When SHTF

[balz]

http://www.zerohedge.com/news/step-asid ... obal-finan

[blackrabbit]

Goodbye Euro. The dollar should strengthen more if this happen, correct? Seems like gold would go up too. Unsure about silver??

[balz]

In the comments below that article, someone said something that made me think. If Greece defaults, isn't that a risk that deflation might be more likely than hyperinflation in the next years? And if there is deflation, it means gold and silver prices would collapse...

I try to be as positive as possible, but i find it difficult to consider that that silver 33% haircut is normal...

[Mossy]

How does deflation come about, anyhow? I can see it caused by the supply side, but not elsewhere.

[balz]

How does deflation come about, anyhow? I can see it caused by the supply side, but not elsewhere.

Well, a default is basically debt-erasing, which would make less fiat money in the system, hence deflation.

[shinnosuke]

If Greece defaults, there will be financial chaos in that country, and the heretofore mostly peaceful demonstrations may get ugly. Ugly means no more tourists spending their money on vacations in sunny Greek resorts on the Mediterranean. No tourists means less demand for many goods and services. (Remember Greece only has shipbuilding and tourism as industries...well, yoghurt too.) Less demand means those businesses & individuals who provided those goods and services have less revenue. Less revenue causes less demand, and the cycle continues downward. Less money will be in the financial system which means prices will fall, hence, deflation.

On a larger scale, all the other Europeans who financed Greece's debt orgy will get haircuts. Haircuts mean less discretionary funds. Less funds means lower demand. Rinse and repeat.

When Europe implodes shock waves will be felt in North America and Asia. Rinse and repeat.

One blind spot I have right now is at exactly what stage of this inevitable meltdown does the elite oligarchy try to introduce a global currency.

[neilgin1]

http://www.zerohedge.com/news/step-aside-bbc-trader-head-unicredit-securities-predicts-imminent-end-eurozone-and-global-finan

brother, there is a WHOLE cottage industry devoted to NOTHING but when the SHTF, and there is a plethora of opinion as to the WHEN.

and thats the whole magilla, it's gone from an IF, to a WHEN. Now the way i see it, there's three crucial bullet points deserving of active consideration:
1. population density----if at all POSSIBLE, get out of the cities. ASAP. if you can live in an area with a population density of 29 to 7.5 people per sq mile...thats good. i'm in the 7.5 people per sq mile, so i'm blessed. (and dont ever think i stop praising a Merciful God, praising Him now!) some folks cant abide the "desolate places"...i love them. There's a solemn majesty about such places. i love people too, with a passion, dont get me wrong. But pop density is key.

2. the 'fear factor'---in my belief, a person HAS GOT TO wean that fear factor out from the heart of their soul and mind. i know the Way, i do it, and thats by leaning on God, and it is He, Jesus, Who loosed me from the fear of death. forgive if that sounds strange or "religious", my belief is that religion kills, Jesus saves, and once you have no fear of death, what can "they" do to you? Kill you?...and getting into that heartspace makes you potent......neither IMpotent, or OMNIpotent, but potent to shelter your family, kin, tribe. These websites that cater to the "prepper" are double edged, its GOOD to have dialogue, ideas flowing, etc...but at the same time there's an underlying contagion of fear, AND people selling a LOT of 'stuff"....and some 'stuff' is good, but resist the urge to just buy buy buy. point being, get rid of fear.
3. Water and Warmth----water is everything, wherever you go to ground, got to be water, and containers to hold water are GOLD. You must have winter, kills all sorts of pestilence, and keeps the all but the most hardy OUT. If you got winter, you need warmth, which means you need wood, and if you can get it, some form of petrol gas to back you up, as long as you can get it. There's another kind of warmth, human warmth, which is communitas. The "lone wolf" motif is bovine scat, we need the warmth of each other and im not only refering to body warmth, we need each other, you get into a communitas, make yourself available, embrace the noble nature within you, and other souls WANT to pack up with you. Its just like the coyote, thats why i keep going on, about the way of the coyote. be blessed, neil

[Mossy]

How does deflation come about, anyhow? I can see it caused by the supply side, but not elsewhere.

Well, a default is basically debt-erasing, which would make less fiat money in the system, hence deflation.

My head hurts.

Okay. Less cash in the system would increase the comparitive value of "cash". But a default means that particular brand of money no longer has value, so it's quantity is moot. Other forms of money should gain in value. However, all brands of paper money are now linked together so they stand or fall together. (A few nations are proudly proclaiming their independence, but they have either fallen already, secretly based on some other country's money, or they are too tightly linked to the global economy.)

The obvious preparation is to stack other some sort of economic exchange marker, and I can think of only two possibles. Rounds (or other maybe bullion) or coins like 90%. Clads are not going to be real popular, except as oversize pennies, perhaps.

Identifiable rounds will be valued over bullion bars, I suspect.

(Ugh. Where's the aspirin?)

[balz]

I am with you. I do stack Ag... as well as Cu. But I believe that they will all fail at some point because they are so interconnected. Don't you see any risk of deflation? And what do you think would happen to commodity prices with deflation?

[68Camaro]

Deflation has to be relative to something, and over what time period.

Frankly, I think we're going to see a bit of everything.

We are already in an inflationary period. (I stopped at the grocery to pick up some stuff for dinner, since the wife wasn't feeling well. Had more sticker shock. Several things I hadn't bought in a few years were 2x what they were the last time I have gotten them.)

During the time the dollar is the safe haven fiat it will rises significantly to other currencies, it will make people with sellable exports rich, but others with exports that become overpriced will gnash their teeth, slowing business, causing loss of US jobs. As measured in dollars, the prices of some things will fall, but the prices of other things will continue to increase. We will continue to have significant joblessness, which will increase as businesses start to shrink. We will see some stagflation, where prices rise but the economy stagnates.

Interesting, many US businesses are actually in good shape, for now, with large cash reserves. They will need those to weather the time.

Gold and silver will increasingly be desired as physical protection. TPTB will back the media in promoting PM as incredibly risky business. They will point to the volatilty of the PM market and exclaim at the risk, which only fools would invest in.

There are too many possible other scenarios, but what is certain is that there will be significant suffering in Europe, which will spread around the globe to a lessor extent. And the resulting crisis will be a significant temptation to someone that wants to flex their muscle - whether economically (BRIC walking from the USD and starting their own currency), or militarily (war often results from these types of events).

What to do in these types of things has been discussed many times before. The path remains the same.

[Mossy]

I am with you. I do stack Ag... as well as Cu. But I believe that they will all fail at some point because they are so interconnected. Don't you see any risk of deflation? And what do you think would happen to commodity prices with deflation?

"Fall" compared to what?

[neilgin1]

I am with you. I do stack Ag... as well as Cu. But I believe that they will all fail at some point because they are so interconnected. Don't you see any risk of deflation? And what do you think would happen to commodity prices with deflation?

....so you admit to hoarding precious metals, do you?...for what purpose? Is that all you hoard and hide, just precious metals? What else do you hoard and hide? Now i believe in Canada they have a VAT tax, on EVERYTHING you hoard and hide, have you paid your fair amount of VAT taxes? ...........forgive my questions, but these are nothing compared to the real questioning that's going to happen, when the rubber meets the road. nuff said. i love Canada and the Canadians, but you all dont have a wild streak in ya, do you? Correct me if i'm wrong but isnt your govt real tight on private firearms ownership?
what your refering to, deflation, would be a liquidity crunch, no paper fiat in circulation. and clearly, our printing presses have been working overtime. True, banks and larger business's have been hoarding cash, loath to spend it, but also some individuals, admittedly including yourself, are hoarding money. i'm not getting what you mean by "fail at some point".

the risk of deflation? i dont know, could be. you mentioned peak oil, how you believe in it. i think we're at peak oil, but we're in a dicey period called the 'rocky plateau', where we can bounce between 80 to 95 mln barrels a day for maybe 10, 15 years, and the whole "crisis" is that the 'calories' cant support the 'investments'. Its the point where infinite growth meets finite resources. hence you have a LOT of "investment vehicles" with an IMPLIED worth, but there's really no underlying BID....i hope i'm being clear.
what i believe any thinking individual HAS to do, is to simplify their horizons...ie, what do you NEED to live?....or what KIND of quality of life do you envision for your family?....the globe is so interconnected, and the sheer amount of information floating about is so vast, much of it true, most of it false, or a half truth, that to try and wargame EXACTLY what happens, is pretty risky.
3 square meals a day, a secure environ, clean drinking water, and maintaining a healthy intellectual life, books, letters, along with being attached to a communitas, a family, those are pretty good horizons to envision. You can literally go insane trying to envison the "what can happen", down to a tee. Just suffice to say we are undergoing a paradigm shift, as we TRY and deal with that infinite growth slamming into the wall of finite resources.

[68Camaro]

...to try and wargame EXACTLY what happens, is pretty risky.

Precisely...

[balz]

I agree with most of what has been said here. However, I do think it is IMPORTANT to think about how likely hyperinflation is likely in comparison to deflation. Sure, in the end, the economy might collapse. Or it might not. But I think we all agree that the next 10-20 years will be completely different than what has been for the last 10-20 years. And I agree as well with the rocky plateau where demand is destroyed each time oil prices goes up.

The real question is: can the printing press makes money fast enough to replace the trillions of fiat digit dollars that will vanish when the economy collapse?

Many believe it can't.

I think it is important to get an answer to this as in the first stage of the collapse we might have to choose between PM or fiat. And right now if we believe in hyperinflation we could already buy PM out of debts, but we shouldn't if we think deflation is likely because if deflation happens commodities will crash big time.

[neilgin1]

Deflation has to be relative to something, and over what time period.

Frankly, I think we're going to see a bit of everything.

We are already in an inflationary period. (I stopped at the grocery to pick up some stuff for dinner, since the wife wasn't feeling well. Had more sticker shock. Several things I hadn't bought in a few years were 2x what they were the last time I have gotten them.)

During the time the dollar is the safe haven fiat it will rises significantly to other currencies,

yep..everything and then some. i had to laugh, 68, what blew you away at the food store, sticker shock wise? 12.98 lb rib eyes? 4.29 bread? what?...i could tell you the stuff thats 'cheap' as compared to actually making it. Canned vegetables, tomatoes..real bargain, corn, etc, and jams and preserves, not all, but grape, and strawberry. Rice is still a bargain, beans, both canned and sack dryed, bargains. salt, a bargain, garlic and onion powders, a huge bargain, same thing with vegetable oils, some...the main line ones, bean and rapeseed, (canola)..the two huge spikes are in any animal protein, beef and pork, chicken, and in fermented drinks, except for wine, but beer and hard spirits..huge spikes. if anyone wants to talk about getting wealthy, its owning hooves on the ground, (which means you have to feed them) and being able to make hard spirits, and that requires grain or cactus, or juniper. If you want to talk about "stacking", start buying cases of half pints of cheap whiskey and vodka, stack them. i dont like booze, so thats a good place to put FRN's for future barter, they'll be worth their weight in gold in any kind of barter situation.

[68Camaro]

I agree with most of what has been said here. However, I do think it is IMPORTANT to think about how likely hyperinflation is likely in comparison to deflation. Sure, in the end, the economy might collapse. Or it might not. But I think we all agree that the next 10-20 years will be completely different than what has been for the last 10-20 years. And I agree as well with the rocky plateau where demand is destroyed each time oil prices goes up.

The real question is: can the printing press makes money fast enough to replace the trillions of fiat digit dollars that will vanish when the economy collapse?

Many believe it can't.

I think it is important to get an answer to this as in the first stage of the collapse we might have to choose between PM or fiat. And right now if we believe in hyperinflation we could already buy PM out of debts, but we shouldn't if we think deflation is likely because if deflation happens commodities will crash big time.

15 one-trillion dollar bills can be printed in a split second...

The primary use of PM (in my view) is to transport assets through a crisis. So that they can be used afterwards, not during.

One will continue to need fiat in the near term, and into most crises, and perhaps less important metals (copper, nickel coin). And supplies, bought now.

PMs should not be used, if at all possible, until after any crisis finds its end.

[balz]

I agree with most of what has been said here. However, I do think it is IMPORTANT to think about how likely hyperinflation is likely in comparison to deflation. Sure, in the end, the economy might collapse. Or it might not. But I think we all agree that the next 10-20 years will be completely different than what has been for the last 10-20 years. And I agree as well with the rocky plateau where demand is destroyed each time oil prices goes up.

The real question is: can the printing press makes money fast enough to replace the trillions of fiat digit dollars that will vanish when the economy collapse?

Many believe it can't.

I think it is important to get an answer to this as in the first stage of the collapse we might have to choose between PM or fiat. And right now if we believe in hyperinflation we could already buy PM out of debts, but we shouldn't if we think deflation is likely because if deflation happens commodities will crash big time.

15 one-trillion dollar bills can be printed in a split second...

The primary use of PM (in my view) is to transport assets through a crisis. So that they can be used afterwards, not during.

One will continue to need fiat in the near term, and into most crises, and perhaps less important metals (copper, nickel coin). And supplies, bought now.

PMs should not be used, if at all possible, until after any crisis finds its end.

But what about deflation? Shouldn't you buy PM when its worth less because of deflation?

[68Camaro]

yep..everything and then some. i had to laugh, 68, what blew you away at the food store, sticker shock wise? 12.98 lb rib eyes? 4.29 bread? what?...i could tell you the stuff thats 'cheap' as compared to actually making it. Canned vegetables, tomatoes..real bargain, corn, etc, and jams and preserves, not all, but grape, and strawberry. Rice is still a bargain, beans, both canned and sack dryed, bargains. salt, a bargain, garlic and onion powders, a huge bargain, same thing with vegetable oils, some...the main line ones, bean and rapeseed, (canola)..the two huge spikes are in any animal protein, beef and pork, chicken, and in fermented drinks, except for wine, but beer and hard spirits..huge spikes. if anyone wants to talk about getting wealthy, its owning hooves on the ground, (which means you have to feed them) and being able to make hard spirits, and that requires grain or cactus, or juniper. If you want to talk about "stacking", start buying cases of half pints of cheap whiskey and vodka, stack them. i dont like booze, so thats a good place to put FRN's for future barter, they'll be worth their weight in gold in any kind of barter situation.

Prices have been climbing for some time; you might recall earlier posts of mine arguing that point (vs others insisting there haven't been any significant increases). Today was a doozy just because I hadn't priced these couple of things in awhile. 20-30% at a time is one thing. Seeing $5.99 in the bakery on a pecan danish when the last time I had bought it was $2.79; well, it was like an out of body experience. (As were several other prices today.)

Yep, that's why I've filled every available shelf (adding many shelving units) with stockable stuff, and have food-grade buckets filled with > 1 years worth of beans and rice (infinite shelf life). Etc, etc. (See the prepping threads.)

[68Camaro]

But what about deflation? Shouldn't you buy PM when its worth less because of deflation?

Assuming there are PMs to buy, and I still have fiat to buy them with, if PMs go down in price I will buy more. But I won't wait until then, because there are too many other scenarios where either PM will be sky-high (no matter the price of food, etc), or not available at all (all gone, or government restricted, rationed, banned), or where I won't have the fiat any more. That's just me. Your mileage may vary...

[neilgin1]

I think it is important to get an answer to this as in the first stage of the collapse we might have to choose between PM or fiat.

i HEAR ya, but what KIND of fiat?...to me, THIS SECOND, the only "fiat" acceptable to chose WITH, not OVER PM's,is the American "brick of nickels", thats fifty rolls of 40 nickels, $2.00, thats $100 FV. the intrinsic value of the 5 cent nickel, undebased, but not for long, went from 6.7 cents high, and its just NOW trading at 5.01 something, with the copper and nickel markets both getting hit.

but paper fiat? sure, its advisable to keep a small stash of folding money around the place, and definitions of small may vary, $200 or $2000, whatever, but i regard paper fiat as ...scary. its kind of like a high school house party, that you dont know when the parents are coming back home and shutting the fun down.
this is no parlor game we're comtemplating here, witness current mythology, films. Think about the many movies hitting the screens with an apocalyptic theme, art mirrors the collective consciousness and imagination of the times. Its no mystery you see films like, "The Book of Eli", or "The Road", or recently "Contagion", just to name a few. Bro, we been hit by that ole Chinese curse, "may you live in interesting times"....and then you get even MORE far out films, Danny Boyles "28 Days Later"?...take a gander at that nightmare. its a wild world http://www.youtube.com/watch?v=HEkJAaGhJhQ

[balz]

Camaro and neilgin what you say makes sense. This is the difficult part for me. I see two scenarios.

First scenario: The States do not want to let public deficit take the economy down and they print as much money as they can to avoid that. We get hyperinflation and PM prices skyrocket. Gold is the best investment. Silver is good too.

Second scenario: The big debtors do not want their fiat money becoming useless as that's how they make their money so they do everything they can to put pressure to avoid any kind of inflation and they live happily with deflation as they have tons of cash. PM prices plummet and those who have cash can make a good deal but those who bought silver at 40/oz are in deep trouble. Bonds are the best investment.

I'd really like to know more about what will happen: HYPERINFLATION or DEFLATION?

[68Camaro]

We're already doing #1, though they are purposely trying to keep it at "moderate" inflation. I don't think we're going to see true hyperinflation. Price controls will be instituted before that happens. Isn't 20-30% a year bad enough? That's where we're headed.

#2 is an unstable condition. Even if it occurs, and I wouldn't be surprised if it happens in concert with #1 - it can't last long. An already risky economy will go into the tank within 6 months. People will be rioting in the streets within a year, if not before, if that happens.

[balz]

We're already doing #1, though they are purposely trying to keep it at "moderate" inflation. I don't think we're going to see true hyperinflation. Price controls will be instituted before that happens. Isn't 20-30% a year bad enough? That's where we're headed.

#2 is an unstable condition. Even if it occurs, and I wouldn't be surprised if it happens in concert with #1 - it can't last long. An already risky economy will go into the tank within 6 months. People will be rioting in the streets within a year, if not before, if that happens.

People would be rioting in the streets even with scenario 1...

I believe in scenario 1 because I buy PM and the other way around too. But I'm concerned because I think tthat big institutions do NOT want hyperinflation as it would make everyone debts lighter.

If we believe in Peak Oil (which is a fact, so we should), then we should consider a very long crisis, so how can we rule out a long and painful 10-20 years deflation?

EDIT: Please take a look: http://www.rickackerman.com/2011/04/the ... y-concern/

I like this comment:

To my knowledge, no bank has ever made provisions in their lending criteria. So to anyone subscribing to the hyperinflation theory, all I can say is there is nothing I, and millions of other North Americans, would love more than to take $250,000 of worthless, hyperinflated money that we worked a few days to make, to pay off a mortgage that would otherwise have taken twenty-five to thirty years to repay.

[68Camaro]

If we believe in Peak Oil (which is a fact, so we should), then we should consider a very long crisis, so how can we rule out a long and painful 10-20 years deflation?

Instead of me speculating with my answer, let me ask some leading questions for you to think through. Let's start with, what do you think will happen, and when, in our culture, during a prolonged period of flat to negative economic growth, increasing joblessness, rising prices, increased scarcity of good. This starting at a point where we have already been flat to down for more than a decade, where we are more in debt that we can produce as a society in many years, and with people already completely tapped out, nervous, scared. What's going to happen? What first, then what next? Then what after that?

[Sheikh_yer_Bu'Tay]

So Greece is fried in it's own debt "grease" and it takes down the Eurozone. Why the hell does that matter to us? Come on, so many countries have gone belly up in the last 40 years I cannot count them all. Almost every South American country, the USSR, Russia, Mexico and others I cannot even think of have defaulted, confiscated their citizens wealth, etc. and it did not bother us hardly at all.

I mean, other than cheese, wine, and hookers... what does Europe have to offer us anymore???! Oil? Nope. They don't have enough for their own. Coal? Nope, exhausted. Gold? Only if you raid their vaults. The mines have long played out. Silver? Ditto. Green technology? Hahahaha! Stop it! You are making my sides hurt! Manufacturing plants? BFD. The Asian sector can run circles around European mfg. tech. So what the Hell? Who give a sh!t if Greece defaults.

The USA supposedly has hundreds of tons of gold locked away for a rainy day. So, fiat money dies. We go back onto a gold standard. Massive DEFLATION. We go back to how it was when I was a little kid. People made every little red cent count. How I wish I still had every 90% silver dime I blew on Cokes and candy from my lawn mowing money!!