At any given time there are an endless number of predictions for the future, and typically a few are outrageously optimistic, a few are apocalyptically pessimistic and most, whether positive or negative, are clustered in the middle. When an upheaval does occur, which is inevitable in the march of human progress, the doomsayers of the time are hailed as wise and everyone wonders why they didn’t see it coming. Here are just a few current examples of why the sky is falling.
Collapse of the dollar – With most of the major banks and central governments printing huge amounts of money, the dollar and other “fiat currencies” which derive their value from government regulation or law are no longer sound and will only continue to lose value. Both the Federal Reserve, with its growing balance sheet, and Congress, with deficit spending that is projected to grow, are postponing the day of reckoning and currency collapse. Interest rates will soar to record levels and threaten to bring down the entire system.
The dollar’s collapse will be hastened by Americans abandoning the dollar for an alternative currency. One possibility is bitcoin, the digital currency that soared in value from $20 to $1,200 in the course of a year (but then retreated to under $500). Another possibility is that the dollar loses its role as the world’s reserve currency, with other countries dumping their dollars and Treasury securities. Whatever its form, the development of a new, international monetary system will destroy the US economy and impoverish millions of Americans.
Climate change – Climate change is predicted to have enormous consequences, from more powerful and frequent storms to changes in rainfall to upheaval in agriculture. Some projections maintain that once the global average temperature increases by 2 degrees centigrade “feedback loops” will accelerate climate change and will make it impossible to stop or even slow these impacts. The cumulative cost of climate change could easily drag down the global economy.
Sea level rise is just one result of climate change, and with the US and global population becoming more coastal it is already drawing attention. Most of New York City is considered to be vulnerable to rising seas, and Miami already has knee-deep water during high tides and floods. Miami is only four feet above sea level and nine inches to two feet of sea rise is anticipated by 2060. Fred Bloetcher, an engineering professor at Florida Atlantic University, estimates “sea level rise threatens six million Floridians, $3.7 trillion in property and a $260 billion annual economy”.
Income inequality – While this is the political and economic rallying cry du jour, in his book “Capital in the Twenty-First Century” Thomas Piketty argues that the purchasing power of the lower and middle classes of the US was stagnated by income inequality. These households were much more likely to take on debt and with unscrupulous banks more than willing to accommodate them, the 2008 financial crisis was the result. Without much higher economic growth than is anticipated or dramatic changes to tax policy, stagnant incomes and household debt will continue to lead to financial crises. And if the income gap grows and strengthens, social upheaval could make any financial catastrophe seem tame.
These predictions are sometimes followed by advice on how to invest and manage money to escape and even prosper from the impending doom. The sales pitch belies the true purpose of the theory; it doesn’t matter how those who follow the advice fare, the pitchman makes out just fine. If the entire financial system or the general society does collapse, it is very unlikely that any of these financial techniques will matter. Creating a gold hoard may preserve value but as a practical matter it is impossible to predict how that would help in a global meltdown.
That’s not to say that we should all just sit idly by and let things fall as they may. We do live in turbulent times and it would not be totally unreasonable to take action to protect loved ones. In that regard, a little historical perspective may be helpful.
Our neighbor’s house in the Tucson foothills had a bomb shelter that was built in the ‘60’s. In fact, there are quite a few private bomb shelters around Tucson. Between Davis-Monthan Air Force Base and the anti-ballistic missile solos scattered in the desert, Tucson was considered a prime target in the Cold War.
So, Tucsonans were concerned enough to commit substantial personal resources to protect themselves beyond what the government or general public were doing. They were responding to a specific threat; although the supplies in the shelter could have been used in a variety of circumstances, the shelter itself would have been useless in other situations. Fortunately, the bomb shelters never had to be used for real protection as the threat eventually dissipated. Finally, we now know that in the event of an actual nuclear attack, the bomb shelters would have totally ineffective in protecting their occupants for more than a very short period. And there was a significant cost to taking these precautions.
Financially, the best protection against Armageddon is probably to stay diversified and not take undue risk. Otherwise, we will all have to rely on our wits and adapt to whatever the future holds. And if you feel compelled to take more drastic action now, the best idea may be to simply put away a year or two worth of food and supplies for your family, and learn how to use and protect it.
(*Henny Penny is more commonly known as Chicken Little and also as Chicken Licken.)