Ten Financial Principles Re-examined
By Peter Goodchild
24 March, 2009
Countercurrents.org
When I wrote “The Ten Principles of Apocalyptic Financing” (largely re-posted at the bottom here), it started to occur to me that many of those principles conflict with one another. Each principle is valid in itself, but one cannot adhere to all of them. There are no such enigmas for a financial expert whose mentality is stuck in the 1950s, who believes that the present crisis is merely a “correction,” and that cheap stocks are bargains waiting to be grabbed. But for those, such as myself, who believe that life will never return to “normal,” there is a serious practical problem to be dealt with: How do we hold on to whatever money we have when protection of any sort seems to be vanishing? Money has been funny for decades, but it is now becoming quite bizarre.
Principles (1) and (2), get rid of debts and stay out of the stock market, are probably fairly sound. Yes, I know some people still like to play the stock market, but the immediate snag is that even if a company is wheeling and dealing in something useful (ammunition? shoelaces?), the general disgust with capitalism/industrialism could get people to stop buying almost anything. The Great Depression of the 30s was also a time when people just plain stopped buying.
Principle (3), investigate the reputation of your bank, conflicts with (5), get rid of money as a form of wealth, (6), avoid banks as a place to store wealth, (8), remember that inflation will cut heavily into the purchasing power of your savings, and (9), watch out for currency collapses. With those four caveats (if not more), is there really much reason left for worrying about something as relatively trivial as the reputation of your bank?
Principle (4), consider switching to a safer currency, is affected by the problem that there is probably no such thing. But again, if all currencies end up being good for nothing but lighting campfires, why are we even talking about ways of preserving our (financial) assets?
Principle (5), putting our wealth into tangible items, is not only in conflict with any principles that involve holding on to money; it also includes the statement that “money is just dots on a screen.” This is a matter that rarely gets discussed. In the various forms of societal collapse, electricity is the most important in terms of chronology. By that I mean, the light bulbs will be flickering long before there are any other signs of a similar technical nature, such as gas stations with “Sorry, No Gas” signs, and certainly long before factories with “Sorry, No Metal” signs. Without computers and electricity there will be no money. Not to mention the fact that the malicious wiping out of large amounts of electronic data is becoming child’s play.
The biggest enigma of all, however, is that if most of the principles below are meant to help us to hold on to whatever is left of our life savings, then how to we pay attention to principle (7), which says that our possessions might one day be reduced to a pair of hiking boots and whatever can be stored in a knapsack? Well, okay, I know your parents told you that if you were ever in trouble all you had to do was talk to a police officer. But do you really think that when millions of people are smashing windows and blocking highways, there will really be a police officer with enough time to deal with your own particular troubles? And, yes, I know you’ve also told your loved ones that they should be prepared to defend your suburban investment, but do you really have bulletproof glass in all your windows?
The Ten Principles of Apocalyptic Financing
1. Get rid of all debts, including such things as student loans, credit-card accounts, mortgages, and car payments. (According to the U.S. Bureau of Labor Statistics, the average car costs $8,003 a year to own and operate; the AAA says $9,641.) As time goes by, there will be less and less opportunity to pay off such debts.
2. Don’t be involved in the stock market or any similar method of investment. Those who think the present economic troubles are merely what is referred to as a “correction” are living in the past. This is the End, and we may as well sit back and enjoy it. Even gold is unpredictable, because although it is more tangible than money it still has value only with the universal consent of the users – its value is nothing more than a convenient fiction. Actually, the question of the future usefulness of gold hinges on another question, that of the level of collapse. In a future era that is merely a slightly impoverished duplicate of the present world, an era in which extensive economic ties still exist, gold may have some use as a means of exchange. In a future world where social breakdown is greater, where starvation is the most common topic of conversation, for example, it is less likely that gold will be a significant item in any trade that goes on – in a widespread famine, how many people would want take gold in exchange for food?
3. Investigate the reputation of your bank. Are you sure you can get your money out if you need to? What would happen to your savings in the case of a self-proclaimed “national emergency” and its resulting draconian legislation? And don’t believe the stories that say your savings are somehow “guaranteed” against loss in the event of a bank failure.
4. Consider switching to a safer currency, if there still is such a thing. Swiss francs or Euros are probably the best bet. Don’t just go for currencies that are rising rapidly: Chinese money is rising, but China is heading into vast problems of food, fresh water, and environmental damage, and the market for its exports is dwindling.
5. As much as possible, don’t save money – get rid of it as a form of wealth. Money is just dots on a screen, not something to base your entire future on. Consider replacing money with more-tangible, more down-to-earth forms of wealth. Put together a collection of non-electric tools. (Yes, electricity will be very expensive.) Stock up on durable clothing and footwear. (Yes, you’ll be doing a lot of walking.) Buy a house and land that are cheap enough not to require a mortgage. Produce your own food. In every way you can devise, become independent of money. Every act you perform that does not tie you to the global economy gives you that much more strength. Repairing a shirt with a needle and thread is a major victory. Learn a lesson from Iceland, which suffered so much from the credit collapse because it was dependent on imports.
6. Avoid banks as much as possible. What purpose do they really serve nowadays? They give you almost no interest, and yet they charge high rates for services. If you walk up to your bank one day and find the doors closed for the indefinite future, you may wish you had buried some of your money in your backyard. Become your own banker. You might even want to buy a safe, although such a thing might be troublesome if you ever had to move.
7. Start reducing your possessions, and consider a more nomadic way of life. (Well, strictly speaking, nomads moved from one known place to another known place, whereas you may be moving to the unknown.) Although Rule #5 says we should turn money into material goods, in reality we should keep those material goods to a minimum. Most westerners own such vast quantities of junk that moving from one house to another is like re-living D-Day. We are convinced by advertisers that happiness consists in owning one of everything, but we are buried in our possessions. The problem there is that, even now, one cannot always count on the police when a dispute occurs, and people living in rural areas sometimes speak of forming their own vigilante squads. Vigilantism, however, is not only illegal but often just plain impractical. When a gang of outlaws moves in next door, as will happen in the coming anarchy, you may wish your assets had been more disposable. In the uncertain future, there could also be a dozen other reasons, not necessarily of so grim a nature, why you might want to be able to pack your bags fairly quickly.
8. Remember that your present savings will be cut in half one day. Your money will be eroded by inflation, as goods become harder to make and harder to transport. Food, clothing, and countless household items, which even now are so cheap that we rarely bother to look at the sales slip, will not be so readily obtainable in the future.
9. Watch out for currency collapses, even if you live in a major industrial country. In the 1980s and 90s, especially in the wake of “free trade” agreements, money-market speculators moved in and forced the currencies of several nations to fall considerably vis-à-vis those of more-powerful countries. Remember the fate of the Mexican peso. Without a gold standard or fixed exchange rates, any form of money has only the spending power that the speculators allow.
10. Remember that your real wealth is in your head. Even if your survival bunker has a thousand tools and weapons, your mental powers are more important. You don’t need a dozen books if you’ve already memorized them. Besides knowledge and wisdom, your head should also contain a modicum of courage, compassion, and all the other virtues we managed to forget.
Peter Goodchild is the author of “Survival Skills of the North American Indians.” He is temporarily living in the Sultanate of Oman. His email address is [email protected].
