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(Mises)—Most economic analysts predict that the US is about to enter into a cyclical recession. Even Austrian School economists (like me) agree. The big question is, “What will government do?” Will it finally stop its fruitless interventions, such as trying to drive down the interest rate via inflation in the face of unprecedented budget deficits?
Look to Past Actions
Tom Fitton, CEO of Judicial Watch, answered this question (regarding another matter) during a Q&A session at the annual banquet of the Conservative Caucus of Delaware. His answer was simplicity itself and should have been obvious to us all. He said that if we want to predict what a person will do, just look at what he did previously under similar circumstances. People really don’t change much. In fact, regarding economic philosophy, my experience has been that it is very, very difficult to entice someone even to consider an alternative.
That is why the Fed has been itching to find any reason whatsoever to lower interest rates. A few weeks ago, the Fed convinced itself and its Keynesian admirers that price inflation had moderated to below its arbitrary target of two percent, which it felt justified lowering the Fed Funds rate by a half a percentage point. Of course, attempting to goose the economy before an election had nothing to do with it. Oh, no. And if you believe this, I have a bridge in Brooklyn I’ll sell you…cheap!
Why Don’t People Change?
A bigger question arises: why continue to do the same thing that caused all the trouble in the first place? Don’t people learn? Don’t they take a good hard look at the never-ending booms and busts and ask themselves why this keeps happening? That answer is more difficult, but I believe it has to do with human nature. No one ever wants to admit that he might be wrong.
All the governments of the Western bloc are wedded to Keynesian economics that itself is rooted in the Great Depression of the 1930’s. Against all evidence and completely ignoring Say’s Law of Markets, in his magnum opus The General Theory of Employment, Interest, and Money, John Maynard Keynes posited that overproduction had caused an unstoppable deflationary price spiral and that the solution was to increase aggregate demand through government spending. This was a godsend to free-spending politicians, who previously had been encouraged—correctly, by the way—to cut government spending in the face of a recession in order to free capital to revive the wealth-generating private sector. The evidence of the rightness of this policy, in addition to its logical correctness, was the post-World War I Wilson-Harding depression that was over in about a year and a half. The government actually cut spending in order to wash out capital-consuming parasites that always emerge during war economies. Mark Thornton has this statement in his 2018 book The Skyscraper Curse: And How Austrian Economists Predicted Every Major Economic Crises of the Last Century:
The alternative approach to business cycle contractions is espoused by the classical economists, the Austrian-school economists, and the real business cycle theorists. This “do nothing” approach involves shrinking government and balancing the budget, expanding resources in the private sector, and a nonexpansionary monetary policy. This was employed by Presidents Woodrow Wilson and Warren G. Harding during the fifteen-month-long depression of 1920–21. This period was one of the most severely deflationary in US history, and yet it is hardly mentioned in history textbooks.
But no one, especially those in government and their politically-connected cronies, will entertain the idea of sound money and reduced government spending today. Oh, no! We are living in the age of “countercyclical spending” in which the cart goes before the horse. In fact, our economic system is full of mandatory spending in the face of recession. All manner of welfare programs have been passed to protect workers and businesses from being forced to adjust to the realities of the market. For example, politicians are lauded for extending unemployment benefits beyond previously-established maximums. But here’s the rub—the economy cannot recover unless people and businesses are willing to change. Working in industries that the market desires at a price the market is willing to pay is the only path to economic recovery. Not working at all and refusing to change business models perpetuates and deepens the recession.
Conclusion
So, what is the answer? It is obvious. The people who have been given the power to enact Keynesian policy must be removed from positions of power. They are not going to change. They and their Keynesian policies must be sent to the dustbin of history. It will not be easy. But it’s either adapt to new market realities or suffer an economic collapse unprecedented in US history.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
