA%90 These people had their own version of WTO/NAFTA, fall of domestic production, disregard for traditional religious values and the superrich robbing the treasury.
One thing puzzles me about Katz’s statement.Â I know that the subjective value of fiat currency, conjured into existence with a few keystrokes, can collapse an be ejected from commerce with terrifying speed.Â But I thought the Romans used coins and did not have this problem. Even a US penny – a zinc wafer – is useful asÂ a commodity,Â and is backed up by more than just an objective exchange value.
>Whatâ€™s interesting is that a direct result of globalization has been to drive world labor costs to zero.
Zero? If you are working for zero, then perhaps youÂ should get a new job. Like everyone else in the world, I work because I value getting a paycheck more than I value having a certain amount of free time.
Because of globalization I find I am able to buyÂ much more clothing with my wages. The products I make can be and are sold overseas, increasing the fruits of my labor. I can also buy foreign automobiles made by manufacturers who aren’t terrorized by federally-protected union workers. Now, if you don’t like globalism, then don’t buyÂ foreign products. That’s your choice.
>Could this be capitalismâ€™s fatal flaw?
“Capitalism” means that the means of production are in private hands. Here, the governmentÂ owns and controls the means of production of things likeÂ mortgages and fiat currency. The govenrment actually owns much of the economy. So I’m not sure we are “capitalist”. But regardless, to oppose globalism in general is to be ignorant of Ricardo’s Law.
“Some of the reasons for the collapse… disregard for traditional religious values”
Is this reallyÂ one of theÂ reasons that Rome collapsed? Perhaps the god Jupiter punished theirÂ impietyÂ by destroying the economy? Or did the market for religious tracts collapse?
Doc, great comments as always.
I wanted to respond to the following:
“But I thought the Romans used coins and did not have this problem. Even a US penny – a zinc wafer – is useful asÂ a commodity,Â and is backed up by more than just an objective exchange value.”
From my understanding, the Romans did use silver in their coins, though I don’t know the exact composition of silver vs. other metals.
However, over time they slowly removed silver from their coinage, roughly 90% or so from 250AD to 265AD. (This sounds familiar!)
My source is Martin Armstrong’s chart titled “Collapse of the Roman Monetary System Measured by Gram“.
This chart can be found in his essay How All Things Can Collapse Overnight.
So, it seems the Romans devalued their currency as well, and it seems it was right at the point they as a nation began to decline.
Your point about the other metal in the coinage, though, is well taken and I understand how the Roman coin, even with less silver content, still had some value, unlike our paper dollars.
My wife and I moved to Kiowa, Colorado 5 years ago. We purchased an 8-acre plot with a modular house. I started growing corn inÂ a corral the 2nd year, then in rows the 3rd year, last year in circles, etc.Â Last year I also planted pumpkins, spinach, lettuce, cucumbers and tomatoes. Tomatoes didn’t make it. The corn gets ear borers, and I learned mineral oil applied to the silk stops them. Watering is the hardest thing. I nowÂ have timers, this year I’ll use soaker hoses.Â THE POINT IS:Â it is definately a learning process!Â Very labor intensive, hoeing weeds, guarding against deer and rabbits, etc. Start now!