Friday, December 23, 2011

- What If The S*** Never Hits The Fan ?

Man there are a lot of crazy people out there.

I honestly don’t understand the romantic appeal some of these people have for preparing for the end of the world. They call themselves ‘preppers’ and talk about being ready for when society collapses. And although I tend to agree with them that things will get much worse in America before they get better, they don’t have any realistic sense of scope about it.

Go to youtube and punch in the anagram SHTF which as you know stands for S*** hitting the fan. You’ll be buried under images of wild eyed people telling you how you’re going to suffer in the future and how they don’t care. Some are laughable (albeit unintentionally), others are terrifying, and they all seem to be absolutely serious about it.

These people all seem to imagine waking up one morning to wholesale nationwide pandemonium all around them. A common theme describes their initial reaction to that as ‘bugging out’ quickly with their box of SKS rifles and 50 gallon drum of diesel fuel in tow, to some unnamed place in “the country”. From there they will hunker down and try to survive the decades to come while we enter a new medieval period which they seem to think will closely resemble “The Book Of Eli”.

If they're doing it strictly for fun then fair enough, but most of them are serious. That isn’t just nuts, it’s also horrible planning.

Don’t get me wrong, I believe things will get worse in America for many people in the coming decades. For the poor and those on a fixed income or that live on government largess, I believe it will get much worse. But an economy with 300 million people will not shut down - ever. It may go underground, or off the books or turn into some sort of barter system. Living standards will fall and whole neighborhoods may begin to crumble. Infrastructure will become undependable and the bureaucracy will become sclerotic and begin to attack itself. Things might even get bad enough in some places to cause periodic local rioting.

But this is a very rich country. And even if the government were to loot every penny of wealth from everyone everywhere, it would still be a rich country. Because the one thing that each of us always has that’s available to sell is our labor and know how. That’s this country’s greatest resource by far, and it can’t be devalued by the government, taxed away and wasted, or exported to the Chinese and Arabs. Places like Yemen and Sierra Leone and Tanzania aren’t poor because of a lack of resources; they’re poor because they don’t know how to do things. We do.

So long as you are willing and able to add value in some way, there will be someone somewhere who will be willing to pay you to do it. They may not pay you as much as you’d like, or enough for you to have the kind of comfort you want. They may pay you in silver, or rice, but they’ll pay you. In this country the economy - that is – some form of a modern economy will continue. Food, energy and other essential resources will be much more expensive relative to income, but they will still be available. There may be local shortages of some goods here and there, and some might become impossible to get for a short time. But the United States of America will not transform into Serb occupied Croatia – ever. Even if we have another civil war.

The truth is, we are a highly civilized people who would all rather work together than duke it out. This is not West Africa. It’s not the Hindu Kush. We will not be dividing into tribes and engaging in internecine clan warfare. It’s not who we are. We’re at the top of the global pyramid for a reason. And that reason is our work ethic, our good manners, our respect for our fellow man, and our ability to come together in spite of our differences to work toward a common goal.

I don’t mean a “common goal” the way Obama or that union thug from the AFLCIO says it, where they choose the goal and the rest of us are ordered to pull their chariot toward it whether we like it or not. I mean a goal that we all agree to of our own free will. One that we know will benefit each of us individually. Even that kind of basic cooperation is more than many around the globe can manage. Imagine trying to get Hamas to cooperate with Israel’s Hassidic Jews. Now imagine trying to make a Gay and Lesbian community group from San Francisco work with a Baptist ministry outreach program from Alabama. There is an order of magnitude difference there.

But there are still a lot of crazy people out there who are ignoring all that, and preparing for the end of everything all the same.

Look, my criticism obviously doesn’t apply to everyone. Some of those people with SHTF videos on Youtube are lucid and actually quite helpful. One set of videos from a Tennessee nurse I found had lots of advice that I thought was really helpful, or at least might be. But frankly she was an exception. Most of those people were simply nuts.

I understand about being afraid of the future. I understand about how a person can feel like we’re speeding toward the cliff’s edge and that there is nothing we can do to stop it. But I hope all those people will take my word for it when I tell them not to be quite so afraid. I’m a gun guy. I believe in insurance against extreme events. But I know that insurance against events that won’t happen is more than just a waste. It gives you a false sense of security that makes things worse for you not better. So I hope you all will take my advice when I tell you that you need to get some perspective.

In a very real way I predict the future for a living. I spend 90% of my waking hours trying to figure out what’s coming around the next bend in the financial markets. I’ve built a long list of skills and tools to help me forecast what’s coming, and since I only get paid when I’m right about it, in all humility I think I’ve gotten pretty good at it. So maybe I can give you a more realistic look into what’s coming down the pipe than you’ve heard up to now. Judging from the videos, I certainly don’t think I can make it any worse.

Of course, looking too far into the future is virtually impossible to do with any accuracy. But if I can help thin the fog a little (even if I can’t completely sweep it away), maybe that will help you limit your preparation to those things you can both do something about, and that you might actually need.

The thing about a bureaucratic collapse of the state is that it’s usually right in front of you even if you can’t actually see it. You sort of have to look out of the corner of your eye. For example, the Victor Davis Hanson piece I mentioned a few days ago talked about how the cops in California’s central valley don’t bother to arrest and prosecute felons any more because they can't afford it. They would rather spend their time in what they view as more productive pursuits like writing tickets for productive middle class folks who are more likely to pay their fines.

That’s an important sign. It means that the government is no longer a service to the public and is now preying upon it instead. In that VDH piece the scale of that burden is still very small, but it will only get worse. And as soon as the that happens, the government becomes a force for disorder instead of order. California is in the beginning stage of that, and it will likely spread. Because of their poor finances New York, Illinois, New Jersey, Michigan and Connecticut are only inches behind them.

But don't go thinking there are safe areas. The pressures on the system are global so they will hit everyone eventually. Inflation for example is now a global story which is being systematically misunderstood by most analysts. The domestic tools we use for measuring inflation currently show it as modest and under control, but prices of imported goods are rising much more rapidly than the statistics would indicate.

Those rising prices, particularly of essentials like food an energy, will eventually make it impossible for the poor and working poor to make their way honestly. So apart from simply resorting to criminal activity, even the law abiding will cheat on their taxes and working off the books will become much more common place. That may seem like a small thing too, but over time it will contribute greatly to the breakdown of law and order in many poor areas.

Illegal aliens don’t report labor disputes; they don’t go to police when they are harassed by criminals. And when everyone begins to realize that the police and the government aren’t there for them either (or in the early stages - that dealing with them is more trouble than it's worth), even natural born citizens will begin to cope the same way that illegals do.

So the irony is that while the bloated bureaucracy struggles to keep it's bills paid by making everything that isn’t mandatory prohibited, going forward, less and less of it will continue to be enforceable.

You’ll know the end game of that breakdown has arrived when it becomes impossible for a policeman to pay his way on his salary alone. When that happens, he’ll naturally find other ways to supplement his income. Mexican policemen have been famous for decades regarding their ‘flexible’ revenue generation tactics. It’s easy to imagine the same thing happening here. But that isn’t to imply that there will be no more law and order whatsoever. If you believe you will be able to simply shoot people when they come to rob you and get away with it, you’re absolutely mistaken.

For rich and middle class America there will still be a functioning society of sorts. At least, they will still have to operate as if society was still functioning in every way. The state will still have access to vast resources - far more than enough to punish people that it sees an interest in punishing. And in the “up is down” world of government bureaucracy, that means that if you’re an otherwise productive citizen then it’s their interest to use the law as an excuse to come get what you have.

If you aren't poor, and therefore have something to lose, you’re going to be arrested and brought to court however minor the infraction. The rich will simply buy off the people they need to, to make things go away. But the middle class will have no choice but to bear the burden of what will amount to government sponsored injustice. The rule of law will become a randomly enforced and capriciously applied thing, but it will still be there; exactly as it is in much of the third world.

We will also eventually end up with no-go zones for the police, just as there are in Caracas or Sao Paolo. These will be poor crime infested neighborhoods where the gangs will enforce the only semblance of order. And as our society becomes increasingly stratified, personal security will become the explosive growth industry of the 21st century. Kidnapping will become a much more common crime, and private guard services will take on the work of keeping order (if not enforcing the law) as the police become more and more useless. All viable communities will become gated communities.

As our living standard falls, much of America will begin to look like the third world as well. Water and power will be less certain, but a complete and sustained breakdown will be rare. More likely will be rolling brown and blackouts while the EPA and the environmental groups duke it out with the energy lobby over who is bribing who.

But you ‘preppers’ out there should remember that while the third world is more violent and dangerous than the first world, it isn’t pandemonium. The violence and crime will for the most part be limited to those areas that any reasonable person will easily avoid. Don’t go to Bed-Sty, avoid South Central, and stay out of pretty much all of Camden or it's equivalent in other metro areas, and you’ll be 90% of the way protected from most of the new crime in third world America.

And when the crime reaches out to get you in your first world homes, put bars on your windows, get a big dog, and carry a gun to protect against muggings or kidnappings. Then don’t stop at red lights unless the traffic demands it, don’t ever travel alone, and you’ll be insulated from another 9.5% of the rest of the problems Americans will face. In the future 99.5% protection will be the very best anyone can expect.

As for the “waterfall moment” with regard to our poor public finances, I think what we’re facing is more the rapids than the waterfall. We’ll be bumped and bruised and bleeding before its finished and certainly much worse off than when we started. But I think we’ll survive it.

I recently did a back of the envelope calculation, and as of November 2011, in order to print enough money to pay off 100% of all our federally accumulated debt and unfunded liabilities, I figured that the purchasing power of a dollar would have to be reduced to roughly 1/3 of what it is now. Cumulatively that’s roughly 300% inflation.
(I can furnish the math if forced, but for now take my word for it.)

That means that if you make 75K per year today, imagine the lifestyle you’d have if you were forced to live on 25K. That’s what the future will hold for you if the government decided to use inflation to buy down the debt. Of course, that’s just addressing the federal liabilities, not the state or local ones. And it also assumes that we’ll stop adding billions of dollars to our problems each and every single day, or that the government won’t actually default on a bunch of foreign held debt, which many people think we’re likely to do. But we have to start somewhere. And at least we know that our worst case isn’t going to be like Zimbabwe. Not yet anyway.

We won’t become Somalia… more likely we’ll become Poland or Lithuania. And since that so, by far the best preparation someone could possibly make for when the SHTF would be to work hard, save your money in a form that will be undiluted by inflation, and get really, really good at a skill that will continue to have a demand whatever the economic conditions. Even today we’ve already begun to dispel the myth that someone who can’t handle basic algebra but has a masters in ‘Ethnic Studies’ has an education. They don’t. And that will become more and more obvious in the future.

The truth is, I know I’m shouting into the wind here. When you see a video of some 30 year old guy waving around an AK who is 150lbs overweight and looks like he couldn’t run from the refrigerator to the couch, he isn’t really preparing for the end no matter what the says. What he’s really doing is mental masturbation. He’s making himself feel better about his life not going the way he wants it to today, by worrying about something else that he can imagine will be worse. If he were really preparing for the scenario he imagines, he’d give up beer tomorrow and you’d never get him off the treadmill.

But if you’re the guy in that video, I don’t mean to ruin your fun. Hell I have an AK too (well… a WASR… but you know what I mean). I love the thing and have great fun with it. You should too. Familiarity with firearms never hurt anyone. And neither I think did imagining a future that’s worse than what we have. Dungeons and Dragons doesn’t work for some people I guess, and you don’t get to fire your guns while you’re playing that game.

What’s more, you don’t have to believe me if you don’t want to. I’m cool with that. Continue to stock those MRE’s if it makes you feel better. Everything I’ve said here is speculation (albeit informed speculation from a professional speculator), and my goal isn’t to lure you into some future vulnerability. But if you decide that you’d like to work with the facts more than the fantasy, I hope you’ll remember what I’ve said here.

I don’t think there is any debate that things will be worse for most Americans in the future than they are right now. But like most things, you really have to keep that in perspective. Preparing for a rainstorm doesn’t require the same thing as preparing for a flood. And it seems to me you'd really be best off making your life better instead of building an Ark in your front yard.


Anonymous said...

You place your bets, I'll place mine.

Good luck.

Anonymous said...

If TSDHTF, then I'll be spending a lot of time at the range burning off all that excess ammo and eating a lot of MREs.

Tom said...

... which sounds fun... except for the MRE part.

Anonymous said...

Dern auto correct....I'll try again...You really must not know how bad of shape America's economy is in?There are many like you who think things will always be ok.That is fine we are all entitled to think what ever we want.Many of us know that grocery stores shelves will be empty in less than 24 hours if anything does ever go wrong.Ever looked there when a snow storm is coming? Same thing will happen but in a total collapse there will be no credit thus no restocking....Good luck.

ikaika said...

That was one hell of a Christmas message!

While "we may be civilized", "we" are not far removed from the places we view on TV and repeating the phrase "can't happen here..." over and over again.

I'm with you, the "preppers" are off their rockers.

When the SHTF, you won't realize it until it's too late. And neither will they.

You think back to events in your own life where you were exceptionally vulnerable and unprepared, but made it out of "the jam" unscathed.

immediately after one of those events you think about how it could have been much worse.

Remember the NYC Black-out? not the big one, but 2003?

I left my office in Mid-town and headed towards Seastreak at 34th st.

The line to use the pay phones or no money in the cash machine, commuters and NYers were hysterical.

I remember getting to the Ferry and it was like the "Boat Lift"...

People were offering me double for a ferry ticket and Seastreak guys were like "don't do it!"

I get on the boat and I saw two guys trying to calm this one guy down. He was freaking that this was a major attack. He sees people walk across the Brooklyn Bridge and starts sceaming: "THERE"S PEOPLE ON THE BRIDGE!!!"

what a fruit loop!

so - yeah, if the SHTF in NYC for a third time and any bigger or more protracted than a Black-out or less orderly than 9/11, expect the worst of humanity to rise to the occassion.

Tom said...

I was living in Westchester at the time - used my sisters car to drive a bunch of friends home first. It was odd coming back in the next day though. I'd never seen the city so quiet. There were no still streetlights working on the upper east, but I could drive down Park avenue at 70mph without a flinch.

Some people seem to think I'm criticizing the idea of preparation for a disaster and I'm not. All I'm trying to do is to put some scope on that. Things will certainly be bad, but it won't be Madmax of "The book of Eli." It will be just another day like it is every day in a place like Equador.

That's worse than now certainly...much worse if you're poor. But it's not 'the end'.

ikaika said...


Anonymous said...

Perhaps this author never heard of Katrina. With just in time delivery of most commodities, we are literally 2-3 days away from chaos, in the event of any disruption.

Just today, there were articles about mall riots over something as trivial as a new issue of sneakers. What do you think it will be like over food?

It doesn't even have to be THE SHTF scenario - just a minor disruption will bring the entitlement crowd to your doorstep.

I am a "prepper" and will be joyful if it never happens, but if you have read any history on the after effects of a kick-the-can-down-the-road financial policy, you will join us.

Anonymous said...

i'm not a preper by any means, and i do hope you are right. As someone who married an Argentine, and who has lived on Brazil, I see the logic of your argument. I got married in Argentina shortly after the last collapse, and while things were certainly bad, the country still muddled along. There was no civilizational breakdown. But what keeps me awake at night is this: argentina could still hum along, albeit in diminished capacity, because the rest of the global economy was doing ok. Same thing with the Ecuadors of the world. Those countries always had a floor beneath them, and that was the rest of the world. But what happens if the SHTF in both Europe and the US?

Tom said...

there is a continuation of this issue here:

Laughingdog said...

Actually, the stockpiling of food is the only part with most of those SHTF guys that seems logical. If nothing else, they're hedging their bets against increased food prices or food shortages. But most of the rest that I see from them is pretty damn stupid.