Every peak has a valley. Every economic period of prosperity has a corresponding economic trough somewhere in the future. Any serious economic downturn happens suddenly and without much warning. Usually, we only recognize the warning signs after the calamity has struck and we are looking back on the tragedy in the stiller moments after recovering. The collapse of the nation’s economy and the global economy as a whole is closer than most people think. In many ways, our economies are like a fragile house of cards, and as one collapses the others fall as well. A global depression now will forever change our world, and the warning signs are there. While we are not a financial advisor and we cannot predict the future, we can rationally examine history and preparedness to educate our choices and increase our potential for surviving such a calamity. Record high unemployment, a global reduction in manufacturing output and trade, high debt, weakening currencies, all point to a looming financial crisis; but can you prepare for this as you prepare for other disasters? The answer is yes. In the days, weeks, and months after a massive economic collapse, the landscape will resemble that of any natural disaster. You likely won’t have guaranteed and uninterrupted utilities. You likely will experience disruptions in health services, police services, fire services, and any other social order services– even trash pickup. In many, many ways, a great economic depression will resemble a natural disaster, so it is something you can prepare for in advance. In this blog, we will examine the five financial decisions and investments you can make now to prepare for an economic collapse.
Economy to Economical
The first financial decisions you have to make before a great depression are about your personal economy. One of the definitions of the economy is the careful management of available resources. When we hear the word, we tend to think only in terms of nations and the world. Your personal economy– the careful management of your available resources– is a core principle of prepping. Having the resources you need to get you through a sustained disaster or economic collapse is fundamental to you and your loved one’s survival. Too often, though, humans refuse to accept change and cling to hope that old ways will return. They might, but more than likely they won’t be exactly the same ever again, so the resources you require will change in some ways as well.
When you see the early warning signs of a great depression or a massive financial downturn, the first thing you must do is assess and restructure your resources. Were you a two-car family before you and your spouse started working from home? Why do you still have both cars? Do you pay monthly for a storage facility or for RV storage? Can you eliminate those expenses? Do you have an RV or trailer? If an economic depression will result in your shelter insecurity, that may be invaluable to you. If you won’t need it because you own your property, you should realize that millions will need housing, and the value of RV and trailers will skyrocket. You can also obtain in trade for other goods, maybe a truck or some other thing you’ve been holding off on purchasing. If you don’t own property but you’ve been thinking about purchasing a small piece of land as a bug out location, ask yourself how dire is your situation? Can you pull the trigger on that plan without dramatically impacting your finances? With average rents in American cities hovering around two-thousand dollars, realize that the average value of cropland, including all land and buildings on farms, was just over three-thousand dollars per acre for twenty-twenty. The average value for pastureland was around fourteen-hundred per acre for twenty-twenty.
Do you have the ultimate TV package? Can you get by with an internet-only package and save a hundred dollars or more a month? Do you have multiple subscription services or a gym membership you don’t use? Also, look at what you can possibly pay off in a larger allocation of your resources. Will paying off your vehicle lower your monthly expenditures by three hundred dollars a month and make it easier for you to live? Realize that shortly after an economic depression begins, the currency will have less real purchasing power. While you don’t want to deplete your savings, take a hard look at whether paying off something early might put you in a better position.
Just as Charlie Merrill, the founding president of Bank of America who accurately predicted the nineteen-twenty-nine stock market crash, advised his clients then, “Lighten obligations, or better still, pay them off entirely.” This may not fall in line with our traditional thinking that “Cash is king,” but during an economic depression, cash is worthless paper that can be turned into confetti overnight. Dependence on a single currency to pay for all goods and services leaves you with no options when that currency collapses. Cash in the bank or hidden under your mattress will not help you if the US dollar becomes significantly weakened, but having that three-hundred dollar a month car payment or credit card payment no longer burdening you each month will help you tremendously. To truly think economically, how can you convert that soon to be worthless stockpile of greenbacks into objects that can provide you income through an economic trough? A field of land to rent, a trailer to rent or sell, tools and supplies to build or trade, if you think economically you can obtain what you need to survive at a later date with your purchases today.
As the U.S. economy is sliding into economic ruin, as global economies falter along with it, quickly take a long hard look at your personal economy. Make economic and economical decisions will allow you will reap the results of in the long future. Every dramatic economic downturn in the past has resulted in great suffering because people dependent on the collapsed system for their daily needs found themselves suddenly without the means to sustain themselves. Understand your personal economy and be economical in your actions.
Spread It Out
We are not a financial advisor, so this blog is purely educational. We are, however, an astute observer of history, and history shows that people who have diversified their assets have fared much better through collapses than those who did not. That couple of thousand dollars in the bank you may have in cash will not hold its value when the US dollar loses its value. Fortunately, today’s options for diversification are numerous. One caveat here, the most important things to you during a total collapse are always beans, bullets, band-aids, water, and the like; however, you don’t question the need to store up firewood during warm months, because you know it will have value in colder months. The same is true for any reserves of cash you currently have only in US dollars. Every economic downturn has also had an economic recovery. We’re not suffering today like our ancestors were in the Great Depression. Eventual recovery is an inevitable fact, but so is the fact that the US dollar, as it is today, may not emerge from a collapse as the world’s reserve currency. Even if it does, though, it may not emerge as quickly as other currencies, or precious metals, or allow you the rapid conversions as cryptocurrency does.
Diversify your assets to minimize total losses. Losses will occur, and they will be dramatic, systemic, and sweeping. When this occurs, some assets will be worth less than others. When the dollar becomes less valuable, precious metals have historically become more valuable, but precious metals lack liquidity. It’s hard to trade an ounce of gold for bread and gas when money seems worthless. Even though it may be worth more, it doesn’t translate well. It’s hard for someone to realize the full cash value of the gold. What is certain is that dependence on a single form of currency (cryptocurrencies, precious metals, fiat currencies like the dollar, even tangible goods) leaves you with no options when that single transactable currency collapses or significantly loses value. Diversification, or having your assets spread across many different currency types, can greatly reduce how far you fall in an economic collapse.
As we have explained in other blogs, once your essential prepping supplies are in order, precious metals do have a place in your prepping inventory. While they don’t have initial, upfront value in an economic collapse, they will retain their value in a recovery.
When currency becomes stronger, you can easily reallocate your precious metals into cash.
Following any disaster, manmade or natural, economies suffer. They often dip with people’s perceptions of how bad and how long it will last. When the markets suffer, or the dollar declines in value, or both, precious metals typically rise in value. If you are observing what is happening right now with the Fed printing money and driving up the national debt, you can observe the spike in demand for precious metal prices as investors are looking to move their fiat currency to a safe haven with precious metals being just one of the assets they’re pursuing.
If you want a somewhat riskier option but one that will provide you the ability to rapidly convert your US dollars to other currencies, you may want to consider cryptocurrencies. Having some of your nest egg in cryptocurrency will provide you a means to instantly transfer a collapsing US dollar to a stronger British Pound, or Yen, even an Icelandic or Danish Krone, if that’s still stable. Any US great depression will likely result in a global downturn as well, so you will have to be aware of other markets and their stability. Having a percentage of your money in a stable cryptocurrency, however, will allow you to move your assets from a dying economy to a surviving economy and will then allow you to retain some of the value when you finally bring it back to your own currency.
Providing yourself with instant liquidy options; providing yourself the ability to rapidly move any larger sums into other currencies through cryptocurrencies is a smart move in anticipation of another great depression. Unlike fiat currencies, cryptocurrencies are established with a set number of tokens or coins. They cannot simply produce more to establish quantitative easing in an economy. Because of this, they retain their value and even accelerate in value as other fiat currencies collapse. The challenge with cryptocurrency, of course, is that there aren’t many options for using that cryptocurrency to buy lunchmeat and a loaf of bread. There are cryptocurrency cards that will translate your cryptocurrency to dollars at a point-of-sale, so it isn’t impossible. It just isn’t as simple as it needs to be at this time.
Whatever route you take, do not keep all your assets solely in cash in a bank or under your mattress. Spread it out to increase your stability. Any economic depression will result in the devaluation of the currency, so don’t have all your eggs in one basket or all your reserves in a single account.
Invest Heavily Into Yourself
Make the financial decision to invest in yourself. Now is the time to get that sewing machine and brush up on your skills. Purchase that inexpensive hunting or fishing equipment and find some new areas to hunt or fish. Buy and read the books you need to develop the skills we outline in some of my other blogs. Learn, learn, learn. Take that internet course that’s going to increase your skills, personal marketability, and value. If we are on the cusp of a Great Depression, the skills you still have a little while to develop may be what will carry you through. You can’t postpone that trial and error to the time when you absolutely must be successful. Learn to tie the knots. Learn to fish. Learn to forage. Learn to cook. Learn to garden. Learn any skill that you can use to survive a prolonged economic downturn. Remember, the Great Depression in the US lasted over a decade. It can reasonably be assumed that the next great depression may last as long or longer.
If you were to look at college course enrollments during a recession, you would see that they increase dramatically. That is attributable to the recently unemployed looking to rapidly find another job. Unfortunately, these people tend to struggle and drop out over the long haul, because their approach is wrong. They should have prepared themselves well before being prepared became absolutely critical to them. Once the economic depression strikes, any opportunity to retool yourself or increase your skills will be less possible. The majority of your time after an economic disaster strikes will be completely consumed with the essentials of survival. Educating yourself or increasing your skills will be a luxury you can no longer afford, or worse, it will have to be done through trial and error while your livelihood hangs precariously in the balance.
From Disposable to Durable
We live in an economic time where we can get almost anything we want whenever we want it often on the same day or overnight, and we don’t even have to leave our bed in the morning. We have become a disposable society in many ways. The old saying “They don’t make things the way they used to” is a result of manufacturing prioritizing all other appeal factors for items but the most important– durability.
In a massive economic downturn, your supply of cheap replacements; your supply chain of what you need right now, is going to evaporate almost overnight. As part of your assessment of your personal economy– your management of available resources– you, of course, need to assess your prepping supplies and durable goods. If you don’t have a personal filtration device for water and they’re under twenty dollars right now, you’ll find yourself in trouble when the municipal water supply fails. The fact is you can’t store enough water for an economic depression which will likely last for many years. Do you have the means to boil and purify water or cook when the flow of natural gas goes down? Something like the Kelly Kettle could be a lifesaver. Essentially, when you look at your durable goods, think about the low-cost purchases you have been putting off and stock up on the affordable items you will need to last you years.
If you have prepared for it, even a little, you will be able to calmly and rationally act through the crisis while others are panicking and helpless. Developing a survivor mindset is the key to your survival and calm, rational decision-making capabilities. The Great Depression lasted almost a decade, and most would argue that our economic structures are more heavily leveraged in debt throughout the world. Most would argue that the house of cards that is our economy could not recover quickly from the domino effect of multiple small to moderate collapses. As such, you have to be mentally prepared for the long haul.
A survivor’s mindset doesn’t look for villains to blame or adopt a victim’s mentality. It calculates its preps and determines what is needed now and for an extended period. The survivor’s mindset is resilient and it adapts to the new climate of economic depravity. It understands that disasters, whether natural or manmade, don’t happen and pass in an instant, but they linger for days, weeks, months, or years after the initial catastrophe strikes. The survivor’s mindset is always hyper-alert to threats from other people who have not prepared to survive even a few hours beyond a disaster. Those who have not prepared will feel a period of mental paralysis, then anxiety, then desperation. Their anxiety is manifest in their panic and stems from their awareness of their failed preparations for a disaster that they cannot visualize an ending to. During any of those phases, your solid preparations will be threatened, so keep your stores out of sight and out of the minds of others.
While the first part of a survivor’s mindset is understanding the long time to full recovery after a disaster, an equally important part is the adaptation phase. You are not only adapting to the new reality of maybe no running water, electricity, or gas for an extended period of time, shelter and food insecurities for the masses, and the collapse of social order structures like policing, health, and fire services, but your entire way of living will become the “old way.” It will become the “good ole’ days.” We don’t recover from any disaster exactly the same, restored to the same point, living our lives the same way, so as part of your survivor’s mindset, you shouldn’t expect this. Be flexible, adaptive, and open to creating and being a part of the new future and not paralyzed by lamenting for and clinging to the past. You may remember the adage of the Greek philosopher Heraclitus, “You cannot step into the same river twice, for other waters are continually flowing on.” We cannot change the course and flow of the world, and we know this as survivors, but we can change and control our piece of it amidst the swirling chaos.
So how do you buy something like a survivor’s mindset which has been intrinsically built into you since birth? You survived the trauma of birth, but what you have done since then and the narrative you have told yourself since then have determined what kind of survivor’s mindset you have right now. Physical training classes, meditation and stress reduction courses, and practice, skills-building hands-on training and experiences, all build your greatest investment in yourself–your knowledge and practice banks–and they give you confidence and calm to shore up your survival mentality. Before the calamity strikes is the time to cultivate the survivor’s mindset. Buy heavily into it, invest heavily in it now. Assess your greatest weaknesses to survival and begin tackling those things. One example may be are you overweight? How will you fare in a crisis as a result? How does this affect your inner voice? Start shoring up this weakness now through exercise. Do an assessment of all your anti-survival weaknesses and develop a plan and weekly goal to make these weaknesses stronger. Even the disaster of an economic great depression will eventually pass. A recovery phase will happen. The survivor, the well-prepared prepper is ready for this recovery and will emerge stronger and ahead of the masses. Embrace your survivor mentality.
Economic cycles from great prosperity to great depressions will happen. How deeply they impact us is the only part of that cycle we have some element of control over. To survive another great depression, examine your own economy and think economically about your resources and your use of them. Examine your resources. Make sure they aren’t all in one place and that you have invested in yourself and in durable, income-producing things. Most importantly and true for all your emergency and disaster preparations, develop and cultivate now your survivor’s mindset. Those who endured the previous Great Depression were better prepared, with better durable goods and better knowledge of self-sustenance. You can be that person too.
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As always, stay safe out there.