Do I sound a little less crazy each month?

Mish talks about Spaniards, etc. getting money out of banks but for Cypridiots it’s too late.  In fact, many things will be too late for them including the ability to buy food soon.  The stores there are now down to 2 day’s worth of food on hand.  Suppliers to the stores are demanding payment in cash.  That screws up the system that was designed to float for a period of time on credit.  The result is store shelves going empty while prices skyrocket.  At the same time, cash is fleeing the country at a massive pace:

http://globaleconomicanalysis.blogspot.com/2013/03/bad-bank-losses-30-90-food-supplies.html

Well, Cyprus is doomed, period.  But we’re all Cypridiots to some degree.   The dominos will fall and the US will be the last to get hit.  But it will get hit simply because we consume more than we produce.  When people stop loaning us their goods because they finally figure out that we cannot and therefore never will repay them, they will stop loaning us goods.  That is, in fact, what they are doing when they run a trade deficit with us -loaning us goods- and then they use the "markers" we send them (AKA dollars) to buy our national debt (they need to park that money somewhere and they cannot spend our dollars in their own economy…).   

Failure to buy our national debt in the future (because of fear of default or of massive inflation) will occur in locked step with failing to ship more goods to us than we ship to them.  This means there will be shortages in the US until we recover and rebalance the US economy to the coming new world economic order.  Many weeks could transpire, months even, when food and other necessities could become scarce.  This could leave many who have not prepared very scared, very desperate.  Too many people rely on the government just for food these days and the government will lose its ability to feed them.   What do you think these people will do, lay down and just die?  I think not.  They will do what it takes to survive.

Again, this is math and odds here, not doomsday “prepper” emotional foolishness.  There is a Gaussian distribution of likely outcomes.  At one extreme we could have doomsday martial law or even civil war and I think government is preparing for it while such preparations are still pretty easy and few suspect anything.  But right now I only give such an extreme outcome 5% chance of ever happening.   I think the fat part of the probability curve covers a range that includes annoying but manageable shortages (i.e. like 1970s gas lines) to real “there just isn’t any food” for a couple days each month in rolling outages throughout the country.  It’s only the very very extreme (and thus unlikely) case that would see tanks roll, martial law, military dictatorship, use of FEMA camps as concentration camps, etc. 

Right now it is still very cheap and very easy to make simple preparations in the US.  Buy and store some extra nonperishable food.  Own a gun and learn how to use it.  A nice medical kit might not be such a bad idea either because in hard times like are happening in Cyprus, the police and medical services start to act like private services for the very rich (staff get cut and those who remain get bribed and normal people do not get the kind of service they are used to).  Medicines become scarce and expensive.  Call 911 during times like that?  Go ahead.  Nobody will show up.  Get hurt and want medical service?  They might demand cash payment up front while the government has you locked out of your bank account or only trickles enough of your money to you per day to eat and buy the basics. 

 

Look at Cyprus folks.  Capital controls are in effect.  The money in the banks does not belong to the depositors if they can't have it back when they want it.  So part of any plan should be to have some cash where you can get it and government cannot stop you from getting it. 

Again all of these things sound so fantastic that it almost seems like a crazy rant.  Except that I predicted much of this was coming years before the signs were as obvious as they are today.  Pretty much nobody that I know was talking about gold ownership back in 2007 (besides me).    But now you can't read the daily news without seeing some mention of gold and many of these stories are about attempts to repatriate gold from the federal reserve.  In fact, now even the state of Texas has demanded its gold back from the federal reserve.   A con job collapses when the confidence of the patsies collapse.   Having a major state like Texas demand its gold back from federally controlled vaults is clearly a reduction in confidence.

Don't kid yourself.  This is going to get serious.  Again, I think the odds of a Mad Max dystopian outcome are low (but nonzero).  But buying a little insurance (in the form of stored food and other items) against a major economic restructuring that so obviously must occur some day is just common sense.