The Scam & The Skinny — It's Time To Duck & Cover

Some mornings I don't have a prepared topic, I just let the winds take me wherever they will. There was a gale blowing today. For your convenience, I have divided this post into two parts.

The Scam

Fed chairman Ben Bernanke testified before Congress that the outlook for the economy was "unusually uncertain" and full of "downside risks,"  which in Fed Speak means, for the little people Outside the Beltway and the Money World, that it's time to Duck & Cover (see part II below). Bernanke has zero credibility, given his curious optimism about the economy before, during and after the Housing Bubble. For him to admit that he has no idea where the economy is headed now is tantamount to an End of the World prophesy.

Yes, the consensus of Fed officials calls for 3-3.5% GDP growth this year, but the Fed (like the IMF or any other bureaucracy) would forecast such "moderate" growth if the supervolcano underlying Yellowstone Park had blown up just last month. The economy would then achieve a healthy growth rate as we cleared the volcanic ash and buried the dead. See my post The Stimulus of Last Resort for a list of the economic indicators signaling that we're up shit creek without a paddle. Add to that list the growing trade deficit.

It wasn't just "Helicopter" Ben who caught my eye this morning. Dean Baker, a highly respected economist and liberal think-tanker from Inside The Beltway, told Tech Ticker's Aaron Task that deficits simply don't matter. As in Why would anybody care about our debt? The market has spoken, and the market wants to buy Treasuries. Baker thinks Obama's committee to study—study!—how we might lower our debt is a total waste of taxpayer's money.

Baker criticized one of the committee's members for saying that the interest on the national debt would be $2,000,000,000,000 (trillions) in 2020, whereas Baker learned from the Congressional Budget Office that the interest on the debt would only be $900,000,000 (billions) in 2020. What a relief! (That's about 1/3^rd larger than the current budget of the Defense Department.) Baker even advocated that the Fed print money and buy Treasuries until we have spent our way to full employment. He did not specify when we might achieve this magic outcome.

This is a good time to quote Will Rogers (1879-1935).

It's almost been worth this depression to find out how little our big men know

Who also said—

Advertising is the art of convincing people to spend money they don't have for something they don't need.

An economist's guess is liable to be as good as anybody else's.

If stupidity got us into this mess, then why can't it get us out?

Smart guy.

The Skinny

The bottom line is that Nobody In Charge knows What The Hell they're doing. That's what you need to know now. Central bankers, liberal economists at Washington think-tanks, subsidized thieves on Wall Street, federal regulators, etc.—they're all worthless but they've also got secure, good-paying jobs. Perhaps you don't. It is likely that you don't.

You need to prepare for a long economic siege. It won't be pretty. I don't tell people what to do because I couldn't possibly know what people should do. But here are some general things for you to consider—

• What is your income compared to your outlays? How secure is your job? (if you have one)
• Are you in debt? If so, how much? What are your debt service costs? How do these compare to your income? At your current service costs and income, how long will it take you to get out of debt?
• Where are you living? How pricey is it? Is that the best place for you to be?
• What do you own (rent, make payments on) that you don't really need? What constitutes the Good Life for you? What is essential? What is fluff?

I recommend that you go through this kind of exercise to get a handle on where you stand. And then create a plan to put yourself on a less risky footing—if that's possible. Many people are already living on a paycheck-to-paycheck make-it-up-as-you-go basis (unemployed or not). I say Good Luck to those in this position.

As they told us in the 1950s, it's time to Duck & Cover. The advice we were given in case of a nuclear attack then is just as realistic as the solutions to our economic problems put forward by the Powers That Be today. Enjoy the film.

Comments

[Matt K]

Good post and advice - I'd add to that to really start to figure out how to be more self-sufficient - basic things like baking bread, breaking down a chicken, learning to can/preserve food, growing your own food, sewing/knitting, woodworking, etc.

I was talking with my grandma about the Depression (she grew up during it) and she laid out simply how they survived -raising their own food - how Tuesday was "rabbit day" with rabbit brains in the scrambled eggs from the chickens. Matter-of-fact - that's what they did. It's amazing in two generations how those skills can be lost and transformed into getting a ready-made meal from the grocery store. I've just started to learn how to do some of these things (such as how to burn yourself multiple times when making jam), but it makes me feel a little more prepared for whatever happens.

[Jb]

I've been talking to my grandmother too. Her parents had nothing so they sent her to live with friends who had a chicken farm in Scottsville, Va. Every Sunday they had a chicken dinner.

This year I've learned how to make stawberry jelly and peach preserves. We have four hens in the backyard and I'm experimenting with a garden. Last year I dug a root cellar under my back porch. I worry that my feeble efforts won't be nearly enough to make a difference.

While I'm out in the yard educating myself, my neighbors are getting a second mortgage to buy the latest whatever. None of my neighbors have a clue where we are headed; they all have young children.

[Greg Pinelli]

It's incredible for anyone to think that becoming more self reliant is useless. It's hard to think of anyone who is more negative about our current predicament than myself..but it would never occur to me intelligent people couldn't mitigate the problems and deal with them the old fashioned way..with resolve and initiative. To think otherwise is self defeating and more an admission of one's own inadequacies and ineptness than those of people in general!

The future is NEVER inherited by the helpless and the weak..it goes to those who know there are no easy solutions and that living productively from day to day is a triumph.

ExtraO..you need to go out tomorrow and plant some vegetables..and a fruit tree or two..keep your word to someone...make yourself a few dollars less in debt! Get of your duff dude..the world doesn't belong to whiners and slackards!

[ExtraO]

Greg-

My point wasn't that becoming self reliant is useless, rather that it is more than likely at the heart of our predicament. That makes it far worse than useless. With our resolve and initiative, we have gone forth, multiplied and conquered the Earth. Too bad about the Earth, heh?

As far as the future is concerned, and who inherits it: well over a billion Christians (and well over a billion Muslims too, as the validity of the Gospel is upheld by Muhammad) supposedly adhere to Matthew 5:5 "Blessed are the meek for they shall inherit the earth." In my dictionary for meek it says "quiet, gentle, and easily imposed on; submissive." Personally, I'm not religious anymore, tho' I was for many years. I quote this here as many still are. You may be among them. Why will the meek inherit the earth in this context? Easy, all the more self-reliant types will have wiped each other out in the process of acting out their blind faith in in human ingenuity.

I have planted the vegetables, many times, and moved way too many rocks to get at some plantable soil. I admit to not doing any fruit trees. I carry no debt. For the past forty years my life has been entirely about keeping my word, and putting my ass on the line to back up my word. Though you must obviously know that already considering you know that I'm also a slacker and a whiner.

I see that my original post has been deleted. The blog owner can do as he pleases, I certainly would. It does make me think however, that possibly he hasn't thought through the implications of his own writing.