The economy is going to get worse

Do you have this feeling that things are going to get worse with the economy? A feeling where you don’t know what direction our country is going, but it isn’t good? Unemployment is hovering near 10% and lots of families are having a hard time making their mortgage payment. At the same time a lot of businesses aren’t doing anyting (hiring, expanding, etc), because they are scared of what kind of policy changes are going to come out from our current administration. I recently read this article from Jim Rogers in which he predicts a new recession in 2012. Just last week I read another article where economist David Rosenberg says that “The economy caught in a Depression, Not a Recession.” At the same time, I don’t know if many of you heard but the Fed has started “Monetizing our national debt.” Monetizing our debt is basically where the Fed is raising money for our stimulus programs by selling bonds at bond auctions. Private bidders are buying the bonds for 2-3 days, and then the Treasury Department is buying those exact same bonds from the private sellers. Basically our Fed and Treasury is printing money to fund our bailout. Here is an excellent video that demonstrates exactly what is going on – linky. This can’t be good for our country and citizens in the long run, because we are superficially inflating our economy which will either lead to default or hyper inflation.

All these things make it feel like the end of the world is coming, but every generation before us has thought…”the end of the world is coming in our generation.” Granted the reasons above are excellent points for starting to state a case against any possibly recovery, but I think we can get take heed from some of the things we see and prepare. Just last week I had lunch with one of my best friends and we exchanged ideas on what we are doing about the uncertainty. Here are some of the takeaways he and I said that you might find valuable.

Don’t worry– realize utimately our future is in the hands of the Creator of the universe. I take comfort in the verse, “Therefore I tell you, do not worry about your life, what you will eat or drink; or about your body, what you will wear. Is not life more important than food, and the body more important than clothes? Look at the birds of the air; they do not sow or reap or store away in barns, and yet your heavenly Father feeds them. Are you not much more valuable than they? Who of you by worrying can add a single hour to his life?” Matthew 6:25-27 This is so true: We are so much more valuable than the birds of the air. Trust in the Lord!

Save cash– have a plan to survive 6+ months of unemployment. The national average right now for people being unemployed is almost 6 months. Lay out a plan while you have a job on what sources of income you can leverage whether it be emergency funds, vacation accrual, and possible serverance. Estimate how long this would last you and have it saved in a diversified assortment of areas from money markets, to brick and mortar savings accounts, and to short term bonds.

Grow your own foods– my friend who I wouldn’t classify as “farmer minded” struck me by surprise when he said he is looking at being self sufficient in growing his own foods. He said he doesn’t want to depend on others for his sustainment and plus he can grow it organically. This way his family can live on organic food and not be susceptible to food price fluctuations or shortages.

Multiple sources of income – if you are dependent on one source of income, then your income wouldn’t be defined as risk averse. Instead investigate other sources of income whether it be a part time job, babysitting, mowing lawns, starting an online business, or having a garage sale.

Am I crazy about this feeling? Do you have a feeling like something just isn’t right with the economy and that there is going to be a massive “reset”? If so, what are you doing about it?

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3 comments

  1. Sheila says:

    I think the economy is going to continue on pretty much like it is now for a while. I don’t think we’ll see a big boom for a long time (ever?), but I also don’t see too much of a downturn from here. In any case, we have 6 months of cash saved, and are debt-free other than our mortgage. We also both work (me part-time), and could live on a single salary (even my part-time salary) if we had to without pulling from savings, but it would mean pulling our kids from their private school. Public schools where we live are not good, so we would either have to try to get them in a school in one of the surrounding towns or homeschool. We also have a good amount of retirement savings, but if things really went badly, that’s mainly in stock, so we would have to carefully monitor that to see if we should go to cash there. The main thing to do is be as prepared as you can for anything – regardless of the greater economy, whatever is going on at your house is your economy. For people like me (control freaks), we also have to remember that we must trust in God, because we are not in control no matter what we do or plan.

  2. Charlie says:

    As always the hard part is trusting God with your future. But then again I think to myself…He did create the universe, so I suppose I can trust him with my life. :)

  3. We can’t just trust God, sorry. In the New Testament it says faith without works is dead. You have to do your part, as well as have trust that he will do whatever you are lacking.

    Unfortunately this “I will just trust God — come what may, and I don’t have to take care of myself” attitude is one of the things that got us into this economic mess. He has told us to be prepared. My church teaches preparedness, and being self sufficient, getting out of debt, saving for a rainy day, encourages growing our own food (well, what other foods besides fruits and veggies and legumes can you really grow? Have you seriously tried growing wheat and harvesting it? It is hard, by the way). I can grow fruits and veggies, but I cannot “grow” a cow, or a chicken. I would have to “raise” them, and in the city that isn’t feasible, where I live at least.

    September is emergency preparedness month — when Hurricane Katrina hit 5 years ago, FEMA told those folks to evacuate to the SuperDome — and to bring 3 days worth of food and supplies for each member of the family. HARDLY ANYONE did that. 72-hour kits are what they are called — do you have one? Something you can just grab and evacuate your house in an emergency? The government recommends it, but yet hardly anyone I know outside my church has one.

    We have to prepare for our basic needs. We should learn sustainability skills. I am trying to learn something new every year. This year I am learning to can. I have about 20 fruit trees now, even citrus (I bring them in my basement in the winter, under grow lights). I will get lemons and tangerines this year. My orange and lime tree unfortunately won’t produce this year.

    Get out of debt is important, too. We cannot rely on the government. Besides, if disaster strikes, they can declare Martial Law and do whatever they want, even if that means ransack your house and take your supplies. The Constitution doesn’t apply anymore while Martial Law is declared. So you may have to fight to protect your home and family… do you have a gun? Enough ammunition?

    Good luck.

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