Recession or Depression

Even though economic difficulties continue, supporters of President Obama insist that the Great Recession is over. The problem is, technically they are correct. A recession has a technical definition of consecutive quarters of negative GDP growth. A single quarter of miniscule GDP growth and the recession is considered to be over, so that even if there is negative GDP growth in the quarter after that it is not the same recession anymore.

Of course one could access Shadowstats to argue that there have been continued quarters of negative GDP growth but that only leads to an argument over which set of numbers is more accurate with most conservatives and all liberals trusting government numbers. The real problem is that even though the definition of "depression" isn't as firmly settled as is the definition of "recession", it is clear that the two are not the same.

This is important when discussing the dismal economic situation with supporters of whoever is in office, of whatever party. Supporters of whoever is in office will argue that the recession is over, and that the recession ended during the term of their own person in office. Even though technically the recession ended a long time ago.

The best way to illustrate to supporters of the current administration is with a concept from trigonometry, a simple Sine wave.



There are four distinct parts to the wave that can be used when discussing economics. The first is when the value and the slope are both positive, the second is when the value is positive and the slope is negative, the third is when the value and the slope are both negative, and the fourth is when the value is negative and the slope is positive.

Recession would then be when the slope is negative, and growth would be when the slope is positive. Prosperity would be when the value is positive and depression would be when the value is negative.

Understanding it from this point of view can explain why the Great Recession (as it is commonly known) can actually be over, while the negative effects of the Great Recession aren't over, that the United States is still in Great Depression II. It still won't convince any supporter of a current administration, but it might be enough to educate the neutral observer and make the supporter seem foolish in denying reality.

Double Dip is a Lie

The failure of the economy to recover after the collapse in 2007 has become so evident that nobody can deny it any longer. This creates an interesting dilemma for Keynesians who have spent the whole time since Obama was sworn in predicting an imminent recovery.

It is true that, due to a quirk of accounting, technically the recession ended already. Government spending shot up in response to the downturn. Unfortunately government spending is included in the GDP, so therefore the GDP went up as a result of government spending increasing faster than the rest of the economy was declining. Since "recession" is defined as consecutive quarters of economic decline, any increase in GDP is considered to be the end of a recession.

Unlike "recession," the term "depression" has no exact definition and is usually considered to be enduring high unemployment. This has enabled mainstream economists to deny that the economy of the United States is in such a state due to the ways unemployment is disguised by government employment.

But using the government to artificially inflate the economy is highly unsustainable. At best it is temporary; at worst it makes the economy far worse due to the attempt. The current situation is not “at best” and the economy is rapidly deteriorating.

Since the economic signals are so bad that it is becoming impossible to ignore. That is why all economists dedicated to the mainstream are calling it a “double dip”. Those on the right side of the Keynesian spectrum are blaming Obama, while those on the left side of the Keynesian spectrum are blaming Bush.

Libertarians know that it is not a whole new recession. They know that it is a continuance and a worsening of the current plight facing the United States economy. For tactical reasons it is important to correct everyone who says that this is a whole new economic downturn.

The recovery is still elusive

A year after the stimulus packages were enacted, Barack Obama is still claiming that the stimulus worked, that it created or saved jobs, and that without it the country would still be in a recession, or perhaps even a depression. Most libertarians would laugh at the claim, but as Ayn Rand pointed out, if you want to know if something is right you have to ask "by what standard?"

What exactly did the stimulus do? The stimulus created temporary government jobs to mask unemployment. Since government spending is included in GDP calculations, it increased the GDP, and then later when the money cycled through the banks it enabled failing banks to show a profit and give bonuses, thus creating a secondary GDP boost. The true point of the stimulus was to make the numbers look good, and since the stimulus made the numbers look good the stimulus actually worked.

By the standard of creating an economic recovery the stimulus was a failure though. The money to pay for the stimulus was borrowed, creating an imminent threat of massive inflation, perhaps even hyper-inflation. While make-work jobs, supposedly shovel-ready, were created, those jobs were not jobs that add to the economy in the long run.

Since "recession" is defined by consecutive quarters of negative GDP growth, it is true that the stimulus put a hiccup in the recession. Some analysts will undoubtedly say that the recession ended and a new one began a quarter later. If the current method of calculating is to be believed, then yes, the stimulus ended the recession - but at the cost of exacerbating the depression.

Government steals retirement funds

It is being reported that agencies with governmental power are considering mandating that people with retirement investments, either in IRAs or 401(k)s, convert part of their savings into government bonds for the purpose of making annuity payments. Allegedly this is to protect investors who have seen the value of their investments decline due to the decay of the housing bubble and the decay of the stock market.

China is unwilling to buy ever increasing amounts of government debt, and private investors are unwilling to buy debt at what amounts to a negative interest rate. The Federal Reserve cannot, at this point and for political instead of economic reasons, raise interest rates. So how will the government unload these toxic assets?

It is noted due to recent United States interactions with Switzerland, that the United States government is desperate for cash. Increased pressure on tax evaders will slightly slow but will not stop this crisis as the true cluprit is spending far in excess of what the government receives in tax reveues.

That leaves the government searching for what money is still available to be seized.

Those who are currently working are not using their retirement funds. They will not notice in the short run if those funds disappear. Eventually, when it is time to collect on the government debt that the retirement money was used to buy, it will become obvious that the funds are no longer there.

This would turn every retirement fund into Social Security, a pile of promises from the government to repay what has been taken, backed by no real value other than the potential of future taxes collected. It is well known that it is difficult for a person to live off of Social Security when retired, that a retiree must have either other savings or family that can be relied on. This move, if it happens, would eliminate the other savings.

The end result, should this pass, is to ensure that when it is time to retire, everyone who was saving will be poorer.

Sources:

Doug Casey on Lew Rockwell
Wendy McElroy
Seeking Alpha
Business Week

Lack Friday

It is time for the Keynesian economists to predict disaster in spite of their pronouncements that the economy was finally recovering. They announced a fragile recovery and a jobless recovery. Then "Black Friday" failed to occur. The single biggest shopping day of the year happened without the massive crowds normally associated with that day.

Retailers were reporting that conditions were basically the same as any normal business day, and that by early evening the stores were fairly deserted. Although there were shoppers seeking good deals on high end items, it appeared that they were shopping for replacements for worn appliances, and not purchasing items like plasma televisions and other luxury consumer goods.

As is preached by Austrian economists, people are saving their money because they are in a recession. Many businesses look forward to "Black Friday" and the rest of the holiday season, as Christmas shopping helps sustain the businesses through the rest of the year. If the 2009 Christmas season fails to provide the profits usually associated with Christmas shopping many of the businesses that depend on it may not make it through the rest of the year.

The Keynesian solution is more stimulus. The message among those in political circles will be that people aren't spending enough.

People are saving money because it is the sensible thing to do, especially in economic hard time. The official unemployment rate is around 10%, the unofficial (and more accurate) rate is aroudn 20%, and the rate among 18 - 30 year olds is 50%. The money isn't there to be spent. Going further into debt is the very last thing peole need to do right now, even if the banks were lending.

If "Black Friday" i an indication of things to come, the situation is more accurately described as "Lack Friday". First the stores will lack customers, and then thanks to government efforts to remedy the situation the people will lack money and freedom.

An announced recovery

The economy continues to decay, but people in various media and government outlets were cheering the fact that the economy only shrank by one percent in the prior quarter, unlike the over six percent shrinkage in previous quarters. That the economy continued to get worse is considered good news because it got less worse instead of more worse.

Some, such as Bernanke, conclude that the economy will recover by the end of the year. Bernanke was saying the same thing back at the beginning of the year though, so the only real strong point he has is consistency. While unable to foresee the recession he sees that it will soon be over.

Naturally anyone familiar with Austrian Economics can poke holes in the pronouncements of recovery.

The GDP only shrank by one percent, in a quarter which saw phenominal increases in government spending. Unfortunately government spending is considered a contributing factor to the GDP instead of either an outside factor or a subtractive factor. The basic equation for the GDP is: GDP = private consumption + gross investment + government spending + (exports − imports). A corrected equation for the GDP would be GDP = private consumption + gross investment - government spending + (exports − imports).

The second formula accurately represents the drain on the economy that is the government. But that may be too controversial for most economists, and just leaving out government spending as a whole would still give a clearer picture of the GDP. GDP = private consumption + gross investment + (exports − imports).

In either case, the GDP smaller than actually reported. And that smaller GDP would indicate a larger decay of the economy considering how rapidly the federal budget is growing.

But supposing that Bernanke is right, that the economy is starting to recover. According to Austrian economics, that will mean that the USA will have to deal with the negative effects of the efforts of the government to stave off the inevitable liquidation of malinvestments. Since this was done by doubling the money supply, the negative effect will be a havling of the value of the currency. That means if the recession does indeed end in 2009, the next one begins in 2010.

The war on home-based businesses

In the entry Home Business Opportunities, various endeavors one could invest in with low startup costs were investigated, endeavors that could operate out of the home. These could function as home based businesses as well as sidelines to primary employment.

Many potential businesses are already forbidden to entrants without extensive resources due to prohibitive licensing requirements, a subject much examined by the Institute for Justice as they try to remedy the various laws that prohibit people from working their way out of poverty.

But it is impossible to license every single field. It is impossible to prohibit home businesses. While certain fields can be forbidden or strictly regulated, the realm of human endeavor is too broad for piece-meal laws to restrict.

In order to inhibit home based businesses it is necessary for there to be very broad laws to catch any endeavor not already covered by existing licensure laws.

Two such bills have recently been in the congress. One has been signed into law and one is in committee.

The Consumer Product Safety Improvement Act is one of those laws.

Anyone who makes any home crafts, from furniture to clothing, has to spend exorbitant sums of money to test the product and ensure that the amount of lead in it is safely under the legal limit, even if there was no lead involved at any stage of manufacture. Buying yarn, knitting a scarf, and selling that scarf is now restricted unless the scarf is tested – even though the yarn has theoretically been tested.

An exception to that rule is that it may be theoretically possible to say that the product is not primarily intended for children, requiring extensive market research to determine if that is the case, extensive market research that (like the testing) is something large corporations can afford but home based enterprises cannot.

The other is the Food Safety Modernization Act which will do for the family farm what the CPSIA did to the family firm.

It is officially target at organic farms, requiring them to use commercial fertilizers and pesticides that organic farmers currently do not use. But that is not the full scope of the law. Anyone who sells any excess produce (as family farms often do) are subject to this law as those family farms are now commercial farms. This bill also includes standard for feed of livestock

Also this creates a Food Safety Administration within the Department of Health and Human Services that tracks the DNA of food products, which would be of great benefit to the primary lobbyist in favor of the bill, Monsanto. Given how bees are spreading genetically modified crop pollen to organic farms and family farms, Monsanto feels entitled to payment whenever a farmer has contaminated seed.

While there is nothing inherently wrong with genetically modified crops, billing innocent farmers is a dirty tactic. Pushing a bill through congress to make it easier is even dirtier. That this will ultimately undermine the family farm when excess produce is produced is a terrible idea in the middle of a recession or at the beginning of a depression.

Two very broad sweeping bills, they essentially cover any product you can sell that is edible (FSMA) or inedible (CPISA). A home based business either sells products or services, and these bills restrict products. Since most services are either licensed or are illegal, these bills finish the destruction of the home business.

Comparing 1929 to 2008

One of the rebuttals to those who compare the depression of 1928 to 2008 is that unemployment is far lower today than it was then. Of course there are problems with that comparison.

One problem is that every government statistic is a poor reflection of reality. It is well known that inflation calculations exclude certain high inflation items in order to bring the actual rate down. The same is true for unemployment statistics that do not count those who are underemployed, have multiple jobs, and have given up on looking for work or are looking for their first job.

But there is another entirely different factor in the unemployment rates that is overlooked even by most who know how government statistics are inaccurate. A greater portion of the population today work for the government than did in 1929.

This is an important statistical variance. Government jobs are not productive jobs, but instead are a drain on the wealth of those who have actual productive jobs. It is hard to accurately measure the number that work for the government, because in addition to three levels of government to count (federal, state, and local) there are many contractors and subcontractors who directly or indirectly work for the government.

According to government statistics direct government employees include 2.7 million people employed by the federal government, 5 million employed by the state governments, and 14 million people employed by local governments. With a total workforce of 136 million people that’s 16% who are government employees.

The official unemployment rate is 6.7 percent. According to Shadow Stats Alternate Data the actual unemployment rate is about 7 percent higher. That would make an alternate unemployment rate of about 14 percent.

Add to that the number who are government employed, and that puts the non-productive employment rate at 30 percent.

That makes an interesting comparison to the unemployment rate during the Great Depression. In 1930 the unemployment rate was comparable to the current rate, and in 1931 the rate was comparable to the alternate unemployment rate. In 1932 the rate was below the current non-productive employment rate.

Year Unemployment Rate
-------------
1929 3.2
1930 8.7
1931 15.9
1932 23.6
1933 24.9
1934 21.7
1935 20.1
1936 16.9
1937 14.3
1938 19.0
1939 17.2

The problem with those numbers is that government employment greatly increased due to public works projects due to the Hoover/Roosevelt New Deal.

Given all the factors that go into calculating employment, the rate of those who are productively employed is indeed comparable already to the Great Depression. The usual proposed Keynesian solution, even more public works programs, will be extremely difficult to implement given the large percentage of people who already work for the government.


Please give to the Salvation Army. They are a charity with a good record on how much of each donation goes to the intended recipient, and this year due to the depression their donations have fallen significantly. That’s unfortunate because in depressions is when charities like this are needed most. Yes, they are a religious based charity, and while I don’t agree with their religious beliefs they do good work. If you’re going to give to a non-political charity, please consider the Salvation Army.

States and the Recession

In spite of federal efforts to stop it, the recession is continuing unabated. Unemployment is rising while prices and property values are falling. While the federal government has mismanagement options that enable it to spend in spite of decreased revenues, other levels of government do not have the same capabilities.

The states generally get funding from income taxes and sales taxes. Cities and counties generally get funding from property taxes and sales taxes. As unemployment rises, income tax revenues decline. As sales decrease, sales tax revenues decline. As property values plummet, property tax revenues decline.

Government officials find the prospect of cutting the budget abhorrent. That leaves the states in a quandary.

Some states are already turning to the federal government for bailout money. Not all agree, but the trend is there. Other states are looking for which taxes can be raised. Some are increasing their ticketing to increase revenue.

On the issue of raising taxes during a recession, Keynesians and Austrians agree it is a bad idea. States that do so are implementing bad economic programs, often in opposition to tax decreases implemented by the federal government.

A better solution would simply be for the states to do what everyone else has to do, and to adjust expenditures downward to match revenues.

George W. Bush is Herbert Hoover

George W. Bush is very much like Herbert Hoover, but not in the way most people understand that statement.

Herbert Hoover was, contrary to the myths, a very economically activist president. When the Great Recession started, he worked tirelessly to try to bail out the failing banks. He started many of the programs that eventually became part of FDR's "New Deal". In doing so he made the Great Recession worse, and since his programs were those of the New Deal, he started the Great Depression. As a result he lost his party the office of the Presidency for decades. The other party (in the person of FDR) gained power and formally instituted the New Deal.

Some of the blame Bush is getting is for allegedly being too free market, allowing the market to proceed unchecked. Allegedly his disbelief in government caused him to deregulate the banking industry, even though there is no truth to that belief.

It should be noted that the Republican Party does not believe in deregulation. The Republican Party believes in regulation, just to the benefit of a different group than the Democratic Party does. Both of them have faith in the government; they just have different faiths from each other. Libertarians are the ones without faith in the government. The Democrats seem confused on the issue of this faith, mistaking heresy for disbelief, but the truth is that compared to the Democrats the Republicans are heretics of big government instead of atheists of big government. Even then few regulations were removed or changed.

The free market got the blame in 1929 for the inflation of the Federal Reserve and the failure of the market interventions of Hoover. The free market is getting the blame in 2008 for the inflation of the Federal Reserve and the failure of the market interventions of Bush.

Bush is in the process of losing his party control of the Presidency, and will be handing the office over to Barack Obama, who will bring us a New Deal to try to solve the economic woes of the United States, completing the cycle and bringing a new Great Depression out of Bush’s Great Recession.

The Party Divide in the Bailout

Now that the bank bailout has been passed it should be obvious to everyone that there are no real differences between the two primary political parties of the United States. Both the presidential candidates voted in favor of the bailout both the times it was presented to the Senate. The voting was not divided along Republican versus Democrat lines. The voting was divided along rank-and-file versus maverick lines.

Those who are not highly regarded by their own parties did not heed the call to vote for the bailout, opting to represent regular Americans instead of their parties and the special interests that control them. These are the Representatives and Senators who seldom get committee assignments and are seldom invited to speak at conventions or other party events.

Those who voted for the bailout represent the mainstreams of both parties, those that follow the line of the party leadership. These are the Representatives and Senators who always get the spotlight and they chose to represent Wall Street instead of Main Street as directed by their financial backers.

The divide isn’t between the parties, it's within the parties. It isn't between Obama and McCain, it is between Ron Paul and Dennis Kucinich on one side and John McCain and Barack Obama on the other.

This was part of the message of the Campaign for Liberty. The parties do not represent the American People, and have not for a very long time. The only politicians who might actually and truly represent the people is if the people vote third party. Of the four that should have been there it is certain that at least one of them would have been an optimal candidate for any American who isn't dedicated to party first and foremost.

The optimal solution is for the maverics of both parties to join the Campaign for Liberty. That is not likely but it would be best for the United States.

Home Business opportunities

In response to How to Survive the Upcoming Economic Collapse the question was asked what home businesses a family can start.

The problem is that several of the businesses that have high profit potential and low startup costs are also subject to specialized licensing. The Institute for Justice has an page Study on Barriers to Entrepreneurship that shows all the businesses that it would be difficult to get into due to prohibitive entry requirements. It is difficult at best to: community transport, cosmetology and hair braiding, catering, and child care.

All businesses, to be formal, will need a business license purchased from the city or the county. To go through this one should consult a lawyer, which is an additional cost. Then, depending on the business there are specialized licenses that must be acquired at various costs and difficulties. Then there is the issue of zoning laws that may prohibit any sort of business in a residential area, more common inside city limits than outside.

Businesses that are among the least licensed are those that manufacture, tailor, and sell clothing. This can be done by sewing or knitting, made to fit, done with minimum startup costs, and even be worked on at odd hours such as when relaxing. Another home business without licensing is for those with woodshop skills to manufacture furniture. Although the specialized tools are an investment, good furniture commands an impressive price.

Another business would be in education, but only in certain areas to reduce the prohibitions and regulations. Teaching in the arts is one option, and tutoring the academic subjects is another. Tutors are technically not teachers, and therefore exempt from some of the regulation, even though in practice they often provide high quality education outside of the formal educational establishment. The only thing a tutor cannot provide is academic credit. In some areas it is possible to formally open a private school in the home, and give academic credit, without possessing educator credentials. A private school does not always need to hire formally trained teachers.

Becoming an eBay vendor is easy, requiring basically registering with eBay and PayPal to start up the business, except in areas that require auctioneering licenses. To collect items worthy of sale on eBay all a person needs to do is scour garage sales for items that would do well in an expanded market.

While some areas require extensive licensing for anyone to tend yard, others are open about it and that would enable someone to get into a home landscaping business that includes mowing lawns, tilling gardens, and even trimming tress. The same applies to animal care short of actual veterinary services, where a person could clean stables and animals and tell the owner when it would be a good idea to refer an animal to a veterinarian.

Those who have formal training in specific fields may find that they can operate a home business completely legally. A licensed electrician may use the home as a location from which to operate on calls, while a licensed therapist may have an office at home avoiding the expense of a separate office. All such efforts are based on the zoning laws, of course.

This all implies that the business relationship is formalized. It is also possible to run an informal business arrangement out of the home, although the legal impediments to doing so need careful examination. Doing so loosens up the business model, but also makes it impossible to apply for small business loans. This could easily cause the entrepreneur to run afoul of the law, so care must be taken if this model is to be embraced. A way to avoid trouble is to engage in a barter economy.

The options aren’t as many as in the past, but there are still home business opportunities for those who want to expand their options.

A food bubble

Food prices are rising. There are food riots in the third world, and food rationing of certain items in the United States. Various analysis pundits are trying to figure out exactly where to place the blame.

This is a real concern, as due to the economic collapse in the United States the prices of many commodities both at home and abroad will be rising. The Federal Reserve insists there is no recession yet, posting a 0.6% growth for the previous quarter, but Shadow Stats begs to differ. There is a possibility that food will become a more scarce commodity, which is why it is important for people to ensure a proper food supply through urban and suburban farming. But we aren’t at the crisis point yet.

Many people blame ethanol, and rightly so. While those who know what foods we should eat enjoy telling us that it takes many pounds of grain to enjoy one pound of beef (based on acreage) any acreage devoted to ethanol cannot be consumed as grain or beef. This has had a direct impact on the price of corn and corn products, but it doesn’t tell the whole story.

Unknown News author Mahdi Abdul Finke blames the current situation on another speculative bubble. With the Dot Com bubble a distant memory, the Housing Bubble still deflating, and the source of them all, the Currency Bubble, not being reported, other bubbles will of course sprout. Until the Currency Bubble finally pops, pressure will be relieved by venting into other markets, creating bubble conditions there until the subsidiary bubbles pop.

All of the bubbles making headlines are subsidiary bubbles. The reason why various government agencies cannot address the cause of the subsidiary bubbles is because they will not address the root cause of the subsidiary bubbles. As long as the Federal Reserve is not looked at as a cause, as long as it is looked at as a cure, then there will be no way to stop these bubbles from growing in the first place.

This doesn’t mean that there isn’t a food crisis looming. There is, but the early signs of it are being exacerbated by the Federal Reserve.

Rising fuel prices are at the root of the real aspect of the food crisis. It takes fuel to power farm equipment, and fuel to transport food from growers to consumers. The fuel crisis has two roots. One root is environmentalist policies that restrict drilling for oil, restrict the construction of refineries, and mandate the use of ethanol (it takes 120 barrels of oil to create 100 barrel of ethanol). The other root is the insane policy of aggression towards countries that produce oil, such as Iraq, Iran, and Venezuela.

Since it is more expensive to grow food and to ship food, prices are rising. Since the economy is in a recession and the Housing Bubble has thrown people into panic mode, this hysteria is taking that rise and turning it into a bubble.

While it is an excellent idea to prepare for upcoming food shortages, it is not yet time to panic. It is, instead, time to plant a garden while stocking up on durable food stores.

How to prepare for a total economic collapse

In my first blog entry on economic collapse, I made the assumption that basic goods and services will still be intact, that there are jobs still available, goods and services can still be purchased, just with higher prices and higher unemployment. In this one I explore an even gloomier, although less likely scenario, the complete and utter collapse of the economy.

Although it is unlikely, the weakened state of the United States economy could result in a complete and total collapse of all systems and infrastructure. Unfortunately that is a lot harder to prepare for, as basic law and order may even break down.

There are signs that the coming depression may go that far. Already in some communities in Syracuse, NY, the banks themselves are abandoning foreclosed properties, and shanty-towns are springing up around Los Angeles, CA. These properties, without any owners, are being taken over by vandals and criminals.

Truckers are finding they are making a loss on each trip due to the rising price of fuel, and if this trend continues, interstate shipping will no longer occur. There is already talk of a nationwide trucker strike, and basic economics will force an end to shipping if a strike does not occur.

The crisis could also be triggered is if the government does initiate war with Iran. That will dry up fuel supplies and may easily be escalated to a nuclear conflict, which would lead to counter measures by the rest of the world.

The worst place to be in the event of a complete collapse is inside a city. The first problem would be the food crisis. The larger cities have only a few days worth of food inside them, which would prompt a very hasty and dangerous exodus from the city. Smaller cities can last longer, but eventually the inability to transport food from the farms to the cities will cause panic, mayhem, and eventually starvation.

Meanwhile, out in the rural areas of the country, food panic will not be a problem because that is where the food is grown. Farm towns will not receive fuel for the farm equipment, but at least the food itself will be there. In the country people are also more likely to own large livestock that can be used as alternative means of transportation.

A necessary item to own in the worst case scenario is a firearm, preferably several of them. In a panic and riot it happens that not only are those who have stockpiled resources the subject of looting, but innocent people are often assaulted or killed in random acts of violence. Law enforcement will be too busy combating the population to provide any security, leaving it the job of the individual instead.

For those who do live in the city and want to prepare for the worst, the best advice to give is to purchase an RV, preferably a Class A or Class C (the motorized RVs.) In the event of a crisis the owner of an RV can leave in a hurry. Some people are thinking about acquiring property in remote areas, outside of easy government control. The advantage of an RV is that one can more easily transport the family to those areas, and can also move again if worried about discovery. A place to live is guaranteed no matter where one travels, the only difficulty being the effort to find sufficient fuel and fresh water. If necessary the grey and black tanks of an RV can be dumped anywhere, not just in an authorized drainage facility.

A collapse of this scale will destroy certain concepts of ownership, due to massive property abandonment and the dislocation of the population. There will be a new round of homesteading, recognized primarily by common law instead of government. Those who still maintain ties to the government, such as agents of the Bureau of Land Management or Internal Revenue Service, will find their intrusion to be far less welcome than is currently the case. Conflicts between homesteaders and the military may occur, destroying some communities, but ultimately most areas will be considered beyond the reach of the government.

Those who live close to the ocean can also take advantage of a slightly more expensive, but ultimately more versatile, alternative, and get a yacht. While commonly considered a recreation for the rich, they can also be dwelling places for middle class ocean enthusiasts. With a yacht, one can quickly leave the territorial waters, and simply moving away from the dock enables the owner to avoid any riots that may be happening on the shore. Once in international water, the owner can travel to any country that has a beach to seek safe harbor, or can go to any wild beach and life off the land as a farmer or hunter.

The hope is that events do not grow this bad, but if another war starts or a domestic police state with price controls is established, this does become a possibility.

How to Survive the Upcoming Economic Collapse

Pretty much every honest and informed person agrees that it's coming – the collapse of the dollar, the end of the American Financial Empire, and a depression that will compare to the depression of the 1930s. The evidence is in the financial news, and abundant on LewRockwell.com. Keynesians, Monetarists, Mercantilists, and Socialists have seen to that as they have consistently destroyed the wealth of this great country.

Greenspan is thought of as a genius, because he had the good sense to leave office and give the mess he helped create to Bernanke before it became obvious it was a mess. Now all that the sensible person can do is prepare for the worst and hope that the preparations won't be needed because Ron Paul will secure the Republican nomination.

The honest and informed economist advises buying gold and gold stock, hard monetary commodities that can't be deflated by government as a solid hedge against inflation. But how can the average person, middle class to poor, prepare for the upcoming collapse? Advice to buy gold or gold stock isn't as useful to those without the resources necessary to do so. Based on the assumption that the basic infrastructure remains intact, that there are jobs but fewer of them and that the stores are still open but with higher prices, there are ways a family can prepare.

The first step is basic financial management. Debts should be paid down and credit cards paid off. The best situation to have going into a recession or depression is to be as debt free as possible. It is time to start ignoring commercials and the desire for the newest and shiniest gadgets. An inexpensive car serves just as well as transportation as a fancy sports car in spite of what advertisers may say. Shop wisely, compare prices and find the best value for the money, which often means buying staple goods in bulk. Purchasing essentials in bulk saves money in the long run, plus a stockpile of food staples can be put aside for emergencies.

Next, take stock of family members and their living arrangements, as residence is the largest expense in the typical household budget. It may become necessary for families to adopt the old tradition of family living with family, instead of the current system of each house having one small family or even just one individual. The family will need to become the safety net it was in the past, with family members each contributing to the whole. The more stable incomes in one house, the better off that house will be. The loss of an income in a house with multiple incomes will not be as devastating as the loss of an income in a house with only one or two incomes. This is already being done as it is harder now for young people to establish themselves: young people graduating from high school or college often return home so they can afford to pay off loans and try to save enough to move out.

Securing a place to live should be the highest priority. Homelessness is the worst possible outcome, especially in economic hard times as charities will be less able to provide assistance to more people in need. Living with family enables the pooling of resources and abilities, so that each can support each other to avoid any being subjected to homelessness. Any relative with extra rooms in the house will be able to help out family members who cannot afford to live on their own anymore. Anyone who has room to take in other family members should prepare psychologically for the adjustment.

Try, when looking over the family situations, to find a family member whose residence has a yard. All the houses in the suburbs have a front and back yard. These can be put to good use, even better use if fenced in, because yards can become gardens. Diversify the garden – include a patch for a few fruit trees if possible. Collect catalogs from nurseries.    These have a wealth of information on companion and succession planting. They also help determine what can grow best in any particular area. Right now most companies provide these catalogs free.

Gardening is hard work, but with more people living together the burden of tending to the garden is shared among several people, lightening the load. Even the children can participate in activities such as pulling out of weeds or crushing of bugs that will attempt to infest the garden. The more food that is grown the less food that needs to be purchased, which is particularly important in the event that food distribution becomes a political tool or prices rise to the extent that that purchasing food becomes too costly. This will extend the family budget. Even those who are in the cities can still garden: window box gardens are an old tradition, and if each apartment in a building grows a different product the garden will be diverse and plentiful.The flat roof top of many apartment houses makes for a good place to garden, as do vacant lots found in many cities.

The household's vegetable based waste as well as garden waste can be added to the compost heap. Leftovers should not go into the trash; they should go back to the garden. Unfortunately a small compost heap won't produce sufficient temperature to degrade meats, dairy products, and non-herbivore animal droppings. Vegetable kitchen and garden waste are excellent sources of composting. This will save on the need to purchase fertilizer for the garden. More information on compost heaps can be found here.

If the yard is medium sized, consider keeping a chicken coop. A family that keeps chickens will have eggs and occasional meat from the back yard. Historically a chicken coop was considered a source of eggs with meat as a by-product. A rooster should be included so that the flock can be self-sustaining. Other alternatives include keeping a beehive or a rabbit hutch. A beehive will provide honey and also wax. The recent bee blights are happening in industrial bee farming, where the bees are not properly nourished as they are traveling from farm to farm, being fed only one type of pollen and nectar at a time, and being fed corn syrup while they are traveling. While the blight is also impacting domestic beehives, in the suburbs a single beehive has a wide range of food and will keep itself healthier and the bees will pollinate the garden and orchard, although one beehive per neighborhood is sufficient. A rabbit hutch actually provides the least benefit, as rabbits only provide fur or meat, but still remains an option for those with smaller yards when zoning laws forbid chickens, and can actually be kept indoors by city dwellers. Keeping rabbits or chickens guarantees a source of protein to compliment the fresh fruit and vegetables already being provided by the garden. More information on raising chickens can be found here, while information on keeping bees or rabbits can be found here and here.

For those with large properties, farther from the cities, it may be possible to keep, in addition to a chicken coop, a couple of goats to provide dairy and also meat. Cows require extensive feeding and pasture, sheep produce too little milk, and pigs produce too much aroma for the suburbs. All that is needed are a couple of does, because all that the community needs is one buck for fifty does, but at least two does are needed as goats are social creatures. Let a professional farmer be the buck's owner, and pay (or trade with) that farmer for breeding services. This will provide two kids a year per doe on average plus a good amount of milk, and some report that goat's milk is actually healthier than cow's milk. Of course any organic milk is superior to government approved processed milk, but goat's milk doesn't trigger lactose intolerance since the sugars and proteins are different. There are different breeds of goats, and some even provide wool which can be used or traded. A goat can even be a beast of burden; pulling wagons for example, although there is a limit to how much can be hauled compared to cows or horses. Being pulled around in a goat drawn wagon will be an inexpensive pleasure for children. For more information on raising goats look here or here.

There are artificial barriers that may prevent the home garden approach to surviving a depression. Zoning laws and beauty ordinances may prohibit vegetable gardens, orchards, chickens, and goats. It is best to find out the laws before engaging too heavily in these activities, but with a good fence around the back yard this shouldn't be too much of a concern. Zoning laws may make the front yard a loss, but sometimes a fruit tress or even vegetable plants that are pretty enough to plant between flowers in the front yard can pass beauty ordinances. With the need to garden and keep small livestock, the local government might succumb to the pressure to change restrictive laws.

Slaughtering livestock properly isn't easy, which is why this should be done by a professional butcher. The savings in the cost of meat will compensate for the payment of the butcher, but it may be possible to kill, pluck, and dress a chicken at home. Every part of the animal has potential use, even the feathers. In the case of rabbits and goats, not only is the meat the direct benefit the hide can be tanned and used in clothing. Organ meats can be eaten as well, something often forgotten in modern times, and even intestines can be used to wrap sausages.

It is time to relearn the old crafts. My own love of cooking led me to discover the joys of making my own jellies and jams, baking my own bread, as well as fermenting home made fruit wines. It will be better for the family to discover how to can and to make jelly and jam from the products of the small garden and orchard. Milk can be made into cheese, and even meats can be canned for later use, which is fortunate because the purchase a ½ a hanging cow or pig, which will provide a large amount of meat which will have to be stored. If any family member has a freezer, that will be a great asset. Frozen meat tastes more like fresh meat. Having learned that, a well prepared family can move on to more advanced food storage techniques such as salting, smoking, and drying. Along with preserving the meat, these add variety to the diet. People normally think of jelly as a topping, forgetting that it is actually contributes to the diet as a fruit as well, especially when made from home. In the long run homemade foods cost less than foods prepared in the stores; what is being purchased in the grocery store is convenience, and when money is tight convenience is a luxury. Time is being spent so that money can be saved and a healthy diet is the result. Such a diet has no preservatives, lower salt contents and no high fructose corn syrup which has been linked to the growing problems of obesity and diabetes.

Knitting and sewing should be learned. There are books out there that describe those arts at every level, from beginner to advanced, and even children can master the making of a knitted scarf. It may seem that those following the advice to start a home garden would be too busy, but knitting or crocheting is an activity that can be engaged in during times when a person is relaxing or after it gets too dark to work in the garden. Knowing how to mend clothing will extend the life of the clothing, and any repaired item of clothing is an item that does not need to be replaced.

The current culture of the United States seems obsessed with youth, leaving many to forget the contributions that the elderly can make. They will become very valuable assets because they remember the household survival skills, can teach them to the younger generations, and can help look after the children, even the teenagers. Multigenerational care was once the norm and it can be again. While the parents are working hard to support the family, the grandparents will teach the grandchildren. Instead of paying to store the elderly in a nursing home the family can now profit from their knowledge and wisdom. Even the children can participate in family endeavors as they discover how the chores they do actually contribute to there being food on the table at the end of the day.

With extra adults in the house it becomes a lot easier to home school, which is a strong benefit since the public schools will become increasingly degraded and the children will be able to help during the day in between studies. A flexible schedule is possible so that children can contribute in large scale family activities. With a larger pool of adults in the house to contribute to the education of the children there is a broader talent pool to draw from, negating the complaint that one parent cannot possibly teach all subjects.

There are resources outside of the family that can be drawn on. Religion will assume a greater importance, if for no other reason than community ties. The principle source of effective charity is the religious charity for those who need it, so those who can help others are able to find those who need help. The people that meet at the temple, synagogue, church, or mosque function as a greater extended family to help out in hard times such as sickness or injury, or even joyful ones like childbirth, and are also contacts for those seeking employment. Different families can also pool the homeschooling resources, creating small private schools in the church. With even more people to draw from there is an even greater breadth and depth of talent available.

Finally, find a home business that can be invested in, and any of the above listed activities can contribute to it with barter or sale of family farm products. Starting a home business is even easier in the age of the internet. Cable television is certainly not a necessity, but the internet is becoming a nearly so. Monster is great for anyone who is looking for work; Amazon and eBay are great for those looking for good prices or to sell goods.    With internet access, it is possible to advertise any home business on one of the many free website hosting services.

Any family that follows these recommendations will find that the upcoming depression will be far more bearable, and will, in fact, be considered rich compared to the neighbors. Simple steps – not easy steps but still simple ones – and if followed any who cannot yet afford to invest in gold will be able to by the end of the upcoming depression.    All of these suggestions are also profitable when not in a recession or depression, but it is only in difficult times that they become necessary.

It never hurts to prepare, but if you don't want to have to use any of these precautions, vote for Ron Paul.