fear_not_2Found this at Alexandra's blog, which led to here, which then led to this SHTF page. This really goes along with how I personally have "sensed" about all of this for the past few years. There indeed was a point where I was preparing myself for the "worst case scenario", but it became very clear to me somewhere along the line that all of those "worst case scenarios" were not going to happen

However, it may have spurred many to learn how to build their own homes, grow gardens, go off-grid, etc.

I found this piece refreshing, even though he goes into the "danger of a nuclear war" bit at the end, it is still a potentially helpful article to read.

As I looked more into Mr. Skousen's view of the plane, however, I must say I do not align with most of the views he has at his website. Very "Russia, China is/are the devil" kind of views. Anyway, take the best, leave the rest.

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The Case Against Imminent Economic Collapse

SR-logoThis week, I'm going to diverge from my normal preparedness tips and switch to my geopolitical expertise as the editor of the World Affairs Brief (www.worldaffairsbrief.com) .  I feel the need to address the root controversy about what we are preparing for. I field more questions from subscribers and preppers each week on the subject of economic collapse than any other topic, and despite the failure of all these collapse predictions since 2010, they are back again in 2015.

And, it's no wonder. There is an unending flow of predictions of complete and imminent collapse coming from both the uninformed and some very bright financial newsletter writers on the conservative/libertarian side such as Jim Rickards, Peter Schiff, Michael Snyder, R.G. Allen, Robert Kiyosaki, John Williams (shadowstats.com), Mike Maloney, and Mike Dillard (who's been pushing the collapse of the EURO for years now and still won't stop despite the failure of his predictions).

I'm not going to tell you that things are fine.  They are not. The financial collapse writers are well informed about the problems of excessive debt, fiat money, and deficit spending that politically cannot be stopped nor solved now that the benefit corrupted voters can out-vote those of us who want government to stop these suicidal redistribution schemes.

But they have not thought out clearly the specifics of how and why it's so difficult for an actual collapse to occur.  Historically, no nation has ever collapsed financially outside of the destruction of war—none (even the so-called "collapse of the Soviet Union" was a carefully crafted deception, as outlined in this piece).  Only when people are thrust into the most abject circumstances of survival, such as in WWII in Europe with the combination of allied bombing and the Russian invasion does an economy cease to function and turn into a mob of pillaging people.

Let me cover the various collapse scenarios that are being hyped constantly and why they aren't necessarily imminent:

Electric Grid collapse: It is true that the nation would descend into massive social unrest should the electric grid go down and stay down for more than two weeks.  That said, there are a lot of uninformed predictions about a massive solar flare, or EMP strike by some terrorist or rogue nation that could cause a grid collapse.  The solar flare scenario is really only a threat to the grid in high northern latitudes since charged particles are channeled by the earth's magnetic field toward the North Pole.  Canada is much more at risk from a massive solar flare.

And, contrary to a lot of arm-chair tacticians, a single nuclear EMP strike over the US by some terrorist group is not capable of taking down the entire grid.  It takes at least six simultaneous high altitude nuclear bursts to blanket the US, and only Russia and China have that capability.  Yes, that strike is someday coming, but not as a separate event.  Because Russia and China know the US military equipment is hardened against EMP, their military doctrine specifies a full nuclear strike against US military targets must follow within a few minutes of an EMP strike in order to stop US retaliation.  So those who think our enemies will choose an EMP strike alone to bring down the US are misinformed.  It is really only a serious threat combined with war—not as a stand-alone attack.

Banking Holiday:  Virtually every claim that the Powers That Be (PTB) are going to pull a bank holiday and shut all banks comes from disinformation sources plying the internet.  It started in Aug. 2010 with the so called "man in the FEMA jacket" telling a Sheriff's department of such an impending change, and for everyone to pull out their money out before it happens.  It was a complete fabrication even though it was claimed to be reliable because the person sharing this information was a Christian (always beware of those claims which take advantage of people's religious loyalties).

There is absolutely no reason why the FED would call a banking holiday which would cut off people's access to money. The economy would collapse within weeks, and the authorities would get all of the blame. Yes, I know people think the PTB would do this to justify martial law and FEMA prisons, but they aren't that stupid to do so on such a flimsy premise. They'll wait for a much bigger crisis, that appears out of their control, before they move into full tyranny.

Collapse of a currency:  In general, this can only happen if the currency becomes relatively worthless in a short period of time, relative to other currencies. Inflation of the currency at high rates is the only thing that can cause this, ending either in devaluation and/or hyperinflation.  Remember, that every other currency in circulation today is a fiat currency, and all are inflating at least as much as the dollar.  Let me explain the specifics of these various collapse scenarios and why they are more difficult to achieve than people think:

1) Devaluation: Devaluation happens when a currency value is pegged to another at a fixed exchange rate, and the smaller currency inflates at a more rapid rate than the pegged currency causing an imbalance in demand which eventually causes the peg to be broken and a new fixed rate set. The dollar isn't pegged to anything—it's the standard. In a non-pegged system an informal devaluation can only occur if the dollar is being inflated at a much higher rate than other currencies. That isn't happening because every other currency is inflating about the same rate proportional to their base as is the dollar. In fact, other currencies approve of US inflation, because it allows them to inflate their currency while maintaining the same relative exchange rate with the dollar.

3) Hyperinflation: Two things must be present for hyperinflation to happen. First, you must start with a relatively small money supply that can be expanded multiple times in a few years. The dollar base is so large, after having been inflated and spread around the world for so long that it literally can't be inflated rapidly as compared to smaller currencies. The quantity of dollars in circulation is estimated at $200-300 trillion (not counting the huge non-monetized economy of derivatives, contracts and hedges perhaps as big as $500T). The FED could create $20T a year and it wouldn't exceed 10% of the money in circulation (and they are only creating about $3T per year).

Second, a nation has to have some sort of indexing or automatic injection mechanism to put increasing quantities of money into the pockets of consumers so they can keep up with rising prices, otherwise the inflation kills stops economic growth—what we call "Stagflation." We don't have that, and what we do have (food stamps, unemployment compensation, Soc. Sec. etc) isn't effectively indexed to inflation. Without the public's ability to keep pace with inflation through automatic salary increases, as they did in Germany in 1936, the economy retracts when people can't keep up, and spending decreases—again stopping hyperinflation and causing stagflation.

Now, I fully realize that real inflation is much higher than the government manipulated CPI.  Real inflation according to Shadowstats.com is between 6-9%, not the 2% the government claims.  That said, you don't get a hyperinflation mentality unless real inflation rises to the 15-20% level, and the FED seems very much aware of that.  They show no signs of letting real inflation rise above that level, and as long as they do so, people do adjust—we've been doing it for 20 years now.

4) Loss of Reserve Status. This also can't happen anytime soon since the dollar base is so much larger than any other currency. You'd have to print up probably 10 times the existing quantities of Euros to supplant the dollar and that would have devastating inflationary effects on the Eurozone. The same with the British Pound. No one would trust the Chinese Yuan because there's no transparency there either. What about a IMF "special drawing rights" basket of currencies? —The same problem exists there as in the EU—there's no way to control that basket of currencies unless you have a global government, which we don't have—yet (thank goodness).

Everyone keeps hyping how the BRICS nations are stopping their use of the dollar and forming alternate currency trading blocks, but all the nations in the BRICS except China represent less than 10% of the dollar markets—too small to sink the dollar.  And, China can't stop accepting dollars if she wants to sell to the US market.  Besides, the US and Europe combined represent 75% of the dollar trade, and that isn't going away at all.

Derivatives Collapse: If there is a real threat right now, it's the huge derivatives and hedge fund bubble—trillions of dollars committed in contracts but almost without actual asset backing. No big paper investment happens today with CDS derivative insurance or hedging, and little of that can actually be paid to the beneficiary if a sufficient crisis develops. However, this mainly affects the huge speculative economy—and these have the most power to get a bailout from their fellows at the FED.  Besides, the US controls all the regulatory agencies that have the power to declare a default—which has to happen before a derivative collapse can happen.  Look what happened to the Greek default.  Despite Greek bond investors having taken a 50% "haircut" (loss), the financial PTB in Europe and the US simple refused to declare it a default, and no derivative claims were allowed.  Slick!

Stock Market Collapse:  There clearly is a huge bubble in equities now, mostly driven by the big banks and institutional investors that have easy access to near zero interest rate loans from the FED.  They invest these funds in the speculative markets rather than the real economy because they can get easy returns of 10-15%.  While I expect there could be a 20% fall in the stock markets, even that would not result in the collapse of the economy. Harry Dent and other deflationists fail to adequately account for the power of the FED to manipulate all of our markets, using the Plunge Protection Team, naked shorts, and outright hiding of certain transactions.

I am fully aware that this fiat money/debt/deficit spending model cannot go on forever, but the globalists who control this nation and both political parties have the power to postpone the inevitable collapse of money for a lot longer than the collapse pundits realize.  One of their main tactics has been to artificially lower interest rates to near zero to stave off the final day of debt reckoning when there isn't enough budget money to pay the interest on the national debt.

In short, what I'm saying is that the FED can keep bailing things out for several more years without fear of collapse. Even in Europe, the FED keeps floating short term dollar loans to European banks to keep them solvent, and it isn't resulting in hyperinflation.  None of this resolves anything permanently, but neither does it mean they can't keep using these same tricks for several more years.

None of what I am saying is meant to put you to sleep or think that "all is well."  It is not.  But what the economic collapse hype does do, that is potentially harmful, is cause people to think destruction is imminent and therefore they don't have time to prepare in an orderly fashion.  Worse, too many keep telling their skeptical spouse that collapse in imminent and each year they get discredited in the eyes of those they are trying to get motivated to prepare.  That is why it's important to understand how the PTB can keep things bailed out for some time longer, and why they intend to do so.

I've been studying globalist motives and intentions for years, including the phony war on terror that they created in order to justify all of this neocon warmongering and intervention around the world—not to mention the destruction of numerous constitutional and civil rights against NSA spying, and indefinite detention.

But it's not the Muslim threat nor a war in the Middle East that is the big threat—it's the inevitable war with Russia and China that is coming in the next decade that you need to factor into your preparations.  A major nuclear war with these other two global predators would not only give the globalists the opportunity to shove a militarized global government down our throats, but it would give them cover for the real economic collapse that would come with war, and they would blame it all on war.

War would also be the perfect excuse to finally implement martial law and the take down of dissidents—the real reason for NSA spying and the militarization of police.  I'll cover all of this, in detail, in my next contribution, including why our government continues to disarm in the face of growing Russian and Chinese aggressiveness.