The sun is finally out after two days of rain. My kids are finishing up school today and I’m headed outside soon to work on some projects. Life couldn’t be better.
You can’t say the same about the global economic system though. For example, I read earlier this week that the US Federal Reserve cautioned that the net worth of American families was near levels they hadn’t seen since 1992.
That bad news sets the stage for today’s letter where I’ll dive into:
- How to avoid the fate of the soon to be extinct global middle class.
- Three simple ways to improve your resilience
- Life after a corrupt government collapses. What’s going on in Libya. The answer is surprising.
The Vanishing Middle Class
Bloomberg did a little digging and found out it was even worse than the Fed’s warning suggests. The median net worth of US families was $11,000, or 12%, LESS than it was in 1983. It gets even worse: today’s net worth is lower even with TWO people working outside the home, not one. I suspect the numbers from the EU and Japan are nearly the same.
The destruction of wealth we’re currently seeing with the “Big Reset” of the financial system, isn’t something that started in 2007. It’s a process of decay that started decades ago and the Reset’s financial panics are merely the latest symptoms — the sharp sounds of a rotten tree snapping in high winds.
It also implies the primary victims of the Big Reset will be the hundreds of millions of economically independent households currently in the global middle class. In other words, we’re going to see the death of the proverbial golden goose of the modern economy, as the Big Reset strips them of their remaining wealth and the means to ever earn it back.
How? Through a series of financial panics like the one in 2008 and the one we’re currently seeing in Europe.
To me, the world that emerges from this crisis is almost certainly going to be a grim place to live. Fortunately, I think we’ve already figured out a way to avoid this fate.
How? Here’s a start (it’s a tough concept to wrap your head around given how indoctrinated we are):
Don’t confuse financial freedom with real freedom.
This confusion is one of the big reasons why the global middle class is going to perish so rapidly.
Financial freedom — the idea that if you accumulate a sufficient number of financial assets, your life will never be constrained — is mostly an illusion. It’s not going to last.
As we are finding out every day, financial assets are akin to a collection of poker chips you get for gambling in a corrupt global casino. A huge casino, run by mobsters (note how few of the people responsible went to jail for the 2008 financial collapse), that’s about to declare bankruptcy in a way that negates all legal constraints. So sure, while financial assets offer quite a bit of freedom and flexibility today, who knows what those assets will be worth in the near future (if anything).
What’s the solution? Rely on history. History teaches us that real freedom — freedom and flexibility for you, your family, and your community — is tied to the ability to produce things that you can use. Global systems may come and go, but food, energy, water, and products that you can produce locally endure.
Focus on that.
The good news is that making things locally has become MUCH easier than it used to be.
NOTE: Local production is also proving to be a great place to set up a business right now. I’m currently working on a new report entitled, Resilient Jobs: Making a Good Living in the Local Economy.
Three simple ways to Improve Your Ability to Produce Locally
Want to improve your resilience with the minimum amount of work possible?
One simple way to do this is to invest in high quality soil. That’s it.
Great soil gives you the option of producing in the future, if you need it. You don’t even have to farm or garden it to improve your resilience.
Here are three ways to do that:
- Compost on as large a scale as you can. Devote a section of your yard or a property you own to a compost pile. Recruit your neighbors to throw grass and leaves on it. Let it cook.
- Plant green manure in as many places as you can. Green manure is a collection of plants that both fertilize and break up the soil (deep roots). Everything from clover to sunflowers to peas to wildflowers. Keep planting as necessary to turn the soil into something that can support even the most demanding plants. I’ll have more details on the best practices for green manure in the future.
- Buy as much local land that can be converted into organic farmland. It’s a good investment even in the current economy. Demand for organic food (food that isn’t poisonous) is increasing at 20% a year, while organic farmland is increasing at 8%.
When a Corrupt Government Collapses Can Conditions Improve?
Conventional wisdom is that without a big central government in control, social and economic conditions can quickly become feral. Zombies roam the streets while good people hide in terror. That hasn’t been my personal experience.
Here’s an interesting example from Libya that suggests the opposite may be true:
The major urban areas are run quite effectively by militia coalitions (or understandings) and local businessmen. The cities of Tripoli (the capital), Misarata, Zintan and Benghazi are all relatively peaceful and bustling. Misarata is also the largest container port and locals repaired that facility and are running it 24/7. To the surprise of shipping companies, the numerous bribes and bureaucracy typical of the Misarata port for decades are gone. The corruption may return, but for the moment the locals are proud of it and the importers and shipping companies are making the most of it. Misarata is also important because it contains about half the militia gunmen in the country. Any new national government will have to convince Misarata that the new rulers are fit to rule Misarata. However, this dynamism is unlikely to last. An authoritarian and corrupt National Transition Council is trying to “unite” the country.
Here’s a question for you: what would happen in your community if there wasn’t a big central government in charge? Would things fall apart or would you find a way to make do? I know my answer.
Your willing to believe in a better future analyst,
PS: This Saturday I’ll feature an amateur’s guide to DIY ferrocement graciously provided by a member of our rapidly growing community, Federico. I’ll also have some ideas you can use to improve your community’s food production.