How to prepare your family to survive and thrive in todays uncertain world

Newsletter – 1/11/11

(NOTE:  I’m going to be posting the weekly newsletter on the site at the end of each week.  It goes out to the mailing list at the beginning of the week, so be sure to sign up here if you aren’t already on it!)

Hi, and welcome to the first ever weekly Preparing Your Family newsletter.

Now, since I’ve never actually written a newsletter before, I’m guessing this will be something that’s a bit … shaky at first, but I’m sure it will get better over time.

A Special Announcement

First, I want to give you all a heads up on an announcement that will be coming over the next week or two. It’s a project I’ve been working on for a while now, and it’s all coming to fruition.

I’ve started a small publishing company with the intent of providing training and educational materials, primarily on preparedness, survival, and homesteading topics.

I have some interesting stuff already sitting by waiting for this new venture to go live with more on the way. I’m putting the final touches on the site and the initial product lineup and hope to go live real soon now.

There will be a larger blog post on this when I’m ready to announce it to the world, but I wanted to give you guys a heads up because I want to give you an opportunity to jump in if you’re interested.

The opportunity is pretty straight forward. I’m looking for a couple other people who have some sort of informational material, whether it’s an e-book teaching a concept, a webinar, or even an informational cd or dvd. If you have something like that, and would be interested in making it available through our storefront, please contact me by replying to this newsletter.

Since I’m only taking a few other folks right now, if you’re interested, jump right on it. I’ll open it up to more folks later on but I need to work out the details of this sort of thing before I open it up broadly.

So look for more information on this soon!

Rudy’s Outlook On 2011

I had planned on making a larger blog post on my outlook for the next year, but haven’t managed to get that done. So instead of that, I’m going to do a bit of ‘stream of consciousness’ here and share some of my thoughts off the cuff in this newsletter.

Hidden Inflation

First, I think one of the biggest problems facing us is hidden inflation. And the key word there is hidden. The powers that be have a perverse incentive to hide the inflation that has struck this country. And so they do.

Food prices on a per unit basis have skyrocketed. Prices for key commodities, both food related and not, have increased astronomically. In some cases, prices have doubled year over year. This growth shows no signs of stopping.

The key indicator to keep an eye on is oil. One of my readers sent me mail a few months ago asking about my thoughts on food commodity prices and their impact on the price of food. Before answering I went to look at historical charts dating back thirty years.

What I found was rather surprising. In a twist of the unexpected, key food commodity prices actually don’t have as much impact to the price of processed food as you might think. The key driver of end consumer pricing of food is actually oil.

If you think about this, it makes sense. Everything we buy uses oil at every level of production, from the cost of transporting the raw goods, to transport of interim products and of course the final products.

So keep your eye on the price of oil. Not the price of gas, which is a direct impact to your wallet, but for oil to see what’s coming down the pipe. Food and other vital goods react to oil prices, but not immediately. If you see a huge spike in oil prices, you need to be ready for the corresponding bump in your daily expenses.

Food Shortages

Second, I believe we will see some food shortages this year. In some areas, acute food shortages. In 2008 when the massive oil price spike caused all prices to skyrocket, there were some key food items that just weren’t available. Rice, for example, was impossible to find for weeks at a time in some parts of the country.

These shortages may reflect as a simple price increase, but what worries me more is a lack of availability at any price. Be sure you read my post from a couple days ago about how to protect yourself from food inflation and take action.

One key area I think we’ll see impact in is beef and pork. Both of these are longer term products. A cow, for example, is usually 18-24 months old before it is processed. There’s a fair amount of expense that goes into that cow feed wise.

Now when input prices (corn feed, for example) are going up rapidly, and the price for a cow isn’t keeping pace, those ranchers need to decide if they’re going to raise that cow as long as they normally would or process it now and get what they can get.

This is a real problem. The cows that produce the beef you get in the store eats primarily corn based feed. This feed went up in price almost 50% in 2001. The price that a rancher stands to get from the sale of the cow went up … 25%. Any fifth grader can draw the divergant price curve that results from that and tell you it’s NOT a good situation for that rancher.

What would you do if you were him? I’ll tell you what, there’s a lot of young cows being sent to the butcher lots. With these cows coming off the market so early, there’s a distinct lack of cows coming down the pipe next year and the year after.

Buy beef now. We just bought a whole cow from a local farmer and split it between us, my sister, and my parents. It’ll keep us in beef for most of a year, we think, but we’re not completely sure. We’re probably going to do the same thing with a couple hogs for pork in the near future.

Economic Deterioration and False Recovery

Third, I think our economy will continue to deteriorate. The public numbers for unemployment are relatively stable in the mid 9% ranger. The real numbers that the government doesn’t give you tell a different, far worse story. This economy continues to shed real jobs and people have been out of work for YEARS at this point.

Nothing that the government is doing will keep us from paying the inflation piper. I believe this results in a currency collapse and hyperinflationary event sometime in 2012 or 2013. I think the government is doing whatever it possibly can to prop up the numbers. The cynic in me says they want to keep everything going until the next election cycle.

The housing crisis continues to be a real problem. What people aren’t telling you is that it isn’t even POSSIBLE for the housing crisis to abate anytime soon. There are enough foreclosures in the hands of the banks right now to cover every house purchase for the next TEN YEARS. How easy do you think it’ll be to sell your house?

And that makes it even harder to move some of these houses. Unless you’re a new buyer or you’re incredibly wealthy, you have to sell your house to buy a new one. The banks are keeping these foreclosures off the market for now, but once they start going back on the market, how easy will it be to sell your house to buy that new place you have your eye on? We’re talking real estate market stasis here.

Don’t be fooled by the folks on ‘Bubblevision’ talking about recovery, and the stock market. The Dow went from 10430 to 11577 in 2010, an increase of 11%. That’s great, right?

Not really, because it all came about due to devaluation of the dollar. If you look at it compared to, say, gold, you see a different story. Gold went from 1121.5 to 1405.5 in that same time frame, an increase of 25%.

But even that isn’t the full story. Say you took some of your gold and bought ‘One Dow Unit’ at the beginning of 2010. With the Dow at 10430 and Gold at 1121.5, that would take you 9.3oz of gold to buy 1 Dow.

Sell that 1 Dow unit at the end of 2010 for 11577. Since Gold is worth 1405.5, you get 8.2oz back. Wait, that’s actually a LOSS! You lost over an ounce worth of gold in that deal, an 11% loss of buying power. Suddenly, that 11% increase in the dow during the same timeframe doesn’t look all that real, does it.

I recommend kicking your preps into high gear. Get your food and water storage in order. Get educated and take classes and gain skills. Buy those hard physical items you’ll need such as tools, generators, etc. If you can, buy property. It’s one of the last solid investments we have nowadays.

Folks, hard times are coming. People in my generation and the generation before it have by and large no idea how bad it can get. Don’t let it take you by surprise. But keep your head about you and don’t panic. Prepare with purpose.

And if I’m wrong (and I pray that I am!) and we don’t have hard times, your life will only be improved by the things you do to improve your life and your situation. So you really can’t lose by preparing!

Wrapping It All Up

Well, this ended up being longer than I expected! I hope you enjoyed this, and if you have any questions or want to suggest future newsletter topics, just reply to this mail. I love reader email and read every single message I get, even if I don’t always have time to respond.

If you know of people who would be interested in this newsletter, feel free to forward it to them. If you’re one of those people who got this from a friend, you can sign up for the newsletter on this page:

Have a fantastic week!


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2 Responses to Newsletter – 1/11/11

  1. Hi Rudy,

    I stumbled upon your blog while checking out other preparedness blogs. I’m glad that I did and I will be checking into and reading your blog and newsletter. I want to thank you for your insights ahead of time. I give you and your wife credit. It is a real challenge having a big family to love and guide. My son and his wife have four children and it makes life very interesting. Children are a blessing. Both of you keep up the good work.

    Pete in Wisconsin

  2. I just signed up. Congratulations on getting your own company started, and good luck on keeping it going.

    Uncertain times indeed. Is the economy actually recovering, or is it just being propped up? And if that is the case, will the government knock it all down just to get what they want? I just hope that the ideas of freedom stay so ingrained into the people’s thinking that any “hostile” takeover by the government is short lived. But on the bright side, such an event may just lessen the unsustainable entitlement mindset out there. Then the people who truly do need the help can have more of the focus on them.