(Schiff)—With consumer debt reaching record levels, the Federal Reserve contemplating rate cuts in 2024, and post-Covid inflation still yet to reach its peak, a storm is indeed brewing.
Price increases on essential goods like food, housing, and fuel are hitting hard for Average Americans. But in its policy to avoid economic reality as much as possible, the Fed’s CPI numbers don’t account for factors such as consumers buying cheap alternatives instead of the name brands that they used to easily afford.
Acting as de facto PR agencies for Federal Reserve monetary policy, some media outlets are claiming that Americans are making headway on their debts, it’s just that higher inflation is obscuring all their great progress. As described by WalletHub editor Christie Mathern:
“When you adjust for inflation to compare this number to past years, our current credit card debt total is actually 15% lower than the highest number in 2008.”
According to that analysis, crippling price increases are causing consumers to take on more loans, but the debt only seems too high because each dollar is worth so much less now than it was 15 years ago. Unfortunately, the economy is now so irreparably distorted that these perceptions of economic pseudo-reality have become the norm. Increasingly severe mental gymnastics are required to continue justifying the position that consumer debt has reached anything but utterly unsustainable levels.
Meanwhile, trillions printed during Covid are still in the economy, meaning inflation will only get worse as Powell waves his magic wand to cut rates in the hopes of “stimulating growth.” If you believe that more debt automatically equals more growth, then Powell might be right. But the real result will be higher prices at the store, more consumer debt, and more previous debts left unpaid. According to a Bankrate survey, over 50 million Americans are carrying credit card balances for an entire year and then some, and other numbers show that around half of consumers are carrying balances from month-to-month.
“Total credit card balances hit a high of $1.08 trillion in the third quarter of 2023, according to the Federal Reserve Bank of New York — a figure that is up $48 billion over the quarter and $154 billion over the year. Interest on this debt is also increasing, with the Federal Reserve reporting the average APR for revolving credit at 22.77 percent as of the third quarter.”
One has to wonder if maybe consumer defaults are the goal. Perhaps “economic growth,” in the Fed’s eyes, really means crashing it all so that more assets like real estate can be owned by parasitic megabanks. However, the simpler explanation is that backed into a corner with so few weapons in their arsenal to meaningfully stabilize prices or get debt under control, there isn’t much else that the Fed can do other than more of the same.
Delinquencies are already at their highest point in about a decade, and the notion that these debt-addicted spenders are going to borrow less rather than more appears quite unlikely in 2024. Lower interest rates will be too tempting when cash-strapped consumers are already struggling more than ever just to afford rice and beans:
As Peter Schiff tweeted on January 11th, there’s unfortunately no end in sight for consumers who are already borrowing just to finance basic needs.
Anyone who thinks the #Fed will succeed in returning #inflation to 2% doesn't understand inflation, including #Powell or other FOMC members. Today's hotter than expected Dec. #CPI doesn't mean that the Fed has to fight harder to win the inflation war, but that it's already lost!
— Peter Schiff (@PeterSchiff) January 11, 2024
As he said on last week’s The First TV with Jesse Kelly:
“Americans continue to borrow to buy things that they don’t earn enough money to afford, and all that means (is) more upward pressure on prices — the Fed has done too little, too late…we’re running a trillion dollars in debt every quarter.”
But if the job numbers pick up, maybe consumers can afford more expensive survival needs and finally start paying down those debts…right? Not so fast. 2023 was a big year for layoffs, especially in an overly-frothy tech industry suffering further disruption by AI. And ResumeBuilder.com’s recent survey found that almost half of companies are anticipating more job cuts in 2024.
Making matters worse, over 1 out of 4 debtors (especially Millennials and Gen Z) are already saying YOLO and “Doom Spending” their way into an even deeper hole. That’s more than 25% of American consumers throwing in the towel, borrowing like there’s no tomorrow, and all but guaranteeing default at one point or another.
The only question left is when we’ll reach the debt event horizon that sucks the economy into a black hole of runaway inflation and cascading defaults. If the Fed is good at one thing, it’s kicking the can down the road — but at some point, that road leads to a cliff, and from there, there’s nowhere left to go but into the void.
Five Things New “Preppers” Forget When Getting Ready for Bad Times Ahead
The preparedness community is growing faster than it has in decades. Even during peak times such as Y2K, the economic downturn of 2008, and Covid, the vast majority of Americans made sure they had plenty of toilet paper but didn’t really stockpile anything else.
Things have changed. There’s a growing anxiety in this presidential election year that has prompted more Americans to get prepared for crazy events in the future. Some of it is being driven by fearmongers, but there are valid concerns with the economy, food supply, pharmaceuticals, the energy grid, and mass rioting that have pushed average Americans into “prepper” mode.
There are degrees of preparedness. One does not have to be a full-blown “doomsday prepper” living off-grid in a secure Montana bunker in order to be ahead of the curve. In many ways, preparedness isn’t about being able to perfectly handle every conceivable situation. It’s about being less dependent on government for as long as possible. Those who have proper “preps” will not be waiting for FEMA to distribute emergency supplies to the desperate masses.
Below are five things people new to preparedness (and sometimes even those with experience) often forget as they get ready. All five are common sense notions that do not rely on doomsday in order to be useful. It may be nice to own a tank during the apocalypse but there’s not much you can do with it until things get really crazy. The recommendations below can have places in the lives of average Americans whether doomsday comes or not.
Note: The information provided by this publication or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.
Secured Wealth
Whether in the bank or held in a retirement account, most Americans feel that their life’s savings is relatively secure. At least they did until the last couple of years when de-banking, geopolitical turmoil, and the threat of Central Bank Digital Currencies reared their ugly heads.
It behooves Americans to diversify their holdings. If there’s a triggering event or series of events that cripple the financial systems or devalue the U.S. Dollar, wealth can evaporate quickly. To hedge against potential turmoil, many Americans are looking in two directions: Crypto and physical precious metals.
There are huge advantages to cryptocurrencies, but there are also inherent risks because “virtual” money can become challenging to spend. Add in the push by central banks and governments to regulate or even replace cryptocurrencies with their own versions they control and the risks amplify. There’s nothing wrong with cryptocurrencies today but things can change rapidly.
As for physical precious metals, many Americans pay cash to keep plenty on hand in their safe. Rolling over or transferring retirement accounts into self-directed IRAs is also a popular option, but there are caveats. It can often take weeks or even months to get the gold and silver shipped if the owner chooses to close their account. This is why Genesis Gold Group stands out. Their relationship with the depositories allows for rapid closure and shipping, often in less than 10 days from the time the account holder makes their move. This can come in handy if things appear to be heading south.
Lots of Potable Water
One of the biggest shocks that hit new preppers is understanding how much potable water they need in order to survive. Experts claim one gallon of water per person per day is necessary. Even the most conservative estimates put it at over half-a-gallon. That means that for a family of four, they’ll need around 120 gallons of water to survive for a month if the taps turn off and the stores empty out.
Being near a fresh water source, whether it’s a river, lake, or well, is a best practice among experienced preppers. It’s necessary to have a water filter as well, even if the taps are still working. Many refuse to drink tap water even when there is no emergency. Berkey was our previous favorite but they’re under attack from regulators so the Alexapure systems are solid replacements.
For those in the city or away from fresh water sources, storage is the best option. This can be challenging because proper water storage containers take up a lot of room and are difficult to move if the need arises. For “bug in” situations, having a larger container that stores hundreds or even thousands of gallons is better than stacking 1-5 gallon containers. Unfortunately, they won’t be easily transportable and they can cost a lot to install.
Water is critical. If chaos erupts and water infrastructure is compromised, having a large backup supply can be lifesaving.
Pharmaceuticals and Medical Supplies
There are multiple threats specific to the medical supply chain. With Chinese and Indian imports accounting for over 90% of pharmaceutical ingredients in the United States, deteriorating relations could make it impossible to get the medicines and antibiotics many of us need.
Stocking up many prescription medications can be hard. Doctors generally do not like to prescribe large batches of drugs even if they are shelf-stable for extended periods of time. It is a best practice to ask your doctor if they can prescribe a larger amount. Today, some are sympathetic to concerns about pharmacies running out or becoming inaccessible. Tell them your concerns. It’s worth a shot. The worst they can do is say no.
If your doctor is unwilling to help you stock up on medicines, then Jase Medical is a good alternative. Through telehealth, they can prescribe daily meds or antibiotics that are shipped to your door. As proponents of medical freedom, they empathize with those who want to have enough medical supplies on hand in case things go wrong.
Energy Sources
The vast majority of Americans are locked into the grid. This has proven to be a massive liability when the grid goes down. Unfortunately, there are no inexpensive remedies.
Those living off-grid had to either spend a lot of money or effort (or both) to get their alternative energy sources like solar set up. For those who do not want to go so far, it’s still a best practice to have backup power sources. Diesel generators and portable solar panels are the two most popular, and while they’re not inexpensive they are not out of reach of most Americans who are concerned about being without power for extended periods of time.
Natural gas is another necessity for many, but that’s far more challenging to replace. Having alternatives for heating and cooking that can be powered if gas and electric grids go down is important. Have a backup for items that require power such as manual can openers. If you’re stuck eating canned foods for a while and all you have is an electric opener, you’ll have problems.
Don’t Forget the Protein
When most think about “prepping,” they think about their food supply. More Americans are turning to gardening and homesteading as ways to produce their own food. Others are working with local farmers and ranchers to purchase directly from the sources. This is a good idea whether doomsday comes or not, but it’s particularly important if the food supply chain is broken.
Most grocery stores have about one to two weeks worth of food, as do most American households. Grocers rely heavily on truckers to receive their ongoing shipments. In a crisis, the current process can fail. It behooves Americans for multiple reasons to localize their food purchases as much as possible.
Long-term storage is another popular option. Canned foods, MREs, and freeze dried meals are selling out quickly even as prices rise. But one component that is conspicuously absent in shelf-stable food is high-quality protein. Most survival food companies offer low quality “protein buckets” or cans of meat, but they are often barely edible.
Prepper All-Naturals offers premium cuts of steak that have been cooked sous vide and freeze dried to give them a 25-year shelf life. They offer Ribeye, NY Strip, and Tenderloin among others.
Having buckets of beans and rice is a good start, but keeping a solid supply of high-quality protein isn’t just healthier. It can help a family maintain normalcy through crises.
Prepare Without Fear
With all the challenges we face as Americans today, it can be emotionally draining. Citizens are scared and there’s nothing irrational about their concerns. Being prepared and making lifestyle changes to secure necessities can go a long way toward overcoming the fears that plague us. We should hope and pray for the best but prepare for the worst. And if the worst does come, then knowing we did what we could to be ready for it will help us face those challenges with confidence.
