Episode 52 The Self Reliant Mind

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I try to be a student of human nature and I have found that homesteaders and preppers have some things in common. One of the things they have in common is the way they look at the world and what they do. We are going to dive into the thought processes of the homesteader and prepper. I hope you enjoy.

Internal Locus

I have found that most homesteaders and preppers have what is called an internal locus of control. This means that they believe they have the greater amount of control in their success. They don't look around for someone to fix their problems.

A person with an internal locus tends to apply themselves to their problems, have projects, and believe they should be able to enjoy the fruits of their own labor. The thought process tends to go beyond that, they want to be able to decide whom they will bless with their abundance. I want to be able to choose to whom I will give extra zucchini.

One reason I believe this is the case especially with homesteaders is because of their closeness to the land. They want to teach others and they take very little for granted.

We want to teach and share. We really want to empower people.

We Believe What We Do Matters.

This one is the one that I believe gives us hope. There are so many people that say and I guess believe that what they do doesn't matter.

Preppers demonstrate this belief of what they do matters every time they add to their food storage or increase their medical kit. With each new skill they are proclaiming that what they do matters.

This is just as much true for the homesteader and possibly even more so. The act of planting seeds, working in animal husbandry. Is a hope for the future. You don't plant a seed today and harvest tomorrow. You have to believe in the future in order to plant.

Responsibility

There are a lot of people that whenever something bad happens they just sit down and wait on someone else to rescue them. The world isn't fair, but if we want to make our world better, we have to do it. No one else is going to. The powers that be are really not interested in helping the individual. They are interested in advancing their power.

Are there times when you have to accept help? Absolutely. The way a person responds and acts after receiving help defines whether or not the person believes they are responsible. When they have to accept help, they do so with a thankful heart. Once a person has made it through a difficult situation, they look around and try to make a plan to help ensure that they will not be found in that situation in the future.

More Observant

I have talked about situational awareness in the past. You cannot be a prepper or homesteader and not be situationally aware. Noticing people while out in public or the health of your plants is an absolute must. If you are not paying attention in your garden, bad bugs can take over.

In permaculture there is a principle that states "Observe and interact".

We Take Action

There are lots of people that will see something that is going on and will not even try to do anything about it. You cannot be a prepper or homesteader and not take actions.

Looking to Be Good Stewards of Our Resources

Many people go through feast and famine cycles. This is especially true for homesteaders. During the summer and fall there is an abundance. If a homesteader doesn't learn to preserve that harvest, famine times will come soon. We store as much of the abundance as possible because we know winter is coming.

Preppers are extremely similar. They put up supplies when things are going good in anticipation of harder times. This is just smart. I am not talking about the end of the world, just hard times.

Conculusion

If you will think about it these behaviors set us apart from many. All of these behaviors are good. We shouldn't look down our nose at someone who has some of the same goals with different methods. What we do really does matter and how we look at the world helps us achieve our goals.

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Prepping When Your Spouse Is Opposed

Being prepared is really important to some people and completely weird to others. I believe it should be important to everyone, but its not and we have to accept that.




When one person comes to the realization that being prepared just makes sense and wants to get started but their spouse is not only unenthusiastic but is actively opposed, the potential for conflict can grow each day. In this episode we are going to talk about how to approach your spouse with the idea of preparedness and how to avoid the big blowout fights that could happen.

Home should be the one place in the world where we are the most comfortable and at peace.  Even if you can't get your spouse to agree or appreciate your preparedness efforts you should be able to get them to the point where they realize that it is important to you and as such will support your desired to some degree. Here are some things that will help you talk to your spouse about preparedness and how to build up your self reliance without too much conflict in your home.

Reasons your spouse is opposed to being prepared

For anyone who has had an interest in being prepared for any time at all, it can be difficult to think of any logical reason that someone would be opposed to having a basic level of preparedness. Logical is the key term here, we are talking about someone's opinions and feelings. Opinions and feelings do not have to be logical to be important to the person. Some of the reasons your spouse might not be comfortable with prepping could be legitimate and others won't be.

Doomsday Preppers

This television show has been a blessing and a curse to everyone who thinks being prepared is a good idea. The show does call into question the likelihood of something traumatic happening. This show does demonstrate things that can be done that will make someone more prepared for a major event, but that is about the entirety of its benefits to anyone.

How has Doomsday Preppers harmed the idea of preparedness? Lots of ways, but we will cover just a few. First, the producers of the show make everyone who appears on the show look like lunatics. Second, the show makes it look like you have to have a lot of discretionary income to be prepared. Third, the show implies that everyone who prepares is expecting the worst to happen and for people to act in the worst possible way. If you will think about it objectively, you will see how this show has done way more to damage the image of anyone who is trying to be prepared than it has done any good at all.

Preparing for something makes it more likely to happen

As I wrote that statement I realize how strange that sounds, but it is true that there are some people who honestly believe if they don't think about something, it won't happen to them. Taking any kind of preventative action forces people to think about bad things happening them and not to someone the next town over, but to them. Denial is comfortable.

I don't want people to think we are weird

When I first told my wife that I wanted to start increasing our food storage and I wanted to be better prepared, her first response was "You're not going to become one of those Doomsday people are you?" I had to ease her fear. This took time, but I am glad to say that now she will notice things that we should have more on hand. In hindsight I could have handled the situation better and helped her along the path quicker. This is one reason I am trying to help those of you who find yourself in the situation that I found myself.

We don't have the money

Once again we have Doomsday Preppers to thank for this fear. This show makes it look like you have to have a fortune to be prepared. This couldn't be further from the truth. I believe in a system that I have come to call SIIS ( Small Intentional Incremental Steps). As best I can tell this system is from my own backwoods brain and I believe it is the best system for people of limited resources to do really anything. We will be going into great detail about the SIIS system in the near future. For this we will just say do a little each time that builds on each other to reach a desired goal.

We don't have the space

When a lot of people think of prepping they envision an entire room filled with long term food storage or a closet full of water storage. The truth is that prepping will take up some room, but done wisely it doesn't have to make your home look like an episode of Hoarders.

Organize your thoughts

This suggestion is a good idea no matter what you're wanting to talk about. Organizing you thoughts ahead of time shows your spouse that whatever you are talking about is important to you. It shows them that you have actually taken the time to think about the situation and you are not just reacting to something. Just organizing your thoughts and reasons will make you more effective.

I will be the first to admit that very few conversations go exactly the way we think they will. You will not be able to predict every possible reaction your spouse will have. You will have to adjust what you say based on their reactions and responses. If they are reacting emotionally, you may have to let it go for the time being and talk about it later.

The terms" I think"," I believe", and "I feel" are not interchangeable." I think" is thought based. The term" I feel" is emotion based. "I believe" can be a mixture of both. This is something that should be taught in every public speaking class in the world. Marketing companies use the differences in these terms all the time based on how they want the consumer to respond. You are not being manipulative if you think ahead of time about which term to use. You are trying to make sure that you express yourself as effectively as possible.

Get involved

I have a feeling this one will be primarily for the guys out there, but it is worth a mention to all. I know some guys that the sum total of their activity is going to work, coming home, sitting in their recliner, eating what their wife fixes for supper, showering, going to bed, then repeat. On the weekend they will mow the yard then sit and watch whatever sports event is on television (it doesn't even matter if it is from 1988....I wonder who is going to win).

Just imagine how you would respond if you did almost everything in an organization and someone who had been a member since the organization was founded but had never really taken an active role in the administration started trying to dictate how you ran things. You would be upset at minimum, more likely angry. This is the way some spouses will respond. I have heard of it happening. Even if they don't get angry unless you are involved they don't have to do anything you say. I can just imagine telling my wife, "Honey, I want you to pick up 10 cans of beef stew this week.". She could forget or "forget". Since I am involved I can just pick things up to be added to the food storage.

The Conversation

By this point you should have put a considerable amount of thought and time into getting ready for this conversation. Very few, if any, conversations go exactly as we expect. If you have put the time into organizing your thoughts, either in your head or on paper, it will be much easier to communicate effectively. Here are some tips to make the conversation go smoothly.

Make it relatable

If you were going to have this conversation today there are several events you could reference; Hurricane Patricia, flooding in Texas or South Carolina, wild fires in the Pacific Northwest. No matter when you have this conversation there will be some disaster in the past couple of weeks that you can reference. A natural disaster happens very regularly and people in the impact area of those disasters go through really tough times. Let your spouse know that you are genuinely concerned about the well being of your family.

Ask questions

This should really be a conversation with give and take. It shouldn't turn into a lecture or a monologue.  How would we take care of our family if we couldn't get to a store for a few days? What would we do if we were without power for an extended period of time (think 3 to 10 days)? How would we get things if the ATM's or debit cards weren't working? By asking questions you are making your spouse think. You are asking them to consider the possibilities of something happening and how they think you as a family should deal with these potential threats.

Allow them to express themselves. Don't interrupt. Ask followup questions. Steven Covey in his book Seven Habits of Highly Effective People made a statement that I have tried to implement in my life. Listen to understand, not to be understood. Too many times we really only listen to someone good enough to come up with a response to what they say, we really aren't listening to what they mean. This is your spouse we are talking about here, listen to understand.

We have had a good example locally for the last question. We live in a small community. In fact our county would be considered small as far as population is concerned. Our county has a regionally owned phone company, yup they still exist. All of our internet access that isn't mobile based goes through this company. Well not long ago one of their cable trucks caught on fire and damaged a major routing hub. Over half of the county was without internet service for over 24 hours. When a business is without internet service they can't take any credit or debit cards. There were people in a panic over just one day without internet. You can use that if you want in your conversation.

Don't reference world changing events

DO NOT talk about global crisis unless one is right in your face. Talking about the possibility of nuclear war isn't going to help your case, neither is the Yellowstone super volcano. Could these things occur? Sure, but the likelihood of them happening is so much smaller than damaging straight line winds. Are you willing to sacrifice doing anything at all if you can't do everything?

Respect

Even if you do everything right your spouse still could be opposed. It does happen. Don't escalate the conversation and continue a conversation that isn't going to end well just because your conviction is so strong. You may have to reach a point where you tell your spouse something along the lines of "I respect your opinion but this is important to me and I am going to prepare some, I want you to respect me and my thoughts as well."

If this happens you will have to be the one who works on your family's preparedness on your own.

The build up

Remember SIIS ? (Small Intentional Incremental Steps) Food, water, basic comfort, and sanitation are the things your should focus on first. At this point you shouldn't even be considering going out and buying a tricked out AR15 and 10,000 rounds calling it being prepared. If you want one that's fine, but don't try to justify it with preparedness to your spouse, especially when you are first getting started.

We will go into much greater detail in the future about individual steps, just remember that each action should build on all of the others. Focus on food, water, and basic comfort. I have included links to previous posts on each.

The demonstration

If you are patient and consistent something will happen that will show your spouse that you are not as crazy as they thought. My demonstration came a couple of years ago. When my wife asked what I wanted for my birthday I told her I wanted a camp stove. She looked at me and asked if this was some of that prepper stuff. I told her it could be used for that, but I wanted us to start camping. It wasn't 10 days later, the weather guessers were calling for a snow, but nothing to be concerned about. It started snowing in the late afternoon. By the time we went to bed we had a nice amount of snow on the ground. My wife woke up at around 4:30 in the morning. The power was out. I have no idea how long the power was out before she woke up, but it was long enough for the house to be cooling off a good bit. I got up and started a fire in the fireplace, got out the camp stove and fixed breakfast for my family. My wife just looked at me. She later asked me "How did you know?". I didn't, I just wanted to be able to take care of my family.

The hope

The hope of every preparedness minded person should be that they never have to use their preps and if they do it is either for something short term or to help someone out in the community. Being prepared is so much easier when you have a team. Your spouse is supposed to be your number one team member. With out their support it will be a lot more difficult, but you can still get it done.

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A Christian Prepper?

This is one question that drives me absolutely crazy. Decent, well meaning people who I believe are truly devout Christians think being prepared is strange. Some of these folks actually believe prepping to be a sin. REALLY!?!?!?!!! 

Even if you are not a person of faith, hang in there for this post. We will be discussing common excuses Christians use for not being prepared, their rational behind these excuses and yes, what the Bible teaches us about preparedness. 

Reasons Christians Don't Prepare

Christians have all of the usual excuses to not be prepared, no time, no need, no money, and no space are very common. In addition to all of the excuses that you could hear everyone give, Christians have a few excuses that they believe are religious based. In fact some of these reasons are even looked at as being holy.

God will protect me.
God will provide for me.
I am sure the church has a disaster plan.
Being a prepper means you are living in fear.
Being a prepper means you don't trust in God.
God won't let things get too bad.

We as Christians tend to grab one scripture and build our lives around it. There are churches and even denominations that  are founded on a small section of the Scripture. All Christians have been guilty of this at least a time or two. We are going to look at each of these excuses. I am going to list the scripture that the belief in based on and will also provide the counter point.

God Will Protect Me.

 

God's divine protection is promised and it is something that I firmly believe in, but there are people who take this to extremes. I have heard tell of someone who claimed that God's protection was so strong on their life that if they laid down on a set of railroad tracks, with a train coming and it wasn't their time to go, the train would derail rather than take their life. The more common occurrence is "If it's my time to go, it is my time to go and it doesn't matter what I do." I've got news for you Bubba, if you are dumb enough to lay on a set of tracks with a train coming...it's your time to go.

The basic premise behind this belief is valid. The most widely known and quoted Scripture about God's protection is Psalms 91:7

“A thousand may fall at your side, and ten thousand at your right hand; but it shall not come near you.”

That taken by itself makes Christians sound almost invincible. You can see how focusing only on that Scripture would reinforce the guy about the train tracks. But like so many things if you do not take in the totality, you can be mislead.  Scriptures like 2 Corinthians 4: 8 - 9 are somehow left out or skimmed over.

“We are hard-pressed on every side, yet not crushed; we are perplexed, but not in despair; persecuted, but not forsaken; struck down, but not destroyed.”

Or Matthew 5:35

So that you may [show yourselves to] be the children of your Father who is in heaven; for He makes His sun rise on those who are evil and on those who are good, and makes the rain fall on the righteous [those who are morally upright] and the unrighteous [the unrepentant, those who oppose Him].

God's promise of protection includes being removed from certain dangers, of course, but it also includes giving His children the strength and wisdom to weather difficulties. God allows bad things to happen to good people all the time. I do not understand His wisdom, but I do know that He is in charge.

God Will Provide For Me

The Scripture that you will hear most widely quotes when talking about God's provision these days if Philippians 4:19

"For my God shall supply all of your needs according to His riches in glory, through Christ Jesus."

Good scripture, powerful, but most of the time taken out of context. This has become such a dominant  theme that there are several personalities that make their living, and a very good one at that, teaching prosperity through faith. Oh and it sounds so good, they are very smooth people, and some of them might actually mention Jesus once or twice. Run from them and run fast.

Let's take a closer look at that same scripture, but let's do so in context.

¹⁴ Yet it was good of you to share in my troubles. ¹⁵ Moreover, as you Philippians know, in the early days of your acquaintance with the gospel, when I set out from Macedonia, not one church shared with me in the matter of giving and receiving, except you only; ¹⁶ for even when I was in Thessalonica, you sent me aid more than once when I was in need. ¹⁷ Not that I desire your gifts; what I desire is that more be credited to your account. ¹⁸ I have received full payment and have more than enough. I am amply supplied, now that I have received from Epaphroditus the gifts you sent. They are a fragrant offering, an acceptable sacrifice, pleasing to God. ¹⁹ And my God will meet all your needs according to the riches of his glory in Christ Jesus.

Whoa! Talk about a difference. Paul was telling the church at Philipi that their generosity in his time of need would be rewarded. I also want you to notice that Paul was not asking for donations. This church had heard that he was in need and responded. In fact he tells them that he has more than enough. This is a far cry from the donation begging, almost panhandling that we see from prominent teachers today.

I Am Sure The Church Has A Disaster Plan

This is just an extension of the" Someone will take care of me" attitude that is so prevalent in first world society today. What most of these people mean is if something comes up that is beyond the normal day to day difficulties, someone else will rescue me. The problem is that most churches do not have a disaster plan. The church that I attend has a disaster response team, but they are trained only for the clearing of trees and it is designed to respond somewhere, out there. There is no plan for immediate action if something were to strike locally. We could help clear the roads, but our congregation would have to wait on other members of our denomination to show up with food, water, and other necessities. The sad part is our church is one of the more proactive. I am hoping to help change this in the coming year.

Being A Prepper Means You Are Living In Fear

I will be honest, some of the people who say this have some very real examples that they can point to. There are some folks in the preparedness community that are fear driven. There are several names for these people; Conspiracy theorists or the Tin Foil Hat Brigade both come to mind. If we will think about it for a moment, is it really being fearful for a person on the Gulf Coast or the Atlantic seaboard to be prepared for a hurricane? Is it being fearful for a person in California to be prepared for an earthquake, Idaho to be prepared for a wildfire, or the Northeast to be prepared for a blizzard?  For someone in Alabama or Kansas to be prepared for a tornado? All of these things have happened and will happen again. That is not fear- that is reality. Just because your community hasn't been hit in a hundred years doesn't mean it won't next year. In fact many would say that your community was overdue.

The passage that is most quoted when dealing with fear is 2 Timothy 1:7

For God has not given us a spirit of fear, but of power and of love and of a sound mind.

 I love this scripture. I really do, when we take it in context it is even more powerful.

⁶ Therefore I remind you to stir up the gift of God which is in you through the laying on of my hands. ⁷ For God has not given us a spirit of fear, but of power and of love and of a sound mind.
⁸ Therefore do not be ashamed of the testimony of our Lord, nor of me His prisoner, but share with me in the sufferings for the gospel according to the power of God, ⁹ who has saved us and called us with a holy calling, not according to our works, but according to His own purpose and grace which was given to us in Christ Jesus before time began, ¹⁰ but has now been revealed by the appearing of our Savior Jesus Christ, who has abolished death and brought life and immortality to light through the gospel^.

This is a firm reminder that we should not allow fear to prevent us from sharing our testimony. My question for those who say that people who prepare are only motivated by fear is, are you really being fearful if you are preparing for something that is likely to happen in your area?

Being A Prepper Means You Don't Trust In God

Many of the people who say this often refer to Matthew 6: 26 - 34

²⁶ Look at the birds of the air, for they neither sow nor reap nor gather into barns; yet your heavenly Father feeds them. Are you not of more value than they? ²⁷ Which of you by worrying can add one cubit to his stature?
²⁸ “So why do you worry about clothing? Consider the lilies of the field, how they grow: they neither toil nor spin; ²⁹ and yet I say to you that even Solomon in all his glory was not arrayed like one of these. ³⁰ Now if God so clothes the grass of the field, which today is, and tomorrow is thrown into the oven, will He not much more clothe you, O you of little faith?
³¹ “Therefore do not worry, saying, ‘What shall we eat?’ or ‘What shall we drink?’ or ‘What shall we wear?’ ³² For after all these things the Gentiles seek. For your heavenly Father knows that you need all these things. ³³ But seek first the kingdom of God and His righteousness, and all these things shall be added to you. ³⁴ Therefore do not worry about tomorrow, for tomorrow will worry about its own things. Sufficient for the day is its own trouble.

I sing a really old hymn that is based on this scripture and it happens to be one of my wife's favorites. She had never even heard the song before she met me. It goes, "For His eye is on the Sparrow, and I know He watches me." If someone were to take this passage completely by itself, one could almost say that the Bible condones a person just quitting their job and relying on God. Only one problem, this passage says to seek first the kingdom of God and His righteousness. How do we do that? By ministering to others. We will get more into that in a bit.

God Won't Let Things Get Too Bad

There are actually several problems with this statement. First and foremost is the passage that people are referencing when they say this has nothing to do with problems, trials, distress, or calamities. It has to do with temptation. The scripture that is being referenced is 1 Corinthians 10:13

No temptation has overtaken you except what is common to mankind. And God is faithful; he will not let you be tempted beyond what you can bear. But when you are tempted, he will also provide a way out so that you can endure it.

 I firmly believe that God will give me strength to make it through whatever I face, but at the same time, God allows us to go through things to help strengthen us as people and to strengthen our faith.

What Does The Bible Teach About Preparedness

This would be so much easier if there were a scripture that said "Thou shalt prepare", but there isn't and even if there was many people would just ignore that scripture. Let's be honest, there are a lot of people that pick the scriptures they like and ignore the ones they don't. Due to there not being a "Thou shalt prepare", we have to look at the stories in the Bible and see what they tell us.

Bugging Out

 

Lot

Believe it or not there are a few stories of people having to bug out in the Bible. The first one that comes to mind is the story of Lot and the cities of Sodom and Gomorrah. These two cities were very wicked and Lot had lived in them for a good while. Lot was Abraham's nephew. These cities were so wicked that God decided that He was going to destroy them. If you look around at some of the places in this world today, you really have to wonder just how bad it was that God would do this.  I will spare you all of the details of the story in this post, but it was really bad and God had His angels tell Lot to take his family and flee to the mountains.

Lot lost everything he had except his two daughters and even that didn't turn out as expected. All they had was the clothes they had on their back. They couldn't even make it to where they were told to go and had to work out a compromise. I cannot help but think if he had looked around and realized how bad the neighborhood had gotten and made some provision for escape in advance, just in case, he would have done better. As it was, he had to be forced out of the city by the angels, I don't know if he was trying to gather supplies, trying to convince friends to come with him, or what he was doing, but he wasn't ready. You can find the full story in Genesis chapter 19.

The Young Jesus and his Parents

Matthew 2:13

After the wise men were gone, an angel of the Lord appeared to Joseph in a dream. "Get up! Flee to Egypt with the child and his mother," the angel said. "Stay there until I tell you to return, because Herod is going to search for the child to kill him."

As we look at these two situations they have similarities and major differences.  Had either group stayed it would have surly meant death. Both events were beyond the control of the ones who had to evacuate. This is where the similarities end. I am not saying that Joseph was a prepper, I am saying that they had to take what they had and flee. The wise men had just presented their gifts and left. Joseph got up, woke up his family and left. Joseph had a skill with which he could establish a new life no matter where he was and thanks to the wise men had operating expenses covered until he got to where he was going.

Food Storage

This one will get deep fairly quickly. We are going to start with Noah. The story of Noah is in Genesis chapter 6. The story of Noah is when God destroyed all life on earth by bringing a flood over the whole face of the earth. Noah spent a long time building the ark, some people say as long as 100 years, but I do not think this is supported by the Bible. According the the Bible Noah was 500 when his sons were born and was 600 when the flood came. In the Bible it tells us that Noah and his sons built the ark, not only that, his sons were married. So the time frame in which Noah built the ark and supplied it with everything they needed for their time in the ark, was much less than 100 years, many Bible scholars think around 60 years.

Noah had not only a set of every animal on the planet, he had the supplies necessary to keep them fed and healthy for the amount of time they were on the ark. How long were they in the ark? If you read the scripture it tells us right at one year and 10 days. If we use the modern calendar that would be 375 days. That is a lot of food.

The story of Joseph and Pharaoh is found in Genesis 41.  The story of Joseph and Pharaoh's dream is even more of a prepper story. Pharaoh had a dream that 7 fat cows came out of the Nile, then 7 skinny cows came out as well.  The 7 skinny cows ate the 7 fat cows and looked even skinnier. There was another dream that was similar that had to do with wheat. Pharaoh knew that these dreams meant something so he looked to his religious leaders for an explanation.  They couldn't figure out what the dreams meant. Joseph was still in prison for a crime he didn't commit and a servant of Pharaoh remembered him. When Joseph was called before Pharaoh he interpreted the dream. The dream meant that there would by 7 years of bounty, followed by 7 years of famine. A famine so deep that the years of plenty would be forgotten. Not only did Joseph interpret the dream, he also advised Pharaoh on what to do to ensure the survival of Egypt. That the entire nation would set aside 1/5 of the production during the 7 years of plenty. Pharaoh did so and the nation survived.

Now, I know there are some that are thinking, "Gregg, both of these were things that God warned people about ahead of time. We are talking about being prepared for the unknown." Fair enough.

The Lesson of the Ant. I have talked about this one in detail before. You can read that post Life Lessons of Ants and Bees. The scripture I am talking about is Proverbs 6: 6 - 9.

6 Go to the ant, you lazy man! Observe its ways and become wise. 7 It has no commander, officer, or ruler, 8 but prepares its provisions in the summer and gathers its food in the harvest. 9 How long will you lie down, lazy man? When will you get up from your sleep?

This is one of my favorite scriptures. The ant is doing what is natural and I believe that this behavior is natural for people, we have just gotten so far away from it that many of us have forgotten.

Jesus warned that hard times would come. Matthew 24: 4 - 8

⁴ Jesus answered: “Watch out that no one deceives you. ⁵ For many will come in my name, claiming, ‘I am the Messiah,’ and will deceive many. ⁶ You will hear of wars and rumors of wars, but see to it that you are not alarmed. Such things must happen, but the end is still to come. ⁷ Nation will rise against nation, and kingdom against kingdom. There will be famines and earthquakes in various places. ⁸ All these are the beginning of birth pains.
⁹ “Then you will be handed over to be persecuted and put to death, and you will be hated by all nations because of me. ¹⁰ At that time many will turn away from the faith and will betray and hate each other, ¹¹ and many false prophets will appear and deceive many people. ¹² Because of the increase of wickedness, the love of most will grow cold, ¹³ but the one who stands firm to the end will be saved. ¹⁴ And this gospel of the kingdom will be preached in the whole world as a testimony to all nations, and then the end will come.
¹⁵ “So when you see standing in the holy place ‘the abomination that causes desolation,’^[a] spoken of through the prophet Daniel—let the reader understand— ¹⁶ then let those who are in Judea flee to the mountains. ¹⁷ Let no one on the housetop go down to take anything out of the house. ¹⁸ Let no one in the field go back to get their cloak. ¹⁹ How dreadful it will be in those days for pregnant women and nursing mothers! ²⁰ Pray that your flight will not take place in winter or on the Sabbath. ²¹ For then there will be great distress, unequaled from the beginning of the world until now—and never to be equaled again.

I thought about including a shorter excerpt, but I just could not bring myself to do so.  This passage encapsulates every reason a person would want to prepare. Famine for food storage, social upheaval for bugging out. I think it is only reasonable to think that Jesus included this prediction for the benefit of believers to be as prepared as possible.

General Preparedness

We have talked about a Biblical basis for bugging out and for food storage, but what about general preparedness? I believe the parable of the 10 virgins applies really well. Matthew 25: 1 - 10

25 “At that time the kingdom of heaven will be like ten virgins who took their lamps and went out to meet the bridegroom. ² Five of them were foolish and five were wise. ³ The foolish ones took their lamps but did not take any oil with them. ⁴ The wise ones, however, took oil in jars along with their lamps. ⁵ The bridegroom was a long time in coming, and they all became drowsy and fell asleep.

⁶ “At midnight the cry rang out: ‘Here’s the bridegroom! Come out to meet him!’
⁷ “Then all the virgins woke up and trimmed their lamps. ⁸ The foolish ones said to the wise, ‘Give us some of your oil; our lamps are going out.’
⁹ “‘No,’ they replied, ‘there may not be enough for both us and you. Instead, go to those who sell oil and buy some for yourselves.’
¹⁰ “But while they were on their way to buy the oil, the bridegroom arrived. The virgins who were ready went in with him to the wedding banquet. And the door was shut.

This has spiritual purposes of course, but I believe that all spiritual lessons have physical applications as well. In this parable we see that some of the virgins had made preparations for the unexpected. They had brought additional supplies with them just in case the bridegroom didn't show up when they expected. The ones that were prepared were able to go with the bridegroom, but the ones that didn't were left behind. The ones that were prepared didn't have enough to share. Man there are a lot of lessons in this one parable.

What Are Christians To Do?

 

 If I could work my will every Christian would be as prepared as possible. Why? In order to answer this question we have to look at what our mission is as a Christian. Our mission is to share the love of Christ. How are we supposed to do that? Well, we seem to have gotten to the point in the first world countries that we think the only way to share this love is by talking. In some areas we are talking people to death (figuratively, or at least I hope so). I will never understand why we as a people realize that helping those in countries that are less fortunate by giving them food and helping supply their needs is a good way to share our faith, but we think those same ways won't work where we live.

James 2: 14 - 20

¹⁴ What does it profit, my brethren, if someone says he has faith but does not have works? Can faith save him? ¹⁵ If a brother or sister is naked and destitute of daily food, ¹⁶ and one of you says to them, “Depart in peace, be warmed and filled,” but you do not give them the things which are needed for the body, what does it profit? ¹⁷ Thus also faith by itself, if it does not have works, is dead.
¹⁸ But someone will say, “You have faith, and I have works.” Show me your faith without your works, and I will show you my faith by my works. ¹⁹ You believe that there is one God. You do well. Even the demons believe—and tremble! ²⁰ But do you want to know, O foolish man, that faith without works is dead?

I believe we as the body of Christ are called to minister to the needs of those who are around us. This means that we should all be better prepared than the average person. When a storm hits, people should know that they can look to the church and its members for the help they need. The body of Christ should be able to put FEMA out of business. We should have spare blankets, extra food, and water to serve our community. Too many people who call themselves people of faith have developed an attitude of "All I should have to do is show up to church". Jesus called us to action.

There will always be people who hate those who have faith and ridicule those that believe in something that cannot be seen. However, if we would get off of our rear ends and do the things that Jesus commanded us to do more people would be willing to listen to what we have to say.

Matthew 25: 40 “The King will reply, ‘Truly I tell you, whatever you did for one of the least of these brothers and sisters of mine, you did for me.’

I would love to hear what you think. Remember, we are

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Front Porch Friday

Welcome to Front Porch Friday!

 I am super excited to be able to join the ranks of the hosts of the Front Porch Friday Blog Hop. I have shared my posts with this hop for quite some time. This hop is great because here homesteading and preparedness take their rightful place side by side.

Take some time and enjoy writing from bloggers from all over on a wide variety of topics.

Here are the featured posts from last week

Gregg's Pick
A Solar Powered Freezer by Making Our Sustainable Life because I am always looking for more knowledge and information about becoming more sustainable.

Mama K chose

 Pumpkin Puree by Taylor Made Homestead because it's that time of the year!

Shelle PreparednessMama's pick


She is always looking for a new slow cooker recipe and this one from Pinch of Nutmeg for Sweet and Smoky Pulled Pork looks downright scrumptious.

Thank you to all who linked up last week!! I really enjoy reading your posts!

• Please share your posts that are homesteading, prepping, homemaking, or frugal living in nature.
• Please be family friendly, although Zombies are ok.
• Please visit the blog that linked before you. Share the love.
• Older posts are okay, but please only share on the Hop once.
• If you would like to be featured I ask that you have linked back to this post
• By linking up here you are giving permission to share your post, if featured.

 

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Global Economic Collapse: Part 2 Can It Really Happen?

If you haven't read part 1 I encourage you to do so, it will help you understand where we are now.

The US as a Global Economic Power

How has the US had it so good for so long?

The US prior to world war two had some severe ups and downs economically. Since world war two we have had it pretty good. Yes we have had some hard times and a few recessions, but nothing that could compare with the great depression.

Have we just been lucky? Have our leaders done that much better a job than other countries? Is it just because the American spirit is so strong? Nope, nope, and nope.

The Gold Standard

After world war two the world's economy was pretty much in shambles. Out of all of the countries involved in World War II the United States came out the best. The US had very little damage to infrastructure, the US had been in overdrive producing everything they could to support the war effort, so profits were high. Plus when all of the men came back there were fewer of them so the labor pool was smaller. I know that sounds cruel, but it is true. You cannot give a job to someone who died on the battlefield.

In July 1944 delegates of the United Nations and what would become the IMF (International Monetary Fund) met in New Hampshire to try and restore stability to the global economy. At the time the United States controlled 2/3 of the world's gold. An agreement made the US dollar the anchor of all of the other world currencies. This agreement insured that every country could convert US dollars to gold at a set rate $35.00 per ounce. The US would support other nations and their central banks within set regulations.

The Bretton Woods Conference thrust the Untied States into the lead role of the world economy. What did that do for the US? It guaranteed that the US and its citizens could borrow money at a lower interest rate than really anyone else in the world.  Since the US dollar was guaranteed to be convertible to gold at a rate of $35.00 per ounce the demand for the US dollar increased which strengthened the dollar. This hurt US exports, but benefited everyone else in the country. This agreement is what ushered in the prosperity that was seen during the 1950's.

This system didn't last very long.

The Nixon Shock

President Richard Nixon took the United States off of the gold standard. This action basically nullified the Bretton Woods agreement. However Nixon had another idea in mind. This is when the US went to a fiat/debt backed system. Nixon negotiated Saudi Arabia a deal where anyone who wanted to purchase oil from their country would have to do so in US dollars (petrodollar). Within just a few years all of the OPEC nations agreed to the same terms. This thrust the US dollar into reserve currency status. 

'Reserve Currency' A foreign currency held by central banks and other major financial institutions as a means to pay off international debt obligations, or to influence their domestic exchange rate.

Every time any country wanted to buy oil they would have to purchase US dollars to do so. In fact it actually went farther than that. If two countries wanted to to business with each other and they did not have a direct exchange rate, country one would have to buy US dollars to pay for the goods they wished to purchase from country two. After the transaction was completed country two would then have to sell the US dollars back to the US for their own currency. Each time a transaction like this took place the US got a small cut, a transaction fee if you wish.

Why would the OPEC nations agree to this? Well, Nixon promised that the US would protect their oil fields and that we would sell them weapons. Most wars really are about money.

So What Is the Problem Here? 

I know this all sounds great, but there is one massive problem. The US is losing its place as the reserve world currency. Iran, Venezuela, and Russia are all large oil producing nations, they do not use the US dollar as the Petrodollar. They negotiate a direct exchange rate. China is working to circumvent the US as a reserve currency, even our close ally Australia has entered an agreement with China for a direct exchange rate, leaving the US dollar out of the loop. Then we get to our debt, holy cow does the United States have debt.

Could The US Experience a Collapse?

I really wish I could tell you not to worry, this will never happen here, but I can't. The truth of the matter is that something will happen along these lines. What an economic restructuring or collapse will look like in the US is anyone's guess. If someone tells you they know exactly what it will look like they are either lying to you, themselves, selling something or a combination of all of the above.

The current official inflation rate in the US is right around 2.5%. This would have been considered really high throughout most of history with a gold back currency, but on our fiat/debt based system this is about average. Every year the dollars buying power is eroding.

The current US national debt is 18.2 trillion ($18,200,000,000,000). Current personal debt in the US is 16.8 trillion. The US current unfunded liabilities is 95.8 trillion. Our gross debt to GDP ration is 102.67%. All of these numbers are going up and the economy is supposed to be doing so much better. At our current spending and revenue levels we will eventually not be able to service our debt. You can see a running total of all of these at www.usdebtclock.org.

If the US has an economic collapse the whole world will go down with us. Why do I say that? Because the world is so interconnected.  Over 6 trillion of our debt is help by other countries. If foreign countries  only hold 6 trillion, who do we owe the other 12 trillion to? Truth is it is a mixture nearly half of the 18.2 trillion dollar debt is owed to ourselves.

If we owe most of the debt to ourselves why not just cancel it out? Well it is not that easy. First the Social security trust fund really doesn't exist. There is no money that has been set aside with your name on it. In fact there isn't even an account somewhere with all the contributions in it. All of that money has been spent, there is nothing there but an IOU. So you see if we just forgave all of the debt held by US citizens, a lot of those citizens who have paid in the longest would starve to death. The balance is held by corporations and foreign investors. 

How can we be so in debt and still give away so much money? That one is tricky. We actually take part of the money that we borrow and give it to foreign countries. Why on earth would be do that? Well, there are a couple of reasons, one is simple and one is just sad.

(1) We give money to our friends to help them out. I have known people who have done this. They have taken out a loan to be able to help a friend. I can see how this would appear to be an honorable act, but it most cases it is not very smart. If a friend is in serious trouble taking out a loan to help them, could give them some temporary relief. If they are a good friend that will at a minimum show thanks and hopefully pay you back at some point. However if the root of the financial problems of your friend are not addressed it will not be long before they are in the same situation if not worse. The same thing is true of nations. If there was a massive natural disaster I am all for financially helping an ally. If however, the hard times are caused by the authorities using the national coffers to enrich themselves or their friends, or they are used to garner favor with their people I am opposed. Just look at Greece above. Austerity had to be put in place in order to start fixing their problems. Greece is not out of danger even today.

(2) We give money to groups and countries hoping they will become our friends. This one is just sad and most of the time it doesn't work. Maybe you will remember when we were helping the "insurgents" all throughout the Middle East. Most of these groups have turned into the bane of our existence today. The Islamic State was actually once supported by our government. Look at what they have turned into now.

Not only are we giving money away to other countries, we are spending money here like there is no tomorrow. I cannot even begin to tell you all of the stuff we spend money on that should be done by private enterprise. Bottom line is we spend too much money.

If we fail there is no one big enough to bail us out. Not to mention there are a lot of countries that are in as bad if not worse shape when it comes to their budgets.

I know it is difficult to see but trust me its not good.

Of our allies Australia's external debt is 97% of GDP (gross domestic product), England 318% but going down due to austerity measures, France 200% and rising, Germany 159% and rising, Greece 218% and falling due to austerity measures, Ireland 822% and falling due to austerity measures, well anyway you get the picture. Most of the nations of the world are either getting deeper in debt or are having to get their budgets inline with what they actually bring in. Which countries are doing best? It is not good news for the US. China, Brazil, Russia, India, and Saudi Arabia are the best performers.

Gross Domestic Product - the total value of goods produced and services provided in a country during one year.

BRICS

Brazil, Russia, India, China, and South Africa are working hard to unseat the US dollar as the world reserve currency. Not only that they are attempting to set up a bank that would rival the IMF. They feel that the IMF has too much of a western influence.

When Will a Collapse Come?

At some point one of three things will happen that will force an economic event. 1) The interest on national debt will become so great that the US will no longer be able to make the payments or 2) People will loose trust in the United States and will require higher interest rates to buy bonds, 3) The US will have an administration that believes that it can print or even tax its way out of debt.  Any of these is bad news. 

You may remember in 2011 when the US credit rating was downgraded from AAA to AA+ by one of the credit ratings companies. There were people who thought that was the end of the world, does it cost the US a little more than it did to borrow money? Not yet, the other two of the big three reporting companies still have the US at a AAA. If the US were to go through something like Greece has where their rating has been reduced to a B rating or "junk" status, the US would have a hard time.

No one can really give you a date that a collapse will occur. Why not? Well because the collapse has already started. The world will not wake up one day and the global economy be on the rocks. To some it will look like it, but it will have been a slow downward spiral. We are already seeing the US dollar lose its place as the Petrodollar. This will continue to happen and it will erode the dollars buying power because the dollar will no longer be in as big a demand. We will continue to see the buying power of the dollar decrease as a result of inflation. We will continue to see the US government spending money on things they shouldn't and spending money they don't have. It is like putting an alcoholic in charge of a brewery, they cannot help themselves.

 Can This Be Prevented?

At one time I would have said yes without a second thought, now it is a very shaky maybe.  Politicians are doing everything they can to delay a major economic adjustment, that is short of addressing the actual problem. I have heard politician talk about cutting spending, but it has all been smoke and mirrors. Allow me to explain.

In the Untied States budget there is built into almost every category an automatic spending increase. When politicians talk about cutting spending, even when they say they are trying to cut spending all they are doing in decreasing the increase. If a program receives $1000 this year and it is supposed to have an annual increase of 10% next year that budget would be $1100. A politician will tell you they are cutting spending for this program by 10% that does not mean that next year the program will receive $900, what that means it the program will receive $1090. They have cut the increase by 10%. Research it you will find that to be true.

In order to fix the United States economic problem would require true cuts in spending or austerity. Austerity is not popular. Remember the riots in Greece? If you tell people they will not be receiving what they were promised or even worse what they believe they are entitled to, they get angry, very angry.

On tax increases. There are a lot of people who think tax increases are the way to go. You can hear their mantra "Tax the Rich". A tax increase only works for a short period of time. It doesn't take long for the mega rich to figure out a way around paying those taxes, they can afford the attorneys to do so. The ones that wind up getting hurt the most are the upper middle class and middle class. They cannot afford those attorneys and most of them have worked hard the get where they are.

A graduated tax system actually discourages people from trying their best. I remember one year, I received a raise at work and my paycheck actually went down. I went to HR and asked about it. I had gone up a tax bracket. Granted it didn't go down much but the fact is still I was making more money and getting to take home less.

Tax decreases have been talked about as a way to stimulate the economy as well. More economic growth means more people get jobs, which means a larger tax base, which means more money flowing into the government coffers. This can be true. If people have more money to spend they normally will. People spending more money means more people go to work, but if the jobs created are low end jobs the growth may not cover the tax loss. This has become increasingly the case as more and more manufacturing jobs have been moved overseas. Corporations have realized that it is cheaper to have something built in an emerging country and have it shipped to the industrialized nations than it is to build the items at home. There are some exceptions, but they are getting fewer: industrial machinery and a lot of the advanced medical equipment.

We might be able to produce ourselves out of this mess. The United States has become the number one exporter of natural gas in the world. This is one reason we have seen fuel prices decline in the past year. If (if is the biggest two letter word in the world, by the way) the government would take the additional revenues generated by the boon of natural gas sales and apply that to the national debt, we might escape.

The truth is that many politicians know that the system as it is set up is unsustainable and they do not care. All they are doing is putting it off as long as they can. Why would they not care? They are getting the goodies as long as they last. The ones who will benefit from a US restructuring are the banks that have bought and paid for these politicians. Now, I want you to notice I have not mentioned either of the dominant political parties. They are both owned by these same individuals and corporations.

Heck there are even some "experts" who claim that paying off the debt would be a bad thing.

The restructuring could be a reevaluation of the currency, issuance of a completely new currency, or an all out default.

What Can the Individual Do to Prepare?

 

Get out of Debt

I know this one is really tough for those of us who are working our tails off trying to make a better life for ourselves and our families. There are even those that say "If there is going to be hyperinflation, wouldn't it be better to be in debt that way you could pay it off in dollars that are worth less". This statement is true to some extent, but it only works if what the world winds up facing is hyperinflation and they are able to service the debt until a collapse comes. If the world faces deflation these people are in serious trouble.

My Paw Paw (my maternal grandfather) lived through the Great Depression. He said "During the Depression every store had things for sale, but no one had any money. The next Great Depression everyone will have money but there will be nothing to buy."

Learn Hard Skills

A hard skill is something that has value in and of itself, it must be teachable, and it must be able to be measured. Trades are hard skills. Carpentry, plumbing, farming, medical professions, computer programmers, things of that nature. Yup, I said computer programmers. Even after a major economic restructuring, the internet will be here. There are situations that could knock us back to the dark ages, but we are simply talking economics. Sales people would be hard pressed in a true economic collapse.
 

Start Your Own Business

A micro or cottage business  give an individual or family some stability in an unstable time. Not having to rely on a major corporation that has its fingers in all of the political mess is a very good thing. Something like selling firewood, making soap, teaching canning, anything that you have a large knowledge base in that is marketable. 

 For a good primer and an idea generator check out my first book. Micro and Cottage Businesses What You Need to Know and How to Get Started.

 Build Community

Having folks around you who are like minded can really help in a hard time. The old saying "Many hands make light work" is true. I know it means more mouths to feed, but it actually works to the favor of the community. If/when a economic restructuring or collapse occurs it will not be without pain and it will not be without violence, at least in some areas. No one can stay awake all the time for very long.

Hard Assets

The first thing that comes to mind for many when talking about economic collapse is gold and silver. It is true that historically gold and silver have never been worthless to what many would call civilization and that gold has kept its value in the face of inflation. But I am still torn on this one. If no one has anything you cannot eat precious metals, but as long as trade continues precious metals will be of value. I actually like silver more than gold. Why? Well for one it is more affordable to the average person, it is more likely to be in denominations that would be used. When gold was at $1600 per troy ounce a grain was worth $3.33. A grain is quite small. I wouldn't want to try to divide any smaller. Even if gold were to take over silver would still be needed for change.

Not just gold and silver though. Assets can be lumber, nails, seeds, really anything that people need.

Learn to Barter and Haggle

During harsh economic times people are going to try to get as much for what they have for sale as possible. At the same time people are also going to try to spend as little as possible for what they want. Enter haggling. Haggling is the art of price negotiations. If you don't know much about it you can read my post The Art of Haggling: An Introduction. I believe it will help you out even if something like this does not occur.

Barter is the art of trading something you have for something you need. It has been practiced for as long as there have been people. Here is a really old post called Barter is Back. It is not up to my current visual standards, but the information is still valid.

Conclusion

I believe a major economic shift will occur in the next 6 to 10 years. Why do I give it so long? There are several reasons. 

1. The politicians are going to prolong it as long as possible. We may even see some form of austerity and true cuts to spending, but I believe that like Greece it will be too little too late.
2. The United States will continue to leverage its natural gas production to keep other countries interested in our survival.
3. Until the BRICS nations have divested themselves of our debt to them or set themselves up in a way so they can take the financial hit they will continue to help the US.
4. Currently confidence in the US is still fairly strong. This will erode, but it will be a gradual decent.

I do not know if the economic shift will be a full on collapse, a revaluation of the currency, or an issuance of an entirely new currency, but I can tell you it will be painful and the ones who will benefit from this shift are the mega rich and those who are prepared.

I know this has been very long, but I hope you can tell I have put a lot of research into this topic and I have tried to be brutally honest.

One way or another we are

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Global Economic Collapse: Part 1 Can it Really Happen?

Of all of the doomsday scenarios that have been floating around I think the most feasible is a global economic collapse. Economic collapse is not a new idea, in fact there have been several collapses through out our history. We are going to cover a few of these crises and their causes as well as similarities to what we are seeing today. Some will think this post common knowledge, others may see this as a revelation, and yes I know there are some who will think all of this is nonsense, that is okay.

What is Money?

Money is really nothing more than a social contract, a means of exchange, and a store of value. Modern money gets its value from two sources: 1 we believe it has value. I am confident that if I wish to purchase something I can take the little pieces of linen with a number and some pictures and writing on it and get what I want. If everyone woke up tomorrow and decided that these little pieces of linen paper were in fact just that the financial system of the entire world would collapse instantly. Thankfully that is not going to occur because we are creatures of habit and we still believe. 2 our government says those pieces of linen hold value.

When a government wants to legitimize a currency all they have to do is make it acceptable to use it to pay taxes, but many governments go a step farther and enforce that it must be accepted for private debts as well. This forces you as the individual living in this country to accept the paper as having value. This does not mean that you have to accept that currency exclusively. If I want to I can build you a bookshelf and if we agree ahead of time you could pay me in tomatoes or really anything else that we agree upon as long as that item is not illegal. This is called a fiat currency. Fiat money has value just because the government says so, it is only based on the strength of the country that issues it. In a true fiat based system the government decides how much of the money is printed and released each year. This means that the government is in total control of inflation and deflation. This can be a very bad thing.

Germany broke the link between the mark and gold and funded their war effort almost exclusively by borrowing. After World War I Germany was required to pay retribution to several countries, these payments were to be paid in hard currencies.  With no link to gold existing these countries would not accept the mark as payment. What did Germany do? The turned up the printing presses and started printing marks like there was no tomorrow. They were taking these newly printed marks and were purchasing gold and gold backed currencies like the US dollar (no longer backed by anything), to pay the countries retribution. This caused hyperinflation. 

"Germany Hyperinflation" by Delphi234 - Own work. Licensed under CC0 via Wikimedia Commons - http://commons.wikimedia.org/wiki/File:Germany_Hyperinflation.svg#/media/File:Germany_Hyperinflation.svg

Hyperinflation is when prices are increasing at an alarming rate. As you can see from the graphic above the value of the paper mark was nothing. Those that still had jobs were having to be paid daily and run out to purchase what they could in order to survive. The next day they would go into work to find out that their wage had been doubled, that sounds great but when a loaf of bread costs 200,000,000 marks, well you get the picture.

We Are Not a True Fiat Based System

Like I said above in a true fiat based system the monetary supply is determined by the government, the value of that currency is determined by the government, the only thing outside of the government that has any bearing on that currencies value is the perception of the governments stability by the public and other world economies.

We are not a true fiat based system, we are a debt backed system. Allow me to explain monetary creation briefly. The US monetary system is what is called a fractional reserve system. What most people think is that if I suddenly find a million dollars buried in the woods. I am extremely happy and I run to put this money in the bank. The first thing that will happen is I will get a visit from either the IRS or the department of treasury to make sure how I got this money. After I have proven that I am just lucky and not some criminal mastermind that has lost track of his senses, they will allow this money to go into the system. Now you would think that if we were on a 10% fractional reserve that when I deposit this million dollars that would give the bank the ability to lend out 10% or $100,000 thus keeping $900,000 in reserves. That is simply not the case. If I were to deposit a million dollar the bank would be able to loan 10 million. The million I deposited becomes the reserve. This is also monetary creation. With one sign of a pen and a journal entry the monetary supply has increased by 10 million dollars. This money did not exist until the deposit was recorded and even then only exists electronically. Every time a loan is made the monetary system expands, this is why inflation is higher during times that seem good, people are borrowing and spending money so prices go up.

Commodity Based Currency

Believe it or not prior to 1971 the US dollar was partially based on the nations gold reserves. At one time if you had a dollar, you could go to any bank and exchange that paper dollar for a dollars worth of gold. 

A commodity based currency can be based on anything that has real tangible value. There have been currencies based on tobacco, gold, silver, and even wool. These products have real value no matter what. But there can be problems with commodity based systems as well. Here is a goofy explanation.

Lets say there is a country called Rural Econostan and its currency the farthing is based on brussel sprouts. One Rural Econostanian farthing is equal to one pound of brussel sprouts and it is a fixed ratio. This year there is a record harvest, this causes the number of farthing to go up. Everything except brussel sprouts will go up in price because people will have more money and be trying to buy the same things. Demand will be high and supply will be constant, this causes inflation.

Okay so next year there is some weird fungus that cuts the average harvest of brussel sprouts by half. That would mean that there would be half as many farthing so prices on everything except for the sprouts would go down because people wouldn't have farthings to spend and companies would continue to produce at their normal rate. This causes deflation.  This is very watered down, but you get the idea.

A gold based system is more stable than one that is agriculture based, but it can still have its ups and downs. The Spanish Price Revolution of the 16th century is a good example. The Spanish conquistadors were importing gold and silver at an unprecedented rate. This caused pretty much everyone in Spain to have more money. These people with all of this new revenue tried to buy more and higher quality things, the problem was everyone had more money so prices went up. Even though the inflation rates they saw would be a blessing today, they placed a major hardship on the average citizen. Oh the difficult inflation rates were 1 - 1 1/2 % per year. So you can see a commodity based system does have some benefits but there are also some challenges.

Challenges of a Commodity Based System

So we are back in good old Rural Econostan. The currency is based on gold, not sprouts. There is a robust internal economy and the country is rich in resources. As long as gold prices are stable there shouldn't be any problems, but in recent years gold prices have soared. In Rural Econostan all of the imported items have gotten cheaper, a lot cheaper. Everything Rural Econostan exports has gotten a lot more expensive. People in other countries have stopped buying things from Rural Econostan. This has created a massive trade deficit. Manufacturing companies are leaving Rural Econostan so their prices will be more competitive world wide and unemployment has risen. There is no sign of gold prices moderating anytime soon. The only thing Rural Econostan can do is hope the prices stabilize, they are not large enough to have a major impact on global gold prices. Tough times are on the horizon. 

What Could Cause an Economic Collapse?

Okay so now we are to the point where we are talking about the things that could cause major trouble. What are the things that trigger national or global hardships. Why does one countries problems affect more than just themselves? Are there signs to look for as warning of economic collapse?

 Stock Market Crash

I honestly don't know anyone who personally remembers October 29, 1929 or as it is commonly referred to as Black Tuesday. If you were to ask a room of 10 economic geeks what caused The Great Depression all of them would agree on a few things, after that depending on how passionate about it they are there could be a fist fight. We are going to focus on the things that most would agree on.

Mass exodus to cities.

The time immediately following World War I was a time of prosperity and optimism for most. People were leaving rural communities in the hopes of a better future in the cities. This placed a strain on the infrastructure of many of the larger cities and also reduced the number of agricultural workers available.

Speculation

Speculation is simply betting on the continued increase in price or value of something. The stock market does not sell cucumbers or anything tangible for that matter. They sell little pieces of companies. If you owned a stock in "Rural Industries", you would be providing them with capital to help with development or expansion. In exchange for your money you would be sold a share in the companies future profits. The accepted price a share should bring involves a very complicated equation that one of my economics professors called  "The Equation from Hell". There are times that a share sells for more than it is worth, this is speculation that the company will do better than projections or that the company has enough goodwill capital to fetch an even higher price later. At some point speculation always causes grief. There may be people that make a great deal of money along the way, but someone will get hurt. Now imagine if all of the stocks were overvalued simply because everything was going so great. That is a big portion of what caused the Stock market crash.

Loss of Confidence

As people began to realize that the stock market might be in trouble, people began selling their stocks as a way to protect their value. The more people that sold stock the lower the price went. This scared even more people and like water goes down a drain in a spiral so did the stock market. The erosion of value continued for 3 years. Every industrial sector saw a decrease in demand so they all had to layoff people. Unemployment reached 25% in the United States.

Protective Tariffs

As the global economy was falling countries thought they would protect their citizens by stopping goods from coming from other countries and by extension increasing the likelihood that their citizens would buy things purchased in their own country. This didn't help it actually caused the flow of money to all but stop.

Natural Disaster 

A natural disaster shouldn't cause a global economic collapse, but it certainly could cause a regional one. Haiti after the earthquake in 2010 could have been a scene from an apocalyptic movie. Over 11% of the nations population was killed in a single event. Billions of dollar in damage to infrastructure and property. Production in the entire nation came to a halt.

Debt

We have already talked about Germany after World War I, so we won't discuss that one again here. There are plenty of other examples of national debt causing major problems. When a nation runs into debt there is normally not a major problem, the country is able to service the debt aka make the payments. Maybe the nation will run budget surpluses and be able to cut down or possibly even eliminate the national debt. The US has been debt free one time in its history and that was all thanks to President Andrew Jackson. It didn't last long, but it does prove that it can be done.

When an entity loans money, they really do not care if the borrower will ever be able to pay off the debt. All they care about is that you are able to service the debt. Servicing the debt simply means make the payments. In fact most lenders really do not want you to ever pay them off. They want you to make payments for a while then go back and refinance the debt and hopefully take a little money home with you after the deal is done. By allowing and even encouraging refinancing many companies are making sure that you are in debt to them for longer than you had originally intended. By doing so they are basically making you an indentured servant by your own choosing. Not only that, we have been convinced that this is normal.

The United States and most other industrialized nations have decided they do not like this whole budget thing. Living within our means is so passe. Most countries so far have done pretty well even with massive debt, but can it go on forever? Some think it can, but history has another story to tell.

Argentina 1998 - 2002 

Argentina was in trouble in 1983 when its national debt reached  45 billion. The interest on the debt alone was greater than all of the trade profits for the entire country. What did the government do? They scrapped the old currency and introduced a new one with a whole new set of loans. This helped for a while until commodity prices dropped dramatically. When the commodity prices fell Argentina again lost its ability to service the debt. During all of this mess the inflation rate averaged 220% per year. Yup, you read that right something that costs $10.00 today would cost $32.00 in one year. This average lasted for 13 years. Something that started out costing $10.00 in 13 years would cost  $36,893,488.15. 

As if that wasn't bad enough in July of 1989 inflation reached 200% for the month. In one month the item that cost $10.00 would be $30.00. The highest annual inflation Argentina saw during this period was 5000%  that same item would cost $510.00 in a year. Needless to say riots broke out and the president resigned.

How did they stabilize their economy? First the scrapped the new money and reestablished the old money. Second they set a fixed exchange rate with the US dollar, this gave their money value because it could be exchanged for US dollars. The International Monetary Fund also provided loans, extensions of loans, and even reduced interest rates to Argentina. Slowly ever so slowly their economy improved. Not without a lot of bumps in the road I might add. These problems really started as early as 1973 and the effects are still felt in Argentina today.

The Economic Collapse of the USSR

This one I will add to what many of the textbooks say. The Soviet Union had a strictly "planned economy". Everything didn't go as planned. The Soviet Union went through a period of what is called stagflation.

Stagflation is a period of time where the economy doesn't grow or contract. It kinda just limps along at the same level. But during the same time there is a high level of inflation and unemployment. Stagflation is equally as bad as high inflation and deflation, but does not compare to hyperinflation.

If stagflation had been the only thing the Soviet Union would have had to deal with, they could have probably made it through, but it wasn't. The United States president Ronald Reagen decided that the past nuclear defense strategy wasn't really a strategy at all. It was called MAD Mutually Assured Destruction. Doesn't just the name make you feel safer. The rational was that if either country launched an attack they wanted to make sure that everyone on both sides died.

Reagan decided that defense needed to actually be defense. He pushed for what eventually was called the Star Wars Defense Initiative. This focus was on detection of nuclear launches and destruction of nuclear missiles before they reached American soil. There is still some debate as to whether this would even work at all, but that really isn't the point right now. The Soviet Union in an effort to keep us with US military spending, spent themselves into oblivion. When the Soviet Union fell apart it wasn't because of some massive civil war, it was because the centralized government couldn't afford to take care of or even attempt to control these breakaway republics. They really did just fall apart.

Greece 2009

Everyone who halfway pays attention should remember at least part of this one. Investors started getting nervous about the Greek ability to service their national debt. The reasons for this fear are deficit spending (spending more money than they make) and debt to GDP(gross domestic product or everything the nation produces in a year) ratio. These two factors spurred a fear sovereign default. Sovereign default is when a sovereign nation refuses to pay its debt obligations in full or fully servicing the debt.

The IMF and the Eurozone took action and provided a two bailouts to the Greek government totaling more than 240 billion euro. Part of the requirements to receive the bailout was the implementation of austerity measures (tax increases, spending cuts, or both), structural reforms, and the privatization of governmental assets. Things didn't happen as planned. The government that agreed to these terms was unseated in the last election and negotiations are ongoing as to how to handle the continued crisis.

There are more examples, but you get the picture.

This has turned into a multi post series just due to length. Please see Part 2. It will be live 5/16/2015

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