There is striking evidence that the economy is in a rapid free-fall. We have almost certainly entered a period of deep recession. Over 7 trillion (Trillion!) dollars have been allocated to “ease frozen credit”. 7 trillion dollars is not chump change. That’s over half the value of everything (Everything!) produced in the United States last year. Our consumption has far outstripped our production, leaving us in severe debt. Other countries are beginning to limit how much they loan us (which is understandable). Some economists are suggesting that the housing bubble was just the beginning. We may soon be seeing a massive run on the dollar as it loses relative value to other currencies. In short, your dollar won’t buy as much in the future as it’s buying now. Top this all off with massive governmental interference in the markets (a possible unwarranted and unwise bailout of U.S. auto companies, for example) and two ongoing foreign wars (with Russia looming large), and well, things aren’t looking so great.

This is how empires fall.

We are in for some unrelenting pain over the next few years; perhaps longer. Whatever the outcome, the length of time we all suffer will almost certainly be extended due to overzealous governmental interference. Because it is becoming increasingly difficult for us to borrow money from our trading partners, money will have to be raised by either raising taxes or increasing the supply of money, both of which will be disastrous and will only serve to severely exacerbate the problem. Higher taxes discourages savings and production (things needed in a recession) and increasing the money supply (printing more money) deflates the value of the dollar, leading to a period of inflation.

I also fear the inevitable civil consequences. We will most likely see a harsher backlash against immigration and foreign made products in the near future. We will be extolled (more than usual) to “buy American” (one of the most UnAmerican things I’ve ever heard muttered). It is likely that we will become more nationalist. Expect to see more calls for “voluntary” civil “service”. There will be more and more nods to Franklin Roosevelt and his New Deal. There will most certainly be calls for a new public works system to “put Americans back to work”. Every last one of these scenarios will only extend our pain.

So, I guess that’s why I’m blogging again. Though I’m certainly no expert on economics (I have much to learn and read), I do believe I’m standing on the ideologically correct side of this. This will be a time for more open communication. It will certainly be a time for rational discourse and learning. Hopefully we will all come out on the other side of this with minimal harm.

Here’s what I’m going to do:

-It’s time to hedge against inflation. Use your current dollars to purchase the hard commodities you will use within the next year. Canned goods, dried foods (rice, beans, etc…), toilet paper, toothpaste, laundry detergent, diapers, etc… Stocking up on goods now will ensure you are not paying a higher price for the same items later.

-Make sure you have any necessary maintenance done to appliances or property you own. If you need new tires for your car, this is probably the time to get them. Ditto on home repairs, etc…

-Pay down as much credit as you can. This is generally a good idea at any given time, but you may need disposable money for other things in the future.

-Save money. Start socking away money in your savings account or just put it under your pillow…but save, save, save.

-It may be a good time to start thinking about gold and silver. I just opened up an account where I can purchase gold bit by bit. As the dollar loses value, more and more people will be turning to gold and precious medals as a hedge on their investments. As demand for these commodities go up, so will the price. Watch out for government manipulation in the gold market, however; and remember that FDR outlawed private ownership of gold in the late 30’s.

-Practice frugality in general. Cut coupons, carpool, keep the heat down in the winter, join a local Freecycle group, re-evaluate your monthly purchases. (I cut out book buying and got a library card instead, a move that’s saving me approximately $60 per month).

-Most of all (and I know this may be a cheesy sentiment), be nice to each other. Love your family and friends. Look out for your loved ones. If you have a propensity for it, socialize and talk about what is going on. Pick up a book on economics (I suggest Economics in One Lesson by Henry Hazlitt) to understand what is happening. Times are going to get a little rough, but if we keep our collective heads, we’ll make it.