Prepping: “How Bad Can It Get?” (ICoD1)

ICoD1 simply means we kick-off our “In Case of Depression” series with this first article.

Although we would love to buy into the “Nanny State will save us all” mentality, there are convincing reasons why this Depression will be different than any before.

Schools have brainwashed most into believing that the US Great Depression (1929-1943) was “IT” – a kind of “one-off” never to be repeated.

Yet, when you’ve spent half a lifetime studying economics and news as I have, it becomes clear that not only are depressions semi-regular (and thus predictable) but they involve numerous common elements.

The National Bureau of Economic Research calls out a recession this way:

“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales. A recession begins just after the economy reaches a peak of activity and ends as the economy reaches its trough. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief and they have been rare in recent decades.”

A Depression differs, as Gregory Mankiw sized it up in 2007, in that…

“There are repeated periods during which real GDP falls, the most dramatic instance being the early 1930s. Such periods are called recessions if they are mild and depressions if they are more severe.”

The most qualified Federal Reserve chair to date was Ben Bernanke who understood the differentiation between recession and Depression all too clearly:

“During the major contraction phase of the Depression, between 1929 and 1933, real output in the United States fell nearly 30 percent. During the same period, according to retrospective studies, the unemployment rate rose from about 3 percent to nearly 25 percent, and many of those lucky enough to have a job were able to work only part-time. For comparison, between 1973 and 1975, in what was perhaps the most severe U.S. recession of the World War II era, real output fell 3.4 percent and the unemployment rate rose from about 4 percent to about 9 percent..”

So, whatever comes on the heels of recent market perturbations, we are likely to get at least a deep Recession.  But, in my view, for a multiplicity of economic  reasons, a full-on Global Depression is likely.

Consider these factors as “get started” ideas:

  • I have long written about the dangers of consumer supersaturation.  We see it everywhere we look.  Whether it’s in the number of televisions and “screens” in our homes (Elaine and I have 9 – for two people!) to the prevailing trend toward epidemic obesity, excess consumption rules the day.  I remember as a news director in 1975, or so, asking the CEO of a new Public Storage company “Why would people buy stuff and then Pay to “Store it?”  At the time (pre-saturation) the proposition of “paid storage” was absurd.  Yet, here we are.
  • The purchasing power of the US Dollar is trash.  We’re down to less than 4-percent of what it was in 1913.  Revolutions begin (historically) when fiat falls below 5-percent of original purchasing power.  The 96% of our “money’s worth” is debt.
  • Savings has become the hands of the one percent.  Although not as violent a displacement as the French Revolution, per se, there will be lots of pain and suffering as many of the One Percenters see their savings destroyed.
  • Despite all the data – and excessive taxation – Depressions do “reset the clock” and provide for another run at long-term economic success.

This was the premise of Nikolai Kondratieff (Kondratiev by revisionists like Wikipedia – privately we hold to the Kondratieff spelling used by the American Economics Association in the early 1940s when Kondratieff’s works were become a hot ticket in American economic thought…):

“In 1925 he published his book The Major Economic Cycles which quickly was translated into German. A short form was published in 1935 in the Review of Economic Statistics and for a time his ideas became popular in the west, until eclipsed by those of John Maynard Keynes.

“Kondratiev’s economic cycle theory held that there were long cycles of about fifty years. In the beginning of the cycle economies produce high cost capital goods and infrastructure investments creating new employment and income and a demand for consumer goods. However, after a few decades the expected return on investment falls below the interest rate and people refuse to invest, even as overcapacity in capital goods gives rise to massive layoffs, reducing the demand for consumer goods. Unemployment and a long economic crisis ensue as economies contract. People and companies save their resources until confidence begins to return and there is an upswing into a new capital formation period, usually characterized by large scale investment in new technologies…”

We now know that although Kondratieff was nominally right – insofar as cycli8cal Depressions being semi-regular through his time – we have seen a change in their length since.

Though the late 1990’s and into the 2000’s a group of us interested in Long Waves of this sort gathered at the University of Colorado Long Waves discussion group to debate things like the change in cycle length.

My preferred work-out was based on the extended life of a working human.  As lifespans increased, so did the length of the Long Wave.  However, that’s not convincing to people like my consigliere who argues that other factors are at work including debasement of the currency at never-before possible rates.  We can thank Nixon for uncoupling the dollar from Gold in 1974, or so.  then, we have a technology cycle, as well.

Not that it matters.  IF we have a Depression, the only point of the economics discussion will be the “Placing a Blame” and the two political wasteland parties, social media, or some  left-field cause (terrorism, another oil spike,, or whatever) will be the blame.

Best thing to do when difficulty like this latter day “Hard Times” arrives is to skip all the demonstrations and get out your list.

The List?

What are my Personal Basic Systems needed to live and navigate through anything?

  • Food:  What are your food supply options?
  • Housing: Where will you live.
  • Transportation:  Do you get around?
  • Energy:  Will you be too cold?  Hot?
  • Environment:  Will you crap on the street?  (A new, yet to be recognized by conventional/group-think economists, but nevertheless, very real leading economic indicator!)
  • Communications:  With no money, what phone?
  • Finance: With no “money” (Or worthless as in the Weimar Republic) how well do your “systems” hold up?

Which gets us to a “bottom line” for this morning’s discussion:

When Bad Times show up, how well prepared are you?  Where are your vulnerabilities lists?

We Need “Threatalyzer” or “Lifealyzer” Software

I’ve argued for years that there is a missing class of software – which I call the “Life Manager Class.”  The idea isn’t here – yet –  let alone mature, but there are examples of the gist of it happening on sites like Founder2Be and this listing.

What will make this kind of “Personal Life Meaning and Management” (PLMM) platform work is when it catches up to current events and recognizes three realities of planning for an impending economic Depression.

  • The software will focus on the Seven Core Life Support modules (my contribution from my books and research).
  • It will be organized somewhat like a Project Manager tool (Project or Kan Ban style)
  • It will offer total score and specific module scores.
  • It will integrate to Personal Banking and Investment.
  • And it will offer modeling like some of the open source data management/machine learning tools like SilverDecisions or Orange.

In the ideal iteration, such a PLMM package would also do things like model your optimum education levels for “next moves” and would even “shop schools” and give recommendations.  More on the algorithm and development in Peoplenomics this morning.

Why the Giants of Big Data aren’t already offering this as a low-cost add-on to personal banking, insurance, and portfolios is one of the greater mysteries of life.  Except that we have a world full of specialists who know every possible aspect of one thing.

But in the Aggregate they know nothing about everything.

Which is why it behooves people like me to wonder (even knocking on the door of 70, lol) How can we better manage life?

You still have that golden choice:  You can MANAGE YOUR OWN OUTCOMES or the EVENTS WILL DO THAT FOR YOU.

Seems a simple-enough task.  But more urgent if, as we suspect, events begin to spiral which they could after elections.

So,  the next section of ICOD (in case of Depression, right?) then rolls into view:  “What can we learn from Third World Lessons?”  Seems like a good topic to pick up in our next prepper and remaining ahead article come Saturday morning over coffee, eh?

Write when you get rich,

27 thoughts on “Prepping: “How Bad Can It Get?” (ICoD1)”

  1. George, we’ve quibbled about the seven major systems. I still believe that there are eight, with social(not social media) being critical to a worthy life. It starts with a significant other, then family, communities(like minded or geographic), and extending as far as you wish. This can’t be assumed! If it’s not worked for and cultured, you’ll end up being alone with the other major systems satisfied. What purpose does communication have without anyone to communicate with?

    I do believe that this perhaps merits a PN column of its own. Like farming, it’s a skill that can’t be learned in one semester.

    One more point: Young folks with a strongly defined 30 year plan tend to do well. At our age, we have a hard time conceptualizing such a plan, yet it’s needed to have the force of will required to feel alive and forward thinking. Young folks are desired because they are future oriented. Older folks tend to become present oriented and stagnate unless they absolutely refuse to. I think this is a worthy topic to consider also.

    • Good points & insight NM Mike. If kids start saving now, over 30 years, the magic of compound interest will make them millionaires. Stock mutual funds are probably best for the kids, because most don’t seem to understand finance.

      I set up shareholder accounts for my grandchildren thru the stock transfer agent & it will provide them a nice start when they reach maturity. You can start them up for as little as a $250 & $25 a month.

      • you would be saving in USD fiat…not a good vehicle to be in….gold and silver are the ONLY remaining assets to be in….imo

      • Absolutely ECS…I have said many times if I could have put my SS donations..(not the company portion just what I paid in) just in savings bonds and reinvested them out every seven years into savings bonds alone.. I would have had a nest egg between twenty five and fifty million.
        That’s where I get irritable when I hear politicians saying that SS recipients are leaches on society and going to destroy the country. My response to that make every federal employee (including congrss) participate in the social security and Medicare programs.

      • D…..we all live and breath by the fiat dollar bill. It has to be in my opinion the best ponzi scheme that was successfully implimented and universally accepted ever dreamt up.
        Gold and silver..hmm..think about it.. They hold value as long as they are accepted as valuable. Coinage really originated as a method of carrying around metals that could be converted into a tool or other useful item.
        Gold and silver was meant as an adornment metals.
        Most ancient civilizations used grains and animals as their measure of wealth.

    • Hi Mike…your absolutely right.. I notice with the kids and grandkids that what they see as important is acquiring the next best toy..
      I failed myself as a child by dumbing myself down to fit in.( wanna hear the funny part lol I use to be in a group that basically thought everyone was a drooling idiot.. I got irritated with them razzing me about my level of achievement and stomped off..the funny part is now decades later I realize I stomped off because I thought they were all drooling idiots lol).I actually see some of my grandkids doing the same thing I did now. I lecture them..hopefully they will listen to an old man.
      You can’t rise to the top of the ivory tower without the paper..
      I worry about the cost of an education and the youth of today and how they can successfully plan for tomorrow with all the cards stacked against them..fifty thousand plus living expenses ends up costing them millions in the end..most of the time they end up after school loans with a wage similar to that of the janitor.
      I worry about the tomorrows..when my age group ends up in a nursing facility everyone will be tattooed and have safety pins stuck through their lips listening to the golden oldies of C…RAP music

  2. Depressions are the ONLY time in economic history, that we as people get to see the true state of our economy! It is a time we realize “the Emperor has NO clothes!” Everything between recessions is just BS and Hype to keep the game going until the next depression.

    Anyone who thinks the last depression was “one of kind” and our economic planners have tools to eliminate depressions are just WRONG!!!!! Kondratieff was right!!! He went as far back as the 16th century and found depressions came around like clockwork every 55-65 years. Well, 55-65 years have gone by and NO depression. Does that mean Kondratieff was wrong! NO, it means the next depression will be WAY different from those in the past. Our economic planners have succeeded in “taming the beast” only to create a gargantuan monster.

    Find that hard to believe? OK, think about it, the consumer literally “picks up the tab” for EVERYTHING in our economy. All those CEO salaries, perks, profits are paid by the consumer. Without the consumer, there would be nothing! So why is everyone kicking the “slats” out from under the consumer. Why is it the consumer has such a hard time living of their earnings? To feed a gargantuan system that demands more tribute from the working masses! As soon as this tribute exceeds what the working masses can deliver, an economic breakdown results. The consumer is tapped out. Therefore, depressions are the only time in history when we see the REAL state of our economy.

    • Isn’t it funny that the great economic depressions happen around the time that those that learned the lessons from it are gone or mostly gone and aren’t in a position to teach the younger generations what they learned from the experience.

  3. Phew.. From my perspective there’s so many points where society can fail causing the next great. I fear when it does it will be so massive that we will not be able to cope.
    Our society hasn’t ever endured he’ll on earth. My fear is the elite will stage a major war to control population and propel themselves. What I think they are missing is the outsourcing that’s been done. It also is how most of the worlds worst leaders have gained office.
    At this point I can’t see a way out. Maybe if they legalized marijuana the tax revenue can be used to whittle down the debt with one in three using it for recreation and with the huge number of incarcerated reduced maybe..easier fuel food building just a few of the ways costs could be reduced.

  4. Meanwhile, back in the real world, George, the dollar IS getting trashed. Duh. The Conservatards just added 10% to the national debt. Where were you?

    All this nonsense started when St. Reagan nearly tripled the national debt. Then baby Bush learned his daddy’s lesson about Voodoo Economics. You realize of course that had you Conservatives not cut taxes (and stayed out of their wet dream called Iraq) we’d have paid off all the national debt.

    What’s it all mean? Higher interest rates. Way higher. Followed by economic collapse. Well done angry Conservatives!! Let me help. Be nice to your wives once in a while, maybe you’ll get laid sometimes, and then you won’t have to be so angry. Think of it as a patriotic act. Best, Mike.

    • At best, Mike, you are being intellectually dishonest. There were budget deficits in the 20 years prior to Reagan taking office, with the exception of 1969, so deficits did not start with him. While revenues did initially stall the first two years following Reagan’s tax cuts, by the end of his term revenue yo the government went up by about two-thirds. The problem during his administration was that Congress was unwilling to control spending, much less cut the size of government. Congress controls the purse strings, and let us recall that the Democrats controlled the House the entirety of Reagan’s time in office, until 1994. One of the ongoing themes here on George’s site is the culpability of both the parties in getting us into the debt situation we are now in. Both parties have created their own pet entitlements, and both fear the political fallout of trying to cut or eliminate them. I submit to you then sir that with a feckless Congress, the only path left to a president is to try and curb the growth of government while spurring the economy to grow its way out of a deficit. That is what Trump appears to be doing now. At this point, it is admittedly a risk, but that is the point where BOTH political parties have gotten us. Please have the intellectual honesty and maturity to acknowledge it.

  5. I’m hoping our host will post these 2 links. The 1st one is one for you to, the reader, to look at and consider if you are in or out of the group. But that site has the 2nd one which is another way to examine the topic of this post. Our host has said many of those ideas over the years but perhaps being expressed the way Mr. Smith has will be of some use to a few of you.

    • I found your comments most useful although my conclusions are entirely contrary regarding the philosopher, Mr. Smith, that you promote.

      Mr. Smith has no institutional or practical life study accreditations that I can ascertain. Certainly his employer is subsidiary to one of the largest media companies in the world with donations favoring Democrats over Republicans 6 to 1. I randomly selected one of the ownership family’s charitable foundations for a review of its publicly available IRS form 990 from 2012 to 2016. The benefactor of the charity’s largest donations was the Carter Foundation in Atlanta.

      While Mr. Smith’s sermons of our “paradigm at the precipice” may mirror the times, do you understand what he advocates for after the crash? The survivors of the 1% and/or government would command a skeletal paid staffed apparatus to direct a mass populace, socially responsible, volunteer workforce to accomplish centrally-determined projects for the common good.

      I regret to advise that I will not be subscribing to Mr. Smith’s hourly social media pronouncements. Antisthenes, why must you disappoint Socrates so?

      May Zeus show you mercy!

  6. The reason we no longer have recessions/depressions –

    “I’ve abandoned free market principles to save the free market system”

    – George W. Bush

  7. Your writings, George, are excellent! I’m an old man (having lived already through one great depression!) and having a lot of leisure now, I read abundantly. I MUST SAY THAT FOR MOST OF OUR PROBLEMS there are adequate solutions to fix, or mitigate those problems discussed most often. However, that’s were it ends!!!
    Why do we have Harvard, MIT, and diverse thinktanks when little gets done?? All through my life it’s b/s after b/s sorry.

  8. The 1 item missing in your 7 core life support modules is “HEALTH”
    Articles like this is why I suffer through your Trump worship and climate denying rants. Edward Teller warned of the pending catastrophe of unrestrained input of greenhouse gasses into the atmosphere in 1959. Not a Chinese hoax, not a Russian weather hack. Although I agree with your theory of using RF to change the weather. I worked on RF medical devices and know the potential of RF. Ben Bova predicted this and much more in his novels.
    I believe we are in the “Fourth Turning”

  9. I’m curious, George, has PayPal blackballed you? I’ve been having trouble with automatic payments for my subscription to your Peoplenomics. PP says they’ve revamped their security rules when talking with them about another payment I’ve had problems with. I may have to wind up sending you a check. Hope this doesn’t portend a cause for you to activate some of your survival preps if services like PP cut you off for “Wrongthink”.

  10. Hi, George

    I think over time you’ve mentioned opening a Treasury Direct account to foil bail-ins. Is this something sill considered?

  11. An “Off Topic” (OT) comment;

    From the old days, George Wallace was a Democrat. Conceded, a “Southern Democrat” of the time, which is closer to today’s Republican. But for any fence sitter that remembers him, a Democrat none the less. Just a way to rattle their cage as it were.

    SYSOP; There is no need to publish this as is. It is simply a way to generate more political unrest in this lead in to a questionable election.

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