Thank you very much for the correction. Visualizing a trillion dollars is not an easy thing to do! The magnitude of these numbers can really boggle the mind.

Never say never.

Correction $1000 dollar bills stacked 67 miles high is 1 trillion dollars.

And all of that will not cause prices to go up, they will only go down, according to Garth so hold those dollars.

I apologize for the length of the first post, but it is necessary to give you an overview of some of the underlying causes of the global financial crisis. It is historical and somewhat detailed which will give you an idea of how much trouble the US economy is in right now. In some of Garth’s earlier post he has indicated that Canada could face the same scenario two to three years from now in 2012-13. Right now we are in the middle of a housing bubble with median house prices in major cities hovering near $400,000. CMHC is allowing first time buyers to put down $1000-$5000 for a new home and borrowing 95%. By 2011 they will back almost $1 trillion of mortgage backed securities (MBS) which the capital markets can’t even short. The Harper Conservative government is borrowing almost $200 million to cover the $50 billion fiscal stimulus package and $125 billion to cover a possible CMHC default. We are also running a trade deficit with a high dollar that is killing manufacturing firms with a loss of 300,000 jobs. Canada’s unemployment rate is currently 9%, but it could be as high as 11% with at least 1.5 to 2 million people out of work!! Corporate and personal bankruptcies are up 50% from last year and at least 500,000 people are at least 30 days in arrears in credit card payments!

Are we facing a deflationary depression followed by hyperinflation or vice versa? To be honest I don’t know for sure. We could be facing a hyper-stagflation event with rising prices in basic needs with deflation in real estate followed by a severe deflationary depression. There could be an L shaped recovery as we experience slow growth for at least a decade? What we can extrapolate from this situation is that our ponzi scheme fractional reserve debt based system that‘s been in existence for 300 year may be coming to an end. A new banking and world reserve system may have to be set up by the IMF if the US dollar crashes or devalues in the next 12-24 months. Future economic growth will have to be based on real assets such as commodities (like agriculture), infrastructure renewal, green and energy technology, artificial intelligence and computer systems, biotechnology and engineering sciences.

When you read both my post the economic situation in the US now and Canada possibly in 2013 is very depressing, but I want to tell you that all is not lost. The world financial and economic system will have to be restructured for better or worse. People will have to learn how to work together in communities to grow and store food, use green/energy technology, provide personal services and create a sustainable economy.

You mentioned that you live outside a major western Canadian City and run a voluntary animal rescue service with 45 four legged friends. The $45k mortgage on your house will be paid off in 4 years. First and foremost read the section of Garth’s book “After the Crash” on preparing for the various economic scenarios. Although the chances of an economic depression are 20%, there are things that you can do to protect your self before and after an economic crisis. Second, try to lock in a mortgage rate of 4-5% for the next 5 years from a financial institution and PAY IT OFF as fast as you can. Third, is your job safe for the next 5 years? If it is then don’t worry too much. If its not see if you can start a home based business based on your hobbies or sell products on the internet. Fourth, review your budget and cut your expenses. Keep at least $1000 in paper money, silver or gold dollar coins for emergencies in a safe place in the home. Eat and live as cheaply as you can. Shop for food and clothing and necessities at the cheapest stores and always look for sales. Fifth, buy as much dry bulk food such as wheat, oatmeal and grains including dry milk powder and store them in animal proof plastic bins. Buy canned goods, like vegetables, corned beef, beans, tomato sauce, fruits and jams etc. Can you grow food on your property such as tomatoes, cucumbers, squash, chives, onions etc? Can you store them some where in the house? Buy seeds for storage! Look into building a portable hydroponics garden inside the house that requires minimal energy? Check military stores for meals ready to eat packs (MRE), winter clothing and all purpose portable cutting tools with retractable pliers. Do you have freezer/cold storage for meat and perishables?

Do you have electric power coming to your house? Can you buy a generator that can supply power during a black out. Is your house insulated against the elements and do you have a built in underground shelter? Can you install solar panels for power and for hot water heating? You can purchase portable solar generators to power portable electrical devices. You can buy portable gas powered stoves and the gas canisters in bulk at any camping stores. Do you have piped services going to your house or water well and septic tank? You can buy 24 bottles of filtered tap water at the store for $5 dollars and store as much as you can for 2 years. Alternately you can buy the X-Pack portable water filter pack that is used by the US military or the Triton M2 filter system or the Katadyn carbon filter that requires no electricity. It can filter water from a fresh water body or stream without electrical power! Can you buy large plastic or metal drums to store large quantities of water in emergencies? Do you have bleach/or chlorine tablets so you can keep the water disinfected? Can you purchase a FEMA portable survival bag? They contain medical supplies, flash lights, candles, batteries, matches, blankets, dry food, candy bars, drinking water packs and a wind up fm/shortwave radio?

With regard to weapons, it’s difficult to give you advice here. If you are buying a rifle/shotgun or hand gun for protection from bears and cougars, it will be necessary to get a firearms license from the federal government and store it and the ammunition in a metal storage or safe as the police can inspect it anytime with a search warrant! Is your house crime proof?

Lastly are you part of a close knit community? Do you know your neighbors and do you keep an eye out for each other. Do you live close to friends and family? Are you close to a small town by car/truck? Do you have a TV, computer and radio to keep in touch with the outside world? Can you get help if you need it and are supplies available locally? Can you trade or barter for goods that you need in town?

Wendy, there is no need for despair and to give into fear, uncertainty and panic (FUP). The economy and the society at large will experience a painful restructuring probably in the next 5 years. Will Canada escape the worst of the economic crisis that is affecting the US? Maybe, but being hopeful also means being realistic and pragmatic as governments may have to cut services forcing individuals, families and communities to be more resourceful and self sufficient and work together cope with structural economic and social change. Whatever you decide to do good luck and God be with you!