James Wesley Rawles’s book, Survivor: A Novel of the Coming Collapse may be a fictional post-apocalyptic thriller, but he paints an incredibly realistic picture of what life could be like for the unprepared should life as we know it come to an abrupt end. Join Jason Hartman in this interview with James, as they discuss the possibilities and consequences of such horrific incidents as all three power grids going down across the country, the raiding of grocery stores, who no longer keep stock in the back of the store, the lack of clean water, and the high possibility of rioting in larger cities. For more details, listen at: www.HolisticSurvival.com. James stresses that people need to pick carefully where they’re going to live, emphasizing the need for access to clean water and water filters. James says, “Without clean water, you’re a refugee in one day.”
Additionally, Jason and James discuss American currency and what is most likely to have value. James says stock up on nickels because they are currently circulated at face value and still produced at 75% copper and 25% nickel. He feels it’s in the best interest of the country to revalue the paper currency by dropping off “zeros” to jumpstart the economy. James also gives his outlook on derivatives and examples of the consequences of them going sour, as well as the effect of ramped-up interest rates. He foresees a global financial meltdown within the next couple of years and warns people to be prepared, to know how to survive. James Wesley, Rawles is a survivalist author and lecturer, and the founder and editor of SurvivalBlog.com. He is a former U.S. Army intelligence officer and now works as a full-time blogger and freelance writer. James graduated with a Bachelor of Arts degree from San Jose State University, also minoring in military science, history, and military history. He held Top Secret security clearance with Special Background Investigation and was granted access to Sensitive Compartmented Information. He was awarded Officer specialty and achieved the rank of Captain. He attended the Army NBC defense officer’s course, as well as Northern Warfare School at Fort Greeley, Alaska.
In 1984, James was commissioned as an Army Intelligence Officer where he specialized in signals intelligence and electronic warfare. He also served as a Special Security Officer, where he was privileged to spend time in West Germany working on a “live” Guardrail signals intelligence gathering and analysis mission. He resigned his commission when Bill Clinton was first sworn into office as President because he didn’t want to serve under him as Commander-in-Chief. At that time, James was a Captain. For the past 20 years, having grown up in the “bomb shelter” era and served in the military in many different security capacities, James has been primarily a journalist and technical writer. He has most recently become self-employed and has authored the non-fiction book, How to Survive the End of the World as We Know It: Tactics, Techniques, and Technologies for Uncertain Times. He also authored a full-length survivalist novel entitled Patriots: Surviving the Coming Collapse and now Survivors: A Novel of the Coming Collapse. James maintains a blog at SurvivalBlog.com that is filled with valuable information on all types of survival techniques.
Narrator: Welcome to the Holistic Survival Show with Jason Hartman. The economic storm brewing around the world is set to spill into all aspects of our lives. Are you prepared? Where are you going to turn for the critical life skills necessary to survive and prosper. The Holistic Survival Show is your family’s insurance for a better life. Jason will teach you to think independently, to understand threats, and how to create the ultimate action plan. Sudden change or worst case scenario, you’ll be ready. Welcome to Holistic Survival, your key resource for protecting the people, places and profits you care about in uncertain times. Ladies and gentlemen, your host Jason Hartman.
Jason Hartman: Welcome to the Holistic Survival Show. This is your host, Jason Hartman, where we talk about protecting the people, places and profits you care about in these uncertain times. We have a great interview for you today and we will be back with that in less than 60 seconds on The Holistic Survival Show. And, by the way, be sure to visit our website at HolisticSurvival.com. You can subscribe to our blog which is totally free, has loads of great information, and there’s just a lot of good content for you on the site. So make sure you take advantage of that at HolisticSurvival.com. We’ll be right back.
Narrator: Here’s your chance to catch up on all of those Creating Wealth shows that you’ve missed. There’s a 3 book set with shows 1 through 60, all digital download. You save $94 by buying this 3 book set. Go ahead and get these advanced strategies for wealth creation. For more details, go to JasonHartman.com.
Start of Interview with James Wesley, Rawles
Jason Hartman: My pleasure to welcome James Wesley, Rawles to the show. He is the author of 3 books and his latest one is actually a novel entitled Survivors: A Novel of the Coming Collapse. I think you’ll find this interview to be very interesting. Jim, how are you?
James Wesley Rawles: Just fine. Thanks for having me on.
Jason Hartman: Good. And my pleasure. Well, tell us about your latest work.
James Wesley Rawles: Well, Survivors is a novel set in the near future. It’s about a full scale socioeconomic collapse that basically affects the whole world, actually to the greatest extent right here in the United States.
Jason Hartman: And is that because we are ahead of the rest of the world in so many ways a collapse will be much more impactful in a place where people are used to all the conveniences infrastructure?
James Wesley Rawles: We’ve actually become very soft as a culture and very dependent on our power grid. And, as I describe in the novel, the power grid – there’s actually 3 of them – is the lynchpin of our society. If the grid goes down for more than a week, all bets are off.
Jason Hartman: Yeah. I think people take electricity far too much for granted. I remember my grandmother’s house. It was built in the 1800s in upstate New York. All the electrical wires are outside of the walls because they were put in after the fact. And the power grid is vitally important. We would basically be in the stone age without it, wouldn’t we?
James Wesley Rawles: We sure would. And, of course, our technological dependence also includes ordering systems for all of our grocery stores, so they used the Kanban Just in Time inventory control system now. So what you see on the grocery shelves is all they have. There’s no longer a back room with extra stock. What you see is what you get.
Jason Hartman: Just in Time delivery.
James Wesley Rawles: Yeah, right. If we have any kind of interruption of Just in Time deliveries, grocery stores would be decimated in less than 24 hours.
Jason Hartman: Yeah, that is really scary. So when you say there are three types of power grids, what do you mean by that?
James Wesley Rawles: Well, there’s three separate grids. There’s an eastern grid, a western grid and a Texas grid just because Texas has to be a little different.
Jason Hartman: They’re the state that could secede from the union in the easiest fashion I guess, too, right?
James Wesley Rawles: I guess so. So, with those grids, unfortunately, we built up this dependence, especially for electrically pumped irrigation water so that in long term situation a lot of what we consider productive farmland will revert to desert, especially in southern California, where you are, they will just revert to desert and very quickly people be reduced to refugee status. In the northern states they’ll be freezing to death and they’ll be on the road or they’re out of gas on foot heading south. And in the arid southwest, they’ll be on the road heading for areas where they can find water.
Jason Hartman: Now, why would the farmlands be reduced to desert? Because the irrigation depends on the power grid? Is that what you were saying?
James Wesley Rawles: Right. Yes, so many farms require electrically pumped irrigation water. Now, there’s not many places in the country, aside from a few what they call dry land farming regions where you can grow crops reliably year after year with just rainfall. And the number of communities that are served with gravity fed water from end to end are just a handful really. So, one of the things that I stress with my consulting clients and that I stress in my novels and books is that people need to pick where they live very carefully. They need to find an area, preferably a dry land farming region like in the northwest for example or an area where they can buy a piece of land that’s on a river or a stream or that has gravity fed spring water. That’s probably ideal. And, of course, I encourage people to move to lightly populated rural areas so they’d be well removed from any trouble in the big cities because lower population density means fewer problems. There’s not gonna be riots in some little town in Idaho or Wyoming when everything hits the fan. It’ll be the big cities where the problems will be.
Jason Hartman: Yeah. All those things that we consider to be resources now, which are all those other people and all of the infrastructure they provide, they also utilize all of that and in a survival scenario that equation gets completely flipped, doesn’t it, where all of the resources of other people become real liabilities.
James Wesley Rawles: Right.
Jason Hartman: When you talk about the three different power grids, what would bring them down? Are you talking about solar flares, are you talking about terrorism, nuclear attack, EMP blast? What’s the real scare now?
James Wesley Rawles: All of the above. But even, as I showed in my novel, if we have a severe economic collapse with a lot of rioting, when they get into the situation where utility employees are essentially afraid to go to work, they’ll be in fear of their lives just being out on the street and they won’t want to leave their families at home unguarded. So they may not show up to work and virtually all the power grid may go down in rapid succession if there aren’t the people to run the grid. There’s a lot of manpower that’s required to keep things humming along. In the western United States, for example, the majority of power comes from coal fired plants in New Mexico and Arizona. Well, those are mine-mouth type plants where there’s literally train loads of coal going into these plants. If there’s not people to feed the plants, they’re gonna go down. The grid will go down and it takes a lot of work, a lot of effort to do what they call a dark restart of the grid. You actually have to start small and build back up to get the grid back online.
Jason Hartman: What do you mean a dark restart? What does that mean exactly?
James Wesley Rawles: Dark restart is where the whole grid goes down. You can’t just fire the grid back up instantly. You have to gradually put generating units online. Typically, what they would do in the western grid would be they would start with the Bonneville Power Administration with a Grand Coulee Dam which probably would still be producing no matter what happened and then use that as the basis to bring all the other plants back up. And a lot of these plants, like the coal fire plants, require power to start back up. They can’t start up independently. We built ourselves a house of cards, really.
Jason Hartman: In other words, it’s like the way you’d have to sort of jump start a car if the battery doesn’t work and the alternator doesn’t work you can’t start the car anymore because you don’t have a crank on the front of it like you did in the old model T days, right?
James Wesley Rawles: Right, effectively. Yes.
Jason Hartman: So, you talked about the most important piece of survival equipment someone can buy, Jim. What is that? I kind of have the feeling you’re gonna say a generator?
James Wesley Rawles: Actually, I’d say a water filter because if you look at all the disaster situations in the last 10 or 15 years whether it’s Hurricane Katrina or the tsunami in the Pacific, you end up in a situation where a day or two into the problem people have run out of drinking water and they end up getting seriously ill or dying because they are drinking water from open sources but it’s been fouled. And especially in an urban environment, we live in a first world country where people are used to toilets that flush. They really don’t know how to take care of their daily business in a world without a flushing toilet. So it’s gonna be a public health nightmare if the power grid goes down and there’s no water magically coming out of the taps or flushing toilets. There’ll be a lot of the open sources for water like creeks and streams and ponds will be fouled by human waste very quickly. So it’s essential that every family have a good quality water filter. There’s gravity filters available like the Big Berkey filter or the Aqua Rain filter or there’s also smaller filters that are designed for backpacking like the Katadyn – they have a small pump built in. I’d say that would be the very top of my list, because without water you’re a refugee in one day.
Jason Hartman: Right, yeah. It’s such a vitally important commodity for sure. You also talk, which I find interesting, about nickels. I mean, what’s the thing with nickels? Howard Ruff would say get some silver and a bag of silver coins and just the circulated ones that are really cheap to buy – but what about nickels? Tell me about that.
James Wesley Rawles: Well, nickels are kind of a special case. When Howard Ruff was writing back in the 1970s, silver had just come out of circulation. Now it’s virtually gone. You might be occasionally very lucky and find a silver half dollar floating around if you’re really lucky if you go through a bunch of rolls. Esentially, the silver is all gone. It’s all been horded away by people who recognize the fact that it’s worth 15 or 20 times its face value. In fact, recently it’s been worth as much as 30 times its face value.
Nickels are a special case, though, because they’re still in circulation, the composition has not changed since World War II, so virtually every nickel you come across is gonna be 75% copper and 25% nickel. Right now it costs the government about 7 cents to make each nickel because of its base metal value. So what I recommend that people do is every time they go to the bank, ask for $20 worth of nickels in rolls and just start salting them away. They’re also worth almost 20% more than their face value. So it’s a win-win. The other advantage to nickels is if we ever get into mass inflation the government may issue a new currency and knock a zero off the currency like they’ve done in many countries like when Israel went to the new shekel for example or the Italian lira, they dropped as many as three zeroes. If they drop the zero off the currency, they’ll probably reissue new paper currency but leave the old coins still circulating because the logistics of melting down and reissuing new coins would be horrendous. It’s not a big deal to change paper currency, but it’s a logistical nightmare to change coinage. So anyone who is holding a large quantity of coinage overnight will have a 10 for 1 gain if they drop a zero off the currency. A nickel will suddenly buy a soda pop again or a candy bar again because if they drop a zero off the currency, gasoline instead of being $3 a gallon would be $0.30 a gallon.
Jason Hartman: You’re saying in a hyperinflation environment they would just revalue the currency?
James Wesley Rawles: Right.
Jason Hartman: Like Zimbabwe did, knocking off a zero, right?
James Wesley Rawles: Yeah. Or in Zimbabwe’s case, they got up to the point where they had 100 trillion dollar bills and even those wouldn’t buy a cup of coffee.
Jason Hartman: I have some of those. I think I have $180 trillion Zimbabwe dollars now. A listener sent them to me. And I thought that was great that he did that, a listener in Ireland. And I felt rich until I went on eBay and discovered you could buy all that for about $12 US.
James Wesley Rawles: As a collector’s item. The buying value before they went out of circulation was next to nothing. Yes, we could because of the government’s just uncontrolled overspending, and the fact that they are now monetizing the debt, which is incredibly scary, they’re actually buying their own debt every time they have a treasury auction to make sure that treasury auction won’t fail. It would be like you or me using our Visa card to pay off our MasterCard. It’s just insanity. I think, in the long run, quantitative easing, which is what they call monetizing now, will be incredibly inflationary and we may very well see a situation where the government sees fit to knock a zero off the currency.
And remonetizing or revaluing our currency actually has a short term economic gain psychologically because everything seems cheaper and it tends to jumpstart an economy. Suddenly, a movie ticket is no longer $8, but $0.80. People are gonna want to go out to the movies even though their wages will have been cut by a factor of 10, subconsciously they won’t recognize that and they’ll be spending more. So it’s in the government’s best interest to revaluate currency and it’s in our best interest to hedge against that by stocking up on nickels because, again, odds are they’ll leave those nickels and quarters or whatever circulating at face value. And, currently, it’s nickels where you get the best bang for your buck.
Jason Hartman: Not with pennies, though, because I heard it costs like 1.6 cents to make a penny which is why pennies are ridiculous. It would be a total admission of bad monetary policy if they were to get rid of pennies, but gosh we should. It’s such a joke of a currency.
James Wesley Rawles: They are a joke, but they won’t be if they drop the zero off the currency. Suddenly, they’ll have value again. The thing with pennies, though, is unfortunately they changed the composition of pennies. They were 99% copper up until 1981, then they switched to a zinc penny which is just copper flashed. The problem is neither of those coins are magnetic, so you can’t sort them magnetically. You have to sort them by weight or by looking at the mint date of every individual coin. So it’s very time consuming. The beauty of nickels is they’re all going to be 75% copper, 25% nickel, up until the time they change the composition of the nickel which is being planned right now. So that’s why I recommend that people stock up on nickels now before the composition changes and before people have to sort them. And then hopefully when they do change the composition, they’ll just make it a stainless steel nickel and then we can sort them magnetically, but I’m not sure if that’ll happen.
Jason Hartman: Very, very interesting thought on the nickels. Never really thought about that before.
James Wesley Rawles: Yeah, I have a detailed article about that on my blog. It’s SurvivalBlog.com. And just the left hand column, click on the link marked NICKELS.
Jason Hartman: SurvivalBlog.com, excellent. In terms of actual barter – I mean now I suppose we’re not talking about nickels anymore – obviously, the precious metals, gold bugs, always talk about that, but I think something with more utilitarian value like maybe bullets would be better barter, certainly food, water, that would be good but those aren’t very portable. There are spoilage problems. Of course you need them for yourself but maybe as barter it wouldn’t be the ideal thing. What’s ideal for barter?
James Wesley Rawles: I think a .22 long rifle hollow point bullets, complete cartridges, are the best barter item to stock up on.
Jason Hartman: Now, why that particular bullet?
James Wesley Rawles: .22 long rifle is ubiquitous. There’s a gazillion rifles and pistols out there that are chambered in .22 long rifle. People will think of it in terms of being able to hunt small game or slaughter livestock or whatever, so the ideal for barter purposes. Ballistically, the .22 hollow points actually are not that much superior to standard .22, but most people think that a hollow point is better. So, subconsciously or consciously, it’s a better barter item. The beauty of ammunition for barter is it has a very long shelf life. If you keep it sealed in ammo can or in a Tupperware container, it’ll store for 100 years and still go bang. It’s also divisible. You can take a box of 50 .22 long rifle cartridges and you can have 50 small transactions. You might buy five cans of beans with one box of .22 long rifle ammunition. So ammunition I think is in common calibers – it’s just about ideal.
In addition to .22 long rifle, I would recommend whatever your local police department carries for their pistol. Typically, that’s 40 Smith and Wesson for a lot of police departments nowadays, although check with your local department. Stock up on some of that, even if you don’t own a gun chamber, and then a decent quantity of 9mm, .45 automatic, .357 magnum for pistols, and then for rifles .223, 7.62 x 39 which is the AK-47 cartridge, and 308 Winchester. And then for shotguns, pretty much 12 gauge 2 ¾ inch variates, birdshot and buckshot slugs. And if you have a good pile of ammunition built up, you’ll be sitting pretty because anything that you’ve overlooked in your food storage, fuel storage or whatever, you can probably, even in the early stages of a societal collapse, still trade ammunition at advantageous terms for whatever you need.
Jason Hartman: You’ve really reinforced my thinking. I kind of said it flippantly when I asked you the question, but I have long thought that ammunition is the very best barter because it’s highly portable, it’s got utility value, and it’s very divisible for those exact reasons. And you didn’t mention portability, but I know you’re thinking it.
James Wesley Rawles: It looked relatively portable, yeah. Now, a lot of other survival consultants talk a lot about silver for barter or even gold coins, but those really won’t come into the fore until a few months into a disaster situation when an economy is starting to reform. In the short term, people are gonna say what am I gonna do with silver? You can’t eat it. But they’ll see utility in common caliber ammunition.
Jason Hartman: Speaking of utility, we did an article in one of my newsletters, The Financial Freedom Report, where we’re talking about inflation and technology’s impact on inflation in terms of the hedonics index and the technology making life seem like there’s no inflation many times when there really is a lot of inflation underlying the economy on the things you need, the core products of food and energy. And it was entitled “I can’t eat my iPad.” And if the power grid goes down, I can’t even use my iPad. So, very good points there as far as utility. I long thought that the gold and silver bugs are – you’re right – it’s much further into the collapse and many people will have already perished. Three, four months, six months into it they will be dead already.
James Wesley Rawles: In fact, gold really is too compact a form of wealth for barter.
Jason Hartman: Yeah, not divisible enough.
James Wesley Rawles: When an ounce of gold currently is pushing $2000 an ounce right now, I mean what are you gonna buy with one ounce of gold? I mean an entire farm or somebody’s pickup truck? I mean, you’re not gonna be able to use that for day to day transactions. So, for barter, I would recommend pre-1965 silver dimes and quarters. It would make much more sense.
Jason Hartman: See, that’s so specific again. How do you get ahold of those? What’s the best way to buy the pre-1965?
James Wesley Rawles: Small quantities, just buy it at your local coin shop. Just go and ask your local coin dealers do you have any junk silver on hand? And that’s the derisive term that’s used by numismatic coin dealers for coins that only have bullion value where they’re so well worn or such common mint date like a 1964 quarter for example where they have virtually no numismatic value to collectors – they only have their bullion value for their silver. That’s the least expensive way to buy silver. It’s also the most recognizable way in The United States to have a coin that people will trust when you hand it to them. If you try to barter with a 1 ounce silver medallion like so many private mints put out right now. People might look at that as suspect and say “Well, how do I know it’s genuine?” But if you hand someone a well-worn 1964 quarter, it will be instantly recognizable. People just turn it over, look at the edge, see that there’s no copper line on it and they’ll realize that’s a silver coin. And the chances of it being a fraud are minimal. So they’ll take it without any question. Anything coming out of a private mint, people might look at with great suspicion. That’s why I like actual stuff from the US mint from 1964 and earlier.
Jason Hartman: So what do you think about what the coin dealers will tell you, silver eagles, the most common?
James Wesley Rawles: The American eagle might have a little more recognizability than anything out of the private mints, but nothing beats actual stuff that was circulating, put out by the US mint before 1965. It’s actually hard to fake a well-worn coin from that time period. They do it a bit with numismatics, but it actually would be too expensive.
Jason Hartman: It wouldn’t be worth it. That’s the thing, with gold there’s a lot more faking in the gold world than in the silver world because silver isn’t valuable enough to fake where the economy makes it work. I want to back up and just ask you another question because there’s several more points I want to cover. So let’s look at something here, Jim, for just a moment. It seems to me, and maybe I’m just not old enough, but it seems to me that the survivalist movement was big in the 70s, Howard Ruff being one – we mentioned his name before, so I thought I’d bring him up again, one of the big names in that world back then. And then for decades he was wrong. I mean, he made all these predictions. People looked back on him and thought “Oh, the guy was paranoid and out of his mind” and I had him on the show, too, and that’s why I mentioned him. And now it seems like the survival movement is really gaining steam again, maybe since the financial collapse, the mortgage meltdown a couple of years ago. Just in terms of the whole survivalist movement, if you will, all these prognosticators in the 70s that were predicting doom and gloom and then we had boom times now, I think those boom times were built on a house of cards, smoke and mirrors, get off the gold standard, pump the money for a couple of decades, it was fake prosperity. But what is your thought on that sort of macro picture? In 10 years, is someone gonna be listening to this show and saying “Listen to these paranoid guys, this never happened, everything’s great.” I don’t think so, but I just thought I’d throw the question out for you.
James Wesley Rawles: Well, on a macro level, the things that I like to look at on the really big picture standpoint are to things. One is derivatives and the second is debt. It took our nation 180 years to develop its first trillion dollars of debt. It got its second trillion dollars of debt in 10 years. And now we have $15 trillion in debt. So we are on a parabolic course, at this point it’s virtually unsustainable. And unless cold fusion is patented in the United States tomorrow, I don’t think we’re going to work our way out of it through economic prosperity. We’re not gonna pay off the debt. So I think it’s inevitable.
Jason Hartman: You’re talking about not just cold fusion but any major development like nanotechnology, biotechnology, anything in the energy field.
James Wesley Rawles: Yes. We were the ones that patented it and if we were lucky enough that it couldn’t be copied for 10 or 15 years by foreign competitors, which I don’t think is possible this days, but that’s the only conceivable way that I could see that we could pay off our national debt. Otherwise, we are trapped in a cycle of compounding interest. You don’t escape from compounding interest.
Jason Hartman: Right. That’s the debt side. What about the derivative side? And I think that’s the one very few people are paying attention to is the derivative side.
James Wesley Rawles: The whole derivative concept is fairly complex and what I would prefer people do is read my piece on derivatives. But, in essence, a derivative is essentially a bet on the way that a market will move and/or protection against a move in a market. It’s an assurance contract. And in a perfect world, derivatives are great because there’s always a party and a counterparty and one offsets the risk of the other. And at the end of the transaction, there’s a zero sum game and everyone’s happy. The problem is what happens if you get into an environment with rapidly rising interest rates, for example, or an economic collapse situation where companies are going out of business. In those cases, your counterparties could disappear, leaving the other side of the transaction twisting in the breeze. And right now there are hundreds of trillions of dollars of derivative contracts in play. And, some day, it’ll probably be a situation a lot like 2008 where we came very close to a derivatives meltdown, we will see a huge meltdown of derivatives and it will topple entire currencies and entire national governments will go under. It could be that bad.
Jason Hartman: And I think that that derivatives complex is something that very few people are talking about. Everybody’s talking about the debt problem. I sometimes wonder really who’s in the power position, the lender or the borrower. I think many times the borrower is in the position of strength, but it will certainly make the lender upset, and that means China and Japan if they don’t get repaid or they get paid in debased dollars. But with the derivatives thing, I think a massively oversimplified way to look at it when we’ve got derivatives out there that are many times the entire global GDP – and I think the global GDP hovers around $60 trillion annually.
James Wesley Rawles: The derivatives are 10 times that.
Jason Hartman: Right. Yeah, I was gonna say like 5 times or so. Anyway, it’s too many to be sure whatever the number is. Derivatives just really represent fake wealth, right? I mean, that’s the way I kind of look at it. It’s money that’s not really there, yet so many parties and counterparties have bet on it being there. And it’s smoke and mirrors game. Is that a good way to look at that?
James Wesley Rawles: I think that’s a pretty fair assessment. The thing to remember with derivatives is that it’s all dependent on a stable financial milieu. If stability goes out the window, the counterparty risk ratchets up to insane levels. And just to cover derivatives risk can create finance risk – traditional finance risk – because to cover the risk of a derivatives contract has gone sour, a company will call in any paper that it has out. So it will cause a huge – it’ll be a margin call, what they call a short squeeze – where anyone holding paper, and a lot of that is people in the futures market will suddenly see all their loans will get called. It’s a whole cascade of events and we came very close in 2008 to a global financial meltdown because there started to be margin calls. And the only thing that stopped it was Ben Bernanke creating $15 trillion out of thin air and lending it to European bankers at 0% interest short term rates. That was the only thing that really stopped it and that was just a stop gap measure. They were really lucky that they didn’t see a full meltdown. I think the next time this happens, and it may very well come out of a crisis over Greece and the euro, there may be no stopping it and we may see the global credit market completely meltdown which would cause a massive depression and a loss of confidence in several national currencies including the United States dollar.
Jason Hartman: Any thoughts on when that might happen?
James Wesley Rawles: Oh, maybe next couple of weeks.
Jason Hartman: It seems like it should’ve happened already, but are we talking one year, five years Mayan calendar? What are we talking about here, you know?
James Wesley Rawles: I think sometime in the next 2 or 3 years, we might very well see a global financial meltdown because, again, we have a whole system of currencies in the world that’s no longer backed by gold and silver. They’re all make-believe currencies, they’re all basically in a race to the bottom.
Jason Hartman: Yeah, it’s all fiat money and I agree with you on the race to the bottom. But, you know what I think becomes important when that happens, I mean as ugly as it sounds, it’s just like the individual with the ammunition and the supplies and so forth. It’s the kid with the biggest stick and that’s the United States military still. So what’ll happen then is the US might start bullying countries around and stealing their resources. I mean, look, that’s the history of the world. People look at Napoleon as some sort of great hero. He was a thief with an army. I mean, come on, let’s be realistic about it.
James Wesley Rawles: A thief with a well-trained army, yes. One comparison that I made in my first novel, Patriots, was to someone who buys a car on credit and who stops paying their car payments. Well, what happens? They send a tow truck and they tow their car away. Well, what happens if you have a kingdom and you stop paying your loans to foreign creditors? Well, they’ll come and tow your kingdom away. That’s what wars are. It’s kingdom towing.
Jason Hartman: But they won’t do that in The United States. I mean, they can’t tow our kingdom away very easily with our big military.
James Wesley Rawles: They most likely won’t. The problem is, as I pointed out in the beginning of our conversation, we have a house of cards here in the United States where we have so much dependent on our high technology infrastructure that we naturally collapse from within.
Jason Hartman: If there’s an electrical problem.
James Wesley Rawles: Electrical grid or it could just be something as simple as inflation kicking in where there’s a lack of confidence in the United States dollar amongst foreign creditors and if there’s a dollar collapse then we could see the genuine rate of inflation start to be revealed and then just like in Zimbabwe, as we mentioned, inflation gets into a cycle where it becomes a self-amplifying feedback loop. Once inflation starts, there’s the anticipation of future inflation. So, if prices are doubling every 2 or 3 days, people will keep driving up prices and they’ll buy up all available goods which will create even more inflation and you get into the self-amplifying loop where suddenly inflation isn’t 20 or 30 percent. It goes to 100%, then 200%, then 1000% annualized.
Jason Hartman: Do you have an opinion on that real inflation rate, Jim?
James Wesley Rawles: A real underlying inflation rate right now is probably around 15%.
Jason Hartman: Yeah, and I think it’s a good 9 to 10 percent for sure.
James Wesley Rawles: Yeah. If you look at things like food and fuel over the last 4 years and annualize it, I think it averages out to about 15% a year. You mentioned hedonics earlier – it’s ironic that not only does the government apply these arcane hedonic measurements and calculations, but they also, when the actual governments calculate inflation, they always discount food and fuel. But what do people need the most? Food and fuel. So they’re setting aside the most important measure of inflation to essentially cook the books.
Jason Hartman: Of course they are. And try going to the gas station or buying a bag of groceries and telling the clerk that you want to pay the core rate and not the real price. It’s obviously a game. Hey, you talked about safest places to live. Did you want to get any more specific on that? You were very general.
James Wesley Rawles: Generally, I recommend the western United States versus the east because the east is too heavily populated. And I prefer the farming regions of the west that are not dependent upon electrically pumped irrigation water. And that only leaves 5 or 6 regions. I mean it leaves like the Willamette Valley, the Palouse hills in Idaho, parts of northwestern Montana, parts of western Wyoming.
Jason Hartman: You didn’t mention Utah in there, surprisingly.
James Wesley Rawles: Well, unfortunately, in Utah it’s just too arid. It’s always been touch and go in terms of whether they have a good farming area or not. They’ve become very dependent on electrically pumped irrigation water. And it’s one of those areas that will revert to desert. The other problem with Utah, most people think of the LDS church and its food storage program as a great asset. And, to some extent, it is. The problem with Utah is virtually every Mormon in the country has relatives in Utah. And when everything hits the fan, they’re gonna want to go move in with their relatives in Utah. So if we have a slow scale collapse, something in order of The Great Depression of the 1930s where people can still travel, the population of Utah will probably explode to about 6 million people in the course of 2 years. So the 6 month supply of food that one of the families have set aside suddenly won’t be a 6 month supply. It will be about a 2 month supply. And then we’ll be stuck in a state where if the grid goes down they’re gonna be in a desert. So I actually don’t like Utah as a retreat location.
Jason Hartman: That’s an interesting analysis. That’s very counterintuitive. Most people would never analyze it that way. So thank you for that. That’s interesting. Let me take a brief pause. We’ll be back in just a minute.
Narrator: Now is your opportunity to get The Financial Freedom Report. The Financial Freedom Report provides financial self-defense in uncertain times and it’s your source for innovative forward thinking investment property strategies and advice. Get your newsletter subscription today. You get a digital download and even more. The price, only $197. Go to JasonHartman.com to get yours today.
Jason Hartman: Let’s talk a little bit about self-sufficiency. Of course, we’ve been talking about that the whole time but is there a single most important skill or top 3 skills?
James Wesley Rawles: Well, I would say first aid skills, if you could at least take the Red Cross first aid course or the CPR course would probably be very important. Shooting skills, I’ve often been quoted as saying owning a rifle doesn’t make you a shooter any more than owning a surfboard makes you a surfer. It really takes a lot of practice to become a safe and competent and confident shooter.
Shooting skills are also quite important. And then old fashioned gardening and canning skills I think are very important. I’d say those probably would be the three top skills that I would recommend that people invest their time in. It takes a long time to learn how to tailor a garden to a particular climate region and get it to the point where you can produce year after year reliably. And reliably in the long term may mean using traditional non-hybrid – which are also called heirloom or open pollenated seeds – those seeds don’t produce as much as the hybrids. And if you can’t have reliable crops saving seed from year to year with hybrids, if you’re reduced to the old-fashioned seeds, your yield is gonna go down per acre. So it’s really important that you practice gardening. Build up your soil. Get your fruit and nut trees planted and established. It takes years for them to start producing. There’s a lot of work that goes into gardening. And then you have to figure out how you’re gonna take care of all your extra produce each fall so it’ll carry you through the winter in terms of dehydrating home canning and so forth.
Jason Hartman: I think what Monsanto has done with seeds should be illegal. That’s just wrong the way they’ve created these hybrid seeds and that’s just wrong.
James Wesley Rawles: The genetically modified ones, I distrust very deeply.
Jason Hartman: I had a guest that talked about heirloom seeds and he sent me a little sample package of them. How do you know, though, if you’re buying these things, if they really are heirloom seeds or not?
James Wesley Rawles: You really should buy from a reputable vendor.
Jason Hartman: Right.
James Wesley Rawles: And there’s also an organization called The Seed Savers Exchange. They have a website. And it’s a wonderful organization. What people do is individual families save seeds from each year’s produce that they’re sure are non-hybrid seeds, they’re traditional open pollenated non-hybrid seeds. They saved those, dried them slightly, put them in packets, and then they have an exchange where all you have to do is agree to send a like quantity of seeds or send someone a self-addressed stamped envelope and they will mail you free seeds. It’s a wonderful organization. I highly recommend people get involved. And it’s also the best way to make sure that you have crops that are well suited to your particular climate zone. Because if you buy off the shelf selection of seeds and you live in a high altitude area or a desert area, you may end up with virtually no production because you don’t have plants that are suitable to your climate.
Jason Hartman: In your book Survivors, you talk about a ham radio. And I think that communication is probably one of the most overlooked things by survivalists I think and preparedness people because they think many times their cell phones will just be the method and you can’t depend on that.
James Wesley Rawles: When the grid goes down, it’ll only be the ham operators that have any real idea of what’s going on.
Jason Hartman: I want to ask you a question about ham. So can I just throw in a question on that and then you can answer them all at once? I think it’ll be helpful to the interview. We did a show with I think it was the president of the Ham Radio Association or America or something like that, was on and he sent me the course to get my ham radio license and I thought that this was a really good idea to do that because, like you say, no grid, no communication. Ham radio is a standalone method of communication where you only need someone at the other end but no grid is necessary, very important.
You know what bugged me about it, though, is if you have a ham radio license, you basically seem to be giving the government an implicit search warrant because they have the right to come in and inspect your equipment at any time. And that just bothers me that they can knock on my door at any time and come into my house and look at my equipment under that guise of doing that. I don’t like that.
James Wesley Rawles: Yeah, it is a federal license. And there is an inspection thing that goes on with that. Some of my readers of Survival blog are real secret squirrels. And their approach is to go ahead and buy short wave receiver, go ahead and buy a police scanner and use those regularly and then buy a ham radio transceiver, an HF band transceiver, but basically test it and then put it on the shelf and never use it because it’s illegal to operate without a license. In time of disaster, they’re planning on operating it without a license.
Jason Hartman: Because who cares? Civility may have gone out the window anyway.
James Wesley Rawles: And there’s even an exemption for emergencies written into the FCC regulations.
Jason Hartman: Oh, excellent point. Now, tell us about a morse code. You talk about that in your book Survivors in the HF band. Why is that so important?
James Wesley Rawles: Well, morse code can be read through…You can understand Morse code through horrible propagation situations where you just wouldn’t be able to make out a human voice. You could literally hear a 2 or 3 watt Morse code transmission from around the world and be able to copy that code and tell what people are saying. A same powered transmitter transmitting human voice because it’s using full band, not a side band, isn’t gonna carry nearly as far and is much harder to interpret what’s being said. So I do recommend using side band transmission in the HF band so that you can transmit that much farther with very little power and also you mentioned security earlier with very little probability of intercept by anyone else because there’s very few people outside of the ham world that even know Morse code.
Jason Hartman: Unfortunately, very few people in the ham world anymore even know it because most of them are getting no code licenses.
James Wesley Rawles: Right. They brought the code requirement. So, yes, I do think it’s important that people go ahead and at least study more code and get the equipment and, if they feel so inclined, to go ahead and get licensed.
Jason Hartman: Yeah, good point. And I like your philosophy, which I thought of doing myself, of buying the equipment, turning it on, and then sticking it on the shelf and not using it until disaster might strike and then you don’t worry about the license or the implicit search warrant which I don’t like too much either. So any thoughts on retirement or fixed income and those people that are in that situation – we got the graying of America – what can they do to adequately prepare?
James Wesley Rawles: I do think that it’s possible to prepare, even on a limited income. And I think that people who are retiring actually are in an admirable situation because that gives them mobility to move to a lightly populated region. Not only is it less expensive to live out in the boonies, you can get by on $15,000 or $20,000 a year pretty easily out in the boonies, you can’t do that in the big city. So that’s your ticket to get to the boonies is if you’re either self-employed or retiring. So I don’t look at it as a minus. I look at it as a plus.
Jason Hartman: That’s an interesting point becaue the people that are retired, they have mobility probably more so than people who need to be somewhere for a job. And mostly, that’s in an urban area, which actually brings me to my next question. If you’re in an urban environment and most of the population is, in some sort of city or at least a suburb. Is it possible, if you live in a high rise, I mean a lot of the things you mentioned, gardening, they might be unavailable. What can someone do in an urban area, obviously being ready for barter, ammunition, you can still store food and water, what else should they know?
James Wesley Rawles: Well, the best thing they can do is be ready to go because I don’t think the urban areas are gonna be very tenable. I think there are gonna be a lot of people eating each other in a few weeks if the grid goes down. So be ready to go, have a place to go, have it well stocked. Be ready to bug out on short notice and recognize the fact that you may only have one trip out of dodge. You may not have a chance to go back for another load. So it’s crucial that you preposition the vast majority of your logistics at your intended retreat.
Jason Hartman: That transportation becomes vitally important. If there’s an EMP or solar flare type situation, is your car gonna work?
James Wesley Rawles: Probably. Your car probably will work, although I’m a big believer in every family owning at least one older diesel car. My absolute favorite for that would be a pre-1987 diesel Mercedes wagon, like a 300D wagon, because they’re absolutely bomb-proof cars, literally EMP proof. They’re not vulnerable to EMP at all.
Jason Hartman: And you’re saying that because the diesel engine basically works on pressure versus electricity.
James Wesley Rawles: Right. And the only electronic component in the whole car is actually electrical. It’s not even electronic, that’s the glow plug. Otherwise, on the older diesels that don’t have electronic fuel admission or electronic breaks, or any of that other fancy bells and whistles like they have on the new diesels, they can be practically at ground zero of a nuclear blast and the EMP will not affect them except for the car radio.
Jason Hartman: Is the Car Mate continuing to work if it’s already running but can you start it?
James Wesley Rawles: Yes, you can. You can start a diesel – as long as you have battery power to fire up the glow plug you can still start a diesel post EMP, no problem whatsoever. If you’re really paranoid, you store a spare ignition glow plug in a metal ammo can and we take something really, really high field strength of EMP to wipe out a glow plug, just electrical, not electronic.
Jason Hartman: Yeah, okay. Good point. And precious metals in the next 5 years, what do you see?
James Wesley Rawles: I think depending on what happens with the European financial crisis, we’ll probably see gold anywhere between $2000 and $4000 an ounce in the next 5 years if we have a full scale collapse. There really isn’t a dollar value to base on gold or silver because paper currency will essentially be worthless, so what would it be then? A million dollars an ounce? It’s in the realm of fanciful conjecture as to what the absolute top would be. But at the very minimum, I think we’re gonna see $2000 gold and $50 an ounce silver in the next year.
Jason Hartman: And I would agree that those are realistic, but the question I always ask is did the gold and silver actually appreciate or did the dollar just lose value? So are you simply storing and hedging that? In other words, my point there, Jim, is this – and I have an interesting philosophy on the metals that nobody else seems to have – is that it’s a defensive strategy, it’s not offensive. It’s a store of wealth, definitely better than paper dollars for sure, but, again, you’re not necessarily gaining when people think you’re gaining.
James Wesley Rawles: It’s not really a gain. It’s a hedge. It’s insurance on the dollar. It’s fire sale insurance on the dollar. I like to think of gold as a time machine. It holds your wealth from one side of an economic crisis to the other. At some point, they will have a new currency and it’ll be convertible. You can take your gold and buy the new currency when they have a new one so that that wealth will not be lost. The thing is, a lot of people overemphasize precious metals at the expense of their personal safety and health. You really need to get your beans, bolts, and Band-Aids squared away before you even think about buying precious metals. And even then, the first precious metals you should buy would probably be pre-1965 silver coinage for barter. And then if you’re really wealthy, then maybe some gold coins.
Jason Hartman: Yeah, great point, great point. And I think that’s a very good deal of it. Well, you talked about bug out locations and people living in urban areas and so forth a moment ago. When someone has a retreat, they need to protect it. Is there a good system for intrusion detection that’s inexpensive, reliable?
James Wesley Rawles: Yes. The one that I recommend the most is called a Dakota alert and that’s a radio based infrared intrusion detection system. They’re in the western United States on farms and ranches. They’re almost standard equipment as a driveway alarm. If someone walks by or drives by the post where you have a Dakota alert transmitter, it will trigger and it will send out a radio signal on the MURS band which is the Multiple Use Radio Service band which is an unlicensed band like CB. And, for example, the front of my driveway, at the far end of our property, it’ll send out this alert – it’ll say “Alert Zone 1, Alert Zone 1”. And that frequency for the MURS band is very convenient. It’s right next to the 2 meter frequency band for 2 meter ham radios. It also happens to be right next to the National Weather Service frequency. So with one handheld walkie-talkie, I can have 2 meters, I can have the MURS band and I can have the local National Weather Service weather alerts all on one radio and I can use that radio for push to talk to coordinate retreat security. It’s the perfect system as far as I’m concerned.
Jason Hartman: I know you can use it when you’re there at the retreat, certainly, but what about when you’re away from it? I mean, if this is a bug out retreat…It’s mostly unattended, right? You’re hardly ever there.
James Wesley Rawles: I do recommend, first, living year round at your retreat if you possibly can. If you can’t, then have a trusted family member who is at your family retreat year round. And failing that, you really need to install webcams and you need to hide the vast majority of what you have stored at your retreat. Typically, what I recommend is that if people have a basement under a retreat that they do a little creative carpentry and make it look like it’s a half basement by building a false wall. So they can store all your electronics, all your food storage, all your guns, all your ammo, everything of value that could be burglarized, we would be in that hidden room. So a gang of burglars could come into a place – you could even spend a couple of days there and they wouldn’t even know that they’re sitting right on top of it. And, aside from that, I’d recommend that people also install webcams, multiple webcams, so that they can document, if they ever do have their retreat burglarized in normal times, there have been some wonderful success stories of people that have been able to track down…In some cases, it was their own neighbors burglarizing their place and they were caught red handed.
Jason Hartman: Well, hey, we’ve gone longer than we’ve expected. You are a very interesting guest and I gotta tell you I really appreciate your very specific knowledge, Jim, and your specific advice on this stuff. You’re the author of 3 books. Survivors we talked about – that’s a novel. Tell us about the other two real quickly, give out your website again and any closing thoughts you have.
James Wesley Rawles: Sure. Patriots was my first novel and it’s been quite a good seller. It was called a survival manual dressed as fiction. And it’s still available through Amazon and most of the other seller. It was actually the prequel to Survivors, although they both are standalone books. They do have a little bit of overlap and they’re set in the exact same time period. Unlike most sequels, when I wrote Survivors, instead of going out farther into the future, I decided to make it contemporaneous with the storyline of patriots and just show different geography and people with different sets of personal circumstances then in patriots. So those are my two novels. And then, in addition, I have a nonfiction book that was also a bestseller. It is called How to Survive the End of the World As We Know It and that’s from Penguin Books and it’s still available through Amazon, Barnes & Noble, all the other sellers. And it’s more or less a compendium of some of the things that you’ll find in my blog. And my blog, again, is SurvivalBlog.com. It has very deep archives. I recommend the people take the time to go through it all. It’s all available free.
Jason Hartman: Right. Any closing thoughts in terms of what one should do, closing advice, anything I didn’t cover? This has been a pretty comprehensive show, so we appreciate that.
James Wesley Rawles: I’d like to close with just one thought and that is I think that survival preparedness begins with prayer. You need to get right with God and pray fervently for God’s providence to put you in the right place at the right time with the right people. And, from there on, it’s all a matter of teamwork. Survival is not just a pile of stuff or even skills which of course are very important but a lot of it has to do with who you know, who you team yourself with. So you’ve got to align yourself with and team with and train and cross train with people that you know that you can trust when times are truly bad.
Jason Hartman: Excellent, very good advice. Well, Jim, thank you so much for joining us today. Excellent show, a lot of stuff discussed, and we went much longer so I appreciate the extra time and our listeners will too. Thank you.
James Wesley Rawles: Thank you. God bless.
Announcer: What’s great about the shows you’ll find on JasonHartman.com is that if you want to learn more about investing in real estates in different markets, there’s a show for that. If you want to learn 17 ways rich people think and act differently, there’s a show for that. If you want to know how to get paid to borrow, there’s a show for that. And if you’d like to know why Amsterdam doesn’t take dollars or why pools are for fools, there are even shows for that. Yep, there’s a show for just about anything, only from JasonHartman.com or type in “Jason Hartman” in the iTunes store.
Narrator: Thank you for joining us today for The Holistic Survival Show, protecting the people, places and profits you care about in uncertain times. Be sure to listen to our Creating Wealth show which focuses on exploiting the financial and wealth creation opportunities in today’s economy. Learn more at www.JasonHartman.com or search “Jason Hartman” on iTunes. This show is produced by The Hartman Media Company, offering very general guidelines and information. Opinions of guests are their own and none of the content should be considered individual advice. If you require personalized advice, please consult an appropriate professional. Information deemed reliable, but not guaranteed. (Image: Flickr | jurvetson)
Transcribed by Ralph
* Read more from Holistic Survival
The Holistic Survival Team