"Where Not to Be In A Crisis"
by Jeff Thomas
"For many years, there have been those who have been prognosticating an economic crisis – not just a recession lasting a year or two, but a full-blown Greater Depression that would eclipse any major event we’ve seen in our lifetimes. That may appear to be an overstatement, but historically, it’s the norm for a time of major upheaval to occur every eighty years or so. And although some of us began analyzing and commenting on the Greater Depression many years ago, it’s clear to all of us that we’ve now entered the leading edge of the crisis.
All of the traditional warning signs are present, and although technology has changed considerably over the millennia, human behaviour has not. We are witnessing the same symptoms that were present in major collapses of the past, going back at least as far as the Roman Empire.
We are therefore seeing not only the initial stages of an economic collapse but the concurrent events, such as an almost total corruption of the political structure, a move toward totalitarian rule, the destruction of currencies, and a loss of faith in leadership across the board. Along the way, we’re also experiencing a decline in logic and morality and an eroding sense of humanity.
That’s quite a lot to take in, yet, sorry to say; we’re only in the first stages of collapse. It will get quite a bit worse before it gets better.As the economy begins its collapse in earnest, what we shall witness will be a population that will be unable to adapt quickly to the symptoms of the crisis as they increase in frequency and magnitude. The reaction to each will be, first, shock (an inability to comprehend that the impossible has occurred), then fear (a state of confusion and inability to adjust to rapidly-changing conditions), and finally, anger.
This last development should give pause to us all, as it’s the stage when those who have been most strongly impacted realise that there’s precious little that they can do to regain normalcy. When they find that they can’t get their hands around the necks of those who actually are to blame, they’ll take out their anger on whomever is in their proximity – each other.
So, the questions arise: Where will these problems be most prevalent? Where will the situations exist that should be avoided as much as possible, in order to minimize the likelihood that we’ll become collateral damage of the crisis? Having studied previous similar historical periods, I can attest that this is a question that, unfortunately, requires an extensive and complex answer. However, as a rough guide, there are three considerations that will be overarching. Regardless of any other concerns that may affect the reader individually, all persons would do well to stay clear (as much as possible) from the following:
First World Countries: Since 1945, the First World countries (the US, UK, EU, Japan, Canada, Australia, and New Zealand) have led the world in both prosperity and power. Under the driving force of the US, they’ve created not only the advances of the last eighty years but also the rot that has led to the current crisis. As such, these countries are not only the countries where we’re seeing the most dramatic oppression of people; they will also experience the most precipitous fall economically, politically, and sociologically.
Although these countries have, until recently, seemed to be the most attractive locations in which to live, that condition has now begun a reversal, and in the coming years, they’ll represent the very nexus of decline. As such, they’ll become the most unpredictable and even the most dangerous places to be.
Conversely, the choicest countries in which to live will be those countries where change will be minimal. Those countries where the populations and governments have been relatively unambitious over the last half century or more, will be the locations that are the least likely to change dramatically during the crisis. That one fact speaks loudly to the reader’s economic, political, and social well-being in this period.
Cold Climates: The colder a location is, the less hospitable it will be in a crisis. When governments collapse economically and seemingly basic amenities can no longer be paid for, politicians will look after their own needs before those of the people they are meant to represent. Simple services such as snow ploughing may be dropped from city budgets that must experience cutbacks. More importantly, during an energy crunch, you’re likely to experience periods in which heat cannot be attained. This doesn’t mean that you will necessarily freeze to death, but it does mean that life will be much harder. In addition, produce cannot be grown in colder climates, which eliminates even the possibility of a kitchen garden in colder months.
Cities: By far, this is the riskiest of the three concerns. The more concentrated the population is the greater the risk. The larger your building, the less control you have over utilities. If the water, electricity, or heat is shut off due to energy shortages, you will have little or no recourse.
But, by far, the greatest risk in a city will be the inherent depersonalization that exists even in the best of times. Even if you live in a very nice apartment building in a nice neighborhood, you’re likely to be socially isolated from others. (You may not even know the people in the apartment across the hall.) People in cities tend not to help each other much at the best of times, but in a crisis, those around you can become a threat to your very existence.
Most importantly, food supplies are likely to be interrupted for indeterminate periods and, as Isaac Asimov stated, "After nine missed meals, a man will kill for food." Even if you’re able to obtain a loaf of bread at a neighborhood store, you may not be able to walk home with it without being waylaid. Even brief periods of interruption of food delivery to a population center may result in a simple loaf of bread being worth killing for. And even for those who live in prosperous neighborhoods where the neighbors tend to be civil, poorer neighborhoods are not so far away that their residents, if desperate, will not make the short trip to where they think others have the essentials.
Such breakdowns, as described above, tend to occur slowly, then suddenly. Those of us who have lived through city riots understand that tension builds as people attempt to maintain normal decorum, then some small event sparks off rioting. A citywide riot can go off like popcorn spontaneously. In good times, police can quell a riot in a few days or weeks, but when rioting is citywide, and the cause cannot be quickly remedied, riots can last for extended periods, potentially turning formerly-safe city streets into the equivalent of a war zone.
Of course, there’s the tendency to say, "Don’t be ridiculous – it can’t get that bad." However, history tells us that whenever a major crisis period occurs, the above conditions almost always occur.
The reader may wish to assess his exposure to the three conditions above. Ideally, he’ll find a location to sit out the crisis – a country that’s likely to be less affected by the events that are now unfolding. He may choose a location that’s warm year-round, where food is plentiful even in harder times. And he may try to locate himself in a community of lower population density, where neighbors habitually help each other. But regardless of what the reader chooses to do, he should be aware that the future of his well-being and that of his family may hinge on the choices he makes in the very near future."
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“Nine Meals from Anarchy”
by Jeff Thomas
“In 1906, Alfred Henry Lewis stated, “There are only nine meals between mankind and anarchy.” Since then, his observation has been echoed by people as disparate as Robert Heinlein and Leon Trotsky. The key here is that, unlike all other commodities, food is the one essential that cannot be postponed. If there were a shortage of, say, shoes, we could make do for months or even years. A shortage of gasoline would be worse, but we could survive it, through mass transport, or even walking, if necessary.
But food is different. If there were an interruption in the supply of food, fear would set in immediately. And, if the resumption of the food supply were uncertain, the fear would become pronounced. After only nine missed meals, it’s not unlikely that we’d panic and be prepared to commit a crime to acquire food. If we were to see our neighbor with a loaf of bread, and we owned a gun, we might well say, “I’m sorry, you’re a good neighbor and we’ve been friends for years, but my children haven’t eaten today – I have to have that bread – even if I have to shoot you.”
So, let’s have a closer look at the actual food distribution industry, compare it to the present direction of the economy and see whether there might be reason for concern.
The food industry typically operates on very small margins – often below 2%. Traditionally wholesalers and retailers have relied on a two-week turnaround of supply and anywhere up to a 30-day payment plan. But an increasing tightening of the economic system for the last eight years has resulted in a turnaround time of just three days for both supply and payment for many in the industry. This is a system that’s already under sever pressure, and has no further wiggle room should it take significant further hits.
If there were a month where significant inflation took place (say, 3%), all profits would be lost for the month, for both suppliers and retailers, but goods could still be replaced and sold for a higher price next month. But, if there were three or more consecutive months of inflation, the industry would be unable to bridge the gap, even if better conditions were expected to develop in future months. A failure to pay in full for several months would mean smaller orders by those who could not pay. That would mean fewer goods on the shelves. The longer the inflationary trend continued, the more quickly prices would rise to hopefully offset the inflation. And ever-fewer items on the shelves.
From Germany in 1922, to Argentina in 2000, to Venezuela in 2016, this has been the pattern, whenever inflation has become systemic, rather than sporadic. Each month, some stores close, beginning with those that are the most poorly-capitalized. In good economic times, this would mean more business for those stores that were still solvent, but, in an inflationary situation, they would be in no position to take on more unprofitable business. The result is that the volume of food on offer at retailers would decrease at a pace with the severity of the inflation.
However, the demand for food would not decrease by a single loaf of bread. Store closings would be felt most immediately in inner cities, when one closing would send customers to the next neighborhood, seeking food. The real danger would come when that store had also closed and both neighborhoods descended on a third store in yet another neighborhood. That’s when one loaf of bread for every three potential purchasers would become worth killing over. Virtually no one would long tolerate seeing his children go without food because others had “invaded” his local supermarket.
In addition to retailers, the entire industry would be impacted and, as retailers disappeared, so would suppliers, and so on, up the food chain. This would not occur in an orderly fashion, or in one specific area. The problem would be a national one. Closures would be all over the map, seemingly at random, affecting all areas. Food riots would take place, first in the inner cities, then spread to other communities. Buyers, fearful of shortages, would clean out the shelves.
Importantly, it’s the very unpredictability of food delivery that increases fear, creating panic and violence. And, again, none of the above is speculation; it’s an historical pattern – a reaction based upon human nature whenever systemic inflation occurs.
Then… unfortunately… the cavalry arrives. At that point it would be very likely that the central government would step in and issue controls to the food industry that served political needs, rather than business needs, greatly exacerbating the problem. Suppliers would be ordered to deliver to those neighborhoods where the riots were the worst, even if those retailers were unable to pay. This would increase the number of closings of suppliers. Along the way, truckers would begin to refuse to enter troubled neighborhoods and the military might well be brought in to force deliveries to take place.
So what would it take for the above to occur? Well, historically, it has always begun with excessive debt. We know that the debt level is now the highest it has ever been in world history. In addition, the stock and bond markets are in bubbles of historic proportions. They are most certainly popping.
With a crash in the markets, deflation always follows, as people try to unload assets to cover for their losses. The Federal Reserve (and other central banks) has stated that it will unquestionably print as much money as it takes to counter deflation. Unfortunately, inflation has a far greater effect on the price of commodities than assets. Therefore, the prices of commodities will rise dramatically, further squeezing the purchasing power of the consumer, thereby decreasing the likelihood that he will buy assets, even if they’re bargain-priced. Therefore, asset-holders will drop their prices repeatedly, as they become more desperate. The Fed then prints more to counter the deeper deflation and we enter a period when deflation and inflation are increasing concurrently.
Historically, when this point has been reached, no government has ever done the right thing. They have, instead, done the very opposite – keep printing. Food still exists, but retailers shut down because they cannot pay for goods. Suppliers shut down because they’re not receiving payments from retailers. Producers cut production because sales are plummeting.
In every country that has passed through such a period, the government has eventually gotten out of the way, and the free market has prevailed, re-energizing the industry and creating a return to normal. The question is not whether civilization will come to an end. (It will not.) The question is the liveability of a society that is experiencing a food crisis, as even the best of people are likely to panic and become a potential threat to anyone who is known to store a case of soup in his cellar.
Fear of starvation is fundamentally different from other fears of shortages. Even good people panic. In such times, it’s advantageous to be living in a rural setting, as far from the centre of panic as possible. It’s also advantageous to store food in advance that will last for several months, if necessary. However, even these measures are no guarantee, as, today, modern highways and efficient cars make it easy for anyone to travel quickly to where the goods are. The ideal is to be prepared to sit out the crisis in a country that will be less likely to be impacted by dramatic inflation – where the likelihood of a food crisis is low and basic safety is more assured.”
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