The Cost of Living

With the price of oil plummeting, I'm expecting to see other costs destabilize.  At this point and time, I'm not even sure what that really means or could possibly entail, but without the gold or silver standard, and so many global currencies; oil is really the global standard.  If the American dollar now has more buying power regarding a barrel of oil, I think that usually means deflation or inflation is coming.  I think both are on the horizon.  Economy experts have forecasted an improved 2015 for America's economy, but much of that is based upon oil and gas, while the price of oil has dropped dramatically.

I believe we're going to see another drop in the value of tangible assets, or at least the selling power of them and I think we're going to see an increase in the cost of living.  The Great Repression of 2008 brought about a real change in the economic climate of this country, with a severe drop in the standard of living for the Middle Class.  In going back to campaign rhetoric of our current leader, he frequently used the term "working class" in reference to what used to be the Middle Class.

In recent conversations, I've experienced not sticker shock, but what I would call "Cost of Living Shock."  I truly had not realized how far out of the economic loop this homesteading lifestyle had taken me.  My daughter started it, last year when we were talking about her sister's move.  I had said something about them being here for a month and giving me $200.00.  My daughter just looked at me over her wine glass and asked, "Two hundred dollars, what's that even begin to cover?"  I then stopped and thought about how much my kids talk about their cost of living, especially the one who had given $200.00 . . . so I certainly quit feeling guilty for having taken almost enough money to cover the cost of my internet overage through their stay.  I have now heard others speak of their income, their monthly expenses, and in many cases, their continued need for assistance.

Obviously, some of the cost of living has to do with money management.  I choose to be frugal to a point, but really, I buy what I need and usually what I want.  I just don't require a lot of high tech gadgetry and I still prefer investments to just purchases.  I don't know that I'll be here in 40 years, but if America is still in business, some of the things I've implemented here in Goshen could still be operational and of course, much of the homesteading lifestyle is perpetual.  As others describe their income, I'm shocked.  I've been out of the mainstream workforce for so long, I had no idea people actually complained about the level of income I'm hearing about.  I can't imagine how they find a way to be broke with that much income!

Our economy did not recover and it's shaky.  We can't keep mismanaging our income and expect G-d, government, or charity to continue to provide.  Wealth does not begin in the wallet, it begins in the way we think and manage.  

The Dollar Dropped our Standards

The title of this article may sound like it should appear in the Business and Investment section, and I almost did that, but the true subject is about so much more than money.  Before the American dollar became the standard for business, there was gold, silver, product, and service.  Money was not the goal!  Even gold and silver were only valuable if you needed to purchase land or needed a product or service for which you had no barter exchange to offer.  Money was only used if you had nothing of value to exchange!  There is a growing awareness in this country that certain voices of reason and faith have been silenced.  Although I would agree with the current observation, I think we're mistaken in the cause.  Scripture tells us the love of money is the root of all evil, which in America translates to the love of the dollar is the root of all of our social problems.

When our society moved from raising produce and providing services to just making money, we changed a great many standards.  The main one happened long before the Supreme Court ruled against prayer in school.  Although the day had already been changed from Sabbath to Sunday, most Americans still ceased from their labor on Sunday.  It was the wrong day, but at least there was an effort to set one day apart.  A farmer could cease from working one day with his crops and herds, and much of the industrial revolution still offered the national set aside day of Sunday, as a day off, but . . . along came overtime.  Retail stores were closed and many states, my own included, had what was called a Blue Law a.k.a. Sunday law.

Overtime crept in so subtly and it was always out of "necessity," but . . . it also came with pay incentive.  Overtime pay meant a wage differential and that meant more money for working on that set apart day.  Since Sabbath had been changed, Saturday was usually only time and a half, but Sunday was double time.  Once everyone justified that their particular job was a necessity to the wellbeing of someone else, working weekends became justified if the opportunity arose.  Once a willingness to work weekends was established, two things transpired.  Overtime pay for holidays gained an even greater wage differential in some careers, while for others Saturday and Sunday simply became another work day.

Whether it was a good career of M-F with increased income on weekend overtime or a career in which the days of the week no longer made a difference, both classes of workers became enslaved.  Those who gained great increase couldn't get enough, and those whose schedules required straight pay for weekends couldn't say no, and maintain employment.   America had already missed the mark by laboring and conducting business on Sabbath, but for many that was done in ignorance, while they did still honor a set apart day.

When American workers chose money over any set apart day and justified it with self importance and martyred indispensability, the dollar became the standard of the value of time and the value of a worker.  Ignorance of the Truth was replaced with a disregard of the Word of our Creator.

Out of Balance

Our economy is out of balance.  Of course, we all know that on some level, but this imbalance is unprecedented in recent history.  Usually the price of precious metals and the cost of land maintain some sort of correlation.  With the collapse of real estate and the Stock Market back in '07-'09, gold prices were driven up in panic.  Silver followed to a point, but it stayed a bit more stable, only spiking for a short time in 2011.

Obviously, I'm not suggesting that we lay up earthly treasures.  We are not to trust in silver and gold, but rather to see it as an indicator that the economy is more unstable that we are being led to believe.  We absolutely cannot trust in anything that is temporal.  These temporal things are very good indicators, however; as they change we can see the correlation they maintain or lose in the changes.  I'm not a history expert, but as far as I know, this is the first time that precious metals have been artificially inflated to offset the Federal Reserve's zero percent interest rate.  

I had shared with someone in late July or early August of 2011 that gold would begin to drop, and selling was a good idea.  Gold is not really a practical savings plan for future use.  If an economy is using precious metals, making change for even small gold pieces becomes quite challenging.  Now that gold is really just an investment attached to paper, it's just part of the Stock Market and Banking.  Then a couple of years ago, someone asked me what I thought of buying silver at that time.  I told them I believed it would be coming back down around $17.00 an ounce.  I also felt that would be an indicator of more economic instability.  Silver has now dropped to that price range, actually even posting under $17.00 before closing on Friday. 

I don't think we need to run out and buy gold and silver at these lower prices.  What has caught my attention in this recent decline of value, is they are no longer comparable to the price of land.  After the collapse of the housing market, land began to increase in cost, but not necessarily in value.  An acre of land will still only produce so much.  If grain prices drop, and subsidies are reduced, mortgaged farmland will not pay for itself.  The actual value of land is what it will produce.  Although currencies have come and gone throughout history, land and precious metals have always had a comparable value, regardless of inflation, until now.

When I bought this homestead, silver was just under $15.00 an ounce and undeveloped land was between $1500.00 - 3,000.00 an acre, depending upon the size of the acreage.  Larger acreages went for less per acre.  Even small acreages were less than $5,000.00 per acre.  Now, silver is hovering below $17.00 and has been dropping in the last 30 days, while land, even large acreages are bringing $5,000.00 - $10,000.00.  There is still no sizeable new housing construction and cities that were hard hit in the last recession have not rebuilt.  There is little left to lose in another economic recession.

Take inventory, count the costs, and see what is truly of value.  We have just about reached the end of being able to kick the can down the road . . .  The crashing of the stock market sent folks into panic mode for gold, which is not proving to be ready to launch new panic.  The last ditch effort to prop up the economy appears to be survivalist gear for surviving ebola.

A Very Odd Feeling

In fifty-six years on the planet, I've never experienced the feeling I got a few days ago and continue to have.  Let me give a little background of my view regarding money.

In my childhood, I handled money by permission, permission, only.  The allowance I earned came with a number of designated destinations, per parental mandate.  They didn't make me pay for food or pitch in on gas money, but about a third was designated for Sunday School and that much also went to my savings account, so that left me saving for the high end dime store desires.  As I got older, there were more complex arrangements made, but to be honest, in the back of my mind, I had no intention of handling money the way my parents did . . . and once I was an adult, I haven't.

I trusted the wrong person, once to make a deposit, and after that fiasco, I never repeated that mistake.  I had a husband with an addiction problem, and I learned to navigate that financial dilemma.  By the age of 25, I planned to be debt free by 40, so I developed some pretty good spending and savings habits, even a few investment plans.  From 25 on, my husband made decent money and took care of responsibility, but we didn't share the same goal.  By the time I met Messiah at 36, my attitude about money changed again.  Savings wasn't really my focus.  I simply did not spend money on something I didn't need, and my needs were diminishing rapidly.  By 40, I was debt free, and when that happens, life can become really inexpensive.  Of course, before 41, I had a high maintenance kid come home . . . so having tasted how inexpensive life could be, I had enough savings to cover that.

Since that time, I've remained debt free and maintained my attitude of saving what I don't spend, and that's what changed this week.  It began last week, but became almost urgent this week.  I felt a real constraint to see what needed to be purchased to bring everything up to non-dependent status on the system, and divest of paper money.  I knew this day was coming, when money in the bank would not be security for hard times.  I started counting my pennies and checking into nonperishable business supplies, as well as perusing Craig's list for everything from goats to tiny houses to other sites for good batteries and wind and solar items.

I've had this feeling twice before.  The first time was back in 2006 when I felt the need to divest of my stock holdings, and I did, thankfully before the crash.  The next time was when when gold was skyrocketing.  I told this individual that the gold market was being driven by fear in buyers and it was not a sustainable market.  I recommended that they divest of gold, stop buying and divest of what they had bought through the recent surge.  I stated clearly the beginning of August 2011, "The relative price of gold between silver and platinum should be around $1300.00, and the current value was being inflated.   Sell while you can get over $1800.00 an ounce because it's going to start dropping."  Gold began to drop later that same month.  It spiked once in early September, then dropped fairly steadily to where it sits today, just over $1300.00 and ounce.  This is not to take us on a tangent of precious metals, but the same feeling I had about gold in 2011 is what I have about federal reserve notes, now.

Many with pension plans and 401Ks were affected by the stock market and bank fiasco.  Not all of us were personally affected by the inflated value and decline of gold, but the loss of the value of the dollar will affect us all.  I'm going to conclude this article to order reusable canning lids before Shabbat.