by Doug Casey, International Man:
International Man: There’s no question the years ahead will be turbulent.
Wealthier people have a leg up and will be better able to insulate themselves from the coming chaos.
For those without significant wealth, how would you recommend they allocate their limited resources in the coming chaos for both protection and profit?
Doug Casey: First, let me draw your attention to one of my favorite quotes from Ayn Rand. When asked what should be done about the poor, she answered: “Don’t be one of them.”
TRUTH LIVES on at https://sgtreport.tv/
That’s quite correct. But a better question might be: How do you leave the ranks of the struggling and become rich?
As I’ve said many times on this blog, it’s by producing more than you consume and saving the difference.
That means doing whatever you can to increase your income while simultaneously cutting your expenses. It may mean taking a second job and abstaining from lattes at Starbucks. It means cutting out smoking if you smoke and cocktails if you drink. It means not following fashion. It means not keeping up with Joneses, and driving a functional used car, bought for cash, not glitzy new one that financed or leased.
You don’t have to become a Benedictine monk, but it’s important to cut back your standard of living now while you’re still in control of the situation. Don’t wait for necessity to do it for you. You might get a used copy of my book, Strategic Investing, which has several chapters on exactly this type of thing.
There’s no way around it. If you want to be a capitalist, you have to build capital. You do that by producing more effectively and consuming less. It’s not easy, but it’s necessary. The Chinese became wealthy by saving 50% of their incomes in recent years. You should put aside at least 10% of everything that comes in the door—come hell or high water.
International Man: What advice do you have for the average person with significant debt?
Doug Casey: Going back to what we were just talking about, the best alternative is to pay it off. But that may not be entirely feasible for some people who are truly buried. You may have to consider bankruptcy.
Many years ago, I had a business that failed, and I was way in the back of the eight-ball. I never declared bankruptcy because all my debt was to private parties; it took me years to pay it off. I don’t believe in hiding behind the State to effectively defraud those who lent you money. But, that said, it’s something that should be considered, especially if most of your debt is to banks.
Banks are the major perpetrators of currency inflation. They operate on a fractional reserve system, which is intrinsically fraudulent. In today’s world, they’re essentially arms of the State and its central bank, the Fed. In a corrupt system, it might make sense to look at what’s legally possible as opposed to what’s morally correct.
That said, skating on your obligations to other people is always morally wrong, and you can’t build a sound future on moral corruption. But would it have been wrong for a Soviet citizen to default on loans he might have gotten from the Soviet State? I’d say no—but let’s not go down that rabbit hole now. Just remember that bankrupts are justifiably seen as either improvident fools, or dishonest mooches. Possibly both. Like alcoholics or junkies, they got into that position because they have bad habits.
The answer to the question, the solution to the problem, is curing the bad habits. And once again, it goes back to producing more than you consume, saving the difference—and not incurring more debt in the future.
International Man: To paraphrase Richard Russell, in a depression, everybody loses. The winner is just the person who loses the least.
What are the implications for people with modest means in the coming crisis?
Doug Casey: A depression is bad for almost everyone, but especially for the improvident. This is why you have to increase your net wealth before the crisis, while times still seem normal. Going into a crisis as a poor person is like sailing on the Titanic in steerage. It greatly reduced your chances of survival once the ship hit an iceberg.
If you are in economic steerage, you’re probably surrounded by other people who are subpar economically, which means that you’re probably surrounded by people with bad habits and bad attitudes. It’s critical to get away from people who consider being poor the normal state of things. Disconnect from people who hate money, and think debt and poverty has been imposed upon them by society.
A major part of being prosperous is to associate with productive and prosperous people. Remember that your life and actions basically reflect those of your five or six closest associates. You want to become an entrepreneur, or a self-employed businessman. Surround yourself with similar people, not human hamsters that can’t get off the treadmill.
Read More @ InternationalMan.com
