Will You Know What to Do? Bond Markets Herald Imminent Collapse

Preparing for Today’s Realities
and Tomorrow’s Threats

Financial and social stability are in big question over these next two years. Especially in the bond market’s rickety funding of federal handout programs. If that scam goes kaput, watch out. When the you-know-what hits the fan, will you know what to do? That’s a question you’ll want to consider carefully before disaster strikes. Not after.

You can’t know in advance exactly what type of crisis situation you will be faced with. Disasters – be they natural or man-made – rarely give advance warning. But if you are vigilant, you can often glean clues to heightened probabilities of one type of event or another occurring.

Your objective as a prepper should be to prepare for the likeliest scenarios to hit your area while also taking prudent steps to be Ready for Anything. Surviving during an emergency isn’t just a concern for backwoods types. Urban and suburban survivalism is just as applicable.

America’s Secret Mainstream Movement

The Economist (December 20, 2014) ran a story featuring a prominent survivalist. The story noted that “the stereotypical image of a survivalist as a loner in combat fatigues who hunkers down in a remote bunker is plainly inaccurate. Some do indeed live in rural cabins, but most have jobs, which means many live in cities or suburbs.”

It’s prudent for everyone to be prepared. The list of threats includes power grid collapse, terrorist assaults, solar flare or EMP bomb, cyber-attacks, geopolitical instability, doctor and drug shortages due to Obamacare, and many other scenarios. Not the least of which is the potential for another financial crisis.

Underappreciated Risks Brewing in the Bond Market

The $44 trillion bond market represents a systemic risk that dwarfs even that of an overvalued stock market. Everyone from corporations, to banks, to life insurers, to pension funds, millions of individual investors, to the federal government itself is making one-way bets that the bond market will hold steady. For more than three decades now, the bond market has been characterized by falling yields and rising values – juicing returns for pension funds and enabling the government to jack up its debt levels to 100% of GDP.

The sweet spot for bonds won’t last forever. One of two probable outcomes threaten to bring untold pain to bondholders in the near future:

  1. A deflationary collapse that triggers a wave of defaults.
  2. A secular rise in interest rates as inflation destroys the value of bonds issued at today’s rock-bottom yields.

The yield on the 30-year Treasury bond in January hit a record low of 2.4%. Bonds are approaching “return-free risk” territory. But nobody who is buying long-term bonds at these levels seems to appreciate the enormous risk they are taking. Will inflation rates surpass 2.4% within the next 30 years? If you think so, then you shouldn’t put any faith in long-term bonds.

When the party in the bond market finally ends, the U.S. financial system could suffer a collapse like we’ve never seen. We say that because we have literally never seen excesses like those that have now built up. It’s impossible to know exactly when a panic out of bonds will begin or what might trigger it, but in such an environment gold would be one of the few assets left standing.

Got Gold?

When you think financial preparedness, think gold. Not because gold is necessarily destined to be the bestperforming asset going forward. But because it’s the most resilient to various unforeseeable financial storms that can wipe out most other assets. When banks fail, when bonds default, when corporations go bankrupt, when currencies collapse…gold in physical form still retains value. The same can be said of silver.

In the early goings of 2015, gold and silver have been the premier assets to hold. The precious metals got off to their best start in years.

The gold and silver markets still have a long way to go before we can confidently declare a new bull market is in force. But we can say that the extant financial and geopolitical threat environment warrants a sizeable allocation to physical precious metals as insurance. When compared to other asset classes such as Treasury bonds and U.S. stocks, precious metals look relatively undervalued here.

Steer clear of gold derivative products such as futures and exchange-traded funds – unless you want to speculate. For purposes of protecting yourself against a financial calamity, only precious metals unencumbered in physical form will do. Stick with widely recognized low-premium bullion products in standard denominations for maximum liquidity and minimum risk.

Race War Rhetoric Threatens
Breakdown of Law and Order

Another rising threat on the horizon is that of accelerating racial strife. Race relations in America have taken a turn decidedly for the worse under President Obama’s leadership. Poll after poll confirms this observation. Again and again, Mr. Obama has taken the side of racial agitators – from privileged university professors who cry “racism,” to street thug protestors, to the nation’s leading racial arsonist Al Sharpton. Sharpton has reportedly visited the White House more than 80 times, serving as Obama’s point man on “civil rights” issues. Widespread social upheaval is being
fomented from the top down, through mainstream media outlets that obsessively re-tread racial narratives, and by militants who now openly call for racial violence (with no threat of prosecution by Obama’s Justice Department).

Nation of Islam czar Louis Farrakhan gave an angry, rambling speech at Morgan State University where he blared, “We want some of this earth or we’ll tear this g**damn country up!” Farrakhan urged revenge attacks on whites and the use of Molotov cocktails. The crowd cheered him on.

Radical Extremists Demand
Nationalization of Local Police

Radical leftist Cynthia McKinney, a former member of the Congressional Black Caucus, has launched a new organization called the National Coalition to Combat Police Terrorism. The group’s co-chairman is Dhoruba bin-Wahad, a former leader in the Black Panther Party.

Some cops are corrupt. Some abuse their powers. Some engage in excessive force. But the police aren’t terrorists. Using war rhetoric against police puts cops’ lives in danger and provokes them into becoming more militaristic. The militarization and nationalization of local police to bring them under the direct control of the U.S. Justice Department is what Al Sharpton is now demanding.

Meanwhile, Malik Zulu Shabazz, head of the New Black Panther Party, called on blacks to spend 2015 “building an army” to prepare for race war. Shabazz predicted more lone wolf killings by blacks but said they would be the fault of whites.

The One Crime Statistic You Don’t Often See

If any one race is collectively responsible for violent crime in this country, it’s not whites. FBI crime statistics show that 93% of black murder victims are killed by other blacks. Moreover, in those cases where black/white interracial violence does take place, 85% of the time the victim is white and the perpetrator is black.

Journalist Colin Flaherty has documented a wave of black-on-white racial revenge attacks since the Trayvon Martin and Michael Brown cases. He’s also documented cases of people using firearms in self-defense and refusing to be victims of this new race war.

You should never go out looking for trouble, just be ready in case trouble finds you. If you’re unarmed, you’re defenseless. Consider getting a concealed carry permit, if available in your state, so that you can legally keep a gun in your car and on your person.

Could Obama Declare Martial Law?

Social unrest could give Mr. Obama the opportunity to impose martial law in parts of the country before his term ends. This could well be part
of the dark agenda of his final two years in office.

Obviously, he would require some sort of crisis situation such as a terrorist attack or a black-swan financial disaster to serve as his rationale for invoking dictatorial powers. To be clear, Independent Living is not predicting that the White House will deliberately orchestrate a national emergency. We don’t know whether Obama will be handed one by circumstance, either. We are merely warning that the potential for a massive power grab exists.

Obama’s Executive Order 13603 (National Defense Resources Preparedness), signed in 2012, has a provision the administration can invoke to order the internment of Americans in detention centers. Read “FEMA camps.”

Famine, Food Wars, and Your Food Security

“In the next 40 years, humans will need to produce more food than they did in the previous 10,000 put together,” warns The Economist (January 3, 2015).

“But with sprawling cities gobbling up arable land, agricultural productivity gains decreasing, and demand for biofuels increasing, supply is not keeping up with demand.”

The next 40 years promise to be more trying than the last 40 in terms of food supplies and costs. From 1960 to 2000, total food expenditures as a percentage of disposable income steadily declined. They’ve since leveled off at about 10%. The amount of money people devote to food could start increasing in the years ahead.

Explosive population growth in the poorest, most backward parts of Africa and South Asia will present a huge challenge to agriculturally productive parts of the world. Western governments are pouring food aid into Africa to avert famine, but the aid won’t forever be able to keep up with growing demand. And rising levels of foreign food aid will put upward pressure on food prices at home.

The potential for global food shortages increases the likelihood of international conflict and the militarization of food. Last May, the U.S. Department
of Agriculture put a bid out for 85 submachine guns to be equipped with “Tritium night sights for front and rear, rails for attachment of flashlight (front under fore grip), scope (top rear) and stock-collapsible or folding, magazine.”

You may need firearms to safeguard your personal food stockpiles, if it comes to that. For now, the important thing is to have non-perishable food stockpiles that can last you several months.

Savvy investors, including an increasing number of private equity managers, are investing in productive farmland in the U.S. and in frontier markets around the world. As long as the world continues to produce more hungry mouths to feed – and United Nations projections are for the world population to reach 9.6 billion by 2050 – agribusiness will be big business. The Market Vectors Agribusiness ETF (MOO) has held up relatively well amid recent gyrations in commodity markets. Those seeking a more direct play on farmland itself might consider Gladstone Land Corporation (LAND) or Farmland Partners (FPI). Both invest in productive North American farms.