Credit Card Declined

Dear Money & Crisis Reader,

At a distance of almost 100 million miles, our galaxy’s sun is hardly our next-door neighbor.

Yet when a storm rages on the sun’s surface, we can feel the effects here on Earth just hours later.

Usually the radiation from these storms is observed by astronomers as it bounces harmlessly off our atmosphere.

But every few hundred years or so, there’s a solar storm so powerful that it creates an enormous EMP (electromagnetic pulse) that penetrates our atmosphere and sweeps across the planet.

An EMP of this size would result in a worldwide power outage and trigger an economic and social crisis unlike any we’ve ever seen before.

In fact, according to a 2008 report on the dangers of an EMP by the National Research Council:

A longer-term outage would likely include… disruption of the transportation, communication, banking and finance systems, and government services; the breakdown of the distribution of potable water owing to pump failure; and the loss of perishable foods and medications because of lack of refrigeration.

Now, the disruption of any one of these systems could have a catastrophic effect on the economy. But the simultaneous failure of all of these systems at once would trigger a chain reaction that would bring down the whole house of cards.

Governments would collapse. Government-backed currencies like the dollar and euro would lose all value. And the economy as we know it would cease to exist.

Your cash… your credit cards… all of it would be worthless.

It could be decades before we see anything that resembles an actual currency again. And until then we’d be back to good old-fashioned barter and trade.

There’s nothing overly complicated about a barter system. We’ve been doing it for thousands of years. You simply trade items and services for things that you want.

That said, there are a few things to consider when shifting from a currency-based to a trade-and-barter economy.

Here are some tips to make sure you’re not getting hustled when trading in the new economy.

Price Your Items

The main problem with pricing items in a barter economy is that there’s no longer an underlying currency that can be used to determine an item’s cost.

If you get paid $2,000 a month and spend $500 on a new TV, you know you’ve spent 25% of your monthly income on a TV.

But if someone wants to trade gasoline for food — and you have some Granny Smith apples, brown rice and a couple of overripe bananas — well, now things are a bit more complicated.

There’ll be a certain amount of trial and error when you first start bartering, but you can make sure you don’t get fleeced by sticking to two simple rules:

1. Supply and demand. If demand for a product is high and supply is low, you can charge more for it. If a certain commodity is flooding the market, you should price (or buy) it low.It might take a while to get a feel for the ins and outs of the post-collapse economy. But if you pay attention to what folks are asking for and what other traders are offering, you’ll have it locked down in no time at all.

2. Think of a common item as your “currency.” If you need to do some appraising on the fly, try to think of trades in terms of a common item that you barter with regularly — like apples or rice.

For example, instead of trying to work out how many pairs of socks equal a sleeping bag, you assign both products an “apple value.”

If a pair of socks is worth five apples and a sleeping bag is worth 30 apples, then the sleeping bag is worth six pairs of socks.

Obviously, this is a simplified example, and bartering won’t always be that cut and dry. But it’s a good rule of thumb to work by.

Be Selective

In short, only trade for items and services you actually need.

Folks are going to try to trade all kinds of pre-collapse junk for food, water and other items they need to survive.

You might be tempted to take them up on their offer — either out of pity or because of the value the item used to have in pre-collapse society.

But to survive in the new economy, you’ll need to barter with your head, not your heart.

Only trade for items you know for certain you can use.

Editor’s note: The strategies you read about in Money & Crisis were developed with the help of Jim Rickards, the best-selling author of Currency Wars and The Death of Money.

For a limited time only, Jim is sending readers a FREE copy of his brand-new hardcover book, The Road to Ruin: The Global Elites’ Secret Plan for the Next Financial Crisis.

This shocking account of the next financial crisis reveals one of the biggest threats to your wealth today… and shows you the simple steps you can take to protect your money and your family. Claim your FREE copy now.

All the best,

Owen Sullivan
Editor, Money & Crisis

The post Credit Card Declined appeared first on Laissez Faire.