Saturday, 28 June 2014

Placing an each way bet.

Predictions of economic collapse are common. Many are credible but I need to remind myself that every generation has believed it was living on the eve of Armageddon. 

I have experienced economic collapse..twice.

Some menacing images- because economics does not photograph well.

I was in Argentina a year or so from the collapse. As an outsider it was possible to see things more clearly than people who were closer to the action. I knew what was about to happen. The local currency was pegged at an unnaturally high level to the US dollar. In theory one peso was equal to a dollar and yet whenever I paid for something with dollars I would receive peso as change- a merchant would rather borrow peso from a friend than give me change in precious dollars.

In other words nobody believed the official exchange rate and would dump the peso at the first opportunity.

I also experienced the 2008 crash more severely than most. Being closer to the action I did not see it coming- even though I blogged about the possibility! I took no evasive action until far too late. I still remember the moment when I realised the possibility of total collapse. I was standing on platform of West Ham Station and reading the advertising posters. All of them were from the pre Christmas period and I was filled with horror and dread. Business had moved into survival mode. There was no spending and no investment, only a grim hanging on by the fingertips.

This was the time of Gordon Brown and his plan to persuade the worlds leaders to inflate their economies simultaneously and stave off total collapse and possible war. He succeeded and (although I did not vote for him) Gordon deserves more credit than history will give him.

In addition I have witnessed the collapse of the Soviet Union and several near misses in Asia and Latin America so I know it could happen here. 

The real question is do I wish to rely upon collapse to ensure a prosperous future?
Many gold bugs are doing exactly this. These people are as relying upon external events just as much as the alternative tribe who rely upon their investments. What is needed is an each way bet.

I do not wish to rely upon any particular outcome. I want to be OK whatever happens.

Place one bet on failure.

If we wish to know what life will be like following a collapse we should ask someone who has experienced it such as the author of the Surviving in Argentina blog.

When collapse occurs (most) people do not become animals. They continue as before. The difference is that while they had one job before they now have five jobs. They exchange favours with friends, they breed some chickens and so on. We find the same thing in Africa- even though there are very few jobs there is plenty of work and it is possible to see people engaged in trading at any time of the day or night.

In other words collapse is a continuation of our present lives but under difficult circumstances.

We should reduce debt and gather people around us who we can trust. A smallholding would be useful as would a comfortable home- provided it is owned outright.

Stored food? Weapons? Plastic boats and wacky gadgets? Hold the absolute minimum. Remember that these things are dead money and will be costing you every day that you hold them. Some will get you arrested.

Prepping is very cost effective. You may acquire skills and tools very cheaply in the good times and these will prove useful even is disaster does not strike.

Place one bet on success.

Paper assets such as shares do well in a booming economy. This is the time to start a business and to be adventurous. It may all go wrong but as long as you have a safety net in place you need not fear too much. When it comes to allocating assets you should aim for an 80/20 split in favour of success because history is a tale of steady progress punctuated by disaster. Yes. We may see a collapse but many of us will see the recovery that follows it.



2 comments:

  1. The Manosphere is rife with advice about economic collapse and the potential of a world-wide depression. But only a few blogs ask why it's headed that way. Do your research and you'll find this slow-motion financial implosion is being thoughtfully initiated by the world banks and governments. Their aims are multitude but center on control. They're going to crash the system on purpose to further their goals.
    Prepare for the collapse as best you can, but know that it is being engineered by those in charge with a specific outcome in mind.

    P.S.~ Gordon Brown is a colossal asshat climate-change alarmist who sold Britain's gold supply near the bottom. The man is a financial boob.

    ReplyDelete
  2. You are right about Gordon and the gold.

    I am less convinced of the banking conspiracy (if this is what you are referring to) but you are welcome to post some links here so that others can make up their minds.

    ReplyDelete

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