Maybe you haven’t been watching closely, but read Ure’s lips: Food (and its sidekick water) are the ONLY issue that we need to be worrying about in the intermediate term. Oh, sure, you can debate endlessly the pros and cons of Hillary versus Cruz, but that would be yesterday’s problem. The “art of the deal” around here is being ahead of, not behind, the curve.
So I pass along this from Oilman2…
Europe was inundated with flooding 18 months back – poor crop yield.
We have beef prices soaring, even at fast food places things are moving up in price – grocery stores even faster.
California is in huge drought, and even if it rains reservoirs are not going to be filled this year.
Now one of the most productive agricultures in South America is getting hit, officially, although friends working there have been saying it’s bad.
You need to tell your investor types to have a look at crop futures….and the other no-investor types to buy up on food now, before the price crush hits. Ask Gaye if she is seeing this out her way, or others?
I am changing modes, after paying $9.41 for a double whataburger, fries and a drink up your way today. That’s up 33% from last spring – found receipt for same meal from April when cleaning out Yota today – was $6.57 then.
Oilman2 family is officially packing breakfast and lunch when going farming for the foreseeable future. And I am laying into buying and canning up this springs crop too…
Nice going on the What-A-Burger – their website is over here – and, curiously enough, OM2 and I both spent time Sunday in the local Lowes and What-a-Burger. I had a triple meat, which is why mine was a little more expensive.
It may seem paradoxical to you, but both OM2 and I have a keen appreciation for something called the “planner’s paradox” (that puke orange drawing).
The way this work is simple: If you drop something, the shorter term future you’re looking at, the more certain you can be of your predictions.
When my free-falling son flips himself out of an airplane at 13.5 in one of his “horny gorilla” skydiving exits, he’s pretty sure that he will accelerate to terminal velocity at something like 32 feet per second per second before friction coefficients kick in and the rate of change diminishes as he come up on terminal drop speed.
On the other hand, if you were a good little sheep and saved a $100 bill into the bank, your would have how much today? No telling, really. It all comes down to where you decided to store your money.
If you had kept that original $100 bill, you would need $1,728.74 in order to have equivalent purchasing power today. In other words, you would need to have 17.28 times as much “paper” in order to preserve purchasing power
If you sat on your money for just one year and then purchased gold at the 1931 average price of $17.06, on the other hand, you would could have purchased 5-ounces of gold plus had 86-cents left over for something else….like dinner. Dinners for under a dollar were common place in the last US Depression.
As of this morning, know what those 5-ounces of gold would sell for at “spot” gold prices? $1`,326 each for a total of $6,630. In other words, while inflation (as calculated by the Minneapolis Fed) would say you needed 17-times your dollars to keep up with inflation, gold was delivering 66-times your original investment.
But then again, the stock market wasn’t doing so bad, either.
If you would have saved that $100 in the bank in 1932, and “brought the Dow Jones Industrials” when it was around $47.50 in May of 1932, you’d have effectively “bought the Dow” twice over.
Since the Dow closed Friday at $16,154, and since you had twice that, you would be at $32,308 worth of purchasing power. And putting money in stocks would have returned an amazing 323 times your initial investment and you would have beat inflation eighteen times over.
I keep trying to have this conversation with my kids. It’s easy to sock a little money away when you’re young and if my kids had each put $500 into a Dow tracking mutual fund in 2001, when they could have begged, borrowed, or stolen the money (figuratively speaking, of course), their stock tracking fund would be up (in theory) to $169.97.
Of course, there’s the little problem of inflation, which means things that cost $100 in 2001 now cost $133.15. A small nit. They would still have made 27% on their money.
If they had spent their $500 in 2001 buying gold, on the other hand, they would have 1.92 ounces of gold today which is worth about $2,550 this morning, or a return of five times their money.
Still, just to be fair, we know that purchasing power changed in the period (adjusting for inflation, right?) so the real return after inflation would be 2.83%, or so.
Just like I told you in 2003 “Buy gold – all the gold you can afford – or you’re an idiot!” and just as in 2005 I told you “Buy all the silver you can – everything you can afford – of you’re an idiot!” I’m going to tell you another thing this morning (please don’t take this as preachy…):
Get seriously into gardening and home food production as soon as you humanly can. Or, you’re an idiot.
I firmly believe we are in another one of those critical windows here: Heritage seeds *(not genetically modified) are still fairly cheap. Good potting and starting soil sells at Lowes for a song. A green house can be cobbled up on the south-facing wall of most houses for less than $500 if you work at it.
A couple of rolls of Warp Brothers 6CH15-C 6 Mil Clear Plastic Sheeting, 15-Foot by 25-Foot ($30 bucks a pop), some old railroad ties, or other heavy wood, some lath so you can provide a continuous attached seam for the plastic, and maybe an old storm door with some 2-by-4’s. Done.
Then run (don’t walk) down to the nearest Dollar Store and l
Load up on planters and read the book JB Slear and I wrote on hydroponics over at the MyGroPonics website..
Odds are pretty good that even you could grow something. And one of my key projects this morning is to go up to our greenhouse and put in a bunch of seeds so that we won’t have to pay $2.00 each for seedlings in a month or two.
Of course, there will be some people who will argue “It’s too cold to do seedlings this time of year…”
Wrong: Get yourself a Hydrofarm MT10006 9-by-19-1/2-Inch Seedling Heat Mat. then you take a stout cardboard box, duct tape some of that left over sheet plastic on it (cutting out big windows for light, right?) and now you have a nearly perfect little starting house.
In a month, or so, you can take the seeds, put them into net pots, plunk them into your hydroponics and sit back while you wait for a summer of fresh veggies. No weeding…although we will be doing some row-cropping in our garden this year.
There you have it…something to do today other than sleep in and take a lazy day off.
It may be a holiday for some people, but not around here: Elaine and I are back working on the house expansions, and gardening chores, because ther most worthwhile investments there are, are in yourself.
Be thinking “food and water” or “garden and gold” and you won’t be as likely to lose in the long run.
Reader “freeacre” also sent me a link to another drought in Brazil story with the note “Between this and the drought in CA, food is going to be REALLY expensive this year….”
It doesn’t have to be, is my point. Everyone who’s human has a right they can claim any time…and one I pass on to my kids (who don’t seem to listen, but over time, they’ll see the wisdom of always asking…
“Who owns this outcome?”
Check the mirror for the correct answer.
Personal Savings Rate Notes
Ah…fine note from reader JimL in snow country (Atlanta). Seems he shares my skepticism of the savings rate figures…
Good morning, George,
I hope all is well in East Texas. It’s still cold in GA, but it’s going to be a nice week without snow and ice.
Every month, I read your comments about the personal saving rate and share your disbelief in the percentage stated. I am reading a newsletter from Agora Financial and they included the following:
“Other critics say the savings rate is bogus because when an indebted consumer pays down his credit card or auto loan, the Commerce Department counts that toward the savings rate.”
Every month, I run up my AMEX bill to get the 1-3% yearly rebate on my charges and every month, I pay the card down to zero. But, the amount I pay to AMEX is NOT savings. As the article goes on to say, “Financial blogger Karl Denninger complains, “when the personal savings rate is under 5% or so, it is virtually certain that people are in fact spending more than they make and are operating in deficit.””
I think it comes down to what the Commerce Dept says constitutes savings. If money put into stocks or towards equity in a home or credit card payments counts as savings, obviously, the definition is a manipulation of the real world. But what’s strange about having the federal gov manipulating the information they put out. I don’t believe a thing the US Extreme Ruler says is truthful or transparent or I my personal best interest. The same goes for any federal governmental office.
I kinda follow their (fedlogic) on this, though. Taken when you buy a house. As you make payments, you are buying equity, hence the belief that “paying down debt” buys equity gets extended (via bullshit clouded thinking) to cover things like paying down a credit card.
I’m sure they’d argue that there is something of enduring value that you would own for all those thousands that go through your fingers when you’re getting credit card burn.
However, I reckon 99% of what goes on cards was fxor current consumption..and JimL is exactly right: Anything to sell the lie.
And…in case you haven’t noticed….it’s working! People are still spending like mad, the market is likely to go up to even higher highs, and jeez, don’t rain on the parade, JimL. It makes it easier for the prepper/economically aware people to save while the saving is good…
Satan Marks Austin
Reader Douglass happened to be out and about with his smartphone on Saturday and sent us in a wonderful picture, there on the right. Email subject line: Satan marks Austin.
This is a perfect example of how Satan gets things wrong.
I did a check and says over here that the Texas Legislature is not presently in session. Won’t be until January 13th of next year.
Or, Satan may be telling us something about the Texas Highway commission that keeps stealing roads from the general public and putting tolls on them, or their current end-run efforts to bring back the Trans-Texas Corridor so that those millions of Mexican tourists, lined up at the border, can take high speed transport up to that vacation mecca Oklahoma City.
In true “back from the dead” fashion, the zombie commissioner’s all need hearing tests: They just can’t seem to hear when the public says No.
Hmmm…maybe Satan didn’t get this one wrong.
More tomorrow – write either when you get rich or get your seedlings started.
George george@ure.net