Wednesday, March 10, 2010

Surviving Economic Collapse

Many moons ago I bought (and promised to review for you) a copy of The Modern Survival Manual: Surviving the Economic Collapse by Fernando (FerFAL) Aguirre whose blog SURVIVING IN ARGENTINA I visit often.

Well I've been reading the book in fits and spurts (hence the delay in fulfilling my promise to you) and find that FerFAL and I agree on important issues almost all the time.

In December of 2001 Argentina's currency collapsed banks closed and stores stopped accepting credit cards. Cash was hard to come by.

FerFAL says "Cash is definitely king during the first stages of a collapse." (pg. 13) Order was restored, he says, first in the capital, then in large cities and then in high-end surrounding suburbs. He says there are still areas where the police don't go except in large groups and with armored backup.

The government forcefully converted in-country U.S. Dollar (USD) bank accounts into Argentinean peso accounts and then allowed withdrawal of only 300 pesos a week.

FerFAL and his family escaped the government's confiscation of their USD accounts by closing their USD accounts (taking the USD's out in US Dollar bills) a few days before the collapse. They had to go downtown to the central bank to get their money because the branch banks either didn't have or wouldn't give them their USD's back.

FerFAL survived Argentina's economic collapse since 2001 and has documented his survival tactics and strategies both in the book and on his blog. I'm going to try to stick to a few points from the book in this review.

However, sometimes it's hard to remember whether I read it in his blog or book. Also, since our views so closely match some of my opinions may leak through into this piece disguised as FerFAL's so if you're about to bet your life on something I say here thinking FerFAL said it; better check his book before you pull the trigger. For FerFAL's more up to date comments you can visit his blog.

Like me, FerFAL believes we are far more likely to face a stay at home economic crisis than the much ballyhooed mad dash for the bunker in the boonies, rebuilding civilization from the ground up, end of the world as we know it calamities found in most fiction books (and some blogs and survival web sites) on the subject.

Yes, the odds are that planet Earth will once again be hit by a giant asteroid the size of the one that wiped out the dinosaurs. No, the chance of that happening in our lifetimes isn't very high.

Yes, the odds are that planet Earth will once again be hit by a great depression the size of the one that wiped out much of the planet's wealth in 1929 - 1939. Yes, the chance of that happening in our lifetimes is very high. (Just my editorializing there I don't recall FerFAL saying that anywhere in his book.)

So instead of writing a how to fend off a UN invasion manual thinly disguised as a novel FerFAL wrote of his day to day activities: what worked when money didn't; how to fend off robbers; preserving your capital when your nation's currency is circling the drain. You know, boring real life stuff that isn't nearly as exciting as dreaming of building bunkers or fleeing the city to try your hand at applying your window box green thumb on 40 acres.

So, if Americans more or less stay home and strive like the Argentineans did in 2001 instead of emptying the cities what will happen?

For one thing crime will go up. Unemployment plus less money for cops, courts and correctional facilities will see to that.

Does your house look a lot harder to break into than the others on the block? Is it? Why haven't you made it so?

Do you drive to work each day in an ostentatious car that makes you look rich? Do you keep your eyes open for unusual activities along the roadside instead of concentrating on the rear bumper of the vehicle ahead?

Are you prepared physically (and mentally) to defend yourself and your family? Even if it means killing an attacker or two? Having a weapon, having the ability/ know-how to use the weapon and having the willingness to use that weapon are three different things.

FerFAL talks about common sense things we might not think about right away when the currency suddenly isn't worth the paper it's printed on. For one thing those with goods were far more willing to part with them for precious metal than the official currency. Black markets sprang up. Black markets are dangerous places to be trying to sell a one ounce gold coin, but selling A silver coin or A gold ring in a black market doesn't mark you as a rich guy with a hoard of gold worth kidnapping for ransom or following home and robbing.

Having precious metals gives you the ability to sell a little bit at the then current value of the hyper inflated currency to buy groceries or gas today. As the value of the inflated currency goes down the exchange value of your precious metal goes up. In theory, at least, your precious metal hoard will keep pace with the hyper inflation.

One of FerFAL's tactics, which I like, was to use a Leatherman multi-tool to cut off links from gold necklaces, bracelets or chains to sell, a few links at a time, to buy groceries, lunch or whatever.

True, today in the USA coin dealers and pawn shops would think you were crazy for trying to sell a link or two from a bracelet marked 14k (58% gold content) or 18k (75% gold content) but in a hyper inflated scenario bits of gold and silver coins became instruments of value just like paper bills and were more welcome too according to FerFAL. Naturally you'd want to sell the part with the karat mark last.

This is one of those tips you file away in your head because it's difficult to act on it now. Yes, some pawn & coin shops and some jewelry stores may be willing to buy your gold chain a few links at a time as "scrap gold" at "melt prices" but why would you want to? If you're that hard up for cash now you'd do better getting offers for the whole necklace from a few of them and then selling it at a flea market, to someone who wants a necklace, for more than the melt price yet less than the pawn shop/jewelry store price.

For now, if you think a currency collapse is in our near future you could prepare by buying pre-1965 silver US dimes, quarters and halves and maybe grab some scrap gold necklaces, bracelets and chains at pawn & coin shops when the price of gold is down.

I think FerFAL and I disagree about just what form your precious metal should take. On page 188 he talks about buying "precious metal bars and coins of reputable origin" but then goes on to tell us about the gold chain/ Leatherman trick for everyday purchases.

This dichotomy is compounded by his advice to keep "Krugerrands, gold Pandas and Mint American Eagles in envelopes or cases so they don't get scratched or nicked, something that people dealing with gold are very picky about."

I guess having a few one ounce gold coins for large purchases couldn't hurt but personally I think rolls of pre-1965 US 90% silver dimes and quarters would be safer to spend and more convenient to cash in for everyday uses.

On page 192 FerFAL talks about the difference between working and making money. He says people ask the wrong question. "What jobs are in high demand after an economic collapse?" is the wrong question. He says the question they should be asking is: How do I make money after an economic collapse?"

He lists Security Guard and Telemarketer as examples of low paying (then as now) jobs available to the unskilled as businesses try to survive. Of course the more skills you have the better chances you have of getting a better job.

As to making money after an economic collapse FerFAL says "Exploit your potential." He points out that when TSHTF in Argentina many of the people who lost their jobs started up their own businesses, working from home, using the same knowledge and skills they'd used when employed or exploiting their expertise learned from a hobby.

FerFAL also talks about exploiting abandoned market sectors. When government or corporations withdraw from an area, product or service there is an opportunity for small businesses to step in and fill the need.

A large portion of the book deals with identifying and dealing with threats. Both FerFAL and I heartily recommend going beyond book learning. Want'a learn hand to hand fighting? Go to a dojo and practice under a master. Want'a know how to shoot (and more importantly when)? Go to a recognized shooting range or join a shooting club.

Yes the Kung fu master on TV or CD or DVD can show you how it's done, but unless you practice with a NONcooperative partner you'll likely do poorly in a real confrontation.

(This is me talking here ) EXAMPLE
During my college days I partially supported myself as a semipro photographer. Part of that scheme involved going to crime scenes with the aid of a Radio Shack police scanner. One night some guy tried to hold up a small BBQ takeout only restaurant with an old WWII break-top revolver. After taking the evenings proceeds from the clerk at the cash register he proceeded to try to rob all of the men in line, one at a time, as he worked his way back towards the front door. When he turned his back one of the men he'd just robbed jumped him giving him a "Karate chop" just like they do in the movies.

Only this wasn't a movie so no scriptwriters had told the crook to fall down when hit, and there was no director to yell "Cut!" when he didn't.

Important point:
Too many people's emergency defense plans consist of a hazy "He'll do THIS and then I'll do THAT!" image in their mind without thinking what would happen if THAT! doesn't get the job done. Without a NONcooperative partner to practice on (many many times) you're likely to end up like the hero I helped get to the hospital that night.

In the resulting melee both the crook and the overaged Karate Kid got shot. I took a picture of a cop wheeling the wounded hero out on a gurney then put aside my camera to help him lift the overweight, overaged Karate Kid into the back of the ambulance. I don't remember for sure, but I think the crook was killed.

If you plan to incorporate Jujutsu into your defensive reactions go to the dojo and learn from someone who knows what he's doing, not an actor on a movie screen. If you think those guys on TV holding their pistols sideways and over their heads while shooting know what they're doing for God's sake go take a shooting class before you embarrass yourself in front of your robber.

There are literally hundreds of other tips in the book from FerFAL's recommendations for BOB bags and EDC items to bartering advice. Too many to go into here so I'll end with this note:

All through FerFAL's book I could see how people's actions and activities revolved around getting enough food to eat, water to drink and protecting what they had from criminals. If hyper inflations hits the United States Of America I doubt our actions and activities will be all that much different.

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