The Coming Economic Downturn
Disclaimer: This isn’t investment advice. If you’re trying to invest and grow your portfolio, you’ll want to look elsewhere. I’m talking about strictly hedging your bets for the rapidly declining future, not getting more money. I don’t know what investment vehicle will be best for percentage gains, nor do I care.
It seems rather obvious that an economic downturn of some form is right around the corner. Between most businesses being shut down (permanently), most of the wealth being transferred to centralizers because of COVID, the unlimited printing of money (inflation) by the Feds, the buying up of single-family homes by big banks (driving up the price ~20% above current inflated market price), and the manipulation of the stock market by elites… I don’t see how this ends well.
It seems like they are just postponing the inevitable, at this point.
It’s about 6 different trains barreling toward us simultaneously. We can’t stop it. So, how do we hedge against it?
Honestly, I’m rather torn. I don’t personally see a great escape route no matter where I turn.
They big players seem to be:
- Exit the stock market and keep your savings in some form of cash
- Buy crypto
- Buy precious metals
Let’s break all of these down:
- Exit the stock market and keep your savings in cash
Considering the likelihood of inflation, this is likely the most damaging option.
If the economy takes a hit, stocks will be wiped out fairly easily. But inflation would likely also go up, wrecking the purchasing power of any cash. You’re damned regardless.
I don’t have much faith in bonds, either. So their doesn’t seem to be a great option with any of the conventional savings/investing methods.
- Buy crypto
A lot of users have taken a massive interest in crypto as a hedge. This could possibly be a decent hedge, but I doubt it.
It doesn’t really have much of an intrinsic use or value except in comparison to other currencies. It also fully relies on an internet connection, electricity, willing partners, and government acceptance of use. If any of these fail, then it is completely worthless.
It seems like a massive bubble or a pyramid scheme. One that made a lot of people rich and one that would be absolutely revolutionary in a non-degenerative, non-totalitarian world. Hell, if the world wasn’t in such a sh*tshow, I’d be a major promoter of crypto. But we have to live in reality. We are in that totalitarian, degenerative world. Crypto won’t save us from it. If the situation gets bad enough, crypto won’t even be a factor in it.
I also find it highly unlikely that the Feds couldn’t find a way to regulate it, or outright ban it from use, should the need arise. They did it decades ago with gold and that was a physical item.
There is no intrinsic stabilizer with any crypto. The value of the coins could tank tomorrow, so I don’t view this as an acceptable hedge.
- Buy precious metals
In many ways, the precious metals have similar problems as crypto. They don’t really have much of a use in reality and thus have very little real value.
If the world ends and society crashes, I sure as shit won’t be trading my food for a silver coin. Why would I want a rock during the end of the world? I’d rather have tangible resources.
This one is also heavily controlled and regulated by the Feds. They have forced the buyback of Gold and tanked its price before; they can easily do it again.
This is only a hedge if the government allows it to be, which they wouldn’t.
In no civilizational collapse or war in recent history have any of the people traded metals. We spoke with a civilian who survived the Bosnian war and his lesson was interesting. He said that currency immediately became worthless, as did precious metals. No one bartered or cared about them at all. Why would they? It couldn’t do much but buy you a few things off of the black market, at prices that were absolutely insane. Instead, they traded tangible resources (food, water, consumables, cigarettes, alcohol, etc).
We also have no examples of precious metals being used extensively during periods of economic downturns. No one in Venezuela or Zimbabwe is trading gold nuggets and they got hit with hyper-inflation. If not war nor depression, what is the point of them?
I don’t really see a situation in the US where we would be trading precious metals for any reason. If everything crashes, we’d be like Bosnia. If everything besides the government crashes, the government would likely regulate/nationalize the metals. If hyperinflation occurs, no one seems to use them anyway. Either way, it doesn’t really help much.
I would wager that the precious metals are far better than fiat, however. And the metals are likely a better hedge than crypto.
Maybe we have a PM > Crypto > Dirt > Fiat type of equation. But none of them are great.
So, what do we do when none of the options are really “great”?
Sure, different people will try to sell you on crypto vs bonds vs stocks vs gold vs silver and the like, but that’s usually because they have a vested stake in one of them. I don’t have any stake, so I don’t really care what you do with your money.
But I don’t see any of them as ideal. So my recommendation is something resourceful.
Instead, I recommend you put the money into something that will hold its value, is tangible, and will be worthwhile in any scenario.
These include the following:
- Water – Water filtration, water storage, and water stockpiles
- Food – Food preservation, food storage, and food stockpiles
- Alcohol – Tons and tons of alcohol
- Medicine – Shelf stable, long-term expiration medicine of all kinds (especially antibiotics and NSAIDs)
- Ammo – Massive amounts of ammo. In any potential situation (war, economic downturn, Biden-ban) the price of ammo and desire for it will skyrocket
- Self Defense Tools – Guns, pepper spray, knives, armor, faraday gear, etc
- House w/ Land – Including all necessary requirements to make that land self-sufficient / sustainable
- Books – Especially ones that are likely to be banned
- Skills – Invest in anything that would make you more sustainable with regard to problematic events (Invest in a survivalist course, or an DIYer course, or a medical course, or a farmer course, etc)
And similar items.
Any of these above items will be 1000 times more useful to you than a rock or an imaginary internet coin should S(actually)HTF. They will also still be more useful to you if stuff does not hit the fan, but does simply degenerate further (a depression, civil war, or inflation).
If you focus on actual resources instead of potential gambles then when an economic downturn happens, you won’t be out of much. These items will keep you reasonably stockpiled and living decent for whatever the future holds.
Sadly, none of these items sell or boost others’ portfolios, so you won’t hear most people recommend them. But I don’t have a stake in this besides trying to help out my readers, so there you go.
My recommendation is tangible assets, useful resources, and skills improvements. Skip the currency simulators or trading instruments. I don’t think any of them will help much.