High Metabolism Money

66 thoughts on “High Metabolism Money”

  1. The forces of central banking have destroyed a lot of our inner cities. As designers who understand the causes of fiat money have – we should be in positions to help communities restructure and reorganize around traditional development. Its not crony capitalism comes from the State protected banks that get to operate without and risk to themselves. Local community banks with a competition in currency will be the path forward, small incremental growth.

  2. I’ve sure I’ve mentioned it before in a previous comment, but I really like Arnold Kling’s distinction between systems that are ‘hard to break’ versus ‘easy to fix’. You’re right that the financial system, currencies, and much else now are often very complex and, in some ways, very fragile.

    > Five thousand years of history shows that it’s never different.

    I think I know, roughly, the degree, and in what sense, you believe that, and I agree, in the same way, that it’s therefore both true and false. Certainly, from even the perspective of the last five thousand years (let alone longer), _banking_ and _double entry bookkeeping_ are ‘different’; agriculture is still somewhat unproven relative to the entire history of our species.

    I’m much more sanguine than you (tho that’s because I know people like you exist), but even you’re not quite as pessimistic as you seem to regularly come across to some people. But I particularly appreciate that you focus on the highest-value, and _easy_, ways to mitigate likely disaster, or really just unexpected adversity of varying severity. I think you’re right to mostly ignore ‘Mad Max apocalypse’ scenarios – not only because they’re relatively less likely but also because they seem to be the kind of thing for which it’s almost impossible to prepare.

    You, personally, are helping to make our civilization ‘easy to fix’! Thanks again!

  3. Johnny,

    You seem to be touching on separate, unrelated issues: payment systems and the value of money.

    I agree with you: the payment systems we have created are complex and fragile. The restaurant hostess who looked at you wide-eyed when you suggested she take your order with a pencil and paper and you pay for your meal with cash, doubtless expected the computer to come back online soon. In the meantime, she was probably following instructions issued from corporate headquarters.

    Should the payment machines ever go down and it becomes obvious they aren’t coming back up anytime soon, people will doubtless muddle through somehow, like they always do. Assuming this occurred and there was a complete absence of cash, I would accept payment in tokens, provided I could use them to buy food and other essentials; doubtless others would do the same. Thus commerce would continue after a fashion, albeit in a highly-localized form: it’s unlikely such tokens would be accepted outside the locality where they were issued.

    I agree with you that inflation is probably coming. Fiat money has always been prone to inflation as a result of money-printing and electronic currency makes that worse: it’s even easier for governments to create new electronic credits than it is for them to print more banknotes. America’s finances are a mess and don’t look like they’re going to get better in the foreseeable future. The federal government is on course to borrow a trillion dollars this year. (To put it in perspective, I like to point out that a trillion seconds is approximately 31,500 years. That’s a trillion!) What’s more, the economy is supposed to be doing well right now. What happens when the next recession arrives, as it surely will. Inflation, however, gives the government the option of a so-called soft default: the debts are repaid, but each dollar which is repaid is worth less – possibly a lot less – than each dollar that was borrowed.

    Still on the subject of debt, but a bit off-topic, concern is often expressed about the level of personal indebtedness in this country. But to what extent do cashless payments exacerbate the problem? Would people be so willing to spend if they had to hand over currency every time they did so?

  4. This is the one that keeps me up at night. I don’t know what the future brings but I do know we’ve never had a financial system this fragile and this global. A simple blackout or a FED rate hike or… this system just can’t take a hit it seems.

    Of course, it’s very painful to actually take steps away from this system because of the large opportunity cost (market gains), inflationary drag (on cash) and plain inconvenience (war on cash). Here’s what we’ve actually done as a family:

    1. Bought a rental condo (in lieu of putting money in the market)
    2. Bought a bit of bullion (coins)
    3. Keep physical cash in various places

    The steps above wiped out any extra money we had. We do still have money in the market but it’s a conservative allocation. Other things we’ve considered:

    1. Holding foreign fiat currencies we consider more trustworthy.
    2. Buying foreign real estate. Or at least out of state.
    3. Getting a second passport in case of true SHTF.

    So we’ve come to this Catch 22 conclusion that we need to have hyper local tangible assets yet at the same time to be ready at any moment to turn into the Jason Bourne family and catch the last ship to… Shanghai? At the end of the day, there’s nowhere to hide.

    I’m curious what you think is a solution to our predicament? The local currency movement is promising. Blockchain could be used for said currency if there was a physical backstop. Plain old credit unions are cool and I use one. And…?

    1. So… My crystal ball is on the fritz again and I can’t find replacement vacuum tubes.

      However, I have a few examples from my travels to relate to the general genre of economic preparedness in volatile times.

      1) Short term crisis.

      I was traveling around Asia during their economic crisis in 1997 and noticed a few categories of winners and losers. During the boom years some people took on debt to buy things they couldn’t really afford. This overconsumption in the market induced businesses to expand (also using credit) to buy merchandise, equipment, hire extra employees, and build new physical plant. The majority of these loans were denominated in American dollars since local currencies were peg to the US.

      When the financial markets seized up business dried up, incomes declined, unemployment shot up, and loans became difficult to service. Meanwhile the dollar peg was discontinued and local currencies were allowed to devalue. But the loans still had to be paid back in much more expensive dollars.

      I saw former advertising executives return to grandma’s farm in the country for a while after the Volvo was repossessed and the condo was taken by the bank. The folks who did relatively well were the ones with minimum debt and businesses that people had a hard time living without: food, medicine, rental properties. People with family abroad had that additional resource to draw upon.

      2) Long term crisis.

      I traveled around the old Soviet Union in 1989/90 after the Berlin Wall fell. Eastern Europe didn’t just experience a few years of banking trouble. The whole society dissolved and the process of reconstructing everything dragged on for twenty years.

      The people who managed best were those with globally marketable skills. Engineers, medical professionals, people in the nuclear field, people with specific high level military information, people who were fluent in foreign languages, as well as young attractive people. They could all relocate to more desirable locations. It wasn’t easy, but it was a viable option. Organized crime did well too.

      Ethnic subcultures who had connections outside the Soviet Union had better access to migration. For example, Jews and Armenians were sponsored and assisted in their expatriation by groups in the US, Canada, Israel, Australia, and South Africa.

      3) The Bamboo Network.

      While I was exploring Latin America during one of their perpetual economic crises I noticed the Chinatowns in Chile, Argentina, etc. were doing better than their native born communities. Rather than depend entirely on local institutions ethnic Chinese had a parallel transnational system of lending, trading, and ad hoc “insurance” provisions that held up better than the official practices.

      So there you have it. For whatever it might be worth.

      1. Great recent examples. We don’t even have to look abroad. The Subprime Mortgage Crisis, which coincided with high oil prices and a mini recession. Who suffered? The debt ridden, the poor living paycheck to paycheck, people in the exurbs, people in the “satellite” office. Who did well? People with low debt, a lot of cash to buy property/businesses at auction; people in urban areas with technical skills and/or connections at company HQ.

        Of course, people will balk at the idea that we could face a long-term humiliating meltdown like Eastern Europe, but the ingredients are certainly in place. An overstretched empire without a real enemy to fight. Political isolation. Tribal instead of national loyalty. An economy and financial system that increasingly, has no “there” there.

  5. I worry about the consequences of a large-scale electronic-destroying event like a nuclear exchange or a Carrington event (a truly massive solar flare in 1859). These are plausible circumstances which could result in the entire electronic money apparatus shutting down. As we are moving toward complete dependence on electronic money (I scarcely ever use cash now, myself) this could produce a huge catastrophe. Another Carrington event is a certainty eventually, although we have no idea what the expected recurrence time is.

    1. First, stop worrying and begin taking meaningful action. The worry drops away after you’ve done a few things to mitigate your concerns.

      I think a Carrington event might be just what the doctor ordered for a very sick economy. Having electronic transactions evaporate would be traumatic, but it would also wipe the slate clean and we’d get a do-over. It would be an accidental jubilee – albeit a messy one. And during the ensuing scramble all sorts of reforms could be put in place as the normal political sclerosis is temporarily suspended. No doubt it would be both cathartic and a license for mischief.

      1. Carrington Event? Jhonny, don’t even go there. We are way past due for certain “Acts of God” to come down on our collective squabbling heads.

  6. One big lesson of the Great Depression was that it was better NOT to have money backed by precious metals. In general, the sooner a nation got off the gold standard, the sooner it started to recover. You can use anything for money if it can be authenticated somehow and there is either a consensus or coercion to get people to accept it. Gold required experts to verify the weight and quality of the metal. Privately issued bank notes required a centralized reporting mechanism on the stability of its issuers along with enforcement against counterfeiters.

    Most of the cashless businesses I’ve run into are little guys: food trucks, hair cutters, small scale farmers. Handling money takes time away from dealing with the product and customers. Then there’s the need to go to the bank and deposit the money. When it’s just you running the shop, dealing with cash is a time sink. Companies like Square make it easy for anyone with a smartphone to go into business without having to buy a cash register, specifically setting up an arrangement with an obnoxious credit card services company or even having a bank account.

    1. Notice I said nothing about precious metals and focused on utility. I’m not opposed to PMs, but they are down a long list of other things to be secured first. Money – including gold – is a representative of real underlying wealth, not wealth itself.

    2. I would say you’re half right in saying the PMs aren’t a panacea. However, they did put friction into the equation and enforced a connection to the physical world. I don’t think a metallic standard would work today but we need… something.

      As for Square, they’re just a middleman for middlemen. At the end of the day, they’re just skimming the transaction for the (valuable) service of dealing with the legacy banks and credit card system. A shock to that legacy system would take Square out of business.

  7. When there was a computer glitch at the beginning of the informatization of the banks, they simply switched back to the old paper and pen system. Nowadays they’re not doing this anymore because, as you mentioned, they don’t carry cash anymore, and the only reason while you would go to a bank during a network disturbance is to get cash. So they just sit there behind their desks and look sheepish.

  8. “What keeps your belly full?”

    Well I am overweight. During the financial crisis, I joked that my fat reserves were the one asset I could absolutely count on. (Storage carries some health risks, however).

    I actually experienced a situation in which payment cards were useless AND cash was unavailable. Brooklyn after 9/11.

    The city was locked down, and Brooklyn was cut off. And the major telephone exchange building connecting the city with the rest of the country was located right next to the World Trade Center, and phone service and credit cards were cut off. For a couple of weeks.

    Pretty soon, people ran out of the limited amount of cash they have on a regular basis. Trucks couldn’t get cash to Brooklyn, so matter how much money you had in the bank, you couldn’t spend it.

    The way people got food in our neighborhood is the local merchants just ran a tab, as in the 1930s, and stayed open as long as they could buy supplies and get them there. Eventually the Federal Reserve had to rush cash to Brooklyn.

  9. What an interesting and somewhat far-flung tale. However, at that end you touch on our need for one another in an emergency. That is the thing we are least likely to think about but most in need to plan for. Fire! Earthquake! Floods! What’s next? Locusts?

    Our local community health action chapter has latched on to a neighborhood disaster planning program as a way to both plan locally for the 3-5 days of no government help at the outset of a disaster and connect with our neighbors. The idea of connecting with our neighbors is so foreign these days that we have also needed to create a support group for getting these local block groups off the ground! These groups discuss who will be in charge of what and what kind of go-bags or house supplies we should have on hand while making friends!

    1. In my experience there are three categories of neighbors you’ll be encountering. 1) The ones who absolutely aren’t interested and never will be. You can ignore them and move on. 2) The ones who are vaguely on board but have no interest or time to attend meetings or do much. They’re good to know for the future, but keep it friendly and don’t push them too hard. 3) A very small number of people who are committed and do all the heavy lifting.

      Cultivate casual non specific contact with the people on your block. For instance, dropping off extra produce from the garden to the lady four doors down, or taking in the trash cans from the curb for the busy family across the street. That little stuff establishes just enough contact that other things become possible over time. And it’s non threatening.

      Lead by example. Once you have an acquaintance in your kitchen you can point out your emergency grab-and-go bag or point out the flashlights and water you keep stored for emergencies. Baby steps.

  10. “This camp is fearful of…the evils of socialism”

    “Venezuelans – They voted for socialism and now their money is worthless”

    Looks like one of your camps just showed up.

    1. For people who have a predisposition to hate “socialism” as define in a specific way to mean government confiscation of private assets, mismanagement, censorship, repression, etc. then Venezuela is the go-to poster child du jour.

      The kind of “socialism” that’s practiced in Denmark, Norway, Sweden, and Finland doesn’t come up as much. For me it isn’t the “ism” as much as the way it’s implemented.

      Capitalism is great in Canada and Singapore. It’s not so good in Nigeria or Argentina… Is that the “ism’s” fault? In other words, things are more complicated than a simple classification.

      1. The trouble is even when you talk about Scandinavian style socialism it will be shot down by references to Venezuela or the Soviet Union.

        Singapore is interesting, the state owns 82% of the housing, it’s hard to call it capitalist.

        1. Well, some would say that Scandinavian style socialism doesn’t work very well either, even if it is currently afloat. Every place will have its issues.

          And, to be honest, most socialism embraces many of the ideas practiced in the Soviet Union, if not the direct form of tyranny that was practiced (Western tyranny tends to be extended via law, “education”, and enforced social conformity).

      2. “The kind of “socialism” that’s practiced in Denmark, Norway, Sweden, and Finland doesn’t come up as much.”

        That’s because socialism isn’t practiced in any of those countries. All are capitalist, free-market countries albeit with large welfare programs. Socialism means government ownership of the means of production, something that the old Union of Soviet Socialist Republics had along with the Warsaw Pact countries, but also Venezuela and post-war United Kingdom which nationalized the bank, coal, aviation and telecommunications, transport, electricity, gas, iron and steel industries…all with awful results.

        The Nordic countries famously shy away from government ownership. Maud Olofsson, a Swedish economics minister, remarked when asked about bailing out the automaker Saab: “The Swedish state is not prepared to own car factories.”

        1. The Nordic system is more of a system of transferments than “socialism” where the state does everything. In fact, the great welfare countries of Scandinavia to a large degree got that way because of the Soviet threat which they had next door during the Cold war (plus civil wars in Finland and Germany post-WW1 meant everyone in the elite understand what would happen if you didn’t take note of your own working class and their wishes. ). Until WW1 these countries were noted for high levels of emigration.

          Unfortunately the Nordics in terms of building environment have pretty much done as the rest of the US, building suburbs and sprawly new towns post-WW2 which is now coming of age 50-60 years later. Add to it a large degree of “density without urbanity” from the 1960’s where the current immigrant underclass lives (no wonder they are miserable even with generous welfare support). Many if not most municipalities have terrible economies, and they run most of the welfare services including roads, schools, sanitation etc (the state level functions as a smoothener through grants etc across municips, it is on local level most services are provided ). The quality of many of these services are in decline in many places which is what people note in their everyday life and complain about when they say that quality of life is shrinking. No amount of tax rise could ever satisfy these demands of replacing capital investments and staff services with what would be needed frankly.

          (As a side effect of Germany post-WW1, the Nordic countries had taken on most of their debts to finance their industrial revolutions pre-WW1 in German banks. As the value of the German mark collapsed post-WW1, the Nordic countries could get off debt-free for almost nothing. You shouldn’t be that critical of debt at all times, you should just happen to find a “good” lender who can finance your critical productive investments).

  11. I have often wondered why you put so much emphasis on avoiding debt, but currency worries make sense. Inflation would be fine for those with debt (as long as they have savings or income) since it would reduce the real value of the debt, but deflation is another story.

    Re touchscreen ordering, besides the fragility of the systems and the job destruction they represent, there is the matter of hygene. Entirely tangential to your point, but there have been reports that those screens are crawling with nasty bacteria.

    1. Inflation does, in fact, effectively diminish debts. But it also jacks up the cost of food, fuel, medical care, et cetera at the same time. Wages never rise as quickly as inflation and any savings that might have been salted away melt like an ice cube in the August sun. So while taking on debt in anticipation of an inflationary period might make sense, it comes with serious consequences for people who lack the steady income to service the loans while also trying to put food on the table.

  12. Greetings from the East Bay! I do hope someone was willing to feed you and take your money over here.

    FWIW, I used to work at Nordstrom in Walnut Creek. One hot summer day, the power went out. We stayed open and wrote up tickets by hand. When the power returned, we ran them through the register. Of all the tickets written during that period, only one ended up being a bad transaction. Had the power been on, that customer might simply have handed us another card, so you can’t even assume they did it deliberately.

  13. Also, there is nothing worse than those stupid screen menus for ordering at McDonalds.

    One other story: I went to a local pub/restaurant recently and their computers were down (much the same as what you related). They had one person who still knew how to write an actual ticket and, by fortunate coincidence, a part-time cook who was there that day that knew how to (correctly) read a written ticket! So I didn’t have to move on but I got quite a kick out of the fact that no one knew how to write up a lunch ticket….

  14. I always find it really annoying that signs such as “No Cash Payments Allowed” always have some kind of idiotic justification statement like, “We’re doing this to make your guest experience better” (or some similar nonsense). As if limiting our options really helps us….

    1. My experience in general is that if the sign says “For your convenience”… it never IS convenient for ME. “For your convenience, we are now checking bags at the door.” I’d rather carry mine than wonder if you’re keeping an eye on mine, thank you.

  15. My father was a professional photographer and he taught me how to use a camera, process the film, and make prints back when all that required lots of chemicals.
    I would often have a camera with me and took many photos of interesting houses and buildings. If anyone noticed what I was doing they would usually smile and carry on or ask me about my camera.
    That changed in the mid-1980s. I am not sure what happened then, perhaps the beginning of video camera surveillance, but I got similar reactions like the bank manager.
    “Don’t take my picture.” Was the average response. So I nearly stopped taking candid photos.
    The electronic payment economy that you mention has its good and bad aspects. The same 14 year old with a laptop can transfer ‘digital money’ from one place to another. The losses get spread around to everyone.
    Some good parts are, as you mentioned, if there is no cash on the premises there is less likely to be a robbery. Those food trucks and convenience stores will surely benefit from this. Also with no cash there are no worries about counterfeit money and having to make change.
    There is also a sorting function. Those that do not have the means for a bank account will have to look around for those fewer places that will accept cash.
    I often use cash and lately I joke about it. “Is cash OK?” gets a laugh in some checkout lines, but many are incredulous that some places will not accept cash.
    As you mention Johnny, cash will eventually be gone, like leaded gasoline.

  16. Are there really all that many businesses that won’t accept cash, preferring credit cards with their 3% nick or debit cards? I see that you found one, but I don’t think I’ve ever encountered one.

    1. Isn’t it illegal anyway not to accept cash? My paper money says it’s legal tender for all debts, public and private.

      1. It actually is illegal. But the trouble of suing an institution would be expensive and time-consuming and worth very little to the person suing, aside from pride.

        It’s also legal to hand-write a check out on any piece of paper (unless laws have been passed in the last 20 years that disallow it). As long as your routing and account number and the pertinent information is included, it is considered a legitimate check. But just try to find anyone that would accept it!

      2. Yes, legal tender for all DEBTS. But if you are at a store, you haven’t incurred a debt until they agree to sell to you at the price and conditions that they choose. If their conditions are “no cash” then no transaction has occurred and there is no debt until you agree.

        1. The real issue is when, for instances gas stations, a retailer advertises one price for cash and one price for e-pay/cc/etc. This happens alot with mom&pop gas stations that will give you 5 cents off a gallon of gas if you pay cash.

          In my preferred field of collecting, cash is still king.

    1. I’m not opposed to precious metals, but they aren’t a panacea. If you’re loaded down with debts from a big mortgage, credit cards, car loans, and the usual high burn rate lifestyle your gold coins won’t last long in crunch. My point is to focus on securing necessities in a way that doesn’t require dependence on paper instruments and continual high income streams. A modest two bedroom home with no mortgage and a big productive garden is preferable to a five bedroom place with a restrictive HOA and a lot of debt. A walkable town and a bicycle are more disaster proof than a fleet of cars and trucks in the driveway if they’re bought on loans. A tight knit community from (extended family, church, or any other affinity group) is more secure than a retirement plan dangling from a thread on Wall Street. Precious metals can come after other things are in place as a kind of backup. But all by themselves… not so much.

      1. “If you’re loaded down with debts from a big mortgage, credit cards, car loans, and the usual high burn rate lifestyle…”

        Oh, absolutely. I just assumed that the demographic for this blog has a positive net worth.

        And don’t go overboard on PMs. IMHO there’s an 80% chance that the economy will just keep chugging along as it’s done since the founding of the Republic, with ups and downs but generally up.

      2. And precious metals have to be stored somewhere “safe”. If that’s in a safe-deposit box or vault somewhere, now you’re right back to being at the mercy of electronic controls and other people who may not have your best interests at heart.

        If it’s at home, well, then you have to have an arsenal and someone home all the time to protect it.

        And you can’t eat gold or sleep in it or get somewhere in it. It is not useful for any other purpose than a theoretical store of value.

        I’m with Johnny: not a panacea.

        1. Converting your assets to precious metals, coins, jewelry or the like could have some merit in the case of refugees who are fleeing one country for another where their jewelry and metals will still have value. However, if you’re planning for the Zombie Apocalypse it probably doesn’t work. Canned goods and ammo might be better.

          I knew a South African once who, when he decided to emigrate, to get around the government’s restrictions on taking money out of the country bought a very nice yacht and sailed it away. Apparently, this was not uncommon. Spend your money on a boat, sail away, sell it somewhere else, use the funds to start a new life.

          1. Look at what happened to the Russian royal family. After their executions it was discovered that many of the daughters had jewels sewed into their underwear.

        2. Some of my Indian co-workers report that their neighbors (also Indians) have been burglarized specifically because Indians are known to often keep a lot of wealth in gold jewelry. Liquidity goes both ways.

        3. “And you can’t eat gold or sleep in it or get somewhere in it. It is not useful for any other purpose than a theoretical store of value.”

          Paper currency, stocks, and bonds theoretical stores of value. Real property and precious metals are actual stores of value. Real property is great but illiquid. A small percentage of one’s net worth, say 5%–10%, in PMs won’t hurt and could help. It’s an insurance policy for an unlikely economic catastrophe. A hedge against this danger that Johnny outlines:

          “No paper currency in history has survived for very long since the issuing governments inevitably abuse this faith in order to meet short term political goals. Electronic versions of cash make it that much easier to manipulate and debase fiat currencies.”

          1. Real property is a store of value insofar as it can provide you sustenance. By working it directly for food, by being on/near a point of trade, by having a resource on it such as timber that you might harvest and barter for other things. And the value of that property is commensurate with how difficult or easy it is to extract sustenance from it. With value working upwards from there based upon societal complexity. Precious metals are still theoretical stores of value. You can’t eat them, many of them are not that useful when compared to various non-precious metals. They are simply a more basic form of theoretical wealth than cash or plastic. That makes them able to be traded in more places and in more diverse political situations. But they are still, ultimately, theoretical. The basic value from which all others spring is the ability to keep us fed, sheltered, protected, etc.

            1. Exactly. The basis of all economic theory is producing a surplus: more timber than one person can build shelter with and more food, water, wine, or fiber than one can eat, drink, or wear. And so on with more complicated goods. But it starts with land and labor.

              The excesses become trading goods, and money is the mediating device, as it would be complicated in the extreme to maintain a system of ratios for all trading goods (how many chickens equal a yard of cotton cloth? How many hewn timbers can one get for a steer?).

              Gold, silver, platinum, diamonds, cash, bonds…all have value because there is general agreement on their relative store of value as compared to consumable surplus, not because they have much intrinsic use value. (Historic stores of value have included furs and tulips. There’s a pretty good argument that Bay Area real estate is following the tulip curve.)

              Note that my first paragraph sounds a whole lot like the basis of Johnny’s personal/small group resiliency plan in this post and throughout his writing.

              1. “Gold, silver, platinum, diamonds, cash, bonds…all have value because there is general agreement on their relative store of value as compared to consumable surplus, not because they have much intrinsic use value.”

                Gold, silver, platinum, and to a smaller extent diamond all have intrinsic value. All are inputs to manufactured products. Cash, stocks, and bonds have no such value.

                And since those PMs have intrinsic value and are quite portable compared to real property, timber, chickens, etc., they’ve been used for tens of thousands of years as a means of exchange.

                Ask people who lived during the Weimer Republic or present-day Venezuela which they’d rather have had, the local currency or some Goldmarks or Krugerrands.

                1. Cash, stocks, and bonds are all tangible inputs also.

                  Try to build a factory that makes something (perhaps out of gold, silver, platinum, or diamonds) without at least one of them.

                  In a serious SHTF moment, the agreed value of gems and precious metals will break down. Metals are heavy to carry around. And diamonds aren’t divisible.

                  What will have exchange value? Ammunition. Fuel. Food. Shoes. Shelter.

                  1. What you’re describing is a Mad Max situation. That’s consistent with the Hollywood disaster vision of the future.

                    The opposite interpretation held by most people is that nothing bad will ever happen so there’s no need to fret. And anyone who thinks there might be a market correction is an idiot (as if 2008 was ancient history.)

                    The reality for most people is going to be somewhere in the middle. And one more time… I personally never said anything about gold or diamonds… I’m all about low debt, shelter, a productive garden, a deep pantry, useful skills, and a cooperative relationship with the people around you.

                    1. “What you’re describing is a Mad Max situation. That’s consistent with the Hollywood disaster vision of the future.”

                      What Chris is describing is Nazi Germany between 1933 and 1939, when more than 90,000 German and Austrian Jews fled to neighboring countries (France, Belgium, the Netherlands, Denmark, Czechoslovakia, and Switzerland). The German government forced them to “sell” their real property at confiscatory rates. Most of those who fled sewed gold and diamonds into their clothing in order to have at least a small percentage of their wealth in their adopted countries.

                      What Chris is describing is Venezuela today, where people are fleeing the authoritarian socialist government. No doubt the vast majority of those unfortunate folks wished they’d converted some of their fiat currency and domestic securities into tangible gold, silver, and/or diamonds after suffering a one-million percent inflation rate (not a typo) earlier this year.

                      What Chris is describing could easily happen in the United States if it were hit by an electromagnetic pulse, man-made or naturally occurring, like the Carrington Event of 1859.

                      Precious metals aren’t a “panacea.” Rather, keeping 5% to 20% of your net worth is just common sense, a hedge against the unlikely calamity.

                    2. “I’m all about low debt, shelter, a productive garden, a deep pantry, useful skills, and a cooperative relationship with the people around you.”

                      But Johnny, those take time and effort to develop. From what I have observed, Americans want “solutions” to their fears that are quickly and conveniently purchased.

                      Nice post, sir.

  17. But are the times really more uncertain than they were in decades past? We like to think so but I’m not so sure. The stable post-war boom of the 50s and 60s was a tiny blip in the long history of this country. But even those times felt uncertain to those who lived them. We just know how things ended up but the people living through Korea, the Cuban Missile Crisis, Vietnam, Stagflation, etc. didn’t have that luxury. Especially if you weren’t white. Not to mention those who lived through the Great Depression and WW2 and the other big crises before that.

    I’m not arguing against organizing one’s life in a robust and self-reliant manner. I do the same thing. I question whether today’s times are more uniquely uncertain than they were for any previous generation. The times are always uncertain to those living them. When I was in HS people were prepping for possible nuclear winter. When my father was a kid the west coast was prepping for possible Japanese invasion. Which seems silly now in retrospect as we understand how the war turned out. But it wasn’t so silly for those who were living it. My grandfather talked about paper money with some of the same skepticism that people today use for bitcoin. And he was traumatized somehow by the depression-era prohibition on holding gold and the government’s control over the gold price. I’m not clear on the details but it nearly wiped him out.

    I do believe that Trump’s erratic flailing and vengeful policies will eventually lead to some sort of economic crisis. But I’m expecting an ordinary downturn not the end of the modern world. I think the real long-term crisis will be climate. And I’ve all but given up hope that the world will effectively reverse things.

    1. One more time. Just for the record. I’m not anticipating the “end of the modern world.” I’m observing the ingredients that could lead to a crisis involving the currency.

      1. The interdependence of everything reminds me of a line from an old song: “you can check out any time you like, but you can never leave”.

      2. Oh, I do agree. But even a currency crisis is a mundane experience for much of humanity. It’s just something Americans haven’t been exposed to for over a century. I was in Argentina in late 2001. It is very messy but people are inventive and get by. The economy just goes underground. Of course it is better to be prepared.

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