Poor Man Survival
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A positive
jobs report is only one part of the picture.
On January
4, the United States Bureau of Labor Statistics released its December
employment figures, causing much rejoicing in America. A total of 312,000 new
jobs were created, far surpassing the estimated 176,000 jobs. Wages were found
to have grown 3.2 percent over the same time last year, again beating the 3
percent increase economists predicted. That year-over-year jump tied with
October for the best month since April 2009.
This was positive news for the U.S. economy, coming amid growing
concerns of a global recession setting in. After a week of terrible losses, new
life surged into the stock markets. Many declared that the U.S. could push
aside fears of a recession.
But while the job numbers were very favorable, they are only one
part of the economic picture. Add a few more pieces to the puzzle, and the real
picture of America’s economy appears.
A Few More Puzzle Pieces
Here is the first piece: One underreported fact from the December
job report was who is
being hired. The majority were workers 55 years and older. In contrast, the
number of people in the prime age group (ages 25-54) decreased by 11,000. This
says a lot about America’s financial situation. More and more Americans of
retirement age are returning to the workforce, most likely because they can’t
afford to retire. This also explains why wages increased more than expected.
Those of retirement age lack sufficient savings for retirement,
and younger Americans are not saving for retirement. Data released last year by
the Federal Reserve found that 4 in 10 adults couldn’t cover an unexpected
expense of $400, and would have to go into debt or sell something to cover the
cost. While this is an improvement from 2013, when 50 percent of adults
couldn’t spare $400, it still shows how unprepared people are for even a small
financial hardship. The most recent study on the issue found that 78 percent of
Americans live paycheck to paycheck, up from 75 percent the previous year.
Here is the next puzzle piece: Not only are Americans without
savings, they are maxed out on debts they cannot pay. The same Federal Reserve
report found that more than one fifth of adults are unable to fully pay all
their current month’s bills, which means they are stuck in an ever worsening
debt trap. Consumer debt in the U.S. continues to smash records. Credit card
debt, along with student and auto loans, are at all-time highs.
This is a problem from the personal level all the way to the
federal level. In 2018 the U.S. government added an additional $1 trillion to
the national debt, bringing the total to nearly $22 trillion.
This has some people worried, like Federal Reserve Chairman
Jerome Powell, who said the government will soon have “no choice” but to face
this issue. But most, including President Donald Trump, seem unconcerned. On
January 8, he tweeted that he longed for interest rates to return to zero
percent so he could have something to “play with,” like the last administration
had, implying that he would add even more to the debt.
House Democrats also appear unconcerned with reining in
spending. Now that they control the House, one of the first things they did was
vote to revive the “Gephardt Rule.” This rule makes debt-ceiling increases
automatic each time Congress passes a budget that would blow through the debt
limit. But they have made the rule even worse.
As Conservative
Review explained, “Obviously, Republicans control the Senate and are
unlikely to cooperate with a Democrat-passed budget resolution from the House,
so any Democrat budget will not become law under a concurrent resolution. To
that end, for the first time in congressional history, Democrats are deeming
just the House-passed resolution (without the Senate) as if the debt ceiling
law was suspended for that chamber, thereby shielding their members from taking
a separate vote” (January 3).
Thus, whatever budget the House approves can exceed the debt
limit. It doesn’t need the Senate’s approval. With the new rules, the
government need not worry about a balanced budget or having to fight to raise
the debt ceiling to cover ballooning expenditures. There’s nothing to hold the
government accountable for its spending. It can run up the debt as much as it
wants.
Snapshots From Around the Globe
When you put these pieces together, a clearer picture emerges.
Yes, jobs are being created, but that in itself doesn’t prove the nation’s
financial soundness. What gets reported in the news is just a veneer of
prosperity covering up a panoply of financial problems. The majority of
Americans are unprepared for even a small economic crisis. The federal
government isn’t ready either. The reality is that America’s economic dominance
is waning, and quickly.
Consider
these stories, all of which broke in the second week of January:
- A
study by the Standard Chartered Bank said that China is likely to become the
world’s biggest economy sometime next year, surpassing the U.S. China is
already the largest economy by some measures, but now it is ready to
surpass the U.S. in all parameters. By 2030, it expects America to fall to
third, with India hurdling into second place.
- The Bank of England’s governor,
Mark Carney, shook the financial world by stating that the U.S. dollar’s
status as the world’s reserve currency was about to change. He stated,
“[U]ltimately we will have reserve currencies other than the U.S. dollar.”
He pointed to the Chinese yuan as an alternative. While nations that could
be considered enemies of the U.S. have worked to discredit the dollar, it
is surprising for a U.S. ally to question its hegemony.
- Russia,
which discloses financial data with a six-month lag, announced that in the
second quarter of 2018 it had dumped $101 billion in U.S. holdings,
exchanging it for euros and yuan. Fifteen percent of Russia’s total
holdings are now in Chinese yuan, up from 5 percent at the end of the
first quarter. This puts Russia’s yuan share at about 10 times the average
for global central banks. Its total holdings of the currency account for
about a quarter of the world’s reserves in yuan, according to
International Monetary Fund data.
- At
the end of December, China increased its gold holdings for the first time
in two years, adding 1,853 metric tons. China is just the latest nation to
begin hoarding gold. Last year, Hungary increased its gold reserves by
1,000 percent, while Poland made its biggest gold purchase in over 20
years, raising its holdings to a 35-year high.
Add these pieces to the puzzle, and a more serious picture
emerges. The strength of the dollar is being questioned by America’s allies,
while hostile nations are pivoting to the yuan. Meanwhile, nations are hedging
their central banks with gold, a tangible asset. The U.S. dollar isn’t backed
by gold. So why would these nations increase their holdings unless the see a
need to return to the gold standard? The only reason for that would be if the
dollar collapsed.
Look at the Cause
While the markets celebrated the December jobs report, a much
bigger picture needs to be examined. America’s economy is not flourishing. In
fact, it is in decline and under assault.
What is the cause of all this economic trouble? Is it just poor
fiscal policies in Washington? Or are there deeper issues?
Historian Niall Ferguson
described the phenomenon of our irrational attitude toward living within our
means and rational thinking in this week’s Sunday Times, writing, “We no longer
live in a democracy. We live in an ‘emocracy,’ where emotions rather than
majorities rule and feelings matter more than reason. The stronger your
feelings—the better you are at working yourself into a fit of indignation—the
more influence you have.
Final Thoughts…
For
the past several months, the housing market has been in steep decline with
sales cratering in December by 10.3 percent-Housing prices are falling in many
areas of the country but lag (as they tend to do) far behind the more immediate
indicator of sales. The Fed's increasing interest rates have translated to
higher mortgage rates across the board. Without low interest rates corporate
buyers are leaving the market, resting the fate of housing on normal consumers
who clearly do not have the capital or credit.
Auto
sales have been dismal, posting declines through the end of 2018 into early
2019, with 2019 expected to be the worst year
overall. Once again, with rising interest rates,
major purchases have become less appealing to the average consumer.
Retail
sales have now posted the worst December numbers since 2005. Retail sales
are often presented by the mainstream media as the end all argument for
economic recovery. Yet they fail to mention the problem of consumer
credit, which has ballooned over the past several years to record highs. In our
unstable economic environment, low interest rates fuel debt, debt
fuels credit and credit
(instead of savings) fuels consumer purchases. Without low interest rates,
the entire house of cards comes tumbling down.
I
also find it interesting that while retail sales are crumbling, consumer debt
continues to rise. If consumers are taking on more debt, where is that
money going if not into purchases? My suspicion is that new debt is being
taken on in order to pay off old debts.
Gallup Poll-Dec ‘18
“Americans
were more likely to cite the government as the most important problem facing
the US than any other issue.”
One of five
Americans [19%] now say some aspect of the federal government is the top
problem facing the US – however, only 3% named gun control or guns!
When I was a
volunteer for the SBA and speaker and board member for the Council of Smaller
Enterprises [COSE] government [at all levels] was named as the number one
obstacle for entrepreneurs when starting a business. The United States continues to drop worldwide
in terms of free enterprise and thus job creation…New Zealand and even
Singapore is more competitive than America.
When Pres.
Obama was in office, Democrats created more job and business strangling regulation
than ever before which is why job creation during his administration was
weak. It has improved under Pres. Trump
due to his reduction of regulation. It can do even better!
“We have too many of our elected officials who have never been
responsible for profit and loss, never been entrepreneurs, never been anything
to do with understanding where a dollar really comes from.
>>Beijing has made primacy in the wireless industry a national
priority. It has taken a whole-of-government approach (including
policy, financial, and diplomatic initiatives) to achieve this geostrategic
priority for Beijing. The U.S. has started to take diplomatic steps to counter
this push. But more is needed – and quickly.
China
and the West are locked in a struggle for control of the future of
communications technology, the next generation internet, and the flow of
information.
The
next two weeks may well prove decisive in deciding who wins the future. The
Chinese know it and are acting with speed, decisiveness, and commitment. The
American government and American companies are far behind and just starting to
play catch up.
Our own laissez-faire tendencies and preferences are being
used to defeat us. If we don’t take decisive action soon, we will find that the
Chinese have occupied an overwhelming position in wireless on the geostrategic
map. We will find ourselves surrounded.
Here’s my idea for a new bill
Since term limits
never seems to gain any traction perhaps we should entertain the idea of zero
pay for elected officials after their third term in office…give them their
office, expenses, health insurance while in office and a living allowance only=much
like our Founding Fathers and see how many decide to remain in office.
Bruce ‘the Poor Man!’
P.S. A little note to the assumptive twit on
twitter who decided to insult me by writing that I sounded like I had a life of
privilege when starting my various businesses & had never experienced any
hard times…screw you! Every business I’ve
started was via the bootstrap method.
Most were successful but not all.
I was given the President’s Award for Entrepreneurship
and have been featured in Entrepreneur Magazine, Venture Magazine and 100s of
others while volunteering with the SBA & at Veteran’s groups [and others] teaching
them to how to launch their own small business!
Final Notes…
Contributors and subscribers enable the Poor Man Survivor to post 150+ free essays annually. It is for this reason they are Heroes and Heroines of New Media. Without your financial support, the free content would disappear for the simple reason that I cannot keep body and soul together on my meager book sales & ecommerce alone.
Free: Economics in One Lesson -
Something the ‘new’ Democrats should read!
People need to become more
self-reliant, not more dependent on government.
How to Survive the War on the Middle Class
Download here:
http://1drv.ms/1d9kfiU
Finally, grab
an emergency power cell!
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Back in stock soon!
Additional
Resources
Most of my readers already know the basics of emergency food
storage, but I also have quite a few readers who are just getting
started--people who have never used any food storage methods other than their
refrigerator. This guide is my attempt to help them get started, and it's also
a good refresher for more experienced preppers.
By the end of this guide, you will know the basics of food
storage so you can start stockpiling the right foods in the right places to
ensure your family has something to eat after a major disaster. You will also
know a little about the most common food storage methods, and you'll be able to
avoid mistakes that could put your food supply in jeopardy. Remember, this
isn't a race to see who can get the most food on the shelf. This is a
methodical, lifelong process--not something you can do in one weekend...
Rosefield is a classic traditional cabin, which can be
built for less than $6,000. The
cabin is open plan, which has the advantage of making it far easier, cheaper
and quicker to build than more intricate cabins with separate rooms. This
particular plan also includes a detailed cabin assembly diagram and
step-by-step instructions which includes a foundation guide. [282sf’]
Social
Chaos Survival Guide: Savvy Precautions To Make You Self-Reliant
1 comment:
Atta boy-always knew about your business acumen and we used to follow your seminars and business exploits in Crain's and other journals!
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