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Twisted Avatar | 07-06-2009 10:39 AM
The Nascent Depression: Be Ready to Barter and Adopt the Rhodesian View The Nascent Depression: Be Ready to Barter and Adopt the Rhodesian View I receive several e-mails each day from readers asking whether the currently-unfolding economic depression will be inflationary or deflationary, whether it will last long, and whether or not the US Dollar will be supplanted by a new currency. My answer is simple: "All of the above." Back in early 2008, I warned that a depression with simultaneous inflation and deflation was possible. As I've mentioned several times in my blog, here in the US we are likely to see a continuation of the current gradual deflation followed by a period of mass currency inflation. Plan accordingly. Try to start looking at prices in terms relative value. In a world of hyperinflation where everyone is a millionaire, absolute prices area almost meaningless, but watching relative prices and values is crucial. For example, a loaf of bread and a gallon of gas have sold for roughly the same amount, since the late 1970s. This outlook on prices is what I call The Rhodesian View. To explain: Those who have lived in Zimbabwe (formerly Rhodesia) since before the change of government eventually learned to adjust their conceptions of "price" and "value". This new outlook was necessitated by the destruction of the national currency by Comrade Mugabe. His hopelessly inept and horribly corrupt government embarked on a systematic looting of the country, which included mass inflation that later became hyperinflation. At one recent point, the Zimbabwean dollar was inflating so rapidly that it lost half of its value each few hours. (An annual inflation rate of more than 200 million percent.) Similarly, nine years of hyperinflation and multiple currency recalls in Argentina had the net effect that to buy what had cost 1 Peso in 1983 would have cost the equivalent of 100,000,000,000 Pesos in 1992. After having been accustomed to a very gradually eroding dollar for so long, it will be difficult for may people to adopt the Rhodesian View. Once inflation sets in, nearly all assets denominated in dollars will suffer horribly. This will be particularly true for dollar deposit accounts, and pensions. Those folks that don't adapt quickly will get blind-sided by inflation. Some investments like stocks will be re-valued and still retain some value because of the intrinsic value of the underlying assets (such as company's inventory, equipment, land, and facilities). Thus, they might be able to "keep up with inflation", at least in the early stages of an inflationary spiral. But most other dollar-denominated investments will be wiped out in a mass inflation. Now lets's look at the prospects for mass inflation in the US: Say, for example, that in 2007 your house's value peaked at $350,000, but on paper it has subsequently lost $100,000 in value. (So it is now valued at $250,000, even though your property tax assessment might erroneously still show its value somewhere north of $300,000.) Fear not! Mass inflation will "restore" the dollar value of your house in just a few years. But the bad news is that shortly thereafter, inflation will be galloping along so rapidly that $250,000 may buy just one typical automobile. And then perhaps a year after that, $250,000 will only buy you a bicycle. And then perhaps less than another year later, $250,000 will only buy you a loaf of bread. Be ready, folks, and adopt the Rhodesian View of economic reality. Keep informed, be flexible, and shelter you assets in barterable tangibles! Granted, we may see no more than 20% inflation in the next few years, but the snowballing effects of mass inflations are impossible to predict. Once the psychology of double-digit or triple-digit inflation sets in--namely the anticipation of continued inflation--it becomes virtually self-perpetuating, often continuing beyond a corrective change of monetary policy, (Ben Bernanke may shout "stop help presses" (and raise the prime rate and restore the bank reserve requirements), but the paper chase may continue for many months. I've said this often in SurvivalBlog: The time has come to begin sheltering part of your net worth in practical tangibles. These include firearms, common caliber ammunition, precious metals, full-capacity firearms magazines, high quality tools, and productive farm or ranch land that can double as a survival retreat. Once inflation kicks in, prices set in dollars will become almost meaningless, and saving "money" will become a pitiful joke, as the dollar's value melts in the fiery furnace of inflation. Start thinking in terms of relative value, potential usefulness/productivity, ounces, and gallons, instead of dollar digits. Get used to bartering. It is a valuable skill that will become crucial in the next decade. Practice barbering now, rather than after a crisis begin. (Learn from your mistakes now, while the consequences are small and not life threatening, rather than later, when the consequences could be much greater.) Develop savvy about precious metals. Buy the references and tools you'll need be able to spot fakes. Practice calculating relative values. You must get handy with a pocket calculator and some standard references. (I have several listed later in this post.) For example, you should be able to calculate the values of a one ounce silver "trade dollar" round versus pre-1965 silver quarters versus a box of of .45 ACP 230-grain ball ammunition. And, with just the knowledge of the day's closing New York spot prices for silver and gold, you should be able to quantify the number of 90% silver dimes that would equal the value of 10 gallons of gasoline or the gold contained in a 1/2-ounce Gold Canadian Maple Leaf or a 2-Franc French "Rooster" or a Swiss Vrenelli. Does this sound daunting to you? If so, then you need to study and practice! As you build up your stockpile of barter goods, you must simultaneously build your knowledge base about barter goods--especially ammunition, guns, fuel, canned foods, and precious metals--since those will all be sought-after, in a monetary crisis. Assemble a reference library that can serve you both for establishing the authenticity of goods, and for establishing their relative values. Be sure to print out some useful data and weight conversion formulas, and keep those pages in a reference binder. In my estimation, if you don't already have your own copies of the following books at home, then you are behind the power curve: Flayderman's Guide to Antique American Firearms and Their Values Blue Book of Gun Values The Official Red Book: A Guide Book of United States Coins 2009 2009 Standard Catalog of World Coins 1901-2000 2010 Standard Catalog of World Coins 2001-Date Antique Trader - Antiques & Collectibles Price Guide Wristwatch Annual 2009: The Catalog of Producers, Prices, Models, and Specifications Jewelry & Gems the Buying Guide: How to Buy Diamonds, Pearls, Colored Gemstones, Gold & Jewelry With Confidence And Knowledge In closing, remember that it will take time and practice to get accustomed to dealing in a barter economy, and thinking in terms of real value rather than "dollars". In times when dollars are like grains of sand in an hourglass, tangibles will represent a fixed yardstick. Take the time to practice bartering now, when the stakes are low. Start attending gun shows, coin shows, antique shows, and flea markets. And be sure to gather those key reference books now, while they are still readily available. Someday, you may be very glad that you did! http://www.survivalblog.com/

Zilver | 07-06-2009 12:15 PM
Re: The Nascent Depression: Be Ready to Barter and Adopt the Rhodesian View Hyperinflation Nation <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/SzmYI_4XCbM&hl=en&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/SzmYI_4XCbM&hl=en&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object> <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/vQCCDttLhA4&hl=en&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/vQCCDttLhA4&hl=en&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object> <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/rVcyM2Z4Ego&hl=en&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/rVcyM2Z4Ego&hl=en&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>

Sparky | 07-06-2009 01:10 PM
Re: The Nascent Depression: Be Ready to Barter and Adopt the Rhodesian View I am appreciative of this point of view, and for the post. Personally, I think it represents the extreme on the spectrum of possible outcomes; real but very unlikely. I'll offer my 7 Levels of Possible Outcomes of the current economic mess that will unfold over the next 10 years, with my personal estimates of likelihood of each. Level 7 represents the scenario outlined in the original post. Feel free to comment. Level 1: 7% We've bottomed out; it will get better from here Level 2: 30% It will be like the 1970's Level 3: 35% It will be worse than the 1970's, but not as bad as the Great Depression Level 4: 20% It will be like the Great Depression Level 5: 5% It will be the Greater Depression Level 6: 2% The U.S. will become like a 2nd or 3rd World country in terms of Standard of Living, a la Argentina scenario Level 7: 1% There will be a system-wide breakdown that will lead to a survivalist culture, accompanied by widespread calamity, mob mentality, and complete fiat currency failure requiring barter as the primary means of exchange.

Twisted Avatar | 07-06-2009 01:32 PM
Re: The Nascent Depression: Be Ready to Barter and Adopt the Rhodesian View Quote:
Originally Posted by Zilver (Post 1803359) Hyperinflation Nation <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/SzmYI_4XCbM&hl=en&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/SzmYI_4XCbM&hl=en&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object> <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/vQCCDttLhA4&hl=en&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/vQCCDttLhA4&hl=en&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object> <object width="425" height="344"><param name="movie" value="http://www.youtube.com/v/rVcyM2Z4Ego&hl=en&fs=1&"></param><param name="allowFullScreen" value="true"></param><param name="allowscriptaccess" value="always"></param><embed src="http://www.youtube.com/v/rVcyM2Z4Ego&hl=en&fs=1&" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" width="425" height="344"></embed></object>
Excellent presentation I forwarded to a few of my sheep friends As it may be helpful

Twisted Avatar | 07-06-2009 01:36 PM
Re: The Nascent Depression: Be Ready to Barter and Adopt the Rhodesian View Quote:
Originally Posted by Sparky (Post 1803437) I am appreciative of this point of view, and for the post. Personally, I think it represents the extreme on the spectrum of possible outcomes; real but very unlikely. I'll offer my 7 Levels of Possible Outcomes of the current economic mess that will unfold over the next 10 years, with my personal estimates of likelihood of each. Level 7 represents the scenario outlined in the original post. Feel free to comment. Level 1: 7% We've bottomed out; it will get better from here Level 2: 30% It will be like the 1970's Level 3: 35% It will be worse than the 1970's, but not as bad as the Great Depression Level 4: 20% It will be like the Great Depression Level 5: 5% It will be the Greater Depression Level 6: 2% The U.S. will become like a 2nd or 3rd World country in terms of Standard of Living, a la Argentina scenario Level 7: 1% There will be a system-wide breakdown that will lead to a survivalist culture, accompanied by widespread calamity, mob mentality, and complete fiat currency failure requiring barter as the primary means of exchange.
That is us. The standard of "American living" has been a massive anomoly in terms of the historical perspective. We are finally wittenessing the beginning stages of "regression to the mean." America will conform to the Global standard of poverty and there is not much we can do about that. Save protect ourselves on a individual basis. T

Sparky | 07-07-2009 01:41 AM
Re: The Nascent Depression: Be Ready to Barter and Adopt the Rhodesian View TA, I agree this is a real possibility. I think a 2% likelihood of such a historically monumental decline within the next ten years is actually quite significant. Five years ago I would have put the odds at a small fraction of 1%.

thorgrim | 07-07-2009 02:00 PM
Re: The Nascent Depression: Be Ready to Barter and Adopt the Rhodesian View I think an extreme drop in the standard of living is inevitable. Not even taking the economy which is on it's last leg into account they are pretty much guaranteeing it with this carbon tax nonsense. The only question is how long is it going to take.

Corinthian bronze | 07-07-2009 10:09 PM
Re: The Nascent Depression: Be Ready to Barter and Adopt the Rhodesian View Bartering skills and thinking in terms of real goods can be quite a valuable skill regardless of how bad or overblown this economy gets. Being able to mentally reference a gallon of olive oil to an ounce of silver or a gallon of diesel can help you spot trends. I think it called indexing. Every time i go to the supermarket i can't help but think in terms of silver. A pound of cheese cost a half ounce of silver....gallon of milk cost 1/3 oz of silver ....5 pounds of white sugar cost 1/5 an oz....a dozen miller high life bottles cost a 1/2 oz and so on and so on. I guess thats what i get from reading this stuff day in and day out. Constant and almost innate silver and gold indexing has become a part of my daily thought when letting go of my dear frn's. Here's to the Rhodesian view of economic realities....it seems our neighborhood is way ahead of the curve. GIM rules!!!:10_1_20:

EE_ | 07-07-2009 10:23 PM
Re: The Nascent Depression: Be Ready to Barter and Adopt the Rhodesian View Quote:
Originally Posted by Corinthian bronze (Post 1806180) Bartering skills and thinking in terms of real goods can be quite a valuable skill regardless of how bad or overblown this economy gets. Being able to mentally reference a gallon of olive oil to an ounce of silver or a gallon of diesel can help you spot trends. I think it called indexing. Every time i go to the supermarket i can't help but think in terms of silver. A pound of cheese cost a half ounce of silver....gallon of milk cost 1/3 oz of silver ....5 pounds of white sugar cost 1/5 an oz....a dozen miller high life bottles cost a 1/2 oz and so on and so on. I guess thats what i get from reading this stuff day in and day out. Constant and almost innate silver and gold indexing has become a part of my daily thought when letting go of my dear frn's. Here's to the Rhodesian view of economic realities....it seems our neighborhood is way ahead of the curve. GIM rules!!!:10_1_20:
I always think in gold and silver when the wife spends money. "how much gold and silver did you piss away today dear?" :rant:

AndreaGail | 07-07-2009 10:28 PM
Re: The Nascent Depression: Be Ready to Barter and Adopt the Rhodesian View just think how many pm's most high maintenance mary women could have if you consider each piece of clothing they have translates roughly to 1 oz of silver Quote:
Originally Posted by EE_ (Post 1806210) I always think in gold and silver when the wife spends money. "how much gold and silver did you piss away today dear?" :rant:

Fermentation | 07-07-2009 10:35 PM
Re: The Nascent Depression: Be Ready to Barter and Adopt the Rhodesian View Quote:
Originally Posted by Sparky (Post 1803437) I am appreciative of this point of view, and for the post. Personally, I think it represents the extreme on the spectrum of possible outcomes; real but very unlikely. I'll offer my 7 Levels of Possible Outcomes of the current economic mess that will unfold over the next 10 years, with my personal estimates of likelihood of each. Level 7 represents the scenario outlined in the original post. Feel free to comment. Level 1: 7% We've bottomed out; it will get better from here Level 2: 30% It will be like the 1970's Level 3: 35% It will be worse than the 1970's, but not as bad as the Great Depression Level 4: 20% It will be like the Great Depression Level 5: 5% It will be the Greater Depression Level 6: 2% The U.S. will become like a 2nd or 3rd World country in terms of Standard of Living, a la Argentina scenario Level 7: 1% There will be a system-wide breakdown that will lead to a survivalist culture, accompanied by widespread calamity, mob mentality, and complete fiat currency failure requiring barter as the primary means of exchange.
Are you accounting for peak oil or no? For me personally every accounting has to take in account peak oil or it's bad math. Just MHO. If peak oil is taken into account, i see us starting now at 3 in the next few months, and progressing to 7 over the next 20 to 30 years. Curious of your views on this?

Abouthadit | 07-07-2009 10:35 PM
Re: The Nascent Depression: Be Ready to Barter and Adopt the Rhodesian View Quote:
Originally Posted by Sparky (Post 1803437) I am appreciative of this point of view, and for the post. Personally, I think it represents the extreme on the spectrum of possible outcomes; real but very unlikely. I'll offer my 7 Levels of Possible Outcomes of the current economic mess that will unfold over the next 10 years, with my personal estimates of likelihood of each. Level 7 represents the scenario outlined in the original post. Feel free to comment. Level 1: 7% We've bottomed out; it will get better from here Level 2: 30% It will be like the 1970's Level 3: 35% It will be worse than the 1970's, but not as bad as the Great Depression Level 4: 20% It will be like the Great Depression Level 5: 5% It will be the Greater Depression Level 6: 2% The U.S. will become like a 2nd or 3rd World country in terms of Standard of Living, a la Argentina scenario Level 7: 1% There will be a system-wide breakdown that will lead to a survivalist culture, accompanied by widespread calamity, mob mentality, and complete fiat currency failure requiring barter as the primary means of exchange.
I bet 97% are severly underestimating the nature of this meltdown.

Glass | 07-07-2009 10:47 PM
Re: The Nascent Depression: Be Ready to Barter and Adopt the Rhodesian View interesting article. Very good points all of which are based on fact except for this one statement which is totally untrue Quote:
This new outlook was necessitated by the destruction of the national currency by Comrade Mugabe. His hopelessly inept and horribly corrupt government embarked on a systematic looting of the country, which included mass inflation that later became hyperinflation.
This can be laid at the feet of the IMF and IMF only.

____hoot____ | 07-07-2009 11:29 PM
Re: The Nascent Depression: Be Ready to Barter and Adopt the Rhodesian View Offical un-employment in my town is 17%, a hellofa lot worse than the "70s" PS: "peak oil" is pure Rockerfeller horse shit,95% of all the oil wells ever drilled have been in the lower 48. Tiny Qatar alone sits on a 200 year WORLD supply of natural gas. Just off-shore of Prudhoe Bay sits a already drilled field twice the size of Prudhoe. A simular sized field just found under the BlackSea. The Saudis can pump at their current rate for 38 more years before they have to drill deeper or use more advanced extraction techniques. Deep deep drilling that the Russians are currently profiting from will probabally find abiotic oil way down at the crust mantle interface all over the world.

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