Most folks are really good about making sure they have the proper amount of insurance for their home and automobiles. But when it comes to ensuring the survival of their family in rough economic times, well … not so much.
I recently explained why I believe an economic collapse is inevitable and what it would look like.
If history is any guide, the good news is that economic collapse won’t result in a complete breakdown of society. Argentina suffered through the collapse of its own economy just over a decade ago and life goes on — but it remains less than idyllic there.
Nobody can say exactly how the collapse of the “almighty” US dollar will unfold, but you can bet that most people will be unprepared if and when it happens.
The worst part of any economic collapse occurs in the first few weeks after the initial event that precipitates the crisis. Empty store shelves and fuel shortages will almost certainly result in civil unrest and a huge spike in crime. I suspect it will be an extremely volatile and scary time — especially in major metropolitan areas — as people caught unprepared end up roaming far and wide, searching for the most basic of necessities, and doing whatever they must to ensure their survival.
The good news is, a new currency will eventually be established that will help repair the broken supply chains. Until that occurs, however, most people will have to rely on the black market for almost everything, but life will go on, and goods and services will continue to be traded — just far less efficiently than before.
How long will it take for things to get back to a relative state of normalcy? That’s anybody’s guess, but I’ve been preparing under the following assumptions:
- It could take as long as six months before supermarket shelves become fully stocked again and shortages for most goods become a thing of the past.
- A collapse of the US dollar will not — repeat, WILL NOT — result in an end-of-the-world-as-we-know-it scenario.
With that in mind, here’s how you should consider preparing — in order of descending importance — to help you get through an economic collapse:
Water. If you’re dependent on your local municipality for water, what will you do if a lack of spare parts shuts down the water system for a week or two? If the situation is dire, you can get by on about one quart of water per day. However, ideally you should prepare to have at least one gallon per person per day for at least two weeks, preferably four. You should also purchase a heavy duty filter to purify additional water. Top-of-the-line water filters that will purify up to 13,000 gallons cost roughly $250.
Food. In the opening days and weeks of the crisis, the last place you or your family will want to be is anywhere near a supermarket, fighting clueless hooligans and hoards of looters and panicked people who were caught, as the saying goes, with their pantry down. Some of the cheapest food available (on a cost per calorie basis) is white rice. And while canned food is preferable to dry, dehydrated, and freeze-dried vittles because it’s ready to eat and doesn’t require other valuable resources to prepare such as heat and water, it’s also much more expensive. That being said, while there may be occasional utility disruptions due to a lack of spare parts, I don’t expect catastrophic failures. You should have at least a six-month supply of food on hand. Remember: Even if the food shortages fail to manifest themselves or are quickly extinguished, the food you stored will come in handy if you find yourself unemployed and unable to afford, say, $30 for a loaf of bread.
Warmth. Although I live in a warm weather climate, I realize many people don’t. If you live in an area with extremely cold winters, make sure you have a sufficient supply of wood or heating oil on hand.
Medications. If you have a lot of prescription medications to take, make sure you have enough to get you through until the supply chains are restored. Make sure you always have an extra bottle or two of aspirin, cold medicine and vitamins. You should also have a decent first-aid kit and, if at all possible, a supply of antibiotics on hand.
Sanitary supplies. One of the most important things we take for granted, aside from food and water, is sanitation. Make sure you have a six-month supply of multiple soaps on hand including: bar soap, laundry detergent, and dish washing liquid. You’ll also want to make sure you have adequate stores of toilet paper, baby wipes, paper towels, trash bags, and feminine hygiene products.
Employment. The best protection against hyperinflation is your own earning power. As hyperinflation takes its toll on the dollar and economic collapse approaches, those on fixed incomes like senior citizens and other retirees will be adversely affected because their buying power will decline sharply as their dollar-denominated savings and retirement accounts rapidly lose value. Although unemployment tends to rise substantially during periods of high inflation and economic collapse, those who manage to stay employed should be able to minimize the loss of their purchasing power because employers will be pressured to increase wages in order to allow their workers to keep up with rising consumer prices. So keep your skills polished and stay employable.
Barter items. When a national currency fails and the normal supply chains breakdown, the local economy carries on and products become available via the black market. The only difference is that instead of using dollars, people will begin trading with others for needed goods and services. Because of its silver content, US currency minted prior to 1965 will be useful for trading; so-called “junk silver” can be purchased from precious metal dealers like APMEX. Other proven options for bartering during times of economic distress include: whiskey and other alcohol, coffee, cigarettes, chocolate, salt, batteries, ammunition, and butane lighters.
Defense. Even now, when seconds count, the cops are only minutes away. And you can bet that if the economy collapses your local police will be hours away. That’s because they’re going to be overwhelmed trying to keep some semblance of order — especially if you live in a large metropolitan area. After Argentina’s economy collapsed at the turn of the century, crime skyrocketed. In fact, rapes increased by 165%, car thefts climbed 248%, robberies climbed 4159%, aggravated assaults rose 5597%, and burglaries increased by an incredible 512,100% (!). That is serious stuff, folks. So, more than ever, protecting your home, family, and yourself is going to be your responsibility. Learn how to use and safely handle a firearm. Then invest in at least one handgun and at least 500 rounds of ammunition, preferably more. My entire family, including my 13-year-old daughter, has taken multiple handgun classes and I consider those courses to be among the best investments I’ve ever made. If you aren’t comfortable with purchasing firearms, then make sure you have alternative defense options on hand such as pepper spray because the odds are good that you’re going to need it.
Long-term fixed rate mortgages. Consider refinancing into a 30-year mortgage. That’s because, as hyperinflation takes it course, those with fixed-rate 30-year mortgages who are lucky enough to remain employed will find that the percentage of their paycheck that goes toward that mortgage payment will decrease significantly, leaving more money to buy other necessities, like food and fuel. And if hyperinflation really takes off, they may even be able to pay off the loan completely.
Wealth preservation. One of the most devastating effects of hyperinflation is the annihilation of wealth built up over long periods of time in saving and investment accounts; nest eggs that are carefully built up over 30 or 40 years can be made practically worthless in short order, and there’s no practical way to recover from such a devastating loss. Unlike fiat currencies, precious metals never lose their purchasing power — that’s right, never — which is why experts recommend you should have somewhere between 10% and 30% of your net worth (excluding your home equity) in physical gold and silver as a hedge against economic uncertainty.
So there you have it.
Yes, if you haven’t started preparing you’ve got a lot of work to do.
Yes, making sure you’re properly prepared to weather the storm that will ensue from an economic collapse is a relatively expensive endeavor. But that money you’re spending is an investment in your future.
If you have a family, you owe it to them to do everything you can to make sure they’re going to make it to other side of this looming economic calamity healthy, happy, and full of hope.
Just think of it as another insurance policy.
Photo Credit: Baynham Goredema