Friday, April 27, 2018

peak cheap


PEAK CHEAP
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note: I've deleted the bonus material blog.  It didn't seem to be going anywhere.  If I have a daily update that is time sensitive ( free book for today only ) I'll just insert it at the top of the article here, just like this note ( it just might be later in the day than when I first post ).
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The end of cheap everything, and not just because of Peak Oil and the collapse of the petrodollar, but because of the end of American colonialism.  Okay, the three are related and intertwined, but I’ve usually focused on inflation as the reason our affordable consumer items will not last forever ( you know, those cool consumer items like ammunition and wheat berries, firearms and warm weather clothes ) and today I’d like to focus more on the less covered aspect.  American colonialism and free commodities for business is nothing new.  The Marines were sent in to keep bananas cheap long before imported oil or our central bank.  What is new(er) is the global aspect of our trade.

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We all know that as soon as the petrodollar is rejected by the last country in a Straw That Broke The Camel’s Back moment ( it doesn’t have to be rejected by all, just by enough ) we lose all our imports and inflation and shortages go de rigeur.  Since we print money ( in the form of government bonds ) as debt and foreigners need dollars to buy oil, in effect we have oil backed currency.  The fact that nobody is buying our bonds anymore has more to do with the rejection of that petrodollar system than it does with our unsound deficit ( which most everyone emulates anyway ). 

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But there is another component to this.  It isn’t as important, nor will it be as devastating, but it will severely impact a certain sector of consumerism.  It is the grain for commodity trade.  Here is how it works in simplified terms.  Take any third world country that grows commodities.  Coffee, chocolate, sugar, cooking oil, spices.  The workers, sharecroppers mostly, are paid enough to eat, and not much more.  Then, because they mostly don’t own the land, they can only grow that export crop and must buy their food at the market.  This food can usually be American grains.

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Most peasants cannot compete with American grain.  Which is usually grown at a loss ( until the corporate welfare check from the government is cashed ).  Besides industrialization, there is government subsidies.  You are feeding a working with like a nickels worth of grain, for that days labor.  In exchange you are getting nearly free export crops ( coffee, spices, cocoa, oil ).  You don’t need to buy land ( it is cheaper to bribe the politician to do Land Use to your benefit ), nor wait the seven years it takes the coffee plant to grow, you just pay a peasant nearly nothing to harvest.  All this transportation ( grain to overseas, overseas crop back to America ) was once again somewhat government subsidized for dirt cheap costs.

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The whole point of a colony is to get nearly free commodities.  British sugar went a long ways feeding factory workers ( besides being profitable in its own right ).  Southern cotton to Yankee pig bankers and industrialists.  Columbian cocaine through US intelligence agencies.  Brazilian coffee.  We do the same with mining.  If a third world worker gets a buck fifty in wages a day, then spends a buck buying your wheat for his family ( because the local grain is far more expensive to produce organically than we can do it mechanically with carbon fuel inputs, and with corporate low interest rate loans from free money from the petrodollar ) which cost you fifteen or twenty cents, the produced commodity is dirt cheap to you.

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This doesn’t necessarily have to be a direct trade.  The country we import from might buy the cheap grain from us, then sell it to the worker even cheaper than they paid for it, for social stability.  Either way, the corporation buying the commodity was allowed to pay in extremely low wages.  Think about a cheap can of coffee at $6.  That is $3 a pound, retail.  The store cost was $1.50 and the company got .75cents a pound for it ( again, I‘m simplifying ).  That includes all their local costs such as the can and distribution and American workers at the warehouse.  How much do you actually think they pay for that coffee on the plantation?

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Since very few corporations control almost all our food, would you like to bet that the same company both grows the grain and imports the product the grain bought?  The company doesn’t make obscene profits.  More than likely, they are at that profit margin of 5% just like the grocery store selling the final product.  My point here is that the true cost is hidden by both government subsidy and centralized monopolies ( in this case, relatively speaking, mostly benign ), both of which are a product of nearly free oil.

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And no, the free oil doesn’t end with the petrodollar.  It was already gone up in price excessively by nothing other than our free conventional oil being mostly replaced by poor net energy fuels.  The days of cheap oil are long gone.  And yet the consumer still sees heavily subsidized gasoline and import crop foods.  Just like Mexico feeding all her poor who get fifty percent of their calories by corn, by selling the corn below cost to them, Americans are also bribed with cheaper commodities.  You might not believe me, but prior to the ethanol fiasco, most Americans were bloated daily with under priced corn.  Try growing your own chicken, even at the retail cost.  No way you can do it.

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When corn was dirt cheap, it came back to the American eating public as cheap soda, cheap meat and cheap snacks.  Most of your calories were corn ( and probably still are, even at double the price ).  Our gasoline is cheap due to our military patrolling the trade routes ( we still get a minimum of half our oil from overseas ).  Corporations profit handsomely at low mark-ups, because they receive government subsidized raw material.  If effect, the government goes into debt to bribe corporations to sell food and fuel at low, low prices.  

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You are spoiled and think prices are too high, but Americans pay some of the cheapest food prices in the world.  Mostly because of free oil, but also by exploiting labor and land in a colonial arrangement.  If you haven’t stocked up on all these commodities that are heavily subsidized, you are not preparing adequately.  It might only be black pepper and coffee ( most likely your sugar is domestic beet sugar ), perhaps some chocolate, and are not strictly necessary ( although I would argue that life without coffee is brutish and short ), but they are so damn cheap it is criminal to not stockpile them.

END ( today's related link https://amzn.to/2K5T6W7 )
 
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14 comments:

  1. Our monetized economy no longer produces commodities or complete finished products that can be internally consumed in a closed loop economy protected from external influences. Globalists and their little sister sluts working the wall street red light district have stripped the copper out of the walls of a crumbling america for the last dime and nickel. Macro corporatists may have expansive crop fields or factories producing light industry consumer/business goods does not mean it will be offered for sale to you, instead is put in cargo containers for overseas "buyers" in lieu of dollars for a return product not for sale to you or of no value keeping you clothed,fed,sheltered,protected. Expect an unavailibilty (even high priced black market-stolen goods are going to rare as hen's teeth) of all these preppy goodies. Hope for a die off quickly, it will free up a lot of pre-collapse goods and materials to be looted and scavenged out of america's stick houses and storage units.

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    1. I wonder if there will be "blood black pepper" or "blood coffee" as China usurps even that role of our middlemen. Why should China pay us a commission, if all they need do is pay the same workers in Yaun ( sorry, spelling? ) when the dollar ain't crap anymore. The "blood" part being, our paid for locals fought the Chinese paid for locals for control of the overseas commodities.

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    2. Right, when a combination of foreign powers think america's force projection is weakened or distracted elsewhere they will become a consortium, thus shutting us out of trade and hegemony influence. Once the writing is on the wall (dollar repudiation-collapse, colapsing economy, military impotance) our so called allies will certainly change alliances as their emissaries brush up on speaking and dealings in mandarin,russian,etc. Just as when folks told romans to go pound sand as they fell. Minions should strive to become a mostly self sufficient or stocked island for a good while (year or more at minimum) when them big wheels stop rolling, there ain't no moving on....

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    3. It is hard to sort out fact and fiction, but I wonder if everyone else is kind of looking at our Syrian missile strikes and sorta going, meh! We might already be considered military impotent ( I mean, not that Vietnam didn't leave a bad impression as it was ), the only thing between us and defeat and occupation our nukes ( I wonder why nobody attacks the gun grabbers as being traitors, trying to soften us up for occupation ).

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    4. Nobody is getting out of easy chair or putting b.d.u.'s on instead of stretchy pants to go all wolverines. There are a whole lot of buffords who can get'er done, but the family is not going hungry, and it is still easy living with all of the trappings and distractions. They key point for minions is to be mentally and prep-physically prepared as it will turn like flipping a light switch on. I don't think even the 1%, 10% ministerials and 9% praetorians, have any real control or are they just holding on to a hunk of mane of an out of control wild- assed animal? Set own path, plan accordingly. Good topics JIM!

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    5. When the inmates control the looney bin, no one is in charge.

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  2. Jim No one can afford to stock a lifetime amount of subsidized products but coffee, tea and spices should be as deep as possible. I think the crash or SHTF event was planned to happen between 2016-2024 under and with Hillary's help. Trump winning threw a wrench in the plan. He wasn't a member of their club and how he does deals is wild west style . I know it is coming but I think we have a little window of time because we have a wild card in office. What do you think of that idea as why we are still afloat?

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    1. I want to believe in Trump, but I fear it is wishful thinking. Look at that golden mane emefer with gun control, the wall, tax breaks for the rich, starting extra wars, etc.

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    2. I don't mean to imply Trump is our savior. I mean he was such a long shot his election wasn't accounted for by the PTB. It changed the timing .

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    3. I was trying to demonstrate that by his actions, Forrest Trump really looks like an elite butt boy to me, and I find it hard to believe he isn't picked and chosen. I could be wrong. Obammy was so obvious in his Muslim-ness, communist-ness and Kenyan-ness that I think the elite realized they can't be so in our face. Trump is much better hidden so it isn't as easy to figure him out. I WANT to be wrong, believe me. Alas, I know it is best to be paranoid and on guard here. On the one hand, the elites do a lot of stupid crap. On the other, their one skill is getting power. Morons or manipulators? Then, also, I need to remind myself how friggin manipulated and hacked elections have been ( Las Vegas had a power outage during the election count. The power came back on, he had won the state-this is the story I'm told by other skeptics. I didn't even bother with watching the news-I just assumes shenanigans ).

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    4. Any complex society is an intricate piece of machinery. You can't give that to some guy who looks good on TV. The role of a head of state is to appear in front of the TV so that people, who often can't grasp the concept of administration (or "Deep State" as it's called nowadays) and need to believe there is a King.

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    5. I love Reagan, bless him, but he was really mostly an actor and the heavy lifting was done behind the scenes by Bush Sr. and company.

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  3. Another threat to the supply of those items is a dollar devaluation if/when more countries reject the USD in trade. If that happens we could see the same sort of thing that is happening in Venezuela. One reason they are experiencing shortages of everything from food to toilet paper to condoms. No one is accepting Venezuelan bolivars for payment so they're exporting anything that isn't nailed down as payment for trade goods. We could experience a similar effect to manage our trade deficit if suppliers will no longer accept US Treasury bills as payment for imported goods.

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    1. Just look at how poorly Britain did after WWI when they lost the world currency to the dollar. From empire to an economy on par with one of our US states. No, we probably won't get as lucky as that-the point being the most mighty falling is nothing pretty.

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