Recommendations

This last year was the time to go to cash, sell what could be sold, pay off debts, and downsize ones "nut" -- how much one needs to live on each month.

This next year one should prepare for a mix of empty store shelves and cash shortages. Cash will be short for all, as jobs, pensions, home equity, tax revenues, credit and liquidity will be increasingly in short supply. However this will only sporadically result in lower prices, as the dollar will be increasingly shunned by America's trading partners, and almost everything we can buy is either made overseas or depends heavily on foreign parts or energy.

The supply/demand curves will go unstable, as the supply of imports will go down, the foreign exchange value of the dollar will decline, credit based, investment and home equity funds will continue to evaporate, while the Fed continues to inject increasing trillions of dollars, trying to revive the failed economy.

So we will have a volatile mix of shortages, including of essentials such as food, and increasing price volatility, along with dramatic increases in crime in some areas, increases in government power grabs, and increases in unemployment.

This means one should stock up on essentials, such as long shelf life food as well as cash, while preparing to live on less.

The Fed is responding as if the problem was a lack of sufficient funds. The problem is rather that the dollar and treasuries are turning from what has been the most liquid asset in human history into toxic sludge. Injecting more sludge (debt based financing) into an engine that is freezing up because its oil has turned to sludge does not get the engine running at full speed again; rather it makes the engine more gummed up. Injecting highly volatile top fuel nitro into such an engine doesn't work either; rather it erratic bursts of power and risks fires and explosions.