Prepper Recon

Prepper Finance and Obamanomics

Now that we have seen the path that 51% of the American people have chosen, it is time to start drawing up our prepper game plan. Obama’s re-election was a surprise to me. I sincerely thought people had begun to wake up to the level of economic turmoil we are facing. I had not thought Romney’s plan to be anything like what we needed to get our country back on course. I had only thought if we could get him in the White House, simply avoiding Obamacare could have bought us a few more years. We would need drastic changes like those proposed by Ron Paul to have any real impact towards getting back to a sustainable path. The Republican primaries showed that we are nowhere near ready for that level of discipline.

Well, the damage is done and crying about it won’t help. As preppers, our duty is to prepare. This means we have to look at how Obamanomics are going to affect us over the next four years. We have strong trend lines in place and we know a good bit about his policies. That should allow us to have some accuracy in determining what may lay ahead.

Underemployment

It is my opinion, this will be the single most destructive element from this administration. Rather than rehash my thoughts on this, you can read my previous post on Obamacare and the coming unemployment crisis. In short, it will raise underemployment to levels never seen in this country. A prudent way for a prepper to get ready for this is to find other ways to produce income. What types of services could you preform or what types of products could you produce if you were laid off for an extended period of time? One prepper might be able to cut grass as a supplemental income, the other might sell homemade  jerky.

Inflation

The past four years have seen round after round of currency debasement aka quantitative easement. In the latest round of quantitative easement or QE, the Fed announced that they would be purchasing $40 billion dollars worth of mortgage backed securities per month. Ben Bernanke also stated that the MBS purchases would continue until there was significant improvement in the labor markets and overall economy. This move alone will create an additional $480 Billion a year in new money. This  new money will compete for the same goods and services in the economy and drive up all prices. We should expect the same policies to stay in place over the next four years. This will likely mean additional money printing that will continue to devalue the dollar. We will continue to watch for dips to add to our precious metals holdings. Like many preppers,  I have always used APMEX to purchase physical gold and silver. Another way to hedge yourself against inflation is to stockpile goods that you expect to rise in price due to inflation. If you expect coffee to rise 15% this year, why not buy a years worth of coffee the next time you have coupons for it and it is on sale? If you buy it now and it goes up 15%, you have effectively made a 15% profit on your coffee. The coupons and sale price will only add to your dividend. This same principle will apply to everything from Peanut butter to Ammo. This is one way that a prepper can profit and prep at the same time.

The Fiscal Cliff

We have basically the same make up in the Senate and the House as we did before the election with the Dems controlling the Senate and Republicans controlling the House. In the last debt ceiling debate, we saw squabbling into the 11th hour. The months of debates yielded the sequester which was viewed as a nuclear option that would force both parties to come together to avoid drastic cuts to each of their pet budgets. No agreement has been made and the sequester is set to take effect in January. The lack of cooperation bought us a credit downgrade from ratings agencies. We should expect more squabbling that will result in more downgrades. The last downgrade produced a lot of fear and triggered sharp sell-offs in all the markets, except, ironically, the US Treasury market. In the fear triggered by the downgrading of US debt, investors flocked to US debt. It is hard to say if that will happen again, but I do anticipate US Treasury bonds to sell off eventually as they have record low yields. If they sell off in a panic, it will be the end of the world as we know it. At some point, Investors will demand higher rates from US Treasuries, rates will shoot up and credit markets will raise rates that ruin our fragile economy.

I am planning to be extremely cautious about investing in equities, at least until after January. I am also keeping some powder dry for when the bond bubble pops. It could be next week, next year or 3 years from now, but I think it is inevitable. Inverse bond ETFs like TYNS and TYBS are funds that I am planning to use to protect my portfolio when it pops.

I hold a degree in Accounting and am pursuing a degree in Finance. I mention my investment strategies from time to time. However, I am not a financial adviser and I don’t make specific recommendations on these posts. Everyone’s situation is different and therefore everyone’s investment style is going to be different. Before investing in any instrument, you should fully understand the instrument and the risks associated with it. All investing is inherently risky and can lose money.

We  went into a lot of detail in our 7 Step Prepper Plan, especially in the area of prepper finance. Our nation’s lack of understanding of the impending economic doom we are facing was made evident in this past election. I was shocked by the result. I am more uneasy and less confident about this administration’s ability to kick the can much further. The can is getting to big to kick. Over the next month, we will be reviewing the 7 Step Prepper Plan and making some adjustments to reflect a heightened sense of urgency. I hope to re-post all 7 steps of our prepper plan in January and February.

Have a blessed day and happy prepping!