???Anybody abandoning Cash?

Interesting excerpts from an interesting book. I agree that FIAT money loses value due to excess supply and resultant inflationary pressures.
It is true that historically, FIAT money ALWAYS ends in excessive inflation. Typically the FIAT money will eventually collapse. But, and this is very important, FIAT money can be replaced by another standard of money. It doesn't have to be replaced by gold or silver money either in order to keep some sembalance of economy going.

My point isn't whether our FIAT money will or will not collapse. You said that 6.66 gallons of gas in 1966 is only worth .47 gallons today, and that 108.9 square feet of land in 1963 is worth 8.7 square feet of land today. By the same logic then, your 1 ounce of gold in 1970 is only worth .058 ounces today. No difference if using your logic. You cannot say an ounce in 1966 is the same as an ounce in 2007 unless you also say a gallon or an acre in 1966 is the same weight/measure as in 2007. In terms of standardized weights and measures, these things do not change in time.
But the value of a dollar does change, relative to all those weights and measures. Because of this changing value of the dollar, what you say rings true if all we want to do is determine the value of a dollar in 1966 vs 2007 simply in terms of a dollar's worth of purchasing power. Your examples factually suggest that one dollar would buy more in 1966 than it does today. But that does not change the fact that the same one dollar invested in 1966 will be worth more in 2007.
Its for this reason that what I posted about investments rings true based upon traditional Future Value of Money formulas. The concept behind the Future Value of Money is the backbone in determining long-term financial decisions. People do invest their money, and if people had invested money every year since 1970 into the stock market instead of into Gold, they'd be better off financially today.

When Benjamin Franklin said "Money makes money. And the money that money makes makes more money", he was only pointing out that money can be invested to earn even more money.
The following quote is from the link I will provide at the end of this post: "The future value of a dollar is simply what the dollar, or any amount of money, will be worth if it earns interest for a specific period of time."

http://thismatter.com/Money/Investme...e-of-Money.htm

Metal "never collapses"? I disagree! What about the value of gold in 1980 vs the value of gold in 1982??
It lost 40% of its value in less than 2 years. It continued to be valued less than that historic peak right up through 2005. In fact, even as late as 2004 continued to be valued up to more than 50% LESS than its 1980 value. It did not regain its historic peak value until last year, a period of 26 years! Zero % gain on an investment over 26 years is not a good investment! And if history is an indicator, the present value of gold may have peaked again and may soon plummet again. True, it could continue to increase but history suggests it may not last long and people could lose significant amounts of money if they invest during peak highs.

Clearly metal most assuredly has collapsed and could collapse again, same as FIAT money. But the fact remains that if a person had invested the same amount of money each year since 1970 in the stock market vs gold, they would most likely be better off financially today by about 50%. You cannot shove the facts under the rug and pretend they do not exist. The facts are that the stock market has historically outpaced gold by far as a long-term investment strategy.

It would be hard to be sitting around, IF Something happened to the economy, thinking about what you could have bought with the money you lost in the stock market, bank failure, worthless paper money. No wonder men jumped out of windows during the depression. So.. we have decided, if we want something, can afford it, spend. Of course we will have some for a rainy day, but will also have something of colateral value too. Too old to start saving for our old age now. This is how DW convinced me to start looking at a new fridge and stove.

I am not too concerned about TEOTWAWKI- in that case all my portfolio will be worthless and my fence, weapons, and garden and our homesteading skills will be our most valuable investments. Otherwise it'll yield us cash enough to pay all bills we need money for except maybe college for two.

That said, my dear bro who advises me (and manages a chunk of our change for us) has advised us to be cash rich now since interest rates are rising and stock returns aren't as hot as they were. For us that doesn't mean sell stocks (which would mean taxes) except the volatile stuff he manages for us, it means less new investment in stocks and more in cash. Also DD heads to college in 5 years and DH may retire in 3 so no use buying stocks we may sell in a few years.

BTW dear Bro is, as I say, independently wealthy- works longer than I would want to managing his portfolio (a few hours every week) on the internet- but has his savings from working until he was 32 (11 years ago) making him free of any need to earn outside money. Caveat: as we told DD when she asked why Dad couldn't stay home all day like bro, he has no wife or kids! We hope to be in his shoes when we are late 40's- with help of DH's mil pension- but college bills may require me working again.

I enjoyed reading this thread quite interesting and funny.

__________________
marching to the beat of a different drummer

the currency of the future is AMMO. Buy all you can now. It ain't going to be any cheaper than it is right now.

Well here is my thoughts:

If a dollar does crash its likely to result in a global recession/depression. Virtually all industrialize nations hold dollar reserves since they all have significant trade surpluses. If they try to dump them, the dollar would crash causing all of thier exports to the US to come to an instant halt, since few americans could afford to purchase imported goods anymore. In such a situation its highly probable that high employement rates will spread through out the industrialized world (especially in the emerging markets such as China and India). Since lots of people overseas own precious (because a lot of foriegn currencies have been unstable) they will start selling their precious metals to put food on the table. In addition the US, Europe and Asian gov'ts have substantial precious metals in reserves. Its likely that at least some gov'ts will dump their reservers on the market to remove currency volitility as well as fund gov't expenses with. Back in 2003, Germany announced that it would start selling off its gold reserves if its economy failed to make any progress (fortunately for PM owners, Germany's economy did make a comeback, and no transactions were made). If the market is flooded with precious metals it may not maintain value as you expected. Mining companies are also heavly dependant on energy. Since the US imports about 70% of its oil, its likely that mining companies might have difficulty fueling their machinery. I think in a dollar crisis oil exports would drop and the gov't would be forced to put in rationing controls to prevent all hell from breaking loose. Invest in PMs if you wish, but I wouldn't recommend investing all your capital strickly in PMs or PM stocks.

That said, I do have doubts about the stability of the US dollar. Its huge trade and fiscal debts are totally unsustainable, Plus we have rising entitlement costs, as Washington continues to expand medical entitlements and large number of boomers are nearing retirement age. Be aware that Europe is in no better shape, since most of Europe has extremely exotic entitlement programs (so I don't recommend investing in the EU). Its also possible that if a economic crisis did occur, that some nations may opt to lock up overseas investments, meaning you would not have the ability to withdraw your capital stuck overseas. There was a article in the Financial Times about a month ago about a drafted EU bill to prevent foriegn investments from leaving during a financial crisis.

My first recommendation is to get out of debt, especially variable debt, such as credit cards, student loans, because in the event of a crisis, I would expect the rates to climb much higher. The new bankruptcy laws make it difficult to get out of this debt anymore.

One investment strategy is to invest into slow grow staple companies. Even in a depression people still need to wipe there butts, wash their laundry, etc. Its also proven that during bad economcy times, the demand for "sin" goods, such as tabacco, alcohol ,etc rise substantially. If dollar takes a nose dive, and inflation takes hold, these stocks will fair well, because they be able to raise the prices and earnings per share will inflate along with inflation. Business that sell discretionary goods and services (new cars, widescreen tvs, or other durable goods, Tech stocks, Construction, Financial) should be avoided since demand for these goods and services will likely plummet and parts from overseas supplier may be difficult to obtain.

If you wish to invest in Bonds, avoid long term bonds, since inflation will eventually drive up interest rates it may be possible to remain above the inflation curve and avoid losses with short term bonds. I would also avoid I-bonds, since the inflation figured are based upon gov't statistics and not real-world inflation rates. Stick with high quality bonds and avoid the risky "high yield" bonds that usually go into default during a financial crisis or recession. Your best option is short term commerical paper which ofters slightly higher yield than treasuries, but are virtual free of deflault risks.

If you feel that things will get really bad, stock up on staple items, that you could later barter with. After the fall of the Soviet Union, few Russians traded using precious metals. The big trade commodities were staple goods like toothpaste, soap and vodka after the factories shutdown. Similar results also occured in Argentina after their collapse in 2001 (which is still ongoing today).
One investment strategy would to stock up on hard liquier. Which usually goes up in value as it ages (although I am not sure if its value every exceeded inflation rates).

Finally don't forget to invest in yourself. If you feel your job may be a risk, it would be a good idea to update your skills. As long as you have a skill that is in demand you shouldn't have trouble getting by. Ideally you want to have a skill on the non-discrestionary side of the economy. Also learn to become self-sufficient. There is no need to pay for something if you can make it or do it yourself.

the problem is where am i going to store the SECOND ton of ammo?

trading mining stocks is the reason i can afford to buy things in ton lots.

(ammo, corn, beans, rice, gasoline, salt, etc... )

pax
t.f.

Well, it seems like it's 6 of one and a half dozen of the other.

Invest in metal - gold, silver, etc. and you can hoard it to your hearts content. Hopefully you tell somebody where you hide it, because if you die suddenly and you buried it in the back yard beside a tree, it could be years or hundreds of years before anybody finds it (and not necessarily your heirs). Or it could possibly never be found. However, hoarding it yourself means you are at risk of being robbed. But the government doesn't know you have the gold or silver, so you don't pay tax on it.

Invest in stocks and make a better "return" on income. Ummmm, possibly. You forget that the stock company sends information to the government that details every dividend you received - pay tax on it on your next income tax return. And when you sell the stock that has made a better return than the gold or silver, and you have to pay income tax again. At least people can't steal your stocks, but the company could go bankrupt making your stock certificate (if you have one) worthless.

Hide a couple dollars in a safe in your house, and now you have really lost. Not only can those dollars be stolen from you, but those dollars don't breed. Put 5 dollars in and lock it up for 10 years. And when you open it, you still only have 5 dollars - and it won't buy what it could have 10 years ago.

Probably the best advice is to save some money for the future, but also enjoy what money you have today. Sure, it is nice to invest for the future and think about what you will do when you are 65 years old and not working anymore, but nobody has any guarantee on how long your life is. You could work hard and struggle today while investing all that money only to die suddenly at age 58. (But your kids will thank you!) Of course, if you buy everything today and invest nothing for the future, you could possibly be an 85 year old person greeting people at Walmart (if you are even able to work then), or deciding if you should eat this month or buy your medication for the month because you aren't able to do both.

Enjoy today and save for tomorrow too is the best advice.

__________________
Michael W. Smith in North-West Pennsylvania

"Everything happens for a reason."

I am going to tell y'all what an oldtimer farmer told me once many years ago, and it has not failed yet:

"Lissen here, I'm a-tellin' you that the whole danged economy should be played by the little man like it was a football game. When you are young like you are now (this WAS years ago!), you want to be out there a-throwing those long bomb passes and trying to get in the end zone and make it big. That's cuz you are young enough to still recover if your pass is incomplete. But as you get older and more my age, you need to shift to a prevent defense, where you might not make the big plays, but you won't stand to lose as much if you do get tackled."

By golly, I have followed that to the letter for 15 years or more, and it works good.

The stock market is at or near a top, and I am making moves to the sidelines.

Interesting to read.

One big problem I've always found is that almost everyone wants cash for goods and services. Trying to barter your way through life is darn hard to do.

I see survivalblog is selling food,taking gold and silver.Gun shop takes it too.More places than you might think have no trouble with taking bullion.You will also see bullion traded at pawn shops.

I know plenty private parties will take it,I sure would gladly if I were selling,I'd even cut the price to take metal.

But not Taco Bell or Wally.

To add-Metal doesnt probate,and doesnt leave your spouse/heirs looking at frozen bank accts. upon your death.

It just quietly grows legs and walks on to were its needed.No muss,no fuss.

BooBoo

Excerpts and a link to Ron Paul about metals.One smart man he is!
http://www.dailyreckoning.com.au/gol...rs/2007/01/19/
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The higher the price for gold, the greater the concern for the dollar. Instead of dwelling on the dollar price of gold, we should be talking about the depreciation of the dollar. In 1934 a dollar was worth 1/20th of an ounce of gold; $20 bought an ounce of gold. Today a dollar is worth 1/600th of an ounce of gold, meaning it takes $600 to buy one ounce of gold.
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Though our inflation - i.e. the depreciation of the U.S. dollar - has been insidious, average Americans are unaware of how this occurs. For instance, few Americans know nor seem concerned that the 1913 pre-Federal Reserve dollar is now worth only four cents.
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Though everyone decries inflation, trade imbalances, economic downturns, and federal deficits, few attempt a closer study of our monetary system and how these events are interrelated. Even if it were recognized that a gold standard without monetary inflation would be advantageous, few in Washington would accept the political disadvantages of living with the discipline of gold - since it serves as a check on government size and power.
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A foreign policy of militarism and empire building cannot be supported through direct taxation. The American people would never tolerate the taxes required to pay immediately for overseas wars, under the discipline of a gold standard. Borrowing and creating new money is much more politically palatable. It hides and delays the real costs of war, and the people are lulled into complacency - especially since the wars we fight are couched in terms of patriotism, spreading the ideas of freedom, and stamping out terrorism. Unnecessary wars and fiat currencies go hand-in-hand, while a gold standard encourages a sensible foreign policy.
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Yep,Ron nails it yet again.

Shows the immense wisdom of those who founded our country

Lets hear it for Fiat currency counterfeiters, vrs. REAL MONEY as required by the US Constitution.

BooBoo

*grin* I invested in hogs. They go up 2300% per year, much better than any of the other stocks.

Actually, land is our big investment captial-wise. Land does not tend to go down. I'm not talking about the over inflated parcels or the minor ups and downs. In addition to that we can live on it, harvest lumber and firewood, grow food, raise livestock and generally thrive. Gold is just so cold and silver gives me shivers. Land lasts.

__________________
SugarMtnFarm.com -- Pastured Pigs, Poultry, Sheep, Dogs and Kids

Now there is a novel idea !! Just go out and spend all your precious gold and silver to buy your food. Then stand back and laugh at all those people who still use cash or credit cards to buy their food. ROTFLOL

[ , I've fallen on the floor (laughing) and I can't get up!]

Is this the same Ron Paul who back in 1992 in his own Ron Paul Survival Report newsletter describe African-Americans as "barbarians"?

Is this the same Ron Paul who in another article wrote;
“I think we can safely assume that 95 percent of the black males in that city [Washington D.C.] are semi- criminal or entirely criminal.”

Is this the same Ron Paul whose “Freedom Watch” newsletter said;
"If you have ever been robbed by a black teen-aged male, you know how unbelievably fleet-footed they can be."
and;
"Opinion polls consistently show that only about 5 percent of blacks have sensible political opinions"
and;
"We don't think a child of 13 should be held responsible as a man of 23. That's true for most people, but black males age 13 who have been raised on the streets and who have joined criminal gangs are as big, strong, tough, scary and culpable as any adult and should be treated as such."


IF this is the same Ron Paul whom you quote as being a "smart man" who "nails it again", then Where Oh Where is the credibility?

Mining stocks?....I wouldn't get too fired up over any of them. For a hard lesson in mining stock take a look at Climax Molybdenum Company. Those of you familiar with Colorado have no doubt heard it mentioned after the collapse in the 80's. Gold and silver-sure, squirrel away a few pieces, but to invest in a mine stock is risky-always has been. Perhaps uranium would be a better bet considering the mutterings over new nuclear power plants. But I would still be wary of putting much money in any of them.

Best way to think of it is in terms of price of a loaf of bread. A while ago a loaf was 10 cents, now it is at least a dollar. So the real value of the dollar has declined by 10 times.

However we have had a lot of technological prowess and advances in medical technology. So a computer that you can buy for $400 today is faster and better than one you could have bought for $4000 5 years ago. Operations and chemo treatment are better and cheaper than before, with patients recovering faster and having less side effects.

I do worry about the USA and how we are spending our money on the wrong things.

This ought to upset some of you servivalists but YES> For the most part I have abandoned cash.
I use my debit card for for almost everything.
the reason is, I work for a bank that incourages its employees to do that.
I can even pay for my food at any fast food place with it.
This of course is only when we travel as there is none of those places here.
I even pay for feed at the feed store with it.
I could pay my bills on line for free but the truth is, I don't have many of those so I just write a check for the 4 I have.

No, you can't have my cash because I still need it for shopping at care and share. Our local thrift store. I shop there everyday on my break. Sorry.

__________________
Corky

LEAD ME NOT INTO TEMPTATION. I CAN FIND IT BY MYSELF.

Keep some cash though,its really the pits when the machines go down,like when you are stuck at the gas station and the machines are out? Been there,done that.Glad I had cash.In the snowstorm,alongside the closed road.I ate,it was yuck food,but it was hot,as was the coffee.

The cards folks,SORRY!

BooBoo