Financial Survival Kit

What do you need to be prepared for the future financial turmoil? How can you survive?

Should I Buy Gold?

It seems like everyone is a gold bug these days, but is it the right thing for you?

What Are The Chances?

With all this "end of the world" hype going on, maybe we should consider the chances. What are the chances of a civilization threatening event?

How Much Insurance Do I Need?

Insurance is an extremely broad topic. Hopefully this generalization on the different types and amounts will help straighten things out a bit.

Iraqi Dinar: Scam or Scoop?

Some say it's an easy way to make a million bucks! But do you understand currency markets enough to take advantage?

The financial world we live in is just as wild, if not more, than the mountains and woods we walk through. We are told that the fundamentals of our economy are strong, but we can feel that something is wrong. My unique financial background and survival passion make Financial Survivalist and excellent place to learn and share.

Friday, January 30, 2015

Why Hyperinflation is not a Danger

Every day someone is on the radio or cable news talking about how there is going to be hyperinflation. Some of them profit big from this. Not that hyperinflation couldn't happen. Anything can happen. However, the dangers of hyperinflation of the US dollar is almost always exaggerated.

Many of the these so called experts refer to situations like the Vimar Republic. I myself have referred to this situation while talking about hyperinflation. I my myself have had concerns about hyperinflation. So why is hyperinflation not a danger?

According to the theory of quantity of money (the theory that most conservative, classical and Austrian economic followers refer to), an increase in money supply is equal to the increase in price level. That means price level will only increase (inflation) if you print money and will only do so at an equal level. You print money, you get inflation.

Even in the Vimar Rebublic they could not print enough cash to justify the inflation they had. The printing presses simply could not print fast enough. So how did inflation increase so fast? Expectations and currency trade my friend. Inflation started, no one had confidence in the Mark so they got out. People didn't want the Mark so they traded it for other currencies, increasing the supply of the Mark and decreasing its demand. I.e. hyper inflation.

The big question is what currency did they trade for? Well, in all inflation and hyperinflation situations since then, it has been the dollar that people want. Its the dollar that countries ban to try and prevent inflation. Its the "flight to security." Until we loose the flight to security, we will not have hyper inflation in the dollar. I don't see us losing the flight to security any time soon. In fact, the reason why we have had concerns of deflation recently is because there is such high demand for the US dollar.

Despite everything that is going on in the US, the rest of the world if far worse. The United States is the least bad of all the bad economies. It would take the entire world to do great while the US was crashing, for hyperinflation of the US dollar to be a reality. Fact of the matter is, the US economy is doing bad, so is the rest of the world, but hyperinflation of the US dollar is simply not a danger any time soon.

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Wednesday, January 28, 2015

OIL: The Black Gold

So China's demand for oil has plummeted, the supply from the United States has skyrocketed, and OPEC is trying to drive competitors out of the market by letting prices fall, and Russia. Don't get me started on Russia.

So that is why Oil prices have fallen, but why is the government so eager to prevent drilling? Obama gave subsidies for Brazilian companies to drill in the gulf, but won't renew drilling permits for U.S. companies? He proposes a ginormous wilderness expanse in Alaska, knowingly preventing drilling for known oil reserves?

The way I see it the two best reasons to "drill baby drill" are 1. economy. Lower oil prices fuels industry. 2. Energy independence from foreign entities. The only two reasons why I see not to drill are 1. Environment, but this can be protected with drilling. 2. Preserve resources for future generations. Let other people sell their oil. Then when they run out, we'll have a monopoly on it.

So why refuse to come to a solution for the Keystone Pipeline? Environment? NO. Obama's own investigation determined that the environmental risk was negligible. To preserve our oil? NO. It would make Canadian oil cheap to us and would be the best thing he could do to disincentivize domestic companies and preserve our oil.

Any idea? What is Obama's logic? Why would he do what he does? Any decent solution will be considered.
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Monday, November 24, 2014

So, I am getting my masters in economics. Let's just say I've learned a lot. I'm not negating everything I've ever said, but I definitely see things in a new light. For example, Keynes wasn't crazy. Gov't spending stimulates the economy. However, his model is based on numerous assumptions and definitely does not hold in an open economy. So what we are left with is a bunch of economic tools in our tools box, and problems that are still not clearly defined by modern economics.

With that being said there are some things that are pretty clear. Inflation is a big one. We know what causes it and it's not printing money. Well, the money supply is a factor, but not the largest. We also know how to control it and the cost to control it.

Also, sticky wages. The reason why I give Keynes any credibility is because I believe that prices are sticky (ie they take time to adjust). This is probably the most defining, but definitely not the only, difference between Austrian Economics and Keynesian Economics. I also don't believe that people act rationally, another important difference. Despite my beliefs there is ample data to support Keynesian economics, and it seems to me that Austrian Economics basically tries (stretches sometimes) to explain the differences.

Some have mentioned that maybe I've been brainwashed by my professors. Well, I'M NOT A LEMING! What the hell! Seriously? Actually my professors have been very good at presenting all sides of the argument. I even tested some of them by arguing the liberal point of view and I got squashed.

To sum everything up, calm down. There will be more financial crisis in the future, but it's not the end of the world. Do the "rulers" have everything under control? Of course not. Do they tell us all the truth? Of course not. But it's still not the end of the world.

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Thursday, January 30, 2014

Three Unintended Consequences of Minimum Wage

Lately there has been a lot of windy politicians blowing about an increase of the minimum wage. I believe 10 states are considering bills to increase the minimum wage. There is also a lot of huff about a "livable wage." Though intentions are good, no one actually considers what raising the minimum wage would actually do. Here are three unintended consequences of minimum wage.

1. Unemployment Increases

It's simple, if labor costs more then employers will purchase less of it. This doesn't mean every employer will purchase less. It just means that employers will run their business with the minimum amount of employees it can. However, the remaining employees will cost more.

2. Prices Increase

If it takes a fixed number of man hours to create a product and the cost of those man hours increases, then the cost of the product increases. A business has to make a profit or break even in order to stay in business. A business owner may absorb some of the increased cost, but realistically most of it will be passed on to the consumer in the form of higher prices. This is also known as cost push inflation.

3. Inflation Increases

IF raising the minimum wage works at all (ie more people making more money), then this means there is more money among the people that are most likely to spend it. When people suddenly have more money to spend and they spend it, this causes demand pull inflation.

In conclusion, raising the minimum wage increases unemployment and inflation. Even the people that are making more cannot buy more because everything cost more. The only situation in which it can have a different affect is if demand for labor is stronger than supply, but in that case the wage rate adjusts naturally. I'm not saying we should lower the minimum wage at all, but is increasing it really going to fix the problem? I argue no. Below is a video from Learn Liberty (a bunch of economists) explaining the affects of minimum wage.


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Wednesday, January 15, 2014

How Many Watts Do I Need?

Have you ever wondered how many watts you need? You might be considering solar panels, or you might just be shopping for an emergency generator. Either way it is important you know how many watts you need. An accurate way to see your usage is by looking at your power bill. But what if you don't want or need to replace ALL the energy you use. For example, your usage would likely be less during an emergency or power outage. I'm sure you could go without the microwave and clothes dryer for a day or two.

These were the questions I had, and I couldn't find a place to answer my questions easily. I did find some resources including Generac.com. This gave me a general idea how many watts I might need, but required I wrote everything down and changes would require... AN ERASER! So I decided to create my own worksheet to share with you guys.

The file is an Excel file, so you will need some way to open it. I have protected cells to keep you from destroying it. However, you can edit it if you know what you are doing. All blue text can be edited. Make sure to keep an eye out for hidden notes to give you pointers on how to use the worksheet. It should give you a decent idea of what size generator you need to buy. I am open to ideas to make it better, so feel free to leave a comment below and let me know what you think.

Watt Worksheet

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