Coping with the Crash
Today’s consensus seems to be that Obama will eke out some kind of victory, perhaps a substantial one. Being a skeptic, I’m assuming the Republicans will manage to steal the election somehow. As with global warming and the march of fascism, I’d love to be wrong about this. We’ll find out soon enough.
I want to put down some thoughts about the economic crash, and what -- if anything -- we can do about it. An edited version of this and subsequent spews will, hopefully, be my next Grassroots Press article.
I have always been a primitive at heart, which is why I chose this “back to nature” lifestyle in the first place. My understanding of economics has always been immediate and direct: How thick is my wad of $20 bills? Is my honey house full of honey? Is the garden doing well? How big is my pile of firewood? I’ve always been suspicious of the fancy stuff such as mortgages and playing the stock market.
Over the years I’ve developed a couple of basic principles. One of them is: DEBT IS NOT WEALTH. Being a cheapskate, I’ve always avoided paying interest. Paying interest, to me, seems like an excellent way to piss away my hard-earned money. Compared to my contemporaries, I have avoided paying several hundred thousand dollars in interest over the years, which has given me many options. Including, most importantly, the option of not having to make so damned much money in the first place.
My philosophy has always been, “pay as you go.” Thus, rather than buying a house and signing up for the typical 30-year mortgage, I bought a piece of raw land in 1973 and built my house over the years, one room at a time. We started out with a 10x20-foot room that my wife, daughter and I lived in. I’ll never forget when a friend came over and said, “What a nice shelter!” Not, “What a nice home!” but “What a nice shelter!” This sums it up right there. “Funky” is my middle name.
People get dazzled by “instant money” without really thinking about the ramifications of paying for it, and how being saddled with debt payments will limit their future options. I realize that for mainstream people, if they’ve got a good job, taking on a reasonable amount of debt is a no-brainer. It’s a financial tool that they are perfectly capable of handling, if they don’t mind paying the interest. But this presupposes stability into the future. For me, being a skeptic, I’ve always asked questions like, “But what if the economy crashes?” At long last, it’s looking like my skepticism is finally becoming common sense, and not just paranoia.
The other basic principle is: STUFF IS MORE VALUABLE THAN MONEY. This is especially true today, as the dollar is being systematically degraded. Originally, money started out as a very clever concept. For one, it’s a convenient medium of exchange. Rather than swapping jars of honey for bales of hay (which I might very well end up doing before long), I sell my honey to somebody else, and then use this money to pay the alfalfa farmer, who might very well prefer money to honey. Slick and convenient all around.
But there’s another function of money, and that is to serve as a more permanent depository of wealth. Consider a bag of wheat. This is real wealth, beyond a doubt. You can eat it, feed it to your livestock, or plant it to grow even more wheat. But the bag of wheat is vulnerable. Mice or weevils can get into it. Your storehouse might flood or burn down. If, instead of buying wheat you put your money in the bank, then theoretically you can withdraw this money in the future and buy wheat whenever you need it. You have, at least in principle, bypassed the risks of storing the wheat yourself.
There’s a social contract involved here. Everybody assumes that the money they deposit will retain its value over time, and in fact might actually gain a little value (i.e., earn interest). But unfortunately, what traditionally happens is, the bankers and other deal-makers take your money and speculate with it. Ideally, storing your money should be considered a sacred trust, but in actuality the bankers can’t resist dipping their fingers into the till. Throughout history, the economy has periodically crashed, and people have lost their savings. It’s a pity there has never been a banking system you can really depend on, because the “depository of wealth” function of money is really convenient compared to, say, burying a bag of gold in your back yard.
Our social contract is being methodically destroyed; which is to say, the treasury is being systematically looted. I’m skeptical that the American people have the gumption to do much about this. We can expect bailout after bailout. The economy will continue to limp along... and then, somewhere down the line, there will be a series of major discontinuities. I have no idea how bad these discontinuities will be. If they’re so severe that law and order breaks down, then this whole discussion is moot. Because my little lifetime plan (or anybody’s) can be ended by a single bullet. Civilization is a fragile thing compared to the raging beast lurking inside all of us.
At any rate, it looks to me like the dollar is going to tank somewhere in the not-too-distant future. Sooner or later, you’ll take your $100 bill to Farmer’s Market to buy a bundle of beets and the farmer will smile and say, “Do you have anything of value to offer me?” So it seems expedient to convert at least a portion of your savings (if any) into stuff that might prove useful in the future. This might be food, solar panels, water catchment tanks, garden tools, an assault rifle... whatever might serve your anticipated needs.
I started doing this in the early 90s, after Laura and I achieved successful DNA transfer and produced a spawn unit. I thought it would be nice to have a little orchard, so I cleared the land with my chainsaw, hired a guy with a front-end loader to scoop out sandbar sand from the river and deposit it onto the orchard site to raise the ground level a little, bought hundreds of trees, set up an irrigation system... and now, 15 years later, I have a mature orchard producing fruits and nuts. It cost me about $10,000 to do this, and has always seemed like a worthy investment.
What I’m doing now is starting to tackle all the jobs I’ve been putting off – pumping out the septic tank, installing a new pressure tank for the well, digging out the pond, spreading gravel on the beeyard driveway so I don’t get stuck in the sand, enlarging the flood control berms along my arroyos, on and on. The point being: I’m not wasting any of this money; I’m not spending it in any new and unexpected way; I’m just getting a lot of necessary work done while my money still has the value I’ve always assumed it had. Because sooner or later, that $100 bill won’t buy very much. And you can’t say you weren’t warned.
The most important thing most people could do is pay off their mortgage, but this is impossible in most cases. Some people could probably double up on their mortgage payments, but it would still take considerable time to pay the thing off. And we’ve pretty much run out of time by now.
I don’t know if mainstream Americans have what it takes to organize themselves into a political fighting unit with actual power. If they do, then it seems obvious that they need to wrest control from the cold, dead fingers of the ruling class. In other words, revolution. But a real revolution this time. (The much-hyped American Revolution of 1776 was essentially a transfer of ruling classes – we exchanged a British elite for an American one.) Otherwise, the American Rabble will become serfs. (Though, since most of them are wage slaves, it could be argued that they already are.)
I’m skeptical that Americans can fundamentally change their trajectory. We are so well programmed, so distracted, so atomized and unable to cooperate in a deep and sustained way. We are, each of us, the prima donna of our own personal drama, guarding our own private stash of loot. “Community,” in modern parlance, really means, “people to have pleasant conversations with.” It’s great -- and a spiritual necessity -- to have people to care about, to have people to care about us, but we remain isolated and powerless individuals and family units, at the mercy of the powers-that-be. I have my antennae turned up full blast (or so it seems), and am still not seeing any evidence that the fundamental socioeconomic reality is changing. We remain, up to now, hunkered down, hoping that all this will somehow blow over. For example, pundits now blithely talk about cargo ships sailing directly over the North Pole after the icecap melts and shaving thousands of miles off of their journey... without acknowledging that a melting Arctic means the liberation of countless gigatons of methane into the atmosphere, which will result in a runaway greenhouse effect. Welcome to Venus! Delusion still rules.
On that hopeful note, I think I’ll move right along now. Have a nice day!
I want to put down some thoughts about the economic crash, and what -- if anything -- we can do about it. An edited version of this and subsequent spews will, hopefully, be my next Grassroots Press article.
I have always been a primitive at heart, which is why I chose this “back to nature” lifestyle in the first place. My understanding of economics has always been immediate and direct: How thick is my wad of $20 bills? Is my honey house full of honey? Is the garden doing well? How big is my pile of firewood? I’ve always been suspicious of the fancy stuff such as mortgages and playing the stock market.
Over the years I’ve developed a couple of basic principles. One of them is: DEBT IS NOT WEALTH. Being a cheapskate, I’ve always avoided paying interest. Paying interest, to me, seems like an excellent way to piss away my hard-earned money. Compared to my contemporaries, I have avoided paying several hundred thousand dollars in interest over the years, which has given me many options. Including, most importantly, the option of not having to make so damned much money in the first place.
My philosophy has always been, “pay as you go.” Thus, rather than buying a house and signing up for the typical 30-year mortgage, I bought a piece of raw land in 1973 and built my house over the years, one room at a time. We started out with a 10x20-foot room that my wife, daughter and I lived in. I’ll never forget when a friend came over and said, “What a nice shelter!” Not, “What a nice home!” but “What a nice shelter!” This sums it up right there. “Funky” is my middle name.
People get dazzled by “instant money” without really thinking about the ramifications of paying for it, and how being saddled with debt payments will limit their future options. I realize that for mainstream people, if they’ve got a good job, taking on a reasonable amount of debt is a no-brainer. It’s a financial tool that they are perfectly capable of handling, if they don’t mind paying the interest. But this presupposes stability into the future. For me, being a skeptic, I’ve always asked questions like, “But what if the economy crashes?” At long last, it’s looking like my skepticism is finally becoming common sense, and not just paranoia.
The other basic principle is: STUFF IS MORE VALUABLE THAN MONEY. This is especially true today, as the dollar is being systematically degraded. Originally, money started out as a very clever concept. For one, it’s a convenient medium of exchange. Rather than swapping jars of honey for bales of hay (which I might very well end up doing before long), I sell my honey to somebody else, and then use this money to pay the alfalfa farmer, who might very well prefer money to honey. Slick and convenient all around.
But there’s another function of money, and that is to serve as a more permanent depository of wealth. Consider a bag of wheat. This is real wealth, beyond a doubt. You can eat it, feed it to your livestock, or plant it to grow even more wheat. But the bag of wheat is vulnerable. Mice or weevils can get into it. Your storehouse might flood or burn down. If, instead of buying wheat you put your money in the bank, then theoretically you can withdraw this money in the future and buy wheat whenever you need it. You have, at least in principle, bypassed the risks of storing the wheat yourself.
There’s a social contract involved here. Everybody assumes that the money they deposit will retain its value over time, and in fact might actually gain a little value (i.e., earn interest). But unfortunately, what traditionally happens is, the bankers and other deal-makers take your money and speculate with it. Ideally, storing your money should be considered a sacred trust, but in actuality the bankers can’t resist dipping their fingers into the till. Throughout history, the economy has periodically crashed, and people have lost their savings. It’s a pity there has never been a banking system you can really depend on, because the “depository of wealth” function of money is really convenient compared to, say, burying a bag of gold in your back yard.
Our social contract is being methodically destroyed; which is to say, the treasury is being systematically looted. I’m skeptical that the American people have the gumption to do much about this. We can expect bailout after bailout. The economy will continue to limp along... and then, somewhere down the line, there will be a series of major discontinuities. I have no idea how bad these discontinuities will be. If they’re so severe that law and order breaks down, then this whole discussion is moot. Because my little lifetime plan (or anybody’s) can be ended by a single bullet. Civilization is a fragile thing compared to the raging beast lurking inside all of us.
At any rate, it looks to me like the dollar is going to tank somewhere in the not-too-distant future. Sooner or later, you’ll take your $100 bill to Farmer’s Market to buy a bundle of beets and the farmer will smile and say, “Do you have anything of value to offer me?” So it seems expedient to convert at least a portion of your savings (if any) into stuff that might prove useful in the future. This might be food, solar panels, water catchment tanks, garden tools, an assault rifle... whatever might serve your anticipated needs.
I started doing this in the early 90s, after Laura and I achieved successful DNA transfer and produced a spawn unit. I thought it would be nice to have a little orchard, so I cleared the land with my chainsaw, hired a guy with a front-end loader to scoop out sandbar sand from the river and deposit it onto the orchard site to raise the ground level a little, bought hundreds of trees, set up an irrigation system... and now, 15 years later, I have a mature orchard producing fruits and nuts. It cost me about $10,000 to do this, and has always seemed like a worthy investment.
What I’m doing now is starting to tackle all the jobs I’ve been putting off – pumping out the septic tank, installing a new pressure tank for the well, digging out the pond, spreading gravel on the beeyard driveway so I don’t get stuck in the sand, enlarging the flood control berms along my arroyos, on and on. The point being: I’m not wasting any of this money; I’m not spending it in any new and unexpected way; I’m just getting a lot of necessary work done while my money still has the value I’ve always assumed it had. Because sooner or later, that $100 bill won’t buy very much. And you can’t say you weren’t warned.
The most important thing most people could do is pay off their mortgage, but this is impossible in most cases. Some people could probably double up on their mortgage payments, but it would still take considerable time to pay the thing off. And we’ve pretty much run out of time by now.
I don’t know if mainstream Americans have what it takes to organize themselves into a political fighting unit with actual power. If they do, then it seems obvious that they need to wrest control from the cold, dead fingers of the ruling class. In other words, revolution. But a real revolution this time. (The much-hyped American Revolution of 1776 was essentially a transfer of ruling classes – we exchanged a British elite for an American one.) Otherwise, the American Rabble will become serfs. (Though, since most of them are wage slaves, it could be argued that they already are.)
I’m skeptical that Americans can fundamentally change their trajectory. We are so well programmed, so distracted, so atomized and unable to cooperate in a deep and sustained way. We are, each of us, the prima donna of our own personal drama, guarding our own private stash of loot. “Community,” in modern parlance, really means, “people to have pleasant conversations with.” It’s great -- and a spiritual necessity -- to have people to care about, to have people to care about us, but we remain isolated and powerless individuals and family units, at the mercy of the powers-that-be. I have my antennae turned up full blast (or so it seems), and am still not seeing any evidence that the fundamental socioeconomic reality is changing. We remain, up to now, hunkered down, hoping that all this will somehow blow over. For example, pundits now blithely talk about cargo ships sailing directly over the North Pole after the icecap melts and shaving thousands of miles off of their journey... without acknowledging that a melting Arctic means the liberation of countless gigatons of methane into the atmosphere, which will result in a runaway greenhouse effect. Welcome to Venus! Delusion still rules.
On that hopeful note, I think I’ll move right along now. Have a nice day!
posted by Gordon Solberg at 7:48 AM
1 Comments:
Outstanding Gordon..... clean, concise, comprehensive.....
You're my role model.
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