Some of the devices to follow will upset some city survivors. This is because these devices do not fit into their preconceived notion of how they fervently wish events would unfold. Let the record note that I wish that our government would collapse and that we could start anew with one based on freedom rather than legal plunder. But looking out over the various countries in the world, there is little cause for hope. We just don’t see this happening.
Electing to vigorously pursue some trading strategies will be tough because we really don’t want them to work. The use of U.S. dollars as a medium of exchange is an excellent example.
MONEY
Only a government can take perfectly good paper, cover it with perfectly good ink, and create perfectly worthless money. There’s no argument that our money has been mercilessly debased and devalued over the past few decades.
It has already been established that those with their financial houses in good order will have the best chance of surviving. Great numbers of examples out of history prove this point. Cubans with money for boats and fuel were able to make it to Mexico, the United States, and Spain early on. Chinese with money are currently emigrating to Canada. Rhodesians with cash are now sprinkled all around the world. They didn’t all make it, but only Jews with lots of cash had a chance of getting out of Nazi Europe. Later they had the only real chance of getting to Palestine, before it became Israel. I have even encountered an extremely wealthy, former high ranking Nazi living in the United States who used his considerable money to buy connections that eventually got him and much of his loot out of post-World War II Europe.
As much as I hate to admit it, the medium of exchange for the foreseeable future appears to be U.S. dollars. This, I realize, is something of a reversal of my past position. But if the late 20th century has taught us anything, it is that politicians hold on and on. Mexicans, Russians, Poles, South Africans, Kenyans, and just about everybody collects dollars. Not euros, not Swiss francs, not German marks, not Hong Kong dollars, and certainly not Chinese renminbi or Japanese yen. The yen was once considered one of the strongest currencies, but 8 years of grinding recession finally wore it down.
I will gladly change my position on U.S. dollars when I see something coming that will also grind them down. Then I can trade my dollars for hard goods and consumables that always have value.
In times past, U.S. dollars, British pounds, German marks, and Swiss francs were equally prized by traders throughout the world. No longer. Everything is U.S. dollars—even in agricultural villages in remote Mexico, prices are quoted in dollars.
It’s kind of like being the chief leper in a leper colony. Because national finances are run so very poorly in most other countries, our own post-freedom economy stands out as being strongest.
New Zealand may be the only exception! Although New Zealand is headed in the correct direction economically and politically with increased emphasis on freedom it currently is experiencing a severe recession. This isn’t of their own doing. Traditionally New Zealand exported raw materials to Asia while importing many manufactured goods. The collapse of Asian markets and 2 years of El Nino-induced agricultural failure has taken its toll.
At any rate, New Zealand’s economy is and always will be too small to be much of a player in world markets. This also may be what happened to little Switzerland—it is a good economy but it’s too small to be influential.
America’s economy is so very large that it will dominate for the foreseeable future. Here is another example. While living in rural Africa, I frequently came across original Maria Theresa thalers being used in trade. This was 70 years after the collapse of the Austrio-Hungarian Empire. Certainly things move much faster these days, but even if the United States does somehow manage to collapse, it may still take years before people realize that its dollars are worthless.
At this writing absolutely everything worldwide is denominated in U.S. dollars. Oil, refinery products, computers, wheat, corn, gold, precious and nonprecious metals, iron, steel. cocoa, lumber, cases of tomatoes, melons, tobacco, and even a night with a woman. I can’t think of anything not denominated and traded worldwide in dollars. As a practical matter, if there were no U.S. dollars we would have to invent them!
Dollars are even being sent rather than food to refugees in ravaged, war-torn areas. It’s the trendy new way of arranging for food aid. Dollars in refugees’ hands, we have found, encourage the inflow of food by private shippers and producers from hundreds of miles away As prices go up, local farmers are encouraged to plant more. Aid organizations sending food shipments into an area discourage farmers by lowering prices in their markets. When it’s done by government agents, it is always handled in a corrupt and inefficient manner. Money gets the economy running again, whereas actual bags of foodstuffs depress it.
The bottom line—especially for city survivors who will be close to quantities of goods and services—is that storing lots of cash has the potential to overcome great deficiencies in one’s survival plan. However, gold—including gold coins—is a poor trade good.
Cuba’s economy has been in a state of collapse since the demise of the Soviet Union in 1991 when all Soviet aid to Cuba was halted. I have been there twice since that time. Under-the-counter barter in the tightly knit Cuban society keeps its economy afloat, but this is barter of my two chickens for your cabbage and dozen eggs, or my skill and labor to repair your Soviet-built motorcycle in exchange for your sugar ration. While there I traded extensively in the underground economy using dollars, but never for gold coins. They wouldn’t have known what to do with gold: gold of any kind had absolutely no practical value to Cubans. It was much the same in East Berlin before the wall came down. Mexicans are in the same boat. Their economy has been devastated by recent massive peso devaluations and they want gringo dollars, not gold coins.
Gold coins are somewhat similar to the piano my dad’s family traded for three sacks of potatoes. Apparently the only reason this deal was finally consummated was out of some sort of perverse sense of humor on the owner’s part. Like the piano, gold packs too much value into too little space for owners ever to realize its full potential. It won’t do to trade the piano one piece at a time.
Gold coin does meet the survivor’s Rule of Portability, but other trade goods do this job better. On the other end of the trade spectrum, small gold coins are also difficult to handle. Teensy, tiny $1 and $5 gold pieces might even blow away in the wind! Our current experience indicates that gold is not a good exchange medium in a primitive survival economy.
TRADE GOODS
Portability, practicality, and profitability are the three P’s of trade goods. Profitability has to do with things that are used as tools to create wealth. In most cases, wealth for city survivors is food, water, and shelter. What items should be stocked as trade goods? They have to be consumables!
This fact was reinforced again with visits to Cuba and Britain. Cuban cigar rollers still work on a piece basis. In very un-communist fashion, they are paid by performance the same as any other entrepreneur. Experienced cigar rollers are the best-paid laborers on the island. What did these top-of-the-line laborers want to trade from me? Not gold coins, not CD/tape players, not my watch, or anything else so exotic. It was common, dull, average things like bars of soap and aspirin tablets.