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comodity graph
Commodities are going up
What does 2011 hold for you? What does it hold for the United States? It would be really nice if we could answer those questions definitively. However, we all know that's impossible. No one can tell the future with certain accuracy.

We can tell the seasons though. If I'm looking at a group of young pigs I can tell from experience and history approximately when they will be ready for the table.

If I'm looking at tomatoes in the garden and they are green but starting to turn, I can say with confidence that "pretty soon" we'll be eating ripe tomatoes.

While I can't see into the future, I can see some things "according to the season."

So using my farmer-ish good sense and fifteen years as a debt management company owner here are my thoughts on 2011.

Before we get started let me say I'm not an expert on the economy by any means and don't want to come across as an alarmist. However I think many well meaning families choose to ignore what's going on in our country. Many times it's because they feel over whelmed or think they can't change it so why worry.

But I think of the Bible verse in the message translation that says "A prudent person sees trouble coming and ducks; a simpleton walks in blindly and is clobbered." Proverbs 27:12

I don't want to walk into anything blindly and I doubt you do either.

The problems we are faced with in the U.S. didn't show up over night or even in the last few years. Some of these issues have been the result of lots of wrong decisions over many, many years.

So here we go....

Fuel Prices are Not Going Down Anytime Soon.

I know most people would say our fuel prices have skyrocketed in the recent years but look at what some other countries pay as compared to us.

U.S. - $2.75 gal avg
Norway - $7.41 avg 172% higher
Germany - $6.82 avg 151% higher
London - $6.60 avg 143% higher
Rome - $6.40 avg 122% higher

So even though we feel like we are really paying through the nose, we're not compared to the rest of the world. Current trends indicate there is no end in site. The United States has enjoyed lower fuel cost than the rest of the world because we are the world reserve currency...more on that later.

Food prices Will Continue to Rise.

Largely driven by fuel prices, and a declining US dollar, food prices will continue to climb. Grain is trending up and according to most level headed analyst it will continue.

"The corn market has one job and one job only—to go high enough to make people stop using the product," says Ryan Turner, risk management consultant for FCStone, Kansas City. "We are past the point of encouraging more supply." Turner predicts 2011 corn futures prices will exceed 2008 highs. "I don’t know if it will happen in January or June, but it will happen," he says.

Soaring corn prices will slice into demand, with corn exports expected to fall first followed by feed usage. Analysts anticipate the cattle industry to begin rationing earlier than other livestock sectors due to poor margins, but rationing in poultry, hog, and dairy will be close behind. "It will be very painful," Turner adds.

The grain prices alone will drive up meat prices. It is going to be more costly for farmers to operate period. I'm glad we at Spring Hill Farms have lowered our grain dependency each year for the last several years and will continue to do so, but it's going to be a real feat to absorb these increasing grain prices and hold our costs in check.   Coupled with higher fuel prices it is sure to mean your food costs will rise...possibly a lot.

The US Dollar Will Lose More of its Value.

The climbing fuel and commodity prices are actually an indicator of inflation. (our money losing purchasing power) You can turn on the TV and find someone to tout how we are in an economic recovery but look at some facts.

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In Over Our Heads
Our Federal budget is out of control. According to the National Inflation Association, if all US citizens were taxed at 100% of their income it would not be enough to balance the federal budget.

Remember 2008? Frannie May, Freddie Mac and General Motors to name a few went broke. Those companies are still in business today...WHY? Because they were bailed out by the government. We were already in debt far beyond what we should be as a country and we took on the astronomical debts of these companies.

You can still get a mortgage from Frannie and or Freddie because the government "guaranteed" these loans. Many of which are still racking up billions of loses.

The same problems that were plaguing these companies have found their way to the US treasury. How much longer can we pay the interest on the national debt? I have no idea but not forever we can be sure of that.

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China is getting Out of The Dollar
Ever wonder just how it is we can keep paying these debts? The short answer is we are the worlds reserve currency. That means we can print money if we need to! The problem with that is once your creditors find out you are doing that trouble is sure to follow! Let's talk about one gift we have received by having the worlds reserve currency...all crude oil in the world is bought with US dollars. If say, Germany wants to buy crude oil they first buy US dollars and then buy oil with that money.

That keeps Germany very interested in keeping the value of their currency in good shape. They need to produce more than they import.

The US on the other hand has been able to import all the goodies we want with seemingly no consequences. Produce something in the US? Who cares? The economy is good let's just consume!

Is the US dollar being devalued? The rest of the world thinks so. China, Russia, France, Japan, Gulf Arabs have already been meeting without inviting the US, to discuss ending the dollar dealings for oil. That would mean among other things huge increases in fuel prices.

China has already began dumping US dollars as fast as they can without crashing their own economy.

So from where I sit it looks as though the rest of the world is pretty worried about our economy and where the US monetary system could end up. Maybe all the talking heads on TV want to believe, and want to help you believe, that the United States is doing alright and maybe turning around economically.

I'm not so sure.

So that's the macro economy. But what really affects us the most is the micro economy.

You know the definition of a recession is your neighbor lost his job. A depression is when you lose your job.

So if during a big  (macro) economic downturn you have a job and can take care of your family things aren't too bad.

On the other hand, the macro economy can be going gangbusters but if you lost your job and were up to your eyeballs in debt your micro economy is in trouble.

So the best thing to do whether the economy is good or bad is make sure your micro economy is in the best shape possible.

I told you what I think could go wrong in the US economy but what should you do to help insulate you and your family from an economic downturn or worse?
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Tomato

Plant a Garden


Estimates I have seen calculate the total acres of lawn in the US at 35 million acres. That's 35 million acres of grass that we Americans cut. It takes some type of fuel (usually gas) to cut all these lawns and they produce nothing you can eat.

Planting a garden gives you some food that you produced yourself which is healthier, fresher, and ultra local...it's a couple steps out the back door.

To me, the most vulnerable people are the ones who rely on someone else for all their food. Even if you live in the city with a small lawn you can plant something. No lawn at all? Try a window sill.

I can't see any good reason not to have a garden. No time? Drop something out of your schedule and replace it with gardening. It takes no gas to get there, and it can be a great family project. Kids need a project in the summer besides video games and playing.

If your kids play sports maybe a garden could be the new sport. Yep it's that important to me. If I had to choose between putting my kids in a sport or having them help in the garden it's a no brainer.

If food prices go up like I think they could, you'll wish you had a garden. But hey if I'm wrong you've still cut your food bill and taught your kids something in the process.

New to gardening? Try this book it's one of the best ways to garden. It doesn't take a lot of space and you can scale it to your needs. It's called Square Foot Gardening.

Buy Local

We need to try to buy local as much as we can. By purchasing locally you help strengthen your community. Money spent locally stays local longer. To see a good source of why buy local information click here.
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Buckeye Rooster


Get a few Chickens


Four laying hens could provide you with up to a couple dozen eggs per week. Up until the 1940's and even into the 50's many families had a flock of laying hens. Even if you lived in the city.

I recently spoke with a gentleman who was ninety eight years young. He mentioned when he was a kid growing up in town that most of the people in town had a few chickens.

We take for granted that food will always be around the corner at the local mega store and we can get it at a price we can afford. Chickens are easy to keep and care for and who doesn't like fresh eggs?

You can get baby chicks from any farm store like Tractor Supply Company here in Ohio around Easter.

Or you can order them from any hatchery. Many offer 17 week old pullets that are ready to lay eggs when you get them.

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Tamworth Piglets
Raise a Pig or Two

If you happen to be out of town with a bit of space you can raise a feeder pig or two. Pigs are easy to raise with a bit of electric fence and some simple housing you're in business! They will clean up all your excess garden plants and produce that aren't fit for your own consumption.

Check with a local farm now if you plan to buy feeder pigs as they are getting hard to find. Start now so you can find a farmer who will have what you need. We can possibly help you with feeder pigs if you're in our area. Go to this page and contact us about current prices etc.

If you want the home grown pig without having to raise it yourself, find a local farmer and buy one from them. If you're in Ohio our Pay as They Grow (tm) program is as close as you can get to raising your own pig. It's affordable, convenient, and happens without you having to think about it. For information on our program go here.

Stock Up on the Basics

Many Americans don't have much food and necessities on hand. Each time you are buying food and necessities grab a few extras to put back for a rainy day.

Things like canned goods for instance store easily and if they do start going up in price you can have some on hand to ease the pain.

Increase your self-sufficiency

To sum it up the idea here is think about what you can do to be more self-sufficient and save money.  If the economy is up or down, to me that's time and money well spent.

When I used to teach financial seminars I would quote a statistic of the IRS. They do studies to determine why so many Americans end up at retirement with far less income than they really needed to retire comfortably.

The number one reason cited to date:
Thinking that somehow "things would work out" instead of having a concrete plan to end up where they desired to be.   

Don't fall into that trap. Start thinking now what you will do if fuel prices continue to go up, your grocery dollar buys less and the government isn't in any position to help.

Until next time...
 
 


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