NINE MEALS FROM ANARCHY
In 1996 Alfred
Henry Lewis stated, “There are only nine meals
between mankind and anarchy.” Since then, his
observation has been echoed by people as desperate as Robert Heinloin and Leon Trotsky. The key here is that, unlike all other
commodities, food is the one essential that cannot be postponed, If there were a shortage of, say, shoes, we could do for
months or even years. A shortage of gasoline would be worse, but we could
survive it, through mass transport or even walking, if necessary.
But food
is different. If there were an
interruption in our food, fear would
set in immediately. And, if the resumption of the
food supply were uncertain, the fear would become pronounced. After only nine
missed meals, it’s not unlikely that we’d panic and be
prepared to commit a crime to acquire food. If we were to see our neighbour
with a loaf of bread, and we owned a gun, we might well say, “I’m sorry, you’re a good neighbour and we’ve been friends
for years, but my children haven’t eaten today - I have to have the bread -
even if I have to shoot you.”
But surely
there’s no need to speculate on this concern. There’s
nothing on the evening news to suggest that such a problem even might
be on the horizon. So, let’s have a closer
look at the actual food distribution industry, compare it to the present
direction of the economy, and see whether there might be a reason for concern.
The
food industry typically operates on very small margins - often below 2%.
Traditionally, wholesalers and retailers have relied on a two-week turnaround
supply and anywhere up to a thirty-day payment plan. But
an increasing tightening of the economic system for the last 8 years has
resulted in a turnaround time of just three days for both supply and payment
for many in the industry. This is a system that’s still fully
operative, but with no further wiggle room, should it take a sufficient
further hit?
If
there were a month where sufficient inflation took place (say, 3%), all profits
would be lost for the month for both suppliers and retailers, but goods could
still be placed and sold for a higher price next month. But,
if there were three or four consecutive months of inflation, the industry would
be unable to bridge the gap, even if better conditions were expected to develop
in future months. A failure to pay in full for several months would mean
smaller orders for those who could not pay. That would mean fewer goods on the
shelves. The longer the inflationary trend continued, the more quickly prices
would rise to “hopefully”
offset the inflation. And ever fewer items on
the shelves.
From
In
good economic times, this would mean more business for those stores that were
still solvent, but in an inflationary situation, they would be in no position
to take on more unprofitable business. The result is that the volume of food on
offer at retailers would decrease at a pace within the severity of the
inflation.
However,
the demand for food would not decrease by a single loaf of bread. Store
closures would be felt most immediately in inner circles,
when one closing would send customers to the next neighbourhood seeking food. The real danger would come when the store also closes on both
neighbourhoods descended on another store in yet another neighbourhood. That’s when one loaf of bread for every three potential
purchasers would become worth killing over. Virtually no
one would long tolerate seeing his children go without food because
others had “invaded” his local supermarket.
In
addition to retailers, the entire industry would be impacted
and, as retailers disappeared, so would suppliers, and so on, up the food
chain. This would not occur in an orderly fashion, or in one specific area. The
problem would be a national one. Closures would be all over the map, seemingly
at random, affecting all areas. Food riots would take place, first in the inner
cities then spread to other communities. Buyers, fearful of shortages, would
clean out the shelves.
Importantly,
it’s the very unpredictability of food delivery that increases fear, creating panic
and violence. And, again, none of the above
is speculation, it’s a historical pattern - a
reaction based upon human nature whenever systematic inflation occurs.
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we get closer to an economic collapse, choosing where to put your money is
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At
that point, it would be very likely that the central government would step in
and issue controls to the food industry
that served political needs rather than business needs, greatly exacerbating the problem.
Suppliers would be ordered to deliver to those
neighbourhoods where the riots are the worst, even if those retailers are
unable to pay. This would increase the
number of closings of suppliers.
Along
the way, truckers would begin to refuse to enter troubled neighbourhoods, and
the military might well be brought in to force
deliveries to take place.
But why
worry about the above? After all, inflation is contained at present and,
although governments fudge the numbers, the present level of inflation is not
sufficient to create the above scenario, as it has in so many other countries.
So,
what would it take for the above to occur? Well, historically, it has always
begun with excessive debt. We know that the debt level is now the highest it has ever been in
world history. In addition, the
stock and bond markets are in bubbles of historic proportions. They will most
certainly pop.
With
a crash in the markets, deflation always follows as people try to unload assets
to cover their losses. The Federal Reserve (and other central banks) has stated
that it will unquestionably print as much money as it takes to counter
deflation. Unfortunately, inflation has a far greater effect on the price of
commodities than assets. Therefore, the prices of commodities will rise
dramatically, further squeezing the purchasing power of the consumer, thereby
decreasing the likelihood that he will buy assets, even if they’re
bargain-priced. Therefore, asset holders will drop their prices repeatedly as
they become more desperate. The Fed then prints more to counter the deeper
deflation and we enter a period when deflation and inflation are increasing
concurrently.
Historically,
when this point has been reached, no government has ever done the right thing. They have, instead, done the very opposite - keep printing.
A by-product of this conundrum is reflected in the photo above.* Food still exists, but retailers shut down because
sales are plummeting.
[*
NOTE: ‘The photo above’
shows a large Supermarket food store with all of its shelves empty.]
In
every country that has passed through such a period, the government has eventually
gotten out of the way and the free market has prevailed, re-energizing the
industry and creating a return to normal. The question is not whether
civilization will come to an end. (It will not.) The
question is the liveability of a society that is experiencing a food crisis, as
even the best of people are likely to panic and become a potential threat to
anyone who is known to store a case of soup in his cellar.
Fear
of starvation is fundamentally different from
other fears of shortages. Even good people panic. In such times, it’s advantageous to be living in a rural setting, as far
from the centre of panic as possible. It’s also
advantageous to store food in advance that will last for several months, if
necessary. However, even these measures are no guarantee, as, today, modern
highways and efficient cars make it easy for anyone to travel quickly to where
the goods are. The ideal is to be prepared to sit out the crisis in a country
that will be less likely to be impacted by dramatic
inflation - where the likelihood of a food crisis is low and basic safety is
more assured.*
*Editor’s Note: In the years ahead, there will likely
be much less stability of any kind. That’s precisely
why Doug Casey and his team just released this new report with all the details
on how to play your cards - both for prudence and profit...
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Dear
Reader, We just entered the most turbulent period in
The
2020’s will be more dangerous than the 1930’s, the 1940’s, and even the 1860’s.
That’s
because severe crisis are brewing on multiple fronts and converging.
The whole
system will have a complete reset, and soon.
The
coming financial volatility will be unlike anything we’ve
seen before…
It
could be the BIGGEST thing not just
since the Great Depression of 1929 to 1946.
It
could be the BIGGEST thing since the
founding of the
Almost
EVERYONE could lose money in the
ensuing economy collapse.
Here’s The Problem
You Face…
We’re in
an economic no man’s-Land.
There
is a stock market bubble, a real estate bubble, a bond super bubble… It’s really an Everything Bubble.
It’s the BIGGEST BUBBLE in human history.
That
means most investments YOU own are
likely overvalued and high risk.
How
did this happen?
In
a desperate attempt to paper over their problems, governments have printed
trillions of new current units, brought interest rates to below zero, and
bailed out failing institutions.
But those
gimmicks have now been exhausted.
There’s
going to be much less stability of any kind - financial, economic, political,
social, cultural, or military - in the months to come.
The Crisis Has Already Started…
So many momentous events are unfolding
right now, including:
Violent social unrest.
A global pandemic of historic proportions.
Financial
instability and a stock market collapse.
Unprecedented partisan acrimony and rising political
turbulence.
Tensions
with
Geopolitical
shocks from the
The truth is, Every Bubble
has already found its pin.
The
biggest financial bubble in human history has popped … and nothing can put the
air back in it.
In
other words, the crisis has already started.
It
will trigger a cascade of consequences.
We
are heading for the double whammy of a political crisis and a thundering
financial breakdown at the same time.
There
has never been such a fraught moment in history.
This
perfect storm will gravely impact the personal liberty
and financial security of EVERYONE.
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