Photo Credit: Carleton Thomas Anderson
One of my favorite blogs is called Granola Shotgun. For those who have never encountered this gem of the blogosphere before, Granola Shotgun is an eclectic collection of observations and editorials surrounding the topics of real estate, human nature, disaster preparedness and urban planning. This might sound like an unlikely combination of themes, but let me assure you, the author (Johnny) has some superb insights into contemporary American culture.
I found one of Johnny's recent posts, titled "Ich Will den Kaiser Zurück", to be particularly compelling. It deals indirectly with a theme that I have encountered again and again when researching investments: the idea that "it can't happen here".
I will quote a relevant portion from the post below (although I do encourage you to read the full article if you have time):
"I had a slow motion epiphany regarding the newest generation of smart charming guests from places like Sweden, Japan, Turkey, and Germany. They have no visceral memory of the twentieth century. They’ve read about it. But they were born so long after the traumatic upheavals that it’s just words. Their parents were born after World War II had already ended. And then it hit me. Their grandparents were born after the war. It’s ancient history. It goes without saying Americans have even more historical amnesia."
This passage really struck me, perfectly crystallizing some of the troubling thoughts I had long had, but was unable to perfectly organize. As a lover of all things antique, I have a certain affinity with history. I am well aware that humanity repeats the same errors again and again throughout time, yet somehow still manages to delude itself into thinking that it's different this time.
And nowhere is this historical ignorance more apparent than in the world of investing. We are constantly bombarded by platitudes such as "buy stocks for the long run" and "the trend is your friend". And for many, many years these hollow phrases have seemingly worked. In fact, they've worked so well that we think it can't happen here.
What is "it"?
Banking crises, revolutions, capital controls and civil unrest are just a few of the potential disasters we face in the modern age. These events have occurred with stunning regularity throughout history. The United States, Western Europe and Japan have simply been lucky enough to avoid the worst of these problems in the brief, 75-year sliver of time since the end of World War II. Unfortunately for humanity, good times breed complacency, and complacency breeds bad times.
And make no mistake, the bad times are coming. The safeguards that should help protect us from repeating these mistakes are failing as our institutional memory fades.
Want an example?
Look no further than the revered halls of the U.S. Federal Reserve. This most important of banking institutions has been busy pursuing destabilizing bubble-centric policies for a full 20 years at this point. Their perpetual hope is that their latest round of money printing will finally drag the economy out of its stolid torpor. And yet it never quite happens.
There are plenty of unpleasant side effects from it, though.
The banks bulge with the profits of usury. The equity markets race toward the moon. Those who are already rich become exponentially wealthier. And all the while the average wage-earner wallows in financial misery.
A revolution? It can't happen here! Can it?
Let me make a prediction. At the end of this orgy of financial speculation, it will make little difference how many zeros are attached to the end of your bank statement. Wealth will almost certainly not be measured in dollars, euros, yen or pounds anymore.
Instead, wealth will be determined by possession of physical goods - and not necessarily real estate.
This is an eventuality that few people are truly prepared for, myself included. Most of my portfolio still resides in conventional assets like stocks, bonds and cash. But I have been slowly preparing myself mentally for the changes that will take place. I've been buying more gold and silver bullion. I've been continuing to purchase investment grade antiques. I've been getting more comfortable with the idea of saving in terms of ounces as opposed to dollars. I'm edging towards the proverbial financial fire escape.
Pre-1965 U.S. 90% Junk Silver Coins For Sale
All of this vaguely ominous talk might seem rather conspiratorial, but it is pretty obvious that Western society is beginning to fray around the edges. It's rather funny that some people claim it can't happen here when the U.S. population is clearly splitting along pro-Trump/Resistance lines. And I'm not sure that the Brexit-addled U.K. or sclerotic Continental Europe is much better off.
Civil war looms distant on our gray horizon.
I would prefer that society not go down this ill-advised route. But it seems as if we are being compelled by forces far more powerful than you or me. The Treasury spends with abandon. The Fed prints as if there are no consequences. Politicians viciously attack each other in myopic attempts to win the next election at all costs. I'm not the first person to say this, but all of this arrogance will end badly.
Never, never believe anyone who says it can't happen here. Wars, hyperinflations and civil disturbances have occurred across dozens of advanced civilizations in the not very distant past. We are not special in this regard. It can happen to us too. It almost certainly will happen to us if we give it enough time.
This is why I implore you to prepare through the acquisition of tangible assets. Buy yourself some pre-1965 junk silver coins. Start a collection of Edo era Japanese samurai sword fittings. Indulge yourself with a vintage Must de Cartier wristwatch. These are relatively safe ways to save and invest in a world that is starting to spin out of control.
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