(continued from Urban Survival Techniques - Fighting Words)
Editor's note: This is the last essay in the series of urban survival techniques. This essay is not itself about personal survival, but assumes that you have been able to protect yourself and you have come out OK on the other side of the chaos, and you and society are ready to start rebuilding.
Here's GT's hopeful vision for the future -- building a free and prosperous society:
RECOVERING AFTER GOVERNMENT COLLAPSE AND ECONOMIC COLLAPSE HAS RUN ITS COURSE
The economy is in total shambles. I am talking about today. Not yet at the point we will have to rebuild. The government is trying by lying to get us into a war, hoping the economy will recover because of it. That is the history of World War II, but only America did well economically. The war was not good for our allies. England, France, China, Russia, all suffered tremendous losses. Both in money and lives. Their economies didn't recover until the mid 1950s.
I could point to a later example. We won the war with Iraq but the economy still suffered. That why Bush wasn't re-elected and it is why his son will also be a one term president. [Editor's note: Written in early 2000s. Well, there is tremendous economic momentum, so the collapse, while progressing, is doing so slower than many have expected.]
Also, while our leaders hoped for a World War II victory, nobody remembers how close we came to losing. We had several advantages. We knew their codes and plans. We could out-manufacture and out-man the Axis powers. Didn't matter. It was close, damn close. Hitler only lost the war due to his own arrogance and meddling. If Hitler has won, sooner or later we would have to fight Hitler on his own terms, not ours, like we did in World War II.
Our country (U.S.A.) is showing the same arrogance as did Germany in 1939. We think we can control the world single-handed. We could end up like the Germany of 1945, with everything in ruins.
With everything in ruins, the citizens of this country will be in the same position as a ragged, penniless immigrant arriving for the first time in this country. Since he is new, he has no one to help him. Many people think it is easy to succeed in this country. After all, their great-grand-parents did.
It isn't going to be as easy as it was at the turn of the century. The country was far different then. It had no income taxes. We were on the gold standard and Government was not as big or intrusive. It has become harder to go from rags to riches in this country. All the regulations make it almost impossible to start a business on a shoestring. I should know. I have tried my best, and still am, to achieve that very dream of becoming a self-made man. Many immigrants today will not achieve that dream. They will end up as store owners at best. The dream of success and super wealth will have to be achieved by their children. If possible at all.
Meanwhile, what about the children? Today's children know they will end up with less than their parents. That nightmare was realized when people learned their children would not share in the dream of owning their homes. Sure the parents could pass the house on to their children, but several factors still mean the children end up with less. Estates taxes can take a 50% haircut from the total property value. The World War II generation brought their homes fairly cheap. The War Generation were few. The Baby Boomers are many. Not all of them will get to share in the estate proceeds, or the estate will have to be split many ways. The proceeds will go to an average of four children and an uninvited mooch, the government.
Knowing the decreased chances of inheriting the same value as did their parents, the Baby Boomers gambled by going into the stock market. They lost. They lost big. There will be no money to supplement the small proceeds of what they will inherit for retirement. The market has crashed. Even if it was at the same level, the generation they could sell it to, Generation X, won't have the money to bail them out. Generation Xers can get only service jobs like working at McDonald's since the high paying manufacturing jobs have been shipped overseas.
This is a short list of the problems we will face when it is time to rebuild. Inflation and hyperinflation. A major cause of the destruction of our economy is the destruction of the dollar. It has gone the way of all fiat currencies and is now worthless. Whatever wealth we had will have been wiped out. The factories, one of the major sources of our wealth, have been shipped overseas. Our creativity and the "can-do" ability of the American citizen -- another source of our wealth -- is being wiped out by our schools dumbing-down and socializing everyone.
Yet, I don't think we will become a third world nation. The "can-do" spirit is still here and there are lots of companies that teach a proper work ethnic. Take McDonald's for instance. It is estimated that one of of four teenagers since 1975 has worked at McDonald. They learn the corporate culture and what it means to work. Yes, the jobs are low paying, but once you have the work ethnic they teach you, you can go on to better paying jobs.
With so many problems and a lot more to come, how do we rebuild? The problem of society is also the problem of individuals. In this case, it is my problem. I said to myself: I have survived the worst the ghetto can offer. Having done that, anything is possible. So now, I ask myself: "Starting with nothing, how do I become rich? I mean really rich? There's no one to help me. I have to stumble along using trial and error. That's part of the reason I have yet to succeed. But I will! It will take time. It will also take time to rebuild society.
In the future to come, the United States can expect no help. We will have made too many enemies; there are too many countries mad at us. It will be hard to rebuild, damn hard! If I can succeed on an individual level, it will be possible for society. So let me tell you my individual dream.
I want to make money! The amount of money I want to make is staggering. You won't believe my greed, but to give you an idea, if I succeed I will end up the second richest Black man on Earth. Just behind J.J. Johnston. Why do I need so much? I sat down and wrote down my dreams and how much is would cost to achieve them. My dreams don't come cheap.
My dreams are based on ideas. I want to get as many ideas out to the world as possible. I want to be able to produce ten movies a year and publish a hundred books. Currently, the cheapest it costs to produce a movie is about 10 million. Books are a lot cheaper, costing only $25,000 for a 5,000 print run. If you figure the cost of what it takes to make one movie or publish one book and multiply that out, I am probably still understating the amount of money it will take. In addition, if I want to achieve my dream I will have to help save and rebuild the world. At least no one has ever accused me of thinking small. I know that as audacious as my dream is, it is possible. And if it is possible for an individual, it will be possible for a society. It will take individuals willing to dream as big as possible to rebuild the United States.
With the foresight you had in buying gold and silver, you are one of the few in a position to help rebuild. Because of your foresight, you have money, real money to invest in rebuilding. Rebuilding after the crisis is the only way I can think of to get back the wealth we are now accustomed to. All the other ways of increasing your wealth -- the stock market, real estate, venture capital -- will be former shadows of themselves.
WHAT INVESTMENTS SHOULD BE AVOIDED IN TRYING TO HELP REBUILD THE COUNTRY?
Government bonds, treasuries, education, government anything. The government will be desperate to get the credit for rebuilding. In the currency crash, in the collapsed social security Ponzi scheme, in their failure to have the Security Exchange Commission protect investors, the government has lost the one thing they had going for them: Confidence, the trust of the people. The government will want to try to rebuild and will sing siren songs to those who can provide capital or have the ability to rebuild. It can't. You can. Even if the government comes up with some rebuilding plan, why would you expect it to work; their crisis plan didn't.
People are going to be desperate. Desperate enough to listen to the lies of the state once more. The government will make lots of promises to rebuild. Even you as a skeptical gold bug might be fooled by its promises. Fool me once, shame on you. Fool me twice, shame on me. Hopefully enough people won't be fooled twice.
You will be one of the few in a position to rebuild. What I want to warn you about, is government. They can't rebuild. They will just use you. Don't deal with them no matter how much they plead or promise. You can avoid being seduced by remembering one simple question. If I am involved with the government in any way shape or form, how do I know they won't make things worse instead of better?
2.) The Stock Market.
In a bear market, at the very bottom, no one is interested in buying. We know that from being long suffering gold bugs. The stock market has yet to reach that fabled bottom. When the stock market is at its bottom, there will be bargains galore, many way below replacement cost. The advantage precious metals have over stocks and bonds is that gold cannot go out of business. There will always be someone interested in buying. It is different for stocks. Companies can go out of business, making their stock worthless.
Knowing that, it will take at least a generation, probably more, before the stock market will be a place to invest again. Maybe some brokers will try the methods of Corporate Raiders by breaking a company into parts and hoping it is worth more that way. The only problem is there will not be enough gold-backed money to pay for all the companies doing this. In a bankruptcy sale, many companies are lucky to salvage 10 cents on the dollar. Since we will have gone through a super crash, there will be super bankruptcies. I expect many businesses to be getting less than a penny on the dollar.
There is an advantage for you. Since many companies will be selling parts of themselves, it may be the chance of the lifetime for you since gold bugs will be one of the few with money. I doubt I will get the chance or the money, but if the price is right I will buy and completely own Disney. For that to happen, gold will have to go up beyond our wildest dreams and Disney's stock would have to drop below its investors' worst nightmares, but at least I can dream. The parts I will keep will be the entertainment/movie division. I would not keep the theme parks or ABC television. I may or may not keep Ringling Brothers Circus. I love the circus but the expense of keeping a troupe of several hundred on the road during the depression will be a killer.
3.) Luxury Items.
The crash and after will be a time of severe belt tightening. There are many things you will have decided you can do without. Go to the mall and see how many stores are selling luxuries and how many are selling necessities. Some of the luxury stores may have already closed up in the mall. Once you've seen this, you'll have a clearer idea of what to avoid.
WHAT WOULD BE WORTHWHILE INVESTMENTS THAT WILL HELP REBUILD THE COUNTRY?
Since we are rebuilding, I would invest in anything that has to do with setting up new trade and travel routes, distribution channels, long distance shipping, and so on. I would chose these because they were the first step to establishing cities and civilization in the past. Except for a very few exceptions, such as Las Vegas, all cities are connecting points to trade routes or a port of entry. A city like Rome grew because it was the center of two major trade roads. New York and Los Angeles grew to their size because of their protected harbors for ships.
Since civilization got its start on the trade routes, I expect the rebuilding to come first to cities near a port, or that are major granaries like in the Midwest. Also, cities with major railroads or highways, because of their open access for trade, will also be ones to recover first.
I would avoid cities such as Las Vegas. Las Vegas is in a desert. Much of its shipping comes in by air freight. Its water comes from neighboring states. In the chaos to come, it will be to easy to disable air traffic and water. What will the city do then?
Another thing I should mention about air freight is that it is the highest transportation cost in gasoline use there is. It is only efficient because of the speed. It depends on "just-in-time" shipping like nothing else. If there is a hyperinflation traffic jam like I predict, you can kiss just-in-time shipping good-bye. I think railroads will be better since they offer the lowest cost per gasoline mile.
OTHER INVESTMENT POSSIBILITIES.
Trade made cities possible but I believe more than anything, insurance, especially industrial and transportation insurance turned this country from farming to industrial to the highest living standard for all. Anything and everything is insured.
Most think this country grew because of the industrial revolution and that is true to a very large extent. Before you could build the plant, you have to raise the money. And to protect the investors you had to have some way of covering the risks involved. You offer business insurance.
Insurance is one the main reasons why Islam has not been able to match the growth of the Western nations. It is specifically forbidden in the Koran to buy or sell insurance. It is considered gambling against the will of God.
Why did the lack of insurance keep Islam from growing? Both Christian and Islamic Nations had entrepreneurs -- risk takers. They would save and start their own business. There would come a point where if you wanted to grow, you would need insurance. The entrepreneurs of Islam couldn't get insurance and so their economy couldn't develop advanced technical and industrial plants. The religion limited them.
There comes a point where no matter how skilled the entrepreneur, it becomes beyond the skill of one man to raise the capital needed for an industrial concern. The entrepreneurs would go to banks, and private investors. They, by their nature, are not risk takers. In order for the entrepreneur, the banker, and the investors to get together, another party had to join. Insurance Companies. Insurance companies would cover the risk the entrepreneur was taking. The nature of insurance is to spread the risk from one person to hundreds. That way if there is a loss, it will be small for each person. Insurance would satisfy the fears of investors. It could protect them.
Insurance nowadays, Investment, Business and Financial Insurance, has gotten so complicated, no one can be sure if they are protected. Derivatives are the prime example. All I know is if there is a blow-up at say: J.P. Morgan, it will destroy both the banking and insurance industry. Already there is a billion dollar lawsuit. One of the insurers want out of the contract because it will ruin them. It takes a lot to ruin an insurance company. They are among the richest companies in the world and have the highest assets to liabilities ratios among all companies. If the insurance industry is destroyed, it will be time for the people like us to offer protection. It will make rebuilding easier.
The last investment I would consider would be entertainment. Not because it will rebuild, but it will boost peoples' spirits during the crisis. I am also basing it on historical fact.
During the Depression, movies thrived because for most people it was their only escape from the harshness of the Depression. The movies made the Depression fun. When I think of movies of the 30's, I think of Hollywood Musicals like Gold Diggers of 1933, 42nd Street, Hollywood Party, the comedies with The Marx Brothers, and more. Sure, there was a Depression going on, but in the movies, while everyone was broke, they still had fun. Even today, those movies are a fun-filled relaxing way to spend an evening.
Hollywood deliberately made most of their movies of the Depression era very upbeat. It worked. People would count the pennies out out of the quicksand of their earnings to go see a movie on the weekend. It made the rest of the week so much more bearable.
Since I am trying to be an entertainer, investing in entertainment makes sense to me. You may have other ideas in what to invest in or what it takes to rebuild. I would like to hear them.
This is the last in the series of my "Protect Yourself" urban survival techniques. Thank you for putting up with my ramblings and my delusion thinking that I can write. If you think there is something I didn't cover, let me know. I may write an revision on things I didn't cover and the possible ways I would deal with it. Feel free to submit comments on any of the posts on this site.
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