"A Tremendous Secret" (resetting the monetary system)

[graveday]

In no particular order, Grower forgot to add.  I always remember this story I once heard.  I had asked a man how he came to own his place in beautiful Potter Valley in upstate Calif.  He said it was in the family, but it came into the family this way.  An ancestor traded for the land with a man who was willing to give him the place for a decent pair of boots.  I take that as a powerful image of the lengths desperation will drive you to.  The man put on the boots, started walking, and was never seen again.  The land is still there, still in the hands of the family who got it cheap.
So hang in there and don't go into debt for land, but, like Grower says, have some sturdy clothes about.

[ninakat]

There have been three pretty polite requests for some tangible advice on this thread but no one has chimed in. I'm adding a fourth here.

Big question is - is it wise to take on a huge debt right now, if the US$ is going to go boom?

From my point of view, all debt could be problematic simply because there are too many factors in a post-collapse scenario that could mess you up. Unemployment or illness top the list for me, and with the future being much less certain as far as job security, I can only tell you what my strategy would be: downsize, keep it simple, and rent (unless you have the resources to buy outright). Any extra money that you would have spent on a mortgage, you could save and/or invest in preps. And, I know from experience that home ownership costs way more than renting. The costs for maintanence add up really fast. If you're living small, you can easily move around from one rental space to another if need be. The main point is to live within your means, stay out of debt, and avoid financial risk. One last point to ponder: I believe that the powers-that-be are done with us, so I wouldn't expect that a dollar devaluation will HELP those of us in debt, unless somehow that was an advantage to them (hard to imagine how that would work). I think it's much more likely that however this thing plays out, we non-elites are going to want to be as independent from the collapsing monetary systems as possible. Just my 2 cents, from my very protective perspective.

[Macs UK]

Regarding personal debt in the face of currency/collapse and revaluation, I guess that if you owe say ten years' salary in $$ today, you'll probably still owe ten years' salary in whatever replaces it. BUT look at it another way - today, in $$, you understand what your debt is. Given a revaluation you don't. So ask yourself if you would take a mortgage or big debt on your hands if you didn't know what the interest rate is or how long you'll have to pay it off. That uncertainty is way bigger than any variations in the BAU you are comfortable assessing for yourself. I see it as a multiplication of risk, and consequently will pay down my debt (a not too huge mortgage) ASAP.

we non-elites are going to want to be as independent from the collapsing monetary systems as possible

Absolutely!

[Emeline]

There have been three pretty polite requests for some tangible advice on this thread but no one has chimed in. I'm adding a fourth here.

Big question is - is it wise to take on a huge debt right now, if the US$ is going to go boom?

From my point of view, all debt could be problematic simply because there are too many factors in a post-collapse scenario that could mess you up. Unemployment or illness top the list for me, and with the future being much less certain as far as job security, I can only tell you what my strategy would be: downsize, keep it simple, and rent (unless you have the resources to buy outright). Any extra money that you would have spent on a mortgage, you could save and/or invest in preps. And, I know from experience that home ownership costs way more than renting. The costs for maintanence add up really fast. If you're living small, you can easily move around from one rental space to another if need be. The main point is to live within your means, stay out of debt, and avoid financial risk. One last point to ponder: I believe that the powers-that-be are done with us, so I wouldn't expect that a dollar devaluation will HELP those of us in debt, unless somehow that was an advantage to them (hard to imagine how that would work). I think it's much more likely that however this thing plays out, we non-elites are going to want to be as independent from the collapsing monetary systems as possible. Just my 2 cents, from my very protective perspective.

Regarding owning versus renting, I think that's a very good point Nina brings up and something that needs careful consideration.   I read the results of a study that came out here a few weeks back which concluded it was cheaper to rent in some major urban centres but generally cheaper to buy in rural areas.  It related to NZ but I would imagine it would be the same in other countries, lots of financial variables from area to area and even town to town, but also very many personal variables.  There's a link down below which might offer a few more thoughts on the subject.

Personally I'd be wary of taking on any debt whatsoever right now, especially a large mortgage.   I know there's a lot to be said in so many ways for owning your own home/property but as Nina said there can be a lot of disadvantages too and with the present economic and housing volatility I'd personally be really fearful of getting in over my head and ending up, as they say, "underwater".

Renting versus owning:
http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10509345

[Grimus]

Thanks for the replies. It does seem to require some serious, careful consideration and even then...anything could happen I guess.

[Madnsassy]

There have been three pretty polite requests for some tangible advice on this thread but no one has chimed in. I'm adding a fourth here.

Big question is - is it wise to take on a huge debt right now, if the US$ is going to go boom?

From my point of view, all debt could be problematic simply because there are too many factors in a post-collapse scenario that could mess you up. Unemployment or illness top the list for me, and with the future being much less certain as far as job security, I can only tell you what my strategy would be: downsize, keep it simple, and rent (unless you have the resources to buy outright). Any extra money that you would have spent on a mortgage, you could save and/or invest in preps. And, I know from experience that home ownership costs way more than renting. The costs for maintanence add up really fast. If you're living small, you can easily move around from one rental space to another if need be. The main point is to live within your means, stay out of debt, and avoid financial risk. One last point to ponder: I believe that the powers-that-be are done with us, so I wouldn't expect that a dollar devaluation will HELP those of us in debt, unless somehow that was an advantage to them (hard to imagine how that would work). I think it's much more likely that however this thing plays out, we non-elites are going to want to be as independent from the collapsing monetary systems as possible. Just my 2 cents, from my very protective perspective.

I agree, Ninakat.  Unless you own a home, with a bit of property to grow some food, already -- I mean, all or nearly fully paid off  --  and not upside down (property value less than mortgage owed), I agree you'd likely be better off renting.  I will add one caveat.  If you can buy something outright, rural property values (based upon what's happening in my valley) won't lose much more value than they have, and very likely over the next couple of years, they'll remain stable and may even go up.  (There are more and more folks seeking retreats.)   The rest, Ninakat just said.

[graveday]

Yes, Madansassy, when I was trying to buy some land around Clear Lake, the bare land prices were holding steady, while home prices were plummeting.  And if there was water on the land, it was even more expensive.

[Abhaha]

I bought land in Western Washington 100 miles south of where I live now...and I do owe money on it. OTOH, I rent in Seattle as my job is here, and I want to have some place to go outside of a city when TSHTF. I am not so sure it will be OK here when peak oil seriously kicks in.

So, it is a risk....it is all a risk regardless of what you choose to do. It is all the unknown.

[scotto]

Ok, thanks for the replies all. It seems the 'reset' is just to hard to plan for. I'll stay debt free and just hope things hold together till I can get some rural land. Till then best plan seems to be to say flexible, able to pick up and move at short notice, and see what happens. Just hope my savings don't get vaporised. 

[bowman]

Just hope my savings don't get vaporised. 

The 'reset' may be unknowable but that doesn't mean you need to be holding cash.  Get some PMs.  Ultimately that's what they're good for: eliminating your need to worry about the vaporisation of your paper dollars.  We can argue to hell and back about inflation vs. deflation and whether the dollar price of PMs will go up or down, but we can all agree that they won't vaporise. 

If you're saving your wealth in dollars you're just gambling.  I'm not saying it won't work out for you... but then a trip to Vegas and putting your life savings on 'black' on the roulette table might work out for you too.  It's no different. 

[TheWarriorMax]

Just hope my savings don't get vaporised. 

The 'reset' may be unknowable but that doesn't mean you need to be holding cash.  Get some PMs.  Ultimately that's what they're good for: eliminating your need to worry about the vaporisation of your paper dollars.  We can argue to hell and back about inflation vs. deflation and whether the dollar price of PMs will go up or down, but we can all agree that they won't vaporise. 

Sorry to have to ask, but for the rest of us foreigners: please define "PMs"?

[mtlouie]

precious metals

[goanna]

I think about taking out a mortgage for some land, weekender style. We would have a place to go when everything falls apart. We would plant trees now and develop the land now. If you take a mortgage which is twice your yearly income that sounds reasonable in normal times, but at the moment everything isn't normal. If the monetary system would be reset, then what would happen to the Australian dollar?

Overall I still think buying a house is better than renting one because you can do better preps, like water tank, trees etc.. I do not mind loosing money buying a house, I prefer the security which it gives me. One simply must downsize a bit. Maybe a two bdr instead of three or one bathroom instead of two etc.. You simply safe and pay more back than you must.

[graveday]

Here is my question for the Federal Reserve. How can the Fed grant a bank the right to foreclose on an asset when that bank did not put up a single penny of real capital to purchase the asset but rather loaned the money into existence by the stroke of an electronic pen? We get the whole ‘retiring the loan from the money supply’ thing, but the bank never had any skin in the deal to begin with – not since 1995 when bank reserve requirements were essentially wiped out through the liberal use of ‘sweeps’.

Furthermore, the Fed was created for a few staple reasons, two of which were to maintain stable prices and full employment. So here’s another question. If the Fed fails to provide either of these economic pillars and Fed member banks then lend against these unstable asset prices and a precarious employment base, then what purpose does the Fed serve if their failed monetary policies creates the environment under which borrowers lose their employment and cannot afford these unsustainable asset prices?

The above is a quote from the site below.  Fair question.

http://itsnotrealmoney.com/2009/08/04/the-great-experiment-on-the-american-lab-rat/

[Simple Home Gardening]

Overall I still think buying a house is better than renting one because you can do better preps, like water tank, trees etc.. I do not mind loosing money buying a house, I prefer the security which it gives me. One simply must downsize a bit. Maybe a two bdr instead of three or one bathroom instead of two etc.. You simply safe and pay more back than you must.

I think buying is better than renting too and that's what we're doing.  What if you pay your rent and the landlord doesn't make the mortgage payment?  You might have to move rather unexpectedly.

*Disclaimer*
We live in an older neighborhood outside the city limits in a very small house.  We also have good neighbors.  Yes there is maintainence involved but we pick and choose when to do it, barring emergencies.  Given all the unknowns this is the best choice for us.