A Note to the Unemployed and Under-employed

The likely scenario in the near future (over the next 36 to 48 months) is a dramatic worsening of economic conditions.  It appears that the U.S. economy  is stuck between a rock and a hard place.  This does not bode well for employment prospects.

Let me explain:  The dollar has been sinking due to excessive money creation and massive government.  The country is basically bankrupt and – like any business – the common stock (in this case the common stock of the USA is the dollar) becomes worth less and less until it’s death.  The Fed basically has three choices to deal with a falling dollar – all of them involve pain:

Choice #1:  Raise Interest Rates and Exercise Fiscal Restraint.  This would bring in more demand for the dollar and slow it’s devaluation.   The problem is that this would crash the already fragile economy and send the U.S. into a serious depression.  This would be severe although it would not be as severe as Choice #2:

Choice #2:  Print More Money:  The Fed could continue to print more money to use to pay off its debts.  This lessens the debt load but robs everyone holding dollars of their purchasing power.  This includes the wages and savings of every American.  As this process of printing money becomes more noticeable in the economy, the average man on the street starts to take notice and he begins to trade his dollars for physical goods – including gold.  This is what Ludwig von Mises referred to as the “flight to real values” or the “crack-up boom”.  This creates an acceleration of rising prices resulting in hyperinflation followed by “the mother of all depressions”.  Unemployment would be 25% or more and social and political unrest would be severe.  Crime would skyrocket.  In short, this situation would be miserable and millions of lives would be ruined.

Choice #3:  Of course, another choice (in my opinion the right choice) would be for the U.S. Government to:

1. Slash government spending

2. Reduce its size by 90% and focus only on the protection of life, liberty and property

3. Abolish the Federal Reserve and restore confidence in the dollar by backing it with gold or silver

This would create a short – albeit severe – depression as mal-invested capital from the past is re-allocated to more productive uses.  After this period of re-adjustment we would see a miracle of economic growth and stability not seen since after the Declaration of Independence.

It appears that the U.S. Government and the Fed have chosen Choice #2.  The problem is that the international holders of dollars are on to this plan and they could begin dumping the dollar in earnest (remember the “flight to real values” from above).  All it would take is one major player to start the stampede out of the dollar.  This would create a sudden collapse of the U.S. economy and a sudden and drastic drop in the dollar.  Wal Mart prices would look like Neiman Marcus prices.  Savings would be wiped out, millions would be impoverished.

So what is one to do?

Before I address the unemployed and under-employed, let me address everyone else:

Create your own “gold standard” and covert all of your savings to physical gold and silver bullion coins that you keep in your possession (no safe deposit boxes, ETFs, storage programs).  Set aside a one year’s supply of food storage.  Convert adjustable rate debt to fixed-rate debt and then pay only the minimum (you can pay this debt off later with much cheaper dollars so put all of your excess funds into gold and silver bullion).

Now, here is my message to the unemployed and under-employed (and everyone else that doesn’t want to suffer through the misery of the coming Greater Depression):

Seriously consider leaving the country for the next 5 years and look for work in better-managed economies. I’m talking about economies where real goods are produced, where the national currency (and financial condition) is strong, where unemployment is low, and where agriculture and resources make up the bulk of industry.

I suggest looking at the Economic Freedom Index put out by the Heritage Foundation for some ideas.  These are countries ranked across 10 specific freedoms such as trade freedom, business freedom, investment freedom, and property rights.  My top picks are Australia and New Zealand followed by Canada.  These places are not utopias – and they have their share of problems – but I feel they will have the best overall opportunities for someone looking to escape the coming turmoil in the U.S.  Canada is heavily dependent on trade with the U.S. but, if you can get a job in mining, agriculture, or natural resources, you will do well.  If you are in the medical profession you might look into Malaysia where medical tourism is thriving.  Or consider setting up a practice in the Bahamas to service those individuals escaping the coming socialized medicine in America.

If you are a young person or someone who is up for adventure – now can be the time to travel and “work your way around the world”.  An excellent book is Work Your Way Around the World by Susan Griffith or Vagabonding: An Uncommon Guide to the Art of Long-Term World Travel by Rolf Potts.

In summary, U.S. Citizens are in for some trying times.  Don’t procrastinate your preparations.  The international flight from the dollar could accelerate at any moment and a dollar collapse could happen overnight. You only need to look at Iceland for an example of how quickly this can happen.