Inflation 101: Prep School For Preppers
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Reference “Preppers,” on the other hand, and fashion goes out the window replaced by sturdy wears and wares. Gucci is supplanted by the “Bug Out Bag (BOB)” and “Get Out of Dodge (GOOD) Kit.” Modern day survivalists have upgraded their essentials to include electric generators, water purifiers, and several years’ worth of provisions. Who’s to blame them? Go big if you can’t go home.
In the blink of an election, the two worlds of Preppy and Prepper have collided. Rather than the possibilities being remote as doomsday scenarios suggest, potential outcomes are conspicuous in their size, abundance and mystery. Hence the logic when yours truly received this warning from a reader logged into a posh investment website in the wake of last week’s upset win for Donald Trump: “Buy brand name defensive ammo for handguns. It will hold its value better than gold. It is an inflation hedge. Buy a box every month. Diversify the calibers.”
Such sophisticated language and tone for a disturbingly dire forecast. And his admonitions came before the tizzy the bond market has thrown in recent days in anticipation of all manner of fiscal stimulus. The question on everyone’s mind is how far does the backup in bond prices in anticipation of inflation have to run?
Theories abound: Is this simply a boomerang reaction to Trump’s more hawkish tone on Fed policy? Will the $500 billion in infrastructure spending arrive as fast as Dr. Copper’s moves suggest? What of all that debt that’s still out there? Haven’t we been lectured by monetary authorities for years that it’s only the cost to service the debt that matters? OK, now what if it’s looking like debt service costs will matter and in a hurry?
Perhaps it would be best to catch our collective breath and take a step back for a moment and assess how underlying inflation has been behaving. In the spirit of keeping things on Planet Earth, let’s look at the consumer price index (CPI). In September (October due out manana), headline CPI rose 0.3 percent over August and 1.5 percent year on year, the quickest pace since October 2014 but tame nevertheless historically speaking. Meanwhile, core CPI, which excludes necessities one and two in life – food and energy – was up 2.2 percent over last year.
If you just said, “Huh?” get in line. Yes, it’s unusual for the core to be rising at a faster pace than headline, and that’s only half the story. The fact is, core has been above two percent for nearly a year making one wonder about Janet Yellen’s initial promise that the upside-down dynamic would be ‘transitory’ in nature. What gives?
It comes down to the services side of the equation, which has been fueled by the Affordable Care Act and rental inflation that’s risen into the stratosphere care of the low interest rates that have encouraged luxury unit construction. To be precise, the CPI tells us rents are up by 3.7 percent in the last year, which is apt to be understated for reasons you need not be bored with, while medical care prices are up by 4.9 percent over 2015. So it’s safe to say services inflation has been driving the train.
The Daily Shot’s Lev Borodovsky is an avid observer of just about every economic and financial market trend out there. From his vista, a switch could be in the process of being flipped.
“We are now seeing price stabilization in the goods sector with a number of indicators such as manufacturing surveys around the world showing rising prices” said Borodovsky. “Perhaps the greatest single indicator is the end of producer price deflation in China, which started about five years ago.”By the looks of some of the metals charts, ‘end,’ timed conveniently at the end of last year, has segued into ‘frenzy.’ Since mid-December of last year, coal prices have more than doubled; steel prices have increased by 50 percent. A similar story can be told across the entire industrials metals complex, which is best reflected in the Baltic Dry Index (BDI), a broad shipping gauge treated as a proxy for global trade. According to Hellenic Shipping News, after bottoming at a record low on February 11, at 290, the BDI has more than tripled, most recently closing at 1,084.
What does this all mean? Could China truly be in the position to finance a fresh round of infrastructure spending? The answer is, sort of. The government has doubled the funds it funnels into Chinese public-works projects, which naturally drives up demand for primary commodities. At the same time, though, authorities have broadcast their intention to cut supply output from the country’s bloated industrial sector. So boost credit and restrain supply?
This dichotomy was sufficient to bring out the hot money. According to Bloomberg data, trough-to-peak daily turnover in steel spiked by nearly 9,000 percent, a boon for traders and metals and mining firms, a bummer for consumers of said goods.
The bottom line is, before the election, some of the underlying demand that raised the specter of inflation was real, but a good bit of it was fabricated. Looking out to 2019, China’s aggregate demand for base metals is forecast to be about one-fourth of what it was in the five years ended 2015. Of course, China is but one country, albeit a biggie.
Fast forward one week, to a Trumpian reality, and all the world is atwitter pondering the magnitude, the majesty, of potential public works projects in the United States, ones that bring us back in line with first world standards.
Does this new world of possibilities now justify speculative bets on metals hovering at mid-2014 levels, when oil was still at its cycle highs? In his typical dry fashion, Borodovsky asked, “Is the rally overdone?” If so, he answered rhetorically, “the unwind could get ugly.” As if on cue, over the last few trading days, many of the metals have come off their highs, in part because they’d risen too far, too fast. But on a more fundamental level, the U.S. is simply incapable of displacing China in its peak commodities consumption years, regardless of the size of infrastructure spending Trump succeeds in securing.
If you listen to campaign promises, that figure could be in the half a tillion dollars a year vicinity. The economists at Goldman Sachs estimate a much tamer $150 billion a year fiscal boost. Their number crunching equates that figure to a 0.6 percent marginal increase in economic output. The author of the report, Daan Struyven, added that timing must be taken into account: “The late-stage cyclical position of the economy makes the multiplier smaller than it would have been in recession or early recovery, especially if the Fed offsets the fiscal impulse.”
Lest we forget the Fed’s role at this late stage. As things stand, all indicators point to a ‘go’ in December. Wages are increasing at the fastest pace since 2008, inflation expectations looking out five years are upwards of 2.6 percent and most importantly, the market is pricing in a 94 percent probability the Fed will pull the trigger.
As for 2017, ‘gradual’ best characterizes the markets’ hopes for just about everything from the aforementioned inflation to the Fed’s reaction function. Steady as she goes to push the second longest bull market in history to first place.
At the risk of injecting the equivalent of a cold shower into this perfect scenario, what if (about to use a four-letter word, so close eyes if under 18) mean reversion applies to the bond market, and in turn the stock market and commercial real estate? What if, after 35 long years, the inflation genie really has been let out of its bottle?
Well then, you’d best take cover. Which brings us back to those smartly dressed preppies, who will inevitably go all in on gold. After all, as The Official Preppy Handbook reminds us, “In a true democracy everyone can be upper class and live in Connecticut. It’s only fair.” Hmmm.
Do any of you doubt that this traditional hedge proffers adequate protection in a world awash in over $200 trillion in debt? If that’s the case, you might consider sturdier shelter. Yes, we’re talking about taking the prepper path, a.k.a. farmland. The bonus is, unlike some other asset classes, farmland prices have fallen at the fastest pace and for the longest stretch since the 1980s.
So stock up on dehydrated water, canned goods and maybe even that brand name ammo, as the sophisticated reader suggested. While you’re at it, take up hunting and gardening in your free time. In a world full of surprises, it’s better to be prepared than not.
3 Shrubs To Plant For Survival
Bayberry
The Bayberry is a very interesting shrub. It’s height varies from 2 to 12 ft, depending on variety and location. It prefers acid soil and has roots that fix nitrogen, allowing it to grow in poor soil. The bayberry, or candleberry, has long been an important plant in the new world and cultivated by our agrarian ancestors.
Survival Uses…
Bayberries are an excellent source of candle wax. It has been called the “candle berry” and the “tallow shrub”. Candles made from bayberry wax are prized because they burn slow and don’t melt or slump in the summer heat. Bayberry fruit produces about 1 lb of wax for every 15 lbs of berries, so if you are interested in planting them for wax production it would be a good idea to plant a number of them.
The fragrant leaves can be used as an insect repellent
Roots can be prepared as a treatment for diarrhea and dysentery.
If you would like more information on growing and using Bayberries you can check out the entire plant profile, including a tutorial on rendering the wax At This Link
Elderberry
The American Elderberry (Sambucus canadensis), has long been a standard homestead shrub and was used extensively by American Indian tribes for many different things. Elderberries can grow anywhere from 9 to 15 ft tall and prefers moist, well-drained, sunny sites, but also can grow in dry soils. It is a dominant understory species in riparian woodlands. The shrub is known to do well in hedgerows.
Survival Uses…
Elderberries are very high in vitamin C, antioxidants, and has very high immune boosting properties. It has been long considered one of the best treatments for the flu.
Both ripe berries and flowers can be used for food and the berries make an excellent wine.
Elderberry shrubs are fast growing and make an excellent “edible hedge”, wind break or concealment screen.
Indian used elderberry twigs and fruit in creating dyes for basketry.
Elderberry branches can be used to make arrow shafts.
Whistles can be constructed by boring holes into stems.
The pith of the stem can be removed and used as tinder for starting fires.
Hollowed out stems can be used as spiles (spouts) for tapping sugar maple trees.
You can find more in depth information on growing and using Elderberry At This Link
Siberian Pea Shrub
The Siberian Peashrub is a tall bush that can reach heights of 6 to 19 ft. The plant has thorns, and is hardy to -40 F, prefers full sun, and can tolerate dry conditions well. It is native to Asia and eastern Europe and has been used for food, fiber, and dye by people in that region for centuries. It is a legume that fixes nitrogen in the soil, a pioneer plant and a producer of large numbers of seed pods.
Survival Uses…
Peashrub seeds are 23% protein, contain 12% fatty oils, and make an excellent chicken feed. History records that Siberian peasant farmers during WW2 overwintered their laying flocks on peashrub seeds when they were cut off from outside supplies.
Peashrubs have many thorns and can be planted as a defensive fence or hedge that will slow down and discourage invaders.
The fiber from the peashrub stalks can be used to make a strong cordage
Russians used to make a blue dye from peashrubs
- buying too much of an item that is not often eaten
- the cans look old and unappetizing
- the canned food has gone bad (8 signs to look for)
Storing Canned Food
1. Old Soda Box
Old soda boxes are great for storing canned food in tight spaces like under a bed or couch. I buy 12 cans of the same food and place them in an old soda box. I write the date that I purchased them on the box. When I find a sale and purchase more of the same canned food, I repeat the process and place the newest box behind the first box. I can fit four soda boxes in a row under the width of my bed and fourteen in a row under the length. I can stock newer canned food on one side and utilize the older canned food for dinner on the other side of the bed. The soda box can be easily painted as you see in the picture below. I just paint the sides and top of the box, not the bottom.
2. Cardboard Tray
Canned food is shipped on cardboard trays to stores usually in a pack of 24, as you see in the picture below. The cardboard trays make it easy to store and rotate canned food at the bottom of closets or on shelves. It would be very time consuming to rotate 48 cans if they were stacked on top of each other with out a cardboard tray. When I have the trays I can easy pick them up and place them on top of the new cans. I save the trays when they are empty and reuse them. To get these cardboard trays ask a store clerk:- to get a case (of whatever you are buying) out of the back of the store
- for empty trays that are just going in the trash (this is easiest right before closing time when they are restocking)
3. Cupboard Rotation Organizer
When I lived in an apartment, it was not easy to rotate the canned food in the cupboards. I’d find a cans of expired cream of chicken that didn’t get moved to the front somehow. Using the cupboard organizers that you see below helped eliminate that problem. About eight cans fit in each box.
4. Can Rack Organizer
The first three rotation ideas use 8 to 12 cans. Here is a rotation rack that is great for storing canned food items you don’t have a lot of (think 4 or less). It’s really useful for utilizing the floor space of a pantry.
Get Family & Friends On Board With Prepping
Whether you are forming a small neighborhood group, a disaster preparedness club, or a prepper group there are 9 steps which will help you get started and begin the path for the success of your group. You’ll want to start with a comprehensive, but family-friendly survival manual such as this one.- When you’re just starting to put a plan together, first define in what geographical area you want to organize your group. It could be a housing development, an apartment complex, a city or county boundary, or a one block area. This will help you know who to include, what resources are already in existence, and what specific preparedness plans you should make.
- When you have defined your boundaries, check to see if there has been a neighborhood group before. You do not want to duplicate what is already being done or cause confusion with any other groups. This inquiry will give you information about those in your city who can help you as you help others prepare. Make telephone calls to the local Red Cross office, the County office of Emergency Services, local fire department and Humane Society, along with the closest chapter of RACES (Radio Amateur Civil Emergency Services). These organizations can give you information about the communities’ emergency operation plan. They may be happy to attend your meeting and share some of their advice and materials.
- Select a location and time for your first meeting. Choose a place and time that will be convenient for most people to attend. If you are holding a meeting for the neighborhood, find a neighbor who is willing to act as host with the group meeting in their home. If it is a community type meeting, find a public place, like a community center, restaurant or conference room in a library. Make the first meeting casual to help make others feel at ease and talk openly. Offer snacks and a drink. It makes it less of a business meeting and more of a group of friends just getting together to socialize.
- For smaller groups, hand deliver the invitation. This gives you a chance to introduce yourself, explain the purpose of the group, and answer questions. Too, a friendly “normal” face goes a long way to insuring newcomers that the group is not militaristic or too “Doomsday Preppers” for their comfort level. If it is a larger group, send out fliers, use social media, local newspaper and magazine advertisement. Many are leery of the phrase “prepper groups”, and those valid reasons are detailed in this article. Unless that is what you are really trying to create, use phrases like self-sufficiency, self-reliance, or family preparedness. It is less intimidating to beginners.
- Have people sign in beforehand and let people socialize a bit. To begin, introduce yourself and share a story about your interest in disaster preparedness. If you do not feel like your story is compelling enough, invite someone in advance who can share their experience. You want others to feel a desire to get prepared but not fear it. People remember stories. If available, have the local fire department or someone from the office of emergency management come and speak.
- Have information packets available to all who attend. Whether they come back to another meeting or not, you have given them valuable information they can use. They may run into the packet months later and decide to get involved. Taking steps to become prepared is a personal decision and you cannot force others to participate. Keep the person updated with any new information that they may find helpful.
- With your group, discuss their concerns and establish preparedness goals. Involve any in the group that have helpful skills. Most people love to teach others a skill they are good at. Not only have you created a group of volunteers, you have found a way to create a closer group.
- Do not forget those with special needs. The disabled, elderly, single parents, ect… Remember that everyone has different needs and may not be able to prepare at the same pace as others. There’s an entire series of articles, “Special Needs Preppers”, on this blog, which will give you dozens of ideas for meeting those needs.
- Decide with those attending what the next steps are and when the next meeting should be. Find others who are willing to help you with the next meeting, be a liaison with community services and reach out to those who were not able to attend.
- Maybe half of the people you will invite will show up. Do not get discouraged. Just walk into this endeavor with realistic expectations. You can invite more people, see who shows up, adjust your expectations or expand your target area. The attendance may fluctuate in the beginning. Hang in there, so not to get discouraged. After some time, you will know the approximate number of your attendees.
- Keep sign in sheets and notes from all of your meetings. They will help you know what to tweak to make future meetings even better. You can track attendance and topics discussed.
- Once you have found a day, time, and place that works for your meetings, keep it. Be flexible in other things, but not the meeting schedule.
- Keep the meetings on track. One crazy story or odd comment can derail the meeting. Learn how to get the topic back in a polite manner. One technique is to say at the beginning, “We want to keep our meeting efficient and get out on time because we have kids and families. Let’s keep our comments and questions focused on tonight’s topic.”
- Share what you envision this group to accomplish, but keep the details open. You will want the ideas of your group. People want to feel like their opinion is heard and validated. They will keep coming to meetings if feel useful and that their contributions are valued.
- Everyone is part of the group. If a neighbor invites a person outside of your designated area, it is okay. Be thankful that someone is interested and willing to contribute or learn.
- Do not have the meetings go over 90 minutes. People may lose interest or feel that they don’t have the time to attend meetings if they are too long.
- Be sure to thank those who may have helped you. The home owner where the meeting was held, any volunteers with food, hand outs and those who were invited to speak.
- Send a letter and contact those who were so willing to volunteer to help as liaisons or in any other capacity. Everyone likes to feel appreciated and needed.
- Reward your hard work! Have an annual party for your group, have a small celebration or BBQ together when group goals have been accomplished.
- Whether it is a church, club or business you will be helping, find out what the main goal is. Is this a one-time presentation, a monthly, or yearly meeting? Is there a certain topic that needs to be taught or discussed? Will follow up meetings be needed?
- It is important to know about those you will be speaking/training? Seniors have different preparedness needs than college students. The disabled may require different solutions for their questions than a soccer mom.
- Know the area you will be helping in. Big cities, rural areas and suburbs have different community services, transportation, communication methods and resources. Adjust your information according to the area where you are going to be at.
- Ask if there is specific material that you should be using as resource or should be handed out to your group. You may be required to gather your own information. Use reliable resources. You may be able to ask other local experts to contribute.
- Some reliable sources I can recommend are this book about water storage and purification, this one about planning and carrying out emergency evacuations, and this 52 week book that covers topics for an entire year. Survival Mom’s family survival book is an all-purpose book that also covers both basic and advanced preparedness.