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When The Rich Become Preppers, It's Time To Worry

Politics / Social Issues Jan 29, 2017 - 03:37 PM GMT

By: Adam_Taggart

Politics

Chris Martenson writes: For over 10 years now, we've been openly advocating that folks take action to become more prepared should crisis arrive. And for a long time, this advice relegated us to being labeled "tin-foil hat doomsday preppers" (and other less-polite monikers). The media just couldn't figure out any other box to put us in.

But now, the concept of taking at least some responsibility for your own future well-being by increasing your self-reliance is finally moving towards the mainstream.


Of course, government agencies have long ascribed to "situational planning" in case sudden unrest were to happen. Nations around the world have long invested in redundant supply chains, as well as well-stocked disaster 'continuity caves', fortresses and hardened facilities of all sorts.

It's strikes us as puzzling that most private citizens fully expect their government to be prepared for disaster like this, yet don't see similar wisdom in practicing a similar approach to preparation in their own life. In fact, many go so far as to denigrate and even mock their friends and neighbors who do.

Perhaps that gap between what's considered acceptable in a public institution but not in a private home is best explained as abdication of personal responsibility. It happens a lot in our society. Live your life and let the government worry about the scary stuff. They'll take care of us if something bad happens.

We think it's a huge error in judgment (remember Katrina, anyone?), but we understand why it's a convenient and comforting narrative to hold. Plus, it frees up a lot more time to shop at the big box stores and keep up on the Kardashians. Life's more fun and stress-free...right up until some unexpected disruption occurs.

Well, we here at Peak Prosperity deeply believe in shouldering our own personal responsibility. And not just to protect our own private well-being, but also that of the communities we live in and depend on.

After all, Peak Prosperity's mission is To create a world worth inheriting. You don't do that simply waiting to see if the calvary is ever going to show up. You assume responsibility for your own destiny, and inspire others to do the same by offering your support and serving as a living model for others to emulate.

Those expecting/demanding the State to have high emergency preparedness while not practicing the same in their own lives lack integrity. Nobody respects a low-integrity person for very long. (Pro tip:  Don’t fly your personal jet to give a lecture on the importance of addressing climate change.)

A resilient nation is built from the bottom up, starting with resilient households. Enough of those households creates resilient neighborhoods, and those in turn lead to resilient towns and cities. And then counties, and states -- you get the point.

So taking steps to be partially self-sufficient in the basics of life – food, warmth, shelter and water – and have useful experience or skills (medicine, fixing things, building, distilling, to name just a few) just makes sense. You don't have to strive to be completely self-reliant -- it's not realistic or necessary. Just position yourself to reduce your lifestyle requirements during times of strife, and to contribute valued support to those whom in turn you ask for help.

Preparing Is Rapidly Going Mainstream

For years now, I’ve written that the highly wealthy people whom I encounter through conferences, family offices and private consultations all got the “bug out” vibe after the 2008 crash, if not before. Today, many of them are more thoroughly prepped than us regular folks can imagine.

Disaster prepping is now acceptable enough that this week's article in The New Yorker had no trouble finding high-profile executives to talk to on record. I couldn't help noticing that the reporter avoided inferring that these folks were crazy, or implying as much. I guess once a critical mass of super wealthy tech entrepreneurs jumps on the bandwagon it’s suddenly hip to be a prepper?

At any rate, if you haven't already seen the article, it's a real eye-opener:

Doomsday Prep For The Super-Rich

Jan 30, 2017

Steve Huffman, the thirty-three-year-old co-founder and C.E.O. of Reddit, which is valued at six hundred million dollars, was nearsighted until November, 2015, when he arranged to have laser eye surgery. He underwent the procedure not for the sake of convenience or appearance but, rather, for a reason he doesn’t usually talk much about: he hopes that it will improve his odds of surviving a disaster, whether natural or man-made. “If the world ends—and not even if the world ends, but if we have trouble—getting contacts or glasses is going to be a huge pain in the ass,” he told me recently. “Without them, I’m fucked.”

Huffman, who lives in San Francisco, has large blue eyes, thick, sandy hair, and an air of restless curiosity; at the University of Virginia, he was a competitive ballroom dancer, who hacked his roommate’s Web site as a prank. He is less focused on a specific threat—a quake on the San Andreas, a pandemic, a dirty bomb—than he is on the aftermath, “the temporary collapse of our government and structures,” as he puts it. “I own a couple of motorcycles. I have a bunch of guns and ammo. Food. I figure that, with that, I can hole up in my house for some amount of time.”

Survivalism, the practice of preparing for a crackup of civilization, tends to evoke a certain picture: the woodsman in the tinfoil hat, the hysteric with the hoard of beans, the religious doomsayer. But in recent years survivalism has expanded to more affluent quarters, taking root in Silicon Valley and New York City, among technology executives, hedge-fund managers, and others in their economic cohort.

Last spring, as the Presidential campaign exposed increasingly toxic divisions in America, Antonio García Martínez, a forty-year-old former Facebook product manager living in San Francisco, bought five wooded acres on an island in the Pacific Northwest and brought in generators, solar panels, and thousands of rounds of ammunition. “When society loses a healthy founding myth, it descends into chaos,” he told me. The author of “Chaos Monkeys,” an acerbic Silicon Valley memoir, García Martínez wanted a refuge that would be far from cities but not entirely isolated. “All these dudes think that one guy alone could somehow withstand the roving mob,” he said. “No, you’re going to need to form a local militia. You just need so many things to actually ride out the apocalypse.”

Once he started telling peers in the Bay Area about his “little island project,” they came “out of the woodwork” to describe their own preparations, he said. “I think people who are particularly attuned to the levers by which society actually works understand that we are skating on really thin cultural ice right now.”

In private Facebook groups, wealthy survivalists swap tips on gas masks, bunkers, and locations safe from the effects of climate change. One member, the head of an investment firm, told me, “I keep a helicopter gassed up all the time, and I have an underground bunker with an air-filtration system.” He said that his preparations probably put him at the “extreme” end among his peers. But he added, “A lot of my friends do the guns and the motorcycles and the gold coins. That’s not too rare anymore.”

Tim Chang, a forty-four-year-old managing director at Mayfield Fund, a venture-capital firm, told me, “There’s a bunch of us in the Valley. We meet up and have these financial-hacking dinners and talk about backup plans people are doing. It runs the gamut from a lot of people stocking up on Bitcoin and cryptocurrency, to figuring out how to get second passports if they need it, to having vacation homes in other countries that could be escape havens.” He said, “I’ll be candid: I’m stockpiling now on real estate to generate passive income but also to have havens to go to.” He and his wife, who is in technology, keep a set of bags packed for themselves and their four-year-old daughter. He told me, “I kind of have this terror scenario: ‘Oh, my God, if there is a civil war or a giant earthquake that cleaves off part of California, we want to be ready.’ ”

(Source)

The message here is clear enough: The wealthy have caught onto the idea that the probability of a major social disruption is high enough to merit serious action.

Prepping is now becoming “a thing.”

And that makes it increasingly OK to talk about in the open. That's a great development; we at Peak Prosperity have been waiting for this milestone for a decade now. But it comes with a cost: the more people who awaken to the risks we face, the faster the peaceful complacency society has slumbered in will dissipate.

From here it’s only a hop, skip and a jump for the newly-awake to start losing faith in our debt-based fiat money system and the massive unsustainability of the economy built on top of it.  As our readers know very well, once you understand how these systems are structured, it's hard not be shocked by their fragility (not to mention their deep unfairness). 

For example, our food distribution system relies on a lot of moving, integrated parts.  If any one of these breaks down, the shipment of food (and pharmaceuticals, and many other components of daily life) simply stops. Cities only have about 3 days' worth of inventory at any given time.  Should a shock occur to the system, even a minor one like a winter blizzard, supply can dwindle out in a matter of hours as people scramble to get what they can.

Here’s an image of shelves at a Wal-Mart in Charlotte NC taken as a relatively minor snow storm was approaching the area on January 6th 2017.

The line between “well stocked” and “stripped bare” is merely a matter of public awareness.  Once people become worried about the possibility of scarcity, their mad scramble to hoard what they can  actually creates the very scarcity they dear. That's because our system is deliberately run on a just-in-time basis, in order to maximize profit. Excess inventory incurs storage fees; so we "optimize" our supply chains to avoid it. But it begs the question: perhaps the human suffering costs of quickly running out of essentials during an emergency is higher than the dollars saved by keeping inventory levels minimal?

Our fractional reserve banking is structured the same way: it only works if everyone doesn’t show up at the same time demanding to withdraw their money.  If that ever happens, there isn't nearly enough supply for everyone. Once the illusion is exposed, then people get panicky and start grouping into angy mobs

Think it can't happen here? Just talk to folks in India. Two months ago they would have agreed with you. Today, the most they are allowed to withdraw for their bank is a few hundred dollars worth of banknotes per week. Here's a video of a run on a bank there where the swaming masses quickly stampede over the security guards, trampling elderly patrons in the process:

And it's even worse in Venezuela. There, the limit is US$5 per day. If you had US10,000 of savings in the bank, at that rate, it would take you 5 and half years to withdraw it all.

Playing the Odds

Of course, most truly catastrophic events are quite rare. Rather than worry about them, it usually makes sense to simply ignore these tail risks and carry on with your life.

I do this rather than stress out about a large asteroid impact or a Yellowstone supervolcano eruption. While either of these *could* happen in my lifetime, the odds are incredibly low and there’s virtually nothing I can do to prepare for or predict such an event. So I don’t even try.

Other potential threats to our well-being, however, have much higher probabilities. And yet, most people are quite content to ignore the need to prepare, no matter how high the risks. Few people maintain a deep pantry, which is why the store shelves invariably get stripped as a big storm rolls into town. And only a small minority of people living along California's active fault lines have put together a well-stock earthquake kit.

But more cadres of thinkers are embracing the wisdom of investing in an ounce of prevention today. In the New Yorker article, the techies from Silicon Valley seem more inclined to ‘do the math’ and follow logic:

Yishan Wong, an early Facebook employee, was the C.E.O. of Reddit from 2012 to 2014. He, too, had eye surgery for survival purposes, eliminating his dependence, as he put it, “on a nonsustainable external aid for perfect vision.” In an e-mail, Wong told me, “Most people just assume improbable events don’t happen, but technical people tend to view risk very mathematically.”

He continued, “The tech preppers do not necessarily think a collapse is likely. They consider it a remote event, but one with a very severe downside, so, given how much money they have, spending a fraction of their net worth to hedge against this . . . is a logical thing to do.”

As we've advised for years, even if something has a low probability, if it's result would be catastrophic, then buy insurance if you can. Prepping for a major "grid-down" power outage is simply a no-brainer for those who have decent math skills. The calculation is eminently rational, as there a number of potential causal factors (weather, sabotage, squirrel) and the downside could be quite large.

So, with all the potential looming risks out there -- economic shock, social disorder, supply chain failure, to name just a few -- what are practical, affordable, achievable steps a prudent person should take?

In Part 2: Preparing Prudently, we present a specific list of the most useful preparations, along with links to helpful resources and services for carrying them out. Nearly anyone can implement these, and nearly everyone should. The more of us who prepare wisely today, the more of us who will be in a position to be of service when the next crisis arrives.

Click here to read Part 2 of this report (free executive summary, enrollment required for full access)

Chris Martenson

http://www.peakprosperity.com

© 2014 Copyright Adam Taggart - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


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