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Thread: Matthew Wakes Up

  1. #21
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    “Dr. Cummings, how have you been?” John began. The two men bantered back and forth for a few minutes so the remote editing team would have whatever they needed as a lead in to suit their format.

    Then the actual questioning started. John began with, “Dr. Cummings, the last time we spoke you seemed sure that our economy was in dire straights. Could you elaborate more on that? What signs are showing you that we may be reaching the tipping point?”

    Dr. Cummings answered with, ” Well, let me just give you a quick laundry list of easily verifiable facts. Anyone with an internet connections could check the veracity of these very easily.'

    ‘First the official US unemployment rate has not been below 9% since April of 2009- and as I mentioned last time we spoke- The real unemployment rate is much higher. The blue collar numbers alone are stunning. 19.5% of Americas blue collar workers are unemployed or underemployed. Compare that to 2000 where the number was only 7.2%’

    ‘We have lost 10% of our middle class jobs in that same period of time. We reported 72 million middle class jobs in 2000 today there are only 65 million middle class jobs- but our population is rising so this number is compounded.’

    ‘In fact! The US now employs about the same number of people in manufacturing as we did in 1940- when we had only 132 million people living here- as opposed to today’s 300 million. More than twice as many people.’

    ‘We continue to bleed jobs with no end in sight. In 1998 25% of the worlds Hi-Tech export was the US’s compared to China’s 10%. Within ten years we had dropped to less than 15% while China had grown to 20%- It has been a shift that has not stopped, or even slowed down.’

    ‘These job numbers are really bad in certain areas. For instance in El Centro, CA 24.3% of the population are officially unemployed.”

    “Dr. Cummings, What do you mean when you say officially unemployed? Is there an unofficial unemployed?” John queried.

    “In a word- Yes.” Dr Cummings replied. “ in the beginning of 2007, there were about a million Americans which had been unemployed for 6 months or longer. Today- about four years later- we are looking at 6 million. But that is not the horrible side. There are actually many millions of people who have stopped even looking for jobs, and that no longer are collecting unemployment- even though congress has extended it beyond all precedent. They no longer qualify. They have been looking for work literally for years. Some people are putting the US unemployment rate closer to 18%, and they are making good points.”

    “What about the Housing market? Are we seeing better news there?" Asked John.

    “The last Census gave us lots of useful numbers- such as the 6.3 million homes for sale or rent in the US- that is by far the record by the way.’

    ‘CoreLogic came out with numbers showing housing prices have declined for the last three months in a row. That is a full quarter! This is at the same time the average 30-year fixed rate mortgage rates jumped 11 basis points in one week. And if that wasn’t enough o scare off US homebuyers, the banks are now talking about requiring a 30% down across the board, regardless of credit history. With 22.5% of all US residential mortgages underwater, which simply means negative equity, at the end of the third quarter; who can blame them. The banks figure that they would be breaking even right now if they had required this from day one.’

    ‘Meanwhile our property values are still shrinking in many places in the US. The average home price has dropped 63% in four years in Merced, CA. Los Vegas and Detroit are not far behind.”

    “Isn’t the new government going to fix all of this?” Asked John.

    “It would be nice to think so, but it is a bit of a Gordian knot. On a state level, New York and California may just be out of luck. In California Jerry Brown has to find 29 billion more to cut from the state budget for this year alone. The key word there is MORE, they have already been cutting.’

    ‘Detroit mayor Dave Bing has come up with some austerity measures to try and stop the hemorrhages there. He wants to cut 20% of the city of Detroit off from all social services. Including road repairs, street lights, garbage collection, and police patrols. It’s no wonder houses in Detroit sold on ebay for $10.00 this last year.’

    ‘Camden New Jersey, which happens to be the second most dangerous city in the US, is laying off about half of it’s police in a desperate attempt to stay afloat.’

    ‘All over the States, the local governments State and Town, have begun “police response fees” For example here in NY, the mayor is pushing a fee of $365.00 if police are called to an accident with no injuries. If injuries are present, fuel spills, or the “Jaws of life” are employed the fees will be much higher on an ala' carte system. They also will be sending out “Organ rescue” Ambulances to accident scenes. I guess in case you can’t afford the rescue fee.”

    “That’s disturbing!” John replied. “But what about the Federal government. I was alluding to the new congress.”

    “Well, they certainly have their work cut out for them.” Dr. Cummings replied. “ The US is going to have figure out a way to roll over existing debt, while financing new debt equivalent to 27.8% of GDP in 2011.’

    The US government budget deficit increased to $150.4 billion last month. $150.4 billion missing dollars we need to find or borrow to close our budget. This is the largest November deficit ever. Bear in mind that if you were to count a dollar bill every second without rest it would take around 33 years to reach a billion. For our November deficit in 2010, our counter would have to count for 4965 odd years, a dollar bill every second, without stopping to reach OUR DEFICIT FOR NOVEMBER 2010. It would be about 500 years if he counted hundred dollar bills’

    ‘I heard some numbers on the radio on the way here. I haven’t had time to vet them. But I do believe them to be accurate.’

    ‘It took from 1776, when the United States became an independent country, until 1990, the year after the Berlin Wall fell signaling victory in the Cold War, for the federal government to accumulate a total of $3 trillion in debt.’

    ‘According to the Treasury Department. It only took from Jan. 20, 2009, the day President Barack Obama was inaugurated, until Oct. 15, 2010, for US administration to add $3 trillion to the federal debt. Don’t get me wrong, this is not Obama’s debt. It is CONGRESS who approved it. Whoever wanted it.’

    “What about the rest of the world?” John inquired

    ‘China is slowly buying us, along with as much of the rest of the world it can. The Chinese government has gathered approximately $2.65 trillion in total foreign exchange reserves alone. They have drained this wealth from the economies of other nations. Not just the US, we are just the biggest players. In fact, the projections are theat the US trade deficit with China will hit 270 billion dollars by the end of 2010.’

    ‘Instead of reinvesting this money, China is just sitting on it. This is one of the biggest imbalances in our global economy.’

    “Why are there so many conflicting opinions by the pundits if all of this is easily verifiable?” John asked.

    “Look, everyone has their own ideas, agendas, soap boxes, politics, causes, and passions. I can’t begin to tell you why some people pull out statistics and say we have a solid recovery and some people say our future is bleak, but I will give you a few trends that you should watch, so you can decide for yourself what is going on.’

    ‘Quanitive easing – Be afraid! This is typically playing with fire. The US money base has more than doubled since the beginning of the recession. And Treasury yields have been rising steadily during the 4th quarter of 2010. Since the only way for America to print money, is to borrow it from the FED, it starts getting scarier.’

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    Dr. Cummings handed a cardboard mounted chart from his briefcase over to John who held it up.

    “What are we looking at here?” Asked John.

    “This is something that scares me.” The doctor replied. “And this is the first trend to keep your eye on. Just check out this chart from the Federal Reserve. Since the beginning of the economic downturn, as I said before, the U.S. monetary base has more than doubled.’

    'But we are told not to worry – Federal Reserve Chairman Ben Bernanke has promised us that this could never cause inflation. In fact, Bernanke says that we need to inject even more dollars into the economy. Of course if this is so, it is contrary to anytime governments have done so in the past. Weimar republic, Zimbabwe, etcetera.'

    'So, our Fed experts say if you are alarmed by this chart, you are just being irrational. Do I strike you as irrational John?”

    “No Doctor Cummings, although I wish I could say you were.” John replied honestly.

    “Me too, me too.” The doctor replied shaking his head. “The next trend to watch involves China. In 1985 The US trade deficit was a then scary $6 million for the year. In 2010 the month of August’s trade deficit with China was over $28 BILLION dollars- for the month.’

    ‘Nobel economist Robert Fogel from the University of Chicago projected that the Chinese economy will be three times larger than the US economy by 2040 if this trend continues. So what we as Americans NEED to see happen this year is a slow down in Chinese trade deficits. '

    'We need to buy American, and so do other countries. Especially China. Historically mismatched economies have led to war many more times than not. And not all wars are fought on battlefields. This one is being fought in banks.’

    ‘The next trend that we as informed citizens need to watch is job creation in manufacturing. In 1959 28% of the US economic output was manufacturing. Today we are around 11.5% and falling. '

    'We are becoming a deindustrialized nation. At the end of 2009 less than 12 million Americans were working in manufacturing. The last time that the manufacturing employment numbers were that low it was 1941.’

    ‘We need to fix unemployment across the board- we need to have a middle class- these are key trends.'

    'In fact as of 2009’s survey 61% of Americans were living Paycheck to paycheck with no reserve. That was up from 49% in 2008 and 43% in 2007. I am not looking forward to 2010’s numbers.’

    ‘Which of course leads us to the poverty trend. 43 million Americans are on the food stamp program. And according to USA Today, one in six Americans is now enrolled in at least one anti-poverty program run by the federal government. With 21% of children in the US living below the poverty line. This trend will end our country, or our way of life in short order.’

    ‘Government spending, National Debt, Social Security, it goes on and on.”

    “I don’t know what to say.” John stated. “What should we as average Americans do.”

    “Pray and prepare at the risk of sounding trite.” Was the doctors reply.

    “Well Praying we know how to do, but what can we do to prepare for a major economic worldwide meltdown?” John asked.

    Well John, I don’t know if I believe you are right about everybody knowing how to pray, but we will leave that alone. As for preparation, I think that is dependent on where and how you live. It’s a broad scope thing.” Answered the doctor.

    “Well, let me see if I can simplify. What would someone living in New York state have to do to see themselves through to the end of this depression, retraction, recession or whatever description you wish to hang on it?” John returned.

    “Well, I guess it would depend on where you lived in New York state. We forget living in the city that New York is mainly a rural state. If I was an Amish farmer living upstate, I would do little or nothing. Perhaps I would take cash out of the bank, and convert it to precious metals… or stock more consumables such as lantern mantles. If I were an average Joe living on Long Island, I would pay off all non reoccurring bills ASAP. But first I would make sure that my really important bills were not in danger.” The doctor answered.

    “Well since the Amish farmers aren’t watching this presumably, lets skip to our average Joe on Long Island. What are non reoccurring bills? And what are you calling important bills?” John asked

    “Non reoccurring bills are things like credit cards. Things that are one-time bills. Credit cards are your enemy in this economy as much as if they were carrying knives. Important bills are things like your mortgage or car payment. They come every month, and you need what they represent. Utilities are important too.” The doctor explained.

    “Could you perhaps lay out a quick plan for an average middle class family to get themselves protected?” John asked.

    “Protected is a slippery word, but here is my advice for families that have an income. Firstly stop using your credit cards. Period. Second, pay the minimum payment on all your credit cards but one. Pay everything you can on that one until it is gone. Then put all the money you can on your next card and continue at this pace until they are gone.” The doctor started.

    John interrupted,” Doctor, How do we pick the order of the cards? Does it even matter?”

    “Yes, it can matter John, and that’s a good question. I would pay off my unsecured debt from lowest to highest amount owed. That way you will finish quicker because as you eliminate one debt, you have more money to throw at the higher one, and it will cost you less in interest as well. I would add the caveat that if you have one card with a much much higher interest rate, and you can’t transfer the debt to your other cards, paying that one first might be called for. You have to do the math and see if it’s cost effective.” The doctor said.

    “Thank you for the clarification, please continue.” John said.

    “Your welcome. Now let’s look at cars. I am torn on how to speak to this. For the average Joe again. If you have two cars in your family, and need them. Pay them off the same way. Double up one payment, or triple it if you can afford to. When that is paid in full- switch to the next one. And again- start with the one you owe the least on. If you do not need two vehicles- why are you paying on two vehicles? Sell one- and put the profit on the other. Or buy a used second car with the profit. Two car payments in today’s marketplace is scary. If you buy new cars- pay cash. Even 0% financing costs you more in the long run.” The doctor smiled. “And now I will prove that I am an economist and not an accountant. Pay your mortgage off as quickly as you can. Double and triple your payments whenever possible!”

    “But I thought mortgages were the holy grail of write-offs, is this not true?” asked John perplexed.

    “That is true, if you are in a very high tax bracket. But the truth is for the very largest percentage of people with mortgages, the money they loose in interest and fees, added to what they loose by having so much less a month to invest in other things, most mortgages do not in anyway save the homeowners in the long run. The vast majority loose big. Get rid of your mortgages as soon as you can. The accountants are simply wrong. Do the math yourself. It is not hard.” The doctor finished.

    “Then why would accountants all tell us to get mortgages for the write off? Is it a conspiracy theory?” John asked with a twinkle in his eye.

    The doctor laughed “Goodness no. It’s how they are trained. They are micro finance- one budget line, be it a person or corporation, split into multiple budgets. They are looking for deductions that appear large. I am an economist. I look at how money works for x or against x. X can be a person, family, company, country, or whatever. I look at the macro view. How it all works together. Nothing sinister, just different points of view. It is up to the individual to choose his best course based on all the options.”

    “I think I see where you are coming from.” John said. “My father says that if you ask a carpenter to build you a house, he will make it from wood. Ask a mason and he will build it from stone. And if you ask a welder, it will be made of steel. “

    “Exactly right!” The doctor laughed. “And you would want your house built of each of those for different styles, budgets, or environments. The individual must make the final decision. In the bible’s book of proverbs it says:


    ‘For by wise counsel thou shalt make thy war: and in multitude of counselors [there is] safety.’



    This is as good advice today as when Solomon wrote it. Whether you are talking sports, finance, or your hobby. The key is getting good advice, and then picking and choosing yourself- based on the information you are given.”

    “I can see your point!” John said “I tend to go with the flow. I rarely go contrary to accepted norms in things like finance.”

    “You certainly aren’t the only one. Most people just sort of ‘go with the flow’ as you put it. That includes elected officials who are spending our money. And the majority of the population doesn’t even seem to notice until there is a problem. There is a saying ‘Great minds think alike’ I think we should instead say ‘Great minds think for themselves’ That doesn’t mean we should be cantankerous and go against every opinion to be different. It means we should make the best possible decisions we can for ourselves.” The doctor replied.

    “What sort of things are we talking about?” asked John.

    “Well anything really, but lets keep it about money as I am an economist after all. Let’s take another hypothetical family in NY. Times get tough. They decide they are going to drop their cable to basic to save some money. Dropping all the pay channels they get themselves down to around $50 here in the city. Maybe $30 other places in NY, I am not sure. Times get tougher.. The family believes it has to decide between TV (which they are convinced they need) and something else. They do not even look for another option. These are the accepted norms, and they go unchallenged.” The doctor said.

    “Are there other options?” John asked. “I can’t think of any myself.”

    “Several options come to mind off the top of my head.” The doctor said. First, usually hi-speed internet is available cheaper than video programming. Much TV and movies are available that way. If that doesn’t work, you can hearken back to the early days of cable TV itself. When little communities like Southampton, NY wanted TV, but no signal was near. A group of farmers and fishermen formed a co-op and bought a satellite system together. They then ran cables to each of the houses and formed one of the first cable companies in the world. Farmers and fishermen are used to figuring out how to make do. It’s a good lesson. This would work in an apartment building I think without a problem, a hotel has more rooms. But personally I would switch to satellite if I were leading our tight family.”

    “Satellite is around the same as cable, you wouldn’t save very much.” John replied.

    “Well if your talking Dish Network style Satellite you’re right. But I was talking FTA satellite. A complete system with DVR is around $200.00. That’s it- no subscription fees. EVER!“ The doctor chuckled. “A technological step back, a financial step forward and I wouldn't even miss Oprah.”

    “Would they have all the channels available on basic cable?” John wondered.

    “No, they would have a substantially different line up. They would loose local news most places as well, unless there were a local station broadcast. But they would also gain dozens of other channels, and several independent stations in the US broadcast. There are also movie stations for free- older movies – not HBO. HBO and it’s ilk are available for a fee. Also you have to rotate your dish to get complete coverage- but these are electric now, and are done from inside your house.” The doctor replied.

    “Most Americans want the convenience and channel line up of regular cable.” John observed.

    “Then they can have it. For the $30-50 a month.” The doctor smiled and added. “Till they can’t afford anything anymore. At the cost of something else. I personally have both. I like the fta stations from overseas, and I get a much broader prospective on world news. Like I said- in this market it is all about personal decisions. There are other families out there who will jump on FTA cable just to have anything. And they may have to save a few months to get that.”

    “I see your point. How can you find out what channels are available FTA to make a decision?” John wondered.

    “A simple web search for FTA programming or channel line up for North America should take care of that for most viewers.” The Doctor answered. “ But your missing the point. To prepare for economic downturn, an individual needs to look at his income, reoccurring bills, and services with a hard eye. And make decisions as to priority. Finding alternatives is just a part of that. One shouldn’t go without completely to roll with the crowd above their current means.”

    “After all, I suppose recessions aren’t forever usually.” John stated.

    “Well, in most cases you are right. But a societies last depression can last for hundreds and thousands of years. Mexico and Egypt are two examples of rich countries sliding into hundreds or thousands of lean years.” The doctor said. “ We also need to be looking towards our futures. Once we get our expenses in line. Different people will be willing to make different sacrifices. But living above your means is just a selfish decision today. In the near future, it may be more.”

    “More how?” John asked.

    “In some countries it has been a death sentence at times. With no reserve, and no state aid, people simply die in tough times all over the world. What makes us think we are any different here? The nanny state can’t last forever.” The doctor shook his head. “ It can’t last much longer at all.

    “So we should apply the lesson of 'find cheaper television' to every bill?” John asked.

    “In my opinion, right now is not a good time to have debt. Of any kind. I would recommend reducing your expenses until your debt is paid, and you have some sort of reserve. Remember this reserve need not be cash in nature." The doctor replied.

    “What other kinds of reserve could we have?” John inquired.

    “Another good question. This answer also illustrates that it is about mindset not formula. You could have a reserve in precious metals, physical possession not paper certificate. People are loathe to take paper anything if we hit a crisis situation. Also I wold recommend not only gold, but silver. It is under priced right now but rising, and smaller denominations if possible. A one ounce gold coin is worth thousands now, but may be worth even more if the economy takes a big dive. If you have one gold coin, you may have to trade it for a single meal, gallon of water or fuel that you could have easily traded a single silver dime for. “ The doctor answered.

    “I see.” said John.

    “There are other reserves too. Remember business is also called “trade” for a reason. People are always willing to trade something of value for something of value. The trick is knowing what will be valuable when you need it.” The doctor continued. “This is what makes precious metals valuable. Other things can have the same intrinsic value to people as well. If you have them, can acquire them, or even make them - then you are rich.”

    “What sort of things do you mean?” John asked.

    “Well that is the hundred thousand dollar question isn’t it?” The doctor replied with a smile. “Again, it depends on the situation. That is why commodity brokers buy futures. They are betting on what will be valuable at different times in the future. A couple of things are always good bets however. I for one am a big fan of foodstuffs currently. More specifically non perishables.”

    “Are you suggesting that it is a good idea to stock a large amount of food?” John asked. “Isn’t that hoarding?”

    “It is no different than commodity brokers at all!” The doctor exclaimed. “And no one accuses them of hording. Buy cheap, sell high. Isn’t that the mantra. When there is a frost in Florida, and three quarters of the Oranges fail. No one accuses the commodities brokers of hoarding. They instead say, ‘Wow, smart of you to buy low, sell high! Attaboy.’” The doctor paused for a moment. “ I am not saying I support gouging. I instead support free market economies. People with forethought deserve to make a profit. That is capitalism. And if food doesn’t sell, you can always eat it.”

    John looked slightly stunned at the things the doctor had said, finally he replied. “ But Doctor, are you saying that only those who prepared, or have the ability to trade, deserve to eat in a crisis? I don’t know what to say to that. It seems very mercenary.”

  3. #23
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    “Really? That is not exactly what I am saying, but let us pretend that it is. And let us pretend that we have never heard anything about redistribution of wealth on the one hand or the fable of the ants and the grasshopper on the other. Let us just use pure reason spiced with human emotion. Agreed?” The doctor began

    John merely nodded.

    “I will pose you a series of questions. I will not prompt answers. You answer using reason first, emotion second. I will warn you – these are hard questions. Are you ready to begin?” The doctor asked.

    “I guess it is your turn to interview me. OK shoot.” John replied with a nervous look.

    “OK let’s start off easy. You are an emergency services member called to a flash flood. A group of people has gathered in the rising water in a place to facilitate rescue. Another group has decided to see if they could swim in the tide for some reason. The water is rising very rapidly, and you will only be able to rescue one group. Which one do you pick.” The doctor asked.

    “Part of me screams to get at least some of the swimmers. But I suppose you would save the group of people waiting rescue.” John answered.

    “John, you are an Emergency worker. It is your duty and your job to rescue people. I asked which you would rescue. Not who you want to rescue, or who you think I think should be rescued. The water is rising man. What are we going to do.” The doctor prompted.

    John set his jaw and answered “We save the group that is easy to save first. They are in danger and time is short, they thought about what they should do in the situation and they did it. Then we try and save as many of the others as possible.

    “That wasn’t so hard was it? “ The doctor teased gently. “Now – same question. But, this time you know some people who are in the group of swimmers. Do you change your answer?”

    More surely this time John replied. “No, I still save as many of them as I can, starting with to ones who made themselves ready.”

    “Fair enough. “ was the reply. “OK now instead of knowing someone in the group of swimmers, one is your brother. Now what?”

    John hesitated and then said “I hate this. My answer is the same. I feel almost as anxious thinking about it as if it were real.”

    “The exercise can go a little further, but I feel as if we have gone far enough to illustrate my points for the audience. You have answered your own question. For yourself!” The doctor smiled wanly.
    “I don’t see how you mean that. My original question was about food.” John said perplexedly.

    “Well Food is a life saver too, isn’t it? Let me ask a couple of simpler questions. Can humans live without air?” The doctor asked.

    “Of course not. Well, for minutes, but that is all.” John replied.

    “Right, what about food? The doctor continued.

    “A little longer, days or weeks.” John answered.

    “But at the end of that time you are just as dead if you starve as if you had no air and drowned?” The doctor inquired.

    “Of course!” John answered.

    “OK.” The doctor went on. “So why did you save the group you did?”

    “Was It the wrong group?” John asked concerned.

    “I told you I wasn’t going to prompt answers. Just relax and tell me why you picked that group?” The doctor said soothingly.

    “Because they were a sure bet. They had themselves in a place that facilitated their safe removal. They were prepared I guess. By getting them out first, I may have a chance at some of the swimmers. But if I try to save the swimmers, I may not be able so save anyone.” John answered. “Besides, why didn’t the swimmers just be logical?”

    “I see.” said the doctor. “Even if the swimmers were family you stayed the course. Why?”

    “Because I am emergency services. It is my job. If it wasn’t I would probably just save my family member first.” John answered truthfully.

    “”So there you have it. You keep illustrating my point beautifully. Let me break it down for you. You say that food- or the lack thereof- will leave you just as dead as not breathing. Albeit at a different time period, and you said those that prepared deserved being saved first. Even over family. You also stated that you may look after your family first. Which is fine in your particular real life situation, because after all you are not in ES are you?” The doctor smiled. “Because if you were, if you saved some prepared people before you saved everyone simply because it was your job, a job you were payed for, that would be quite mercenary wouldn’t it.?”

    “I see your point. People who save food deserve first crack at it in an emergency. But to trade it at an increased rate still seems wrong to me.” John replied.

    “OK, what if your family has plenty of food. But it needs a couple of other things to survive. Would it be wrong to sell some of that precious food for the most that you could so that you could purchase the other things needed? Asked the doctor.

    “I guess not. And point made.” Said John. “but could I give some of my stuff away? To my family?”

    The doctor smiled and said “John, it is your food, you can do with it as you will. But make sure you have enough before you share. Sometimes life requires hard life and death decisions. And if you do not make them, life will do it for you." The doctor smiled “Would you like to hear another thing you must remember?

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    “I am a reporter, I want to hear EVERYTHING!” John said with a smile.

    “OK, It’s just this. ‘Loose lips sink ships’.” The doctor replied. “Do you know what I mean by that?”

    “I have heard the saying before, it’s a WWII saying. It refers to service men telling people; wives, girlfriends, buddies. Etc; things about their postings and missions that could be overheard or passed onto the enemy as operational intelligence. Right?” John answered. “But I am not sure how it applies here?”

    “Let me pose you another question in illustration.” The doctor began. “If you had saved a briefcase full of money, would you tell everyone you know about it? Put it on your Facebook page? Tweet ‘Just counted it! X Bucks! WOOT!!’ Bring visitors to your home to see it under your bed?”

    “Of course not!” John laughed.

    “Why not?” asked the Doctor.

    “First off it would be Tacky! Secondly, you never know about people. One might feel they needed it more than I do and break in and take it. I see where you are going with this. But we are talking about food not money.” John exclaimed.

    “We are actually talking about things of value.” The doctor returned. “And I am proposing that food may be a thing of great value at a near future point. You can believe or disbelieve my proposal and act accordingly. When gold was at $400 an ounce I said on an interview show much like this one that people should buy gold. Some people believed me and bought gold. Some didn’t and even sent me email calling me an alarmist, a gold bug, and even worse things. Now we all know where gold has reached. I propose that food will have a meteoric rise soon. I also maintain that the beginnings of the rise have already begun. It is up to you to believe or disbelieve.”

    “So you think that food prices will increase that much?” John asked.

    “I do indeed. Which is why I suggest both passive and active protection for it, as well as your other valuables.” Came the doctor’s answer.

    “Protection for food? What do you mean? Should we hire armed guards?” John asked tongue in cheek.

    “If the situation warrants it. But at the point we are at now, simply being quiet about our stock should be enough. Soon however you may want a security system. Or even more.” The doctor said.

    “Are you proposing we arm ourselves to protect our cornflakes Doctor?” asked John.

    “I am an economist, not a security expert. If I was to suggest you invest in diamonds, and then said to protect them, you would not bat an eye. I am telling you that in the near future, very near future, food will be more valuable than diamonds. The proof is all there if you want to research it. And I for one believe you should. Great minds think for themselves! Remember. But this has to do with a lot more than food. It has to do with our entire global economy. Housing, Fuel, Food, Energy, and everything else will be effected. The world is one harvest away from starvation. And the people are living paycheck to paycheck globally. Austerity is leading to riots in Europe, the Middle East, North Africa, and Asia. Only a fool would believe that could never happen here. The largest union rally in history just happened in Wisconsin, and our nation is more polarized than ever over things like entitlement programs versus budget cutbacks. Even during the civil war, we had three camps of thought, union, confederate, and neutral. Today we are almost evenly split into two camps. That is a definite red flag.” The doctor returned passionately.

    “Let’s move on to other things besides food, what other areas should we as New Yorkers, and Americans be worried about?” John inquired.

    “We still haven’t settled the housing problem yet. Our taxation is out of control. Our energy markets are scarier than a horror movie. Which one do you want to talk about?” The doctor asked.

    “Housing is something we are all aware of. What is your advice for people who want to own a home, and can’t get a mortgage. Or can get one but are afraid of a mortgage in this economy.” John asked.

    “I would tell them not to get a mortgage. I don’t blame them for being nervous. I would never get a mortgage right now. The market is too volatile.” The doctor said.

    “So my generation should give up on home ownership?” asked John.

    “Of course not!” the doctor exclaimed. “Have you forgotten the lesson of the cable service already. I told you it’s a mindset.”

    “So you have alternative methods of home ownership in mind?” asked John.

    “Well off the top of my head, I can think of several. First, for most of American history people bought land from each other without banks involved. Many Americans are still willing to hold paper. Or, if you are in a rural area you may have more options. For instance, if you call your county extension office, they may be able to turn you onto a situation that is unique to our time. Many farmers’ children are not going into farming. This leaves the farmers with an interesting dilemma. They can’t afford to retire. They can’t sell their land because it’s worth less than they owe. So they are willing to ‘adopt’ a family. They build a small house on the property and they train their own replacement. With the stipulation that they get to live out their life on the property and in some cases receive a small salary for an advisory role.”
    “That seems cumbersome and a possible personality nightmare.” John commented.

    “Perhaps, but it is a a possibility. But I have an even better one. That anyone can do.” Said the doctor. “wanna hear it?”

  5. #25
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    "What is that?l prompted John.

    "Well every area has 'for sale by owner' web sites and newspapers. A way to home ownership without a credit check or down payment is available through them. It is simple, especially for web users." The doctor began.

    "I can hardly wait for this one " John said with a smile.

    "Oh, now your wise guy?" The doctor smiled. "Me too, but this is for real. Simply look on the for sale by owner site a year earlier. You can do this by using various internet 'way back' or archiving sites. Then look on the site for it's current listings. Any that are still on have been there for a while. Right?"

    "Right." John responded. "So what does that tell us?"

    "It tells us that they may be a motivated seller. " The doctor replied. "And they may be more likely to make a deal."

    "What kind of a deal? Even if they agree to a rockbottom price most people would still need a mortgage and a huge down payment." John responded.

    "You are right if we were looking for the traditional mortgage sale arrangement. But, we are not. What we are going to do is contact the owner and offer to take over their payments. If they are behind on their mortgage this is a huge benefit to them. Or they might want a little on top monthly. Or they might say no." The doctor replied.

    "I would say no." Said John. "I don't see how it is a good deal for them. "

    "If your house is foreclosed on it kills your credit rating for years. This deal is a good one for some people. Others will say no, and neither of you looses anything but a half hours conversation. " The doctor said earnestly.

    "It would feel to me as if I were taking advantage of people in a tight spot." John said seriously.

    "By saving their credit? By removing a burden? Honestly I do not know what they are teaching people now a days. Listen, only people who need this deal will take it. And those people are grateful." The doctor replied.

    “If helping people out of a tight spot in a mutually beneficial way is something you are too squeamish for, the Green Movement has provided us with a host of alternatives as well. They have invented and reinvented literally dozens of building styles which are labor expensive but materially cheap. Things such as Cordwood masonry, Pise’ which also known as rammed earth, Cob, and Earthships all deserve a look. If you provide the labor, and use recycled windows and doors along with whatever else you can scrounge, some of these buildings can be literally free for the building, with the exception of plumbing and electric.” Said the doctor.

    “I suppose that would be helpful for handy people. But what about folks who have never held a hammer?” Asked John.

    “Well I think you should do some research on these things before you make that leap of judgment. Really, I would have thought you had learned better by now. I wouldn’t be offering these suggestions to the general population if I thought it was beyond their reach. If you do a search on the internet about cob construction alone, you will find stories of women in their 70’s with no experience building their own homes. Single moms as well- while they hold a job AND take care of their children.” The doctor chided.

    “I can see I need to look into these methods more before I comment. Are there any more like this.” Asked John.

    “Certainly. There are plenty. Strawbale building for one, not as cheap as it used to be but definitely doable for the owner builder who wants to build a superinsulated passive solar house ANYWHERE. A version of Pise’ using straw dipped in clay. Houses made of converted shipping containers. And my personal favorite, the rammed earth block. I am currently building an addition to my home upstate using them.” The doctor commented.

    “Tell us a little more about them then, since it is a current subject in your life.” Pressed John.

    “Well I am using the TerraBlock system. I would encourage everyone to check out their website and YouTube videos. They are wonderfully educational. The TerraBlock system uses the soil on your property to make large bricks which are then built with on site. The bricks have the best ballistic protection of any of the methods I have mentioned, and are even being used to build police stations and barracks in third world countries because of it. They also are a great thermal mass and more insulative than most other methods of construction. Yet you can easily put a nail into them to hang a shelf or picture. The company rents or sells machines that produce the blocks quickly. However, you can easily construct a single block maker from plans on the internet which use a long lever or a hydraulic jack.” Said the doctor.

    “Well that sounds interesting and very green, although I am not sure how much ballistic protection means here in New York.” Said John.

    The doctor just chuckled.

    “But these all presuppose land ownership. Which is still an expense that most of us simply cannot conquer.” Stated John.

    “Well I guess it depends on where the land is, how much we need, and our resources.” Said the Doctor. “There are plenty of places in New York that land can be had for one to three thousand dollars an acre. They are usually rural or agricultural areas, or areas that have been recently logged- we aren’t talking about the Hamptons here. Most people could live quite comfortably on an acre or two. Especially if we are raising much of our own food. All of a sudden our expenses drop to energy, land tax, and car expenses with the exception of a few minor things. It’s a definite priority switch, but if you let your TV time be replaced with a few simple chores, you can save yourself a lot of time and money. But there are people who would not be able to come up with the minimum two or three grand to get started. Or are chained to an area that has much higher land prices due to circumstances in their own lives. There is a great solution for these folks too. If I were a single man or young couple, it is probably the path I would take. Should I go into it more , Or are we getting short on time?”

    NOTE:
    For the curious- the two options of the ones listed above that are best imho for preppers in general, are the Rammed Earth Block:

    http://www.terrablock.com/

    YouTube - Terra Block System

    or Cob:

    http://www.cobcottage.com/

    http://www.beckybee.net/

  6. #26
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    “I definitely think we can continue in this vein for a few minutes. Please continue.” John replied.

    “Thank you. This next idea is something that is just gaining momentum presently. They are called ‘Tiny Houses’, ‘Tumbleweeds’, and other things but the description is really a trailer with a small house built onto it.” Said the Doctor.

    “Like a camper?” asked John.

    “Yes and no.” Came the reply. “Really, campers are designed as a home away from home. And they are very expensive to buy new. These are more like really small primary dwellings. Most are built custom by their owners. However kits and prebuilts are available although expensive.”

    “So It is like a mobile home?” asked John. “You live in it full time.”

    “Well they are usually much smaller, and yes they can be used as a primary dwelling, or as a camper, or even as a second home.” The doctor replied.

    “So you have to still meet code, which means contractors and such. Or is this more like the Cob building you were talking about?” John asked.

    “Well, as long as you don’t get longer than 39’ or higher from the ground than 13’6” or wider than (I believe) 12’ you do not get into the area of code for mobile homes, so anything goes. You will also need to build within the capabilities of what ever trailer you build on, or the vehicle you have to tow with. But most of these things are VERY small. I know of at least one person that owns one, and does not even have a vehicle. She rents a truck from Home Depot the infrequent times she moves it. I would also specify that unlike most motor homes, you are better off using a small composting toilet rather than a chemical system so that dumping it is not a problem. If I were someone with money problems, this is definitely the way to go. Or if I were going to be going down the owner builder route, I would build one of these first, then live in it while I was building the ‘Real’ house. I even saw one of these built onto an old army deuce and a half 6 wheel drive truck.” The doctor said with a smile. “And if I ever needed to travel, I could pull my little house behind me. Even if I had to leave in a hurry, due to a storm or some such- I would never have to worry. I would have my portable house that I could park in a friends back yard. Or a campground, or even a tiny house camping area. There is one of these in the Catskills that operates as a club. You Have your own site, which you can rent monthly or yearly, even keep your own shed or storage building on the site, then just drive your tiny house there when you want to, or leave it there as you drive back and forth with your car.”

    “That sounds fun. How hard are these to build? Are they expensive?” John asked.

    “Well, I know of several people who built them from old wood pallets on scrounged trailers for under a thousand dollars. I also know of people who buy them premade for twenty grand or more.” The doctor said. “Which while cheaper than a camper, is still more than most people have lying around. I would probably build my own if I were looking for one.”


    At this point Luc flashed his pocket flashlight a few times at John, and John straightened up in his seat.

    “Dr. Cummings, I think we are about out of time, Is there anything you feel you should add before we wrap this up?” He asked.

    “Just this, our economy is in for a rocky ride over the near term. Expect severe inflation in gasoline, food, electricity, water, and clothing among other things. Severe inflation. There is simply no way around it. Expect the real estate market to crash even harder in the next year or two. And prepare yourselves for this eventuality. Forewarned is forearmed. And if you do not take care of your selves and your family no one else will. It’s not the end of the world. It is just a much-needed correction. However it has been put off for so long, that the fallout will be unsurvivable for the people who have the greatest exposure. What worries me is that all this may be a prelude to a World War. Economies such as this one in the past have done exactly that. And now more of the world is in this shape than ever before preceding past conflicts.” The doctor leaned back in his chair as he finished.

    “Well that gives us all a lot to think about. Thank you Doctor Elijah Cummings, and we will have you back whenever possible, it is always a pleasure to talk to you, even if the subject matter is not. “ John smiled at the camera until the live light went out and then sat back.

    “Doctor you are scaring the living daylights out of me. Are things as serious as you say? Luc asked.

    “No sir, they are much worse. But if I dumped some of the realities this interview would never get airtime.” The doctor said sadly.

    "What do you mean, do you think there is a conspiracy to keep information from us?" asked Luc.

    "No. Well not per se." The doctor replied. "But people don't sponsor doom and gloom reporting, except precious metal brokers and "Year Supply" companies. And there aren't many of them. Besides Stations don't want to seem as if they are cheerleading America falling."

    "So what can a guy like me do?" Asked Matthew. "I have nothing and am barely getting by as it is. Am I done for?"

    "That is up to you my friend." The doctor replied warmly. "Robinson Crueso made it. Plenty of folks stranded in deserts, on mountains, in jungles, and snow storms have lived to tell the tale. And the Dark Ages were not the end times. It's a mindset to make it. And the better prepared you are, the easier it will be. You don't need anything but the right attitude and ideals to start however. It also helps to have like minded friends. If I were you I would just start preparing for the eventuality we have outlined."

    "But where do I begin? I can barely cover my bills as it is. In fact at this point I am not even doing that!" Matthew replied.

    "Well then, that is where you start. You can't afford your lifestyle. Cut back on non essentials on the one hand, and find a second job on the other." The doctor said. "No one said it was easy. But it becomes easy after you have lived it for a while."

    "If I cut back anymore, I would be homeless. " Matthew laughed.

    "Well maybe that's where you start. If you can't afford your rent on an apartment, rent a room. If you can't afford a room, rent a bed. While you are living like that put away enough to build a tiny house, or buy a used motorhome. Live tight and build up as quickly as you can." The doctor replied.

    "It sounds easy when you say it Doctor, but I don't know if I can do it. It just seems so overwhelming." Said Matthew in a depressed tone.

    "Then you are right you can't do it." Stated the doctor. "If you say you can do it-you are right. If you say you can't do it, well you are right as well. Its a decision. It is a mindset as I said."

    "As trite as that sounds on the surface, it is true my friend!" said Luc. "I have lived my life by that rule since the baby came. It is definitely true in my life."

    "So where do I start?" Asked Matthew.

    "Begin at the beginning, to quote Lewis Carrol. Sit down with a pen and paper and outline what you have, and where you need to get to. Then fill in the middle on a time-line, or using milestones. I recommend the latter. It is easier to motivate myself using events rather than dates. But you need to figure out things for yourself!" said the doctor. "Other people can be a great resource, but make sure YOU are the only one in charge of your destiny."

    "Thank you for the encouragement doctor. I believe I will give it a whack!" said Matthew, his momentary despair quelled.

    "Good and you used the right word. Belief is the biggest hurdle, all the rest is housekeeping!" The doctor chuckled."And now lads, I am off to visit with another reporter from NPR who wants to politicize everything I say to blame the last administration for anything she does not like. Oh did I say that out loud... Shame on me."

    The doctor shook everyone's hand and hurried out the door.

    The three friends looked around at each other and each seemed slightly confused. As if they should be doing something, but couldn't quite figure out what it was.

    "I have an incredible sense of urgency. To do something- anything!" said Luc. "As if I should spring to my feet and rush out the door to take care of my business."

    John laughed."I think we are all there. Tell you what, why don't you and Marie have dinner with Matthew and I at my place tonight. We can think about what we have rolling around in us and push it out over a glass of wine. We can just order Pizza. You guys in?"

    They all agreed and went to work putting all the equipment away.

  7. #27

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    Thank you. You present a lot of great information in a non-preachy way.

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    I agree. You have a ton of info in here and some good ideas on how to do several things. Repurpising items like the stone, and different ways to cut food and cleaning cost are great ways to help with budgeting and saving money. I also like the links to certain ideas or ways of doing things such as the TerraBlocks. That is sure one item I am going to brush up on.

    Great start and I'm looking forward to reading more.
    Greater love hath no man than this, That a man lay down his life for a friend.
    John 15:13

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    Thank you. I think prepping is as much a mindset as it is knowledge and supplies. I am glad your enjoying it.

    btw- I am currently building a new building using rammed earth- like the blocks only not bricks, but uses a form like cement and a tamper. I encourage everyone to try
    Last edited by MacBestus; 02-01-2013 at 08:26 AM.

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    Chapter 17-
    After they were done rolling cables and storing gear, Luc showed Matthew how to use job numbers on his time card.

    "This is the code for the interview." He said filling in a blank on Matthews card. "If you do not put in a code, then you are paid out of your general account- and at that rate. Mark gets angry if you don't use job numbers because it kills his budget, and he can't bang other people for your time."

    "Makes sense. You can be sure I will use job numbers if it means I will make more than my regular rate!" Matthew answered. They both chuckled and Luc set him up on one of the staff Macintosh computers to do some tutorials.

    Matthew had watched a couple and was looking for a third when Mark stuck his head into the room and bellowed "Matthew are you independently wealthy or something?" He handed Matthew his pay envelope. "This thing has been on my desk all day, and it's the last one there. I don't need to be babysitting your check."

    "Thanks Mark!" said Matthew. "I didn't think I would get paid till next week"

    "We don't have a lag here. Do you have a way to cash it?"

    "Yeah, I still have a bank account." Matthew answered. "And there is a check cashing place on my street if I didn't"

    "Don't use those places unless you have to! Are you nuts. The only time you have too is when your on the run or a tax cheat. Can I assume that you are not one of these?" He asked with a wry grin.

    "Of course not!" Laughed Matthew. "I would dress better. But seriously, if I didn't have an account, I would have to right?"

    "For some reason many people think so. And they pay the crazy fees that those places charge. But really, if it is a payroll check, the issuing bank HAS to cash it most places, whether or not the employee has an account. If they won't the employer must then pay cash, or the department of labor will have some interesting questions for them." Mark replied.

    "But if I had just got a job, I might not want to make waves. What then?" Matthew asked. "I would have to bite the bullet and go to a check casher, fee or no fee, know what I mean?"

    "I know what you THINK you mean, but really, most bosses won't think it's amiss if you ask their help getting paid. Either cashing the check, or calling the bank. But even if I was a delicate little flower like you," Mark winked at Matthew." I would still not go to a check casher. I would go to a grocery store. Most of them will do it. If not the Wal-Mart type stores do it as well. Or I would ask a friend. I would buy him or her a beer of course, but I would definitely have to be hiding out to use a check casher. It's just to much of a fee. But you have an account, so I don't have to cash it for you, which is what I was getting at."

    "I should be fine, and thank you!" said Matthew. Then he headed out to cash his small but welcome check

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