The best way to protect one’s self from the scenario we described in yesterday's post was suggested a decade ago. I'm not encouraging you to run out and buy a truckload of food that'll probably spoil before you ever get the chance to eat it all (although prudence dictates one should have three to four weeks worth of food and drinking water on hand for any unexpected crisis event).Bill's advice will perhaps have little resonance with the grasshoppers among us, but the ants out there will undoubtedly see the wisdom of it.
I do suggest, though, that you join a shopping club like BJ’s or Costco where you can buy in bulk and get great value, specifically on non-perishable consumer goods. It’s a 2-fer. You save on your purchases and you avoid spending exorbitant amounts later when the inflation tsunami comes ashore. By this time next year, or the year after, the cost of the products mentioned below could very well have doubled or tripled (not a bad return on one’s investment ... that’s if some of these products are even available at all). Further, and importantly, none of these items will spoil, they need no special storage considerations, and you will always be able to use them. In other words, it’s a zero-risk investment!
The strategy is simple: Acquire your inventory and store it away. Don't use it when you've run out of an item, rather continue to purchase what you need until you determine the item in question has become too expensive. That’s the time to begin dipping into your inventory. How much and which items you should acquire are personal decisions that only you can make, but I would suggest that any supply lasting less than three to six months is probably not worth your effort.
Consider toothpaste for example. If an individual consumes a tube of toothpaste per month, then twelve tubes of toothpaste would last for a year. Given the state of the US fiscal dilemma, one year's worth of inventory is probably a conservative assessment. You're going to use all of these items anyway so why not buy them now? Here are some suggestions.
Laundry items (detergent, fabric softener, bleach, etc.)
Bathroom necessities (toothpaste and brushes, floss, soap, shampoo, deodorant, toilet paper, swabs, air freshener, kleenex, sanitary napkins, etc.)
Over the counter first-aid and meds (aspirin, antibiotic ointment, isopropyl alcohol, hydrogen peroxide, band aids, bandages, etc.)
General household cleaners (mildew remover, lysol, pine sol, windex, etc.)
Kitchen necessities (dish/dishwasher soap, paper towels, aluminum foil, glad wrap, trash bags, sandwich baggies, sponges/wipes)
Miscellaneous (salt, sugar, coffee, light bulbs, spices and seasonings (may have an expiration date), bottled water, flashlights, batteries, motor oil, etc.)
We're tempted to think, and hope, that an economic depression can't happen here, but that's what folks thought in the 1920s. The depression that began in the late 20s lasted for over a decade and it took a world war to get us out of it.
Once our creditors are convinced that our deficit is so high we'll never be able to repay our loans our credit will dry up. When that happens we'll have no money to finance our enormous spending on social programs like medicare, medicaid and social security, nor money to spend on our military, nor on infrastructure. The government will have to either severely cut spending, raise taxes to confiscatory levels, or print more money, all of which will throw millions out of work, and the last two of which will only exacerbate the problem.
The only way to avoid this future is to cut our deficit now which means cutting the amount of money the government spends on entitlements. Yet consider how hard it was just to inveigle a $385 million cut from the Democrats two weeks ago, and we need to start today to cut trillions in order to avoid the calamity that awaits us if we delay.
Inexplicably there's no appetite in the White House to cut entitlements, only to raise taxes, which will not raise nearly enough money to stave off the grim reaper, and will probably actually produce more joblessness and less revenue in the long run.
Yet the administration refuses to make it easier for oil companies to drill into our own reserves, which would certainly keep oil prices down in the mid-term. But that's a topic for another post.