World GDP = $75 trillion
World Debt = $230 trillion
Derivatives = $1,500 trillion (bets on debts)
Simple enough, from where I am sitting. The world owes 3 times what it makes per year. This is saying that if everyone in the world did nothing but pay the bankers (no eating, rent, electricity, etc.), it would take 3 years and change to pay this debt down.
But now we get to the fun part – derivatives are bets and hedges against anything – from stock prices to weather to oil to political outcomes (yes, they have those going too). Essentially derivatives are like a giant casino operation based on anything that financial folks are willing to wager on. There are bets upward and downward on most everything one can imagine.
The derivatives bill is 1.5 quadrillion dollars, or $1500 trillion, which is 20 times world GDP. This would be in addition to the nominal world debt of $230 trillion – or $1,730 trillion total debt exposure globally. The world could pay this back in 23 years if nobody ate or did anything else. Realistically, it would take a century even if everyone on the planet agreed to pay the bankers back.
The world economies are in decline for many reasons, but the primary one is the unbelivable interest on all of this debt. It will never be repaid – repayment of government debt continues to eviscerate every economy on the planet, and now banks are piling more debt into their coffers with zero and even negative interest loans. They do not learn history very well, and so here we are facing this. No reason to play the blame game – the reality is hard enough to deal with. Sorting out who caused it is an exercise in futility – because it took millions of greedy people to make this happen.
At this point, financial collapse is baked into the cake worldwide. It will happen in fits and starts, with the big whammy being the crash of the dollar as world reserve currency. When the dollar tanks, world trade (globalism) will shut down, as payments will become impossible for buying and selling things – which is what commerce is. There will be lockups in global payments due to currency issues – and things will slow to a crawl in the import/export business.
Gold and silver will help one maintain something of value, as will real estate and other actual, tangible physical assets. Any financial instrument, like stocks, will become pretty worthless in the immediate sense, including paper money. Venezuela is going through this right now, and many countries have been through this calamity. It means very hard times for all people.
The difference today is that in America, we do not produce anything that people want to buy – we have gutted manufacturing from the country by sending it overseas for improved profit margins. It really doesn’t matter how it happened – it is now a fact. Ford will be unable to make cars if global trade hiccups even for a few months – their parts are shipped from all over the planet. It will be difficult to even get replacement parts when global trade locks up. Computers are not made here – same thing – lockup and no replacement parts. Cell phones, water heaters, washers, dryers, lawn mowers, weed eaters, tv sets, prescription drugs – none or few of them manufactured here.
The truth is, when globalism finally locks up, it is the countries that benefited most from it that will pay the highest price – which is the western countries who gave up much of their manufacturing base.
What does this mean for your SHTF preps?
Sure, food, water, shelter – those are the simple ones. But now what does one do to make enough money to pay off the tax man, because you can bet that government isn’t going to just quietly go away. You will still need to pay property taxes to retain your home or your land. What does one do when there are no parts to fix things like your 4-wheeler or your mower or your tractor? Where do you get an alternator for your truck or car when there simply isn’t one available?
Let’s look at just a few items and discuss what happens when parts become unavailable, for whatever reasons you wish to pick, including zombie hordes.
Today’s autos are incredibly complex, and come with myriad sensors, safety interlocks and computer controls that monitor different systems of each car. If we roll back to around year 2000, there were fewer of these. If we roll back to 1985, there was a minimum of these. Back into the 1970’s or earlier, and all we had were seat belts.
If your auto has a keyless ignition or a smartkey, then you have a weakness that can render the vehicle useless without dealer parts. If the car cannot sense the key because the sensor is out or the broadcast bad on your dongle, then you are shut out of even starting the thing.
If your car has diagnostic sensors that are designed to prevent the vehicle being run with a broken part (such as a leaky brake line), then you are shut out of driving. Never mind that you can just put brake fluid in every day in an older vehicle until you can fix it – the new sensor knows that there is a leak and will lock you down – no driving.
These are just 2 things that have become prevalent – there are myriad of these “intelligent systems” designed to both prevent you running the vehicle until you get it to an authorized repair center. So what if you can’t get the parts?
For serious preparedness, it makes more than a little sense to have at least one or two older vehicles. Not only are these free of the interlocks and sensor systems, the parts are available to fix them all across the country, and they are so simple that you can make Ford alternator work on a Chevy if you know just a little shade tree mechanic stuff. And these older vehicles can be bought for a fraction of the cost of recently manufactured vehicles. Nope – you don’t get a seat warmer or GPS navigation with them, but if you really cannot do without those, you are unlikely to be reading this anyway…
Personally, we opted for an F350 Ford diesel from 2001 with the giant 7.5-liter engine – to be able to pull anything. It has minimum ECU, being mostly a fuel metering system in the ECU. Our other vehicle is a 1974 Chevy El Camino – carburetor equipped and no ECU – and parts can be used from newer vehicles with minimal fuss. We do have a spare rebuilt carburetor – those are getting harder to find with everything going to EFI and ECU’s. Sure, we have other vehicles, but these are our backups if things get really sketchy trying to get parts.
An electric water heater has a thermostat control and a heating element and a tank. Gas water heaters have a tank, burner, a gas valve and a thermocouple. Hot water is something most people are used to, and I for one want my hot water – it helps with cleanliness and keeping things more sanitary.
These devices are mostly made overseas in very cheap labor places. Honeywell makes the majority of the thermostat controls and gas valve controls. These are made in China and Thailand and other places. The tanks themselves are mostly made in China, and their quality is all over the map. The heating elements are made in China as are the burner assemblies for the gas water heaters.
What do you do when your water heater stops heating? Do you have a clue how to repair it, or have you always simply replaced it? Replacement will really suck when there is a demand for them and limited supply – no more $400 solution, and at that time, it may be $5000 dollars – depends on if serious inflation has hit yet.
Far simpler to have the spare parts and understand how it works and how to fix it. But where does one get this knowledge? Where do you buy the spare parts? We got our spare parts by scavenging the local trash on trash day, stopping and removing burners and gas valves until we had 4 or 5 of each (they are not universal, but there are only a few types). We tested them and kept the good ones. Cost was the time and effort to scavenge and test them. But now we have spares.
One can get buy without a dryer – the clothesline will still work just fine to dry clothes. But until you have washed your nasty work clothes by hand in a bathtub, you have no idea of the drudgery one avoids by having a simple washing machine.
Washing machines have now been mostly outfitted with digital control systems – not for safety reasons but to make consumers think they are getting new technology. The basic systems are unchanged inside the washer – there is just another layer of complexity between you and the innards of your washer. Unfortunately, there is no way to “hot wire” around these new control systems – the timing of the wash cycle is now digitized, not mechanical.
My advice here is to buy an older model and restore it yourself. Buy one with the clicking dial on the front, as that means it has mechanical timer system. This timer can get broken, but it takes a lot of mistreatment to break it. The rest of the system is a pump, an electric motor, a belt and a wiggle-waggle to make the thing turn clockwise then counterclockwise to wash. There are many books out there on how to fix these old, solid mechanical washers.
There are still a few of these machines being sold, but they will be the low-end models. Mostly, these have disappeared from stores in favor of the digital controls.
There are also hand washers like this: http://www.laundry-alternative.com/our-products/the-wonderwash/
While they are not made for doing large loads, one can adapt and wash more often.
If you own a tractor with an ECU, I recommend you sell it and buy an older model without one. These tractor ECU’s are more expensive than auto ECU’s, and harder to get even today. There is no reason for a tractor to have an ECU other than to force you back to the dealership every time something wears out or breaks. I can prime an entire fuel injection system in 20 minutes on my tractors, but I cannot do it on the newer ones – many will not even crank unless you have an ECU reader attached to bypass the lockout on the injector pump when it has lost prime.
Under no circumstances should you buy a John Deere tractor with an ECU – their ECU is now encoded – (http://www.wired.com/2015/04/dmca-ownership-john-deere/)
We have opted for a 1978 International and a small 1982 Kubota, both diesels and without any bells or whistles we didn’t put on ourselves. Parts such as alternators can be replaced using Chevy equivalents or Honda equivalents, and the injector pumps and injectors can be rebuilt easily without much fuss. Hydraulic pumps can also be rebuilt on these, whereas more recent hydraulic pumps are made to be replaced rather than rebuilt. Many are made from aluminum or magnesium – they tend to crack very easily when over-stressed.
It is a good idea to have a spare tractor radiator – especially if your radiator is aluminum with plastic upper and lower return manifolds. These plastic units cannot be soldered – they are pulled apart with special crimping tools and the cores replaced. You can do it by hand, but finding the right core will be a pain.
Another thing for tractors is to have a set of tubes to put into the tires. Tractors don’t go fast, and tubes will prevent you from being stuck if you get a bent rim or a sidewall puncture. You can patch a sidewall puncture if you use a tube – tire guys wil tell you you cannot do this, but we are running on a patched sidewall with tubed tire going on 3 years now.
If you have trailers for tractors, trucks or ATV’s, then you should have spare bearings. That is about he only thing you need, but finding them with a locked up supply chain will be difficult. It’s a good idea to have spare bearings for every vehicle – these are what make the wheels roll, and you can’t do without them.
Chain saws need blades and tongues as they get bent. They need replacement hoses for the fuel lines and a spare clutch is good to have. Chain saws make short work of logs and trees and are far superior to a 2-man handsaw. We used that saw once, and it was roughly 10 times as long to cut a tree and afterward we were absolutely beat.
Weed wackers, mowers, 4-wheelers – these are not mission critical, but great work multipliers. You need to look at what matters when buying these items – and what should matter is ease of repair, parts availability or interchangeability and the robustness of the design. Buying things made to last a year is simply no longer a good practice – we are too close to the point where commercial lockup may happen.
There are many more items you can think about, but these particular highlighted items we had to do without, and it made our days much longer having to do things by hand. When you look at buying into a piece of equipment designed to multiply your work, you need to be aware of what happens if you have no recourse for parts or repairs. This should be part of your shopping criteria.
Axes work, but they are nothing next to a chain saw.
Horses work, but they are nothing next to a tractor.
Boiling your hot water works, but a water heater is truly a Godsend once you have done without one.
A clothes washer is hard to do without, once you have seen how hand-washed clothes are just never as clean without an hour of work just washing very few of them.
Think about what things save you time and drudgery – those are the items you need to prepare backups and parts for in the event that things unfold as they have historically – and we are rhyming our own history more each day as we advance into the maw of our amazing debt bubble…