This report was originally published by Daisy Luther at The Organic Prepper
Anyone with a price book will agree that the cost of nearly everything has been steadily going up. Unfortunately, wages are not increasing at the same rate. And to quote Bachman-Turner Overdrive, you ain’t seen nothin’ yet. There are three events happening in the economy right now that could, alone, cause the prices of everything from food to the materials to make replacement parts for your vehicle to skyrocket. But if you combine them all together? We could be facing a perfect storm of economic havoc.
Iran is blocking oil exports from Saudi Arabia
Yesterday, Saudi Arabia announced that they were halting oil exports through a specific lane in the Red Sea due to attacks by “Yemen’s Iran-aligned rebels.” Reuters reported:
Saudi Arabia and arch-foe Iran have been locked in a three-year proxy war in Yemen, which lies on one side of the Bab al-Mandeb strait at the southern mouth of the sea, one of the most important trade routes for oil tankers heading from the Middle East to Europe.
The Houthis, who have previously threatened to block the strait, said on Thursday that they had the naval capability to hit Saudi ports and other Red Sea targets. Iran has threatened to block another strategic shipping route, the Strait of Hormuz.
Saudi Energy Minister Khalid al-Falih said the Houthis attacked two Saudi oil tankers in the Red Sea on Wednesday, one of which sustained minimal damage.
“Saudi Arabia is temporarily halting all oil shipments through Bab al-Mandeb strait immediately until the situation becomes clearer and the maritime transit through Bab al-Mandeb is safe,” he said. (source)
According to the US Energy Information website, the United States imports 904,000 barrels of oil per day from Saudi Arabia. Prices of fuel would almost certainly go up, which, of course, affects the price of everything that is transported, which is, of course, everything.
Should we suddenly see a shortfall of nearly a million barrels per day, we’d have to get that oil from somewhere else. Most of the other oil we do not produce ourselves comes from Canada, from whom we currently import 120.000-140,000 barrels of oil per day.
Which leads us right to the next financial catastrophe that is looming.
The trade war is getting more heated every day.
As soon as President Trump slapped tariffs on products from China, the EU, and even Canada, he opened the door to our exports also being subject to tariffs. While I think the intentions were good – to bring production back to the United States – the whole thing could turn out to be very, very bad for many Americans. We are going to see the prices of almost everything we buy increasing.
Of course, that’s ALMOST everything, The prices of some things are going to plummet, which may seem good for many of us initially. But for businesses that rely on being able to export their goods, they could face utter devastation.
Take, for example, the farmers. 2.5 BILLION pounds of meat are taking up space in cold storage right now, and the pile just keeps growing as exports slow down due to the trade war.
U.S. consumers’ demand is increasing, but not at levels that are in pace with record production of chickens and hogs. The excess supply is generally exported to Mexico and China—among the biggest foreign buyers of U.S. meat — have both recently slapped tariffs on U.S. hog products in response to President Trump’s tariffs on steel, aluminum, and other items. Industry officials told the WSJ that U.S. hams, chops and livers have become more expensive in international markets, coupled with a strong dollar weighing on local currencies, which has dramatically reduced demand for U.S. meats.
America’s meat industry production is rapidly filling up the specialized warehouses built to store meat…
…Thanks to President Trump, Canada implemented a 10 percent retaliatory tariff on U.S. beef starting July 01, and China increased its tax on U.S. beef to 37 percent on July 06. Mexico, the largest export market for U.S. pork, in June ordered a 10 percent tariff that soared to 20 percent this month. The USDA indicated that overall exports to Mexico are slightly higher than 2017, however, new weekly export data reported for the week of July 05 came in at their lowest levels in more than a year…
…Scott VanderWal, a farmer from South Dakota, said the uncertainty of a trade war disrupts entire supply chains and will be chaotic to rural America:
“We’ve got a decreasing population in our rural areas already. If we lose any more population in the state in these rural areas, not only does it make the young farmers and ranchers leave, or the retiring or about to retire people…it also takes out the people who supply those farmers and ranchers. The feed store, the fertilizer people, those that supply the things that we need to raise the products that we do. It has a tremendously long tail.”
Rapidly increasing meat stockpiles could force prices into a continued downward trend, which could be beneficial for meat-hungry U.S. consumers, along with restaurants and food retailers. While what is good for the consumer is usually bad for businesses, deflationary prices are quickly eroding margins for meat processors. (source)
Weather conditions are dealing another blow to farmers.
Nobody in the Western half of the United States can deny that this summer has been hot, dry, and miserable. The conditions are terrible for farmers and Michael Snyder of the Economic Collapse Blog has made an alarming comparison to the current heat and drought.
Despite all of the other crazy news that is happening all around the world, the top headlines on Drudge on Monday evening were all about the record heatwave that is currently pummeling the Southwest. Of course it is always hot during the summer, but the strange weather that we have been witnessing in recent months is unlike anything that we have seen since the Dust Bowl days of the 1930s. At this moment, almost the entire Southwest is in some stage of drought. Agricultural production has been absolutely devastated, major lakes, rivers and streams are rapidly becoming bone dry, and wild horses are dropping dead because they don’t have any water to drink. In addition, we are starting to see enormous dust storms strike major cities such as Las Vegas and Phoenix, and the extremely dry conditions have already made this one of the worst years for wildfires in U.S. history. What we are facing is not “apocalyptic” quite yet, but it will be soon if the rain doesn’t start falling. (source)
If you recall the Dust Bowl era from history class, you may recall that similar weather conditions to the ones we’re seeing now worsened the Great Depression exponentially.
It occurred due to a combination of ill-conceived ideas and drought conditions.
The Homestead Act of 1862, which provided settlers with 160 acres of public land, was followed by the Kinkaid Act of 1904 and the Enlarged Homestead Act of 1909. These acts led to a massive influx of new and inexperienced farmers across the Great Plains…
…A series of wet years during the period created further misunderstanding of the region’s ecology and led to the intensive cultivation of increasingly marginal lands that couldn’t be reached by irrigation.
Rising wheat prices in the 1910s and 1920s and increased demand for wheat from Europe during World War I encouraged farmers to plow up millions of acres of native grassland to plant wheat, corn and other row crops. But as the United States entered the Great Depression, wheat prices plummeted. Farmers tore up even more grassland in an attempt to harvest a bumper crop and break even.
Crops began to fail with the onset of drought in 1931, exposing the bare, over-plowed farmland. Without deep-rooted prairie grasses to hold the soil in place, it began to blow away. Eroding soil led to massive dust storms and economic devastation—especially in the Southern Plains. (source)
The dust storms became so bad that they traveled 2000 miles – as far as New York City and Washington DC. On one particularly notable occasion, the Statue of Liberty could not be seen because of the dust. Another dust storm was so bad that it was called Black Sunday, and on that day an estimated three million tons of topsoil were blown off the Great Plains.
Just last month, it’s important to note that commuters in Arizona faced down a mile-high wall of dust that was so bad that the National Weather Service in Phoenix warned of “near-zero visibilities” and “life-threatening travel.” Drought conditions, wildfires, and extreme heat have put a massive strain on the power grid in the Southwest.
These conditions could be troubling for farmers and ranchers. California produces a tremendous amount of the food grown in the United States and the Midwest and Southwest are studded with farms and ranches. Again, we could be looking at a massive increase in prices as shortages arise due to weather conditions. This is a shortage that would normally be overcome by importing the foods, but wait – since there’s a trade war, you can expect those imports to have an extra 25% cost slapped on them. Look out, economy.
None of these things alone would be enough to collapse the economy, but together, they’re a perfect storm.
Each of these events could affect a sector of the US economy on their own but they wouldn’t be enough to cause an economic catastrophe. But all together? It’s a perfect storm. A worrisome picture is starting to form. An inverted yield curve in interest rates has accurately been a predictor of an economic recession 7 times since the 1960s, and we are currently flatlined.
I know that bloggers have been predicting an economic crisis in America for years now, so much so that some readers scoff.
But it has been edging along this whole time. The indicators are all there.
- The mass closing of retail stores has increased every year.
- The price of medical care has become out of reach for all but the very rich who can afford it or the very poor who have it subsidized.
- Rents have increased in 89% of US cities this year already.
It would be difficult to deny that a perfect storm is brewing.
Please feel free to share any information from this article in part or in full, giving credit to the author and including a link to The Organic Prepper and the following bio.
Daisy is a coffee-swigging, gun-toting, homeschooling blogger who writes about current events, preparedness, frugality, and the pursuit of liberty on her websites, The Organic Prepper and DaisyLuther.com She is the author of 4 books and the co-founder of Preppers University, where she teaches intensive preparedness courses in a live online classroom setting. You can follow her on Facebook, Pinterest, and Twitter,.
To read more on the 1930’s southern plains drought a good book is ‘The Worst Hard Time’ by Timothy Egan. It tells about the people who stayed and their survival.
ordered for my fall reading, sitting on the porch swing enjoying the cool, dry weather
Saw a good documentary on TV, can’t rem. if it was the history channel a few years back. Many left the land and some stayed. Mother w/her siblings, parents stayed in S. Dakota and kept up the farm, she and sister left when 2d ww started for a job in the war factories. Fathers side migrated from Canada to Wash.state, his parents opened up a hardware store circa 1910. Agree with this article.
“Should we suddenly see a shortfall of nearly a million barrels per day, we’d have to get that oil from somewhere else.”
On a short term basis we could get that one million barrels a day from tapping the Strategic Oil Reserve and that would be good for at least a year or so.
Energy is NOT a problem …. for US. The USA is nearly self sufficient in energy and could easily become so by Presidential decree. As it is, the Administration has unleashed the Oil Companies and the US is set to become the top oil & gas producer in the world again next year. There is also new technology to extract oil & gas from our GIGANTIC shale oil deposits…. at $28 a barrel. At least 30 billion barrels are sitting in the Green River Basin.
Mexican fields are in decline because they do not have American technology to develop and redevelop their offshore oil & gas. Mexican SOCIETY relies upon the cash from oil & gas to fuel its economy. Mexico will come begging for American help soon enough to mitigate social unrest.
Any conflict in the Red Sea, the Gulf, or the straits of Hormuz would be a BIG problem for the EU: which is why they need US more than we need them.
No “catastrophe” here. Sorry Daisy. 🙂
“While I think the intentions were good – to bring production back to the United States – the whole thing could turn out to be very, very bad for many Americans. We are going to see the prices of almost everything we buy increasing.”
Yes, the Trade War is heating up. It is a war that China cannot win. It imports about $130 billion worth of American products every year. On the other hand China EXPORTS about $400 billion worth of Chinese products to US.
A trade War with China would be inconvenient and cause the price of many products (if they are available) to increase, but these products could be purchased from Japan, SK, or others even Ukraine. The Economic Principle of Substitution applies.
China cannot replace a BUYER of $400 billion of their exports. Factories would close. Unemployment would SKYROCKET. Markets would CRASH. People will PANIC. Social unrest would see the Chinese in the streets like never before.Revolution could replace the CCP. China will fold like the Paper Tiger it is.
No “catastrophe” here for US. Sorry Daisy. 🙂
“Weather conditions are dealing another blow to farmers.”
Farmers have dealt with unusual weather anomalies for millenia. The price of wheat and corn rises and falls. the drought that has gripped the Southwest is over. There has been an inordinate amount of rain during this monsoon season. It has rained cats & dogs & buckets where I am at EVERY DAY for weeks. That is the way Mother Nature works. She abhors a vacuum. Reservoirs are filling up. And Forest Fires ??? 15 fires were set by ONE ILLEGAL, reason enough to build THE WALL. The WALL would pay for itself by cutting our losses.
Again the Principle of Substitution applies.Produce will be sourced from other producers.No need to but tomatoes from Mexico, we can grow our own in the backyard or on the patio or balcony.
Even better, producers will recognize that they need to use technology to control the environment for their crops: and Vertical Farming is the answer. It mitigates heat and cold, protects from pests, and is a much more sustainable use of water. Better still, Vertical Farms can be constructed where the people are, reducing loss and the need for costly transport.
No “catastrophe” here just a little stimulus to make things better. Sorry Daisy. 🙂
“Rapidly increasing meat stockpiles could force prices into a continued downward trend, which could be beneficial for meat-hungry U.S. consumers, along with restaurants and food retailers.”
Stockpiles of meat and other essential products are not a problem for anyone: not even meat producers. Government should subsidize meat producers during the Trade War to stabilize production and price by buying a certain quantity of beef and pork to support prices and passing that product along to soup kitchens, food pantries, churches, and schools for their Lunch Programs.
American Govt has a long history of “price and production support” whether you are talking about gold mining in the 30’s, farm subsidies, coal mining, or even auto production.
Then there is CHEESE. Yes cheese, American govt has stockpiled massive amounts of cheese to support milk producers (and that’s a good thing) while Canada blocks milk imports from Wisconsin and elsewhere in the Midwest to protect their ranchers and farmers. If we don’t fight and win the Trade War now, when ??? If not US, who ???
Bottom line, no catastrophe here. Sorry Daisy. 🙂
“Rents have increased in 89% of US cities this year already.”
Rents will continue to increase because the housing market is cratering; meaning that homeowners are looking to sell at the top of the market prior to the Crash and need rental space to ride out the next Recession.
Just another sign that this business cycle is coming to a close. No catastrophe here either. Just the typical market cycle turning round. Sorry Daisy. 🙂
“The price of medical care has become out of reach for all but the very rich who can afford it or the very poor who have it subsidized.”
True enough, but it will require the majority of Americans to think differently about health care and in particular the system that has developed around BIG Pharma and BIG medicine in general.
We are in a period of transition.
The system is not sustainable because the doctors in the system treat our symptoms not our diseases; creating a dependent population of customers that only become sicker. Antibiotics are growing more useless every day as a method of fighting disease.
Eventually Americans will have to get up off their asses from the couch, exercise, and emphasize the natural cures that God gave us (like Vitamin C) to heal our bodies. Bottom line, no one lives forever but no one should die before their time. 🙂
“The mass closing of retail stores has increased every year.”
While I do not deny hard times in America due to the systematic offshoring of American factories and jobs, that is EVIDENCED by massive retail store closings, this phenomena also is coupled with the rise of internet purchases ie Amazon, walmart, and Home Deport the most visible examples, reflecting a societal change in consumer behavior.
Warehouse space is a whole lot cheaper than retail space. No Catastrophe” here either. Sorry Daisy:-)
I would heartily recommend people watch documentaries on the Dust Bowl, Valley Fever, and coping strategies during the Great Depression. The documentaries are almost always made by liberals so they of course will fawn over FDR, yet we know from history that the New Deal was an utter failure and only arms sales got the USA out of the Depression.
I feel certain that you will learn some ways our ancestors coped. Bicycles, whiskey, and shoes sold very well while most everything else did not.
Obviously if you can buy meat in bulk you should but not freeze all of it but can some of it. A practical gift of meat to family members makes more sense than useless geegaws.
This simple sentence is how TRUTHFUL history will describe the actions of the cowardly Sworn drunken dumbed down little boys and girls in the collapsing Police State hell on earth of damned and doomed New Babylon America:
THE SWORN OATHBREAKING COWARDS OF THE POLICE STATE HELL ON EARTH OF DAMNED AND DOOMED NEW BAYLON AMERICA WHORED THEIR CHILDREN OUT TO PSYCHOPATHS FOR BOOZE AND PENSIONS AND THEIR COWARDLY SOULS ARE NOW DAMNED FOR ETERNITY!!!!
Well that escalated quickly… What’s “NEW BAYLON”? ?
SORRY….”BABYLON”….with a spelling now you know I am a human
It’s one interpretation of the Biblical, End Times.
Great or Mystery Babylon is the naughty country.
In general, the decadent merchant nation, sole superpower, military hammer over all the Earth, and epicenter of apostasy, ie, sex, drugs, rock&roll.
(Whichever country that is.)
Don’t take all of our fun away, Ronnie.
Ronnie needs one of those life-like Japanese sex dolls. Chill, Ronnie. Chill.
and now with a grammar error…you really know I am a human
It isn’t just American farmers that are having trouble with droughts and flooding. It takes time to gather the statistics to make crop harvest forecasts so it’s hard to know how much impact the weather is having. China has experienced drought in the north and flooding in the south. The Chinese try for self sufficiency but that’ll be hard this year. Global prices should go up.
If Iran does interfere with traffic in the Strait of Hormuz, we’ll probably get into with them. In the words of Oliver Hardy of the comedy team Laurel and Hardy, “Here’s another fine mess you’ve gotten us into”. America is Oliver Hardy and the need for middle east oil is Stan Laurel.
ALL of this is the fault of bibi. And the stooges that do what he tells them to. hE is the one that started all this with Iran.
I agree with the author on the weather. People here in the Great Lakes are a have been keeping track of weather cycles (in Michigan’s Thumb) since the mid-1800s. More than 50 years ago they told me the lakes run from 7 to 9 years cycles with all of it in longer cycles.
According to the old data we are due for a string of years of super cold winters and 100+ summers similar to what I grew up with as a kid in the first half of the 1950s. We had no air conditioning and I cooked in the upper dormer on our house.
“””None of these things alone would be enough to collapse the economy, but together, they’re a perfect storm”’
Which is why we here prepare food, medical supplies, paper products, water, ways to cook, ways to defend what we stock, etc. to weather the storm(s).
You are correct in what you are doing!!! One of the most difficult things we will have to do is defend what we work hard on now to preserve and keep our family fed thru this hard time. If more people who pay attention to the warning signs and prepare also. This would save a lot of lives, for sure.
Learn a useful skill.
B from CA, indeed . like growing as much of your own food as you can for starters. It is actually a very pleasant and satisfying endeavor.
There are so many possible outlier events in motion now it is impossible to even consider them all. These mentioned are just a few, although supposed healthcare is actually a joke here in USA so no need to even concern one self. You do not need any of it to be healthy, strong and fit, which brings well being and good sleep ! There are many other illusions as well to be aware of !
California could dry up and blow away, and it wouldn’t affect what I eat one bit. The things they grow the most of are either not required or grown here in NC. I can certainly live without orange juice, rice, or California wine. NC has plenty of vineyards and wine producers. I have Scuppernong grapes in my backyard.
The page about California food production that’s linked in the article contains errors. For example, it says that, among other things, figs and peaches are only produced in California. I have a number of fig bushes in my yard, and there are peach trees next door. You can go down to the beach and buy commercially grown peaches. We go each year to get some for freezing. We make and can fig preserves every year.
If you go to Gaffney, SC, you will see that their water tower looks like a giant peach, as that’s an important crop in that area. They are also a big crop in Georgia.
Here’s a drone fly around of the Gaffney peach:
A side note: When you pass the peach on your right you will pass some trees and a pond. The next business on your right is the biggest music store I’ve ever seen. Two huge floors of instruments, music, amps, mixers, etc.
Im certain the weather abnomoly’s are being caused by the shifting of the magnetic poles. The USA still grows a surplus of grain. The price is so low to cost more to produce grain that what it will sell for on the world market. So the USDA pays support payments to make up the difference. Welfare for big agribusiness. And then there are disaster programs and zero % loans. Certanly the plains are in bad shape. But its a far cry from the 1930’s dust bowl. Also the Mississippi River Delta will grow enough to feed everyone. They simply irrigate and will grow a bumper crop. One thing ive noticed none of these authors offer any viable solution. They simply peddle doom & gloom?
I do not know if this is hype or not but I have been reading for about a month how wonderful the moringa tree is, I has been around for a long time, I only now have discovered it. If you believe in it, you can grow this tree anywhere in the south. If it freezes and dies you can grow it as an annual every spring, as it grows very quickly. People either eat the leaves or dehydrate them and fill capsules depending on taste. Check it out for all the nutrients.
I do not know if this is hype or not but I have been reading for about a month how wonderful the moringa tree is. It has been around for a long time, I only now have discovered it. If you believe in it, you can grow this tree anywhere in the south. If it freezes and dies you can grow it as an annual every spring, as it grows very quickly. People either eat the leaves or dehydrate them and fill capsules depending on taste. Check it out for all the nutrients.
Only 3 things? This is a great improvement…….
`Hot as it is, the daily temps are 5-12 degrees lower than they were in 1995 here in Louisiana. Still very uncomfortable heat though.