Hello all –
I have a buddy – his name is Paul R. From here on I will refer to him as just “Paul” or “JR“. Anyways – he has been a non-believer when it comes to prepping.
The other day we had lunch at a local restaurant. The discussion led to current events and that led to the infamous “What if?” question.
Here is how it went down –
Paul: “What do you think John? Is the economy really rebounding? The unemployment rate just dropped to 9%.”
Rourke: “Well Paul, we are pretty busy at work and actually outsourcing some of our work to a competitor – which is a rare situation. That is a good thing.
What I do know is that a large part of our business is based on a seasonal product – the domestic and Australian cotton crop. Sales projections are great – but a bad storm or two – and we will be laying people off.”
Paul: “You still haven’t said if you feel the economy is on its way to recovery. I know you pay a lot of attention to these things.
I am trying to decide where to put a substantial portion of my 401k – and the market has been doing great.”
Rourke: “Alright Paul – get ready ’cause this is going to take a few. You mentioned the unemployment rate just dropped to 9%. It is very misleading.
Let me explain – the net jobs created in January amounted to only 36,000 jobs – yet the unemployment rate dropped several points from 9.6% to 9.0%?. Really? 36,000 jobs?
Do you really think that 36,000 jobs would make such a large change to the rate? The reason it did is because the total number of people looking for work has dropped dramatically. If they are not looking for work – they are not considered unemployed.”
Paul: “Well John that makes sense. However – the stock market has been doing well. Gold and silver has been going up. Many corporations and banks have been making money. I mean – isn’t this all good news?”
Rourke: “I am no economic expert – but I have my theories. I am staying away from the stock market – I feel the rise in values is false. Corporate books are looking great from some companies.
Cash flow may be up over 2008 and some 2009 numbers – but for most companies there expenses are way down.
They have laid people off, lowered wages, passed on more of the cost of health insurance to their workers, reduced or eliminated wages, and performed mass efficiency projects to reduce costs.
Some of this is good and is just smart – but the bottom line is they are employing less people, paying them less money, and they have fewer benefits – which means they have to pay more when they get a prescription or go to the doctor.
Paul – this is multiplied by millions and millions of people.Gold and silver – well – it gets complicated and I only have 1 hour for lunch.”
Paul: “I really have never thought of any of that. Are you saying that gold and silver would be a good investment?”
Rourke: “Again Paul – don’t put your faith in me – this is just my opinion. I do believe that for awhile – the price of precious metals like gold and silver will increase and then hold steady.
As the government continues to print more money than it takes in – a lot more money – the US Dollar looses its value. People invest in precious metals because while the dollar looses its value – gold and silvers value actually rises.
There are numerous reasons for that – another lunch. If I had some disposable money – I would buy some silver. “
Rourke: “One more thing Paul and then I need to get back to work. Have you noticed anything at the grocery stores lately? Have you seen any price change?”
Paul: “You know John I was just talking to my mother on the phone about that – she lives in Florida. She mentioned that her Social Security check isn’t going as far as it once was with the price of gas going up and her grocery bill has skyrocketed.”
Rourke: “Bingo, Paul – that’s what I was going to say. Inflation is starting to show its ugly head. The cost of almost everything has risen of the past few months at the grocery store. I believe this will continue.
The food companies will absorb cost increases for only so long and then will pass it on to consumers. Packaging is changing as well – containers are getting smaller and counts are getting lower – with no changes in price.”
Paul: “Well John…..I am guessing that your answer to my original question if the economy is rebounding is NO.”
Rourke: “That would be a very big NO.”
Paul: “Alright…..What if the economy is really not improving and inflation is just going to get worse? What is going to eventually happen?”
To be continued…
We usually meet for lunch once or twice a week. Wonder what he will ask me next.