NIM, I don't think things will be that bad. There will be massive corrections in our EXTREMELY wasteful lifestyles. Children will actually start eat food that they don't "lurve". Restaurants will cook food to order again, instead of precooking massive quantities so that they can serve it quickly. People will go back to making french toast from stale bread that was considered "inedible" a few years before, and they'll realize it tastes good. Someone will make a large sum of money by starting a cooking show based on how to make "turned" food taste good.

A lot of what will happen will be necessary and long overdue. I don't believe there will be famines.

People on the ETS forum will smile inwardly, as this will all have been foretold and they will have been prepared.

But overall we will persevere. I think the chance of us going into a 20 year recession are plausible, although it will be more like the "new normal" than a recession.

This issue is especially germane to those who use Dave Ramsey's methods of finance, specifically the "emergency fund". That fund has to be immediately liquid and is only to be used for real financial emergencies (medical bills, big home/car repairs, etc). Being immediately liquid means it will yield little or no interest, which means it will be eroded over time by inflation.

The slow loss of value due to inflation might be seen as the cost of the security provided by the emergency fund.

I just heard on the radio today that Ohio will be out of funds for unemployment payments at the end of this month. Kentucky is already out of money and is borrowing from the Feds. California is probably just using IOUs...

But the 'big news' is that 'unemployment has slowed'. I think all that has happened is that some people have run out of unemployment and have fallen off the rolls, so they're not being counted.

The neighbors behind me (the ones with the dogs that killed my chickens) have moved out and abandoned their house, leaving a bunch of trash and an old car. The neighbors next door to me have moved out without saying a word, and there is a for-sale sign in the front yard today. The neighbor on my other side is living in his 25' travel trailer.

More houses for sale, more empty business storefronts. One has a series of signs on it: "For Rent", "For Lease", "For Sale", and "Take Your Pick".

"But don't worry, at least here in North America, healty food is very affordable. Beans, vegetables, rice, wheat, a whole chicken, etc...."

And much of our food is coming from the Midwest and California, and the rest is coming from outside the country. Add processing and transportation costs, delete a job and the Fed/State/County assistance programs, and then what?

Economic solutions seem to be just about as rigid as the laws of physics: There are no shortcuts, it only really works one way, you have to plan for long-term results, not just the short-term ones. All they are really talking about is fixing the job problem. The job problem is not the main problem, the housing problem is not the main problem, the economy is the main problem. Our government and the people who control them are looking for short-term shortcuts and ways to make profits. Until they really decide to settle down and fix the problems with the SYSTEM, I think it's all just going to get worse.

If we go into a major depression but the talking heads don't admit it, is it still a depression? YES! Remember the Emperor's New Clothes?

Sue

Dave reccomends the emergency fund be in a money market fund (mine's in a so-called "high interest savings" account). This ought to more or less follow short term interest rates, so it should to stay about even with inflation. Granted, it is not where you will make your millions.

What's the alternative? A credit card or HELOC? Lines of credit may be closed just when you need them the most, especially nowadays.

IMHO people can adapt to slowly changing conditions. As things tighten look for families to move in together. During the 30s it wasn't uncommon for for three, sometimes four, generations to be under one roof. This may be the up side to the huge McMansions. Stuff the grandparents in one bedroom, and and the grand kids in another. Convert that golf course sized yard into a garden and the SUV, on blocks in the great southern tradition, into a potting shed.

What really hurts is, like falling off a cliff, the sudden stop at the end. In economics it is the sudden shocks that tears things up and causes the greatest pain.

Only problem is that there are fewer children and even fewer grandchildren.

Seems we're headed for a Demographic Winter

The other side was that a lot of people with a spare room let out the space. Humans are social animals and coming together is our default response to stress. It is, on its face, more complicated with non-family but then again dealing with family is always fraught. A stranger may be more of a unknown quantity at first but you can always kick a stranger out. Your lame brother-in-law is safer initially but more difficult to deal with.

Grouping together isn't necessarily a choice between strangers and family, the best may be friends. Who wants to go up against a set of armed Golden Girls? NOT ME!

What I worry about is some of those old people in care facilities.

Sue

What kind of interest rates are you currently seeing on these types of accounts?

Inflexibility breeds insolvency.

A creative mind can find a solution to any problem given time, conditioning, and the proper motivation.

"Can't" means "Won't"

It is in our nature to choose the path of least resistance. Great men became great by going against their nature.

An excuse will buy nothing. An idea can save the world.

My monday morning zen zingers. I contend we still all have a choice, and it appears many have made theirs already.