Where Are We, And Where Are We Going?

A month of social distancing, self-isolation and coronavirus fear media spin has probably done more to damage the social fabric and hasten the collapse of the global economy faster than any other event in history.

Isolation, a technique usually deployed against heinous criminals and terrorists has made its way to the mainstream and the result was predictable: protests across the country demanding that states re-open their shuttered economies sooner rather than later.

So far, the protests have been mild and peaceful, but violence is just around the corner and this game of political chess has only just begun. As the government continues to play out its poorly-chosen scenario to stem the advance of coronavirus it has alienated and frustrated a population that was already on edge. Forcing citizens to stay home, businesses to close, and strictly enforcing rules in an effort to contain a pandemic is likely to turn out to be a poor choice in terms of controlling the citizenry, none moreso than in America, where independence is inbred and following orders largely a matter of choice.

So far, a few states have relaxed their mandated strictures, and more will follow, but the damage to psyche of the nation has been severe and this may only be the beginning of a long, tortuous calamity.

The first true casualty was the collapse in the price of oil on Monday, as the May futures contract ended deep into negative territory, an outcome that could only happen in a controlled, contrived environment such as the exchange itself, the NYMEX. Entities long oil got slaughtered while the shorts carried the day and the profits fro a failing system. The June contracts aren't looking any rosier, with WTI crude checking in Wednesday morning in a range of $7-11 per barrel. As expiration nears, less than a month out, a similar outcome may await the breathless traders in search of not oil, but profit in fiat currency.

An oil price shock such as occurred on Monday is anathema for central bankers and economies built on producing the world's energy supply. Long-term ramifications are difficult to ascertain with such limited knowledge, but besides the obvious carnage this will cause in oil-producing nations such as those in the Middle East and Russia, US shale producers - who were already on the brink of collapse anyhow - are going to default in droves, leaving empty holes in some bank balance sheets.

Naturally, President Trump has ordered Treasury and Energy departments to find a solution, though none will be handy. More meddling by the government, and more bailouts by the Federal Reserve will only serve to enrich those who failed, at the expense of everyone else.

What happened in the oil market will happen in other markets. Prices should, and will, collapse, at first, as demand becomes nil and supply is overabundant. Certain foods will be cheap as oversupply is drawn down, but then will become increasingly expensive as the means of production are disrupted or shut off entirely.

Around and around this circle of supply and demand will go in markets that are already distorted by government mandates, price controls, subsidies, and other devices which serve to prop up industries. In the end, everything will go bust, including the currency, but directly prior to that, stocks, then bonds, will go belly up.

Currently, because of the business shutdowns across the country, small business closures are expected to expand well beyond normal circumstances. That will serve to slow derivative businesses, suppliers, intermediaries, wholesalers. There will be winners, most of them well-known publicly-owned corporations which have been spared the worst of the crisis thanks to trillions in loan guarantees and purchases by the Federal Reserve. Eventually, not even the "infinite" resources of the Fed will be enough to fend off a depression that will bankrupt entire industries and individuals. It could take years, but only months in certain segments of the economy, as illustrated by the oil price collapse.

America and the rest of the world is entering a phase of political, economic and social unrest that has never been precisely pondered. Not since the Great Depression of the 1920s has anything even remotely similar to what's ahead been considered, a world of limited supply, eroding confidence, wild swings in financial markets, currency debasement gone wild, all overtopped by a neo-feudal police state bent on keeping the status quo intact and the general population under control.

There are any number of ways to get around the conditions that prevail and will likely become somewhat unbearable, but the best are to divorce oneself from the system that is causing the carnage. Just as one would rationally flee a burning building, individuals and families, armed with knowledge and a strong survival instinct would be well-advised to have been preparing beforehand. Barring that, immediate departure from populations centers would be advisable.

It's already a known fact that urban and suburban areas have been hit the hardest by the coronavirus and the knock-on effects of the shutdowns. Rural areas have been left relatively unscathed as "social distancing" is the natural order in these places. Neighbors, rather than separated just by walls or back yards, are acres away, and the people like it that way. Thus, it behooves anyone who wishes to escape the coming general mayhem to find accommodations far off the beaten path, preferably with some acreage and own supplies of water and, to some extent, energy, making a working well and at least some solar panels and ready supply of fuel (propane being the most accessible) essential.

A good wood-burning stove would likely be a solid investment, along with a stand of trees, at least enough to last a few winters. Anybody who has never tended a garden would be well-advised to get up to speed as quickly as possible. This summer should serve as a tutorial for future endeavors.

Antenna TV will be preferred over cable or satellite, at least on a cost-forward basis, and some good radio equipment, batteries, and a knowledge of broadcast antennae will go a long way toward providing some entertainment and information when situations become critical.

While Money Daily has focused on financial markets, it also has never shied from being critical of control mechanisms like the Federal Reserve or any form of government. It also has consistently advocated self-sufficiency as a panacea for a better overall lifestyle. Most of what is being suggested here could be found in just about any prepper manual, and yes, guns, the ability to use them properly, silver, gold, and good equipment have also been consistently advocated in our message.

As for debt, especially the unsecured kind, like credit cards, don't worry about it. Just about everybody is going to eventually default, so, one can either join the maxed out crowd in the courts (which will be a zoo), or try to maintain some semblance of balance and propriety. The best condition would be to have no debt, though that's somewhat unrealistic for the vast majority of people. It's nothing to fret over, though. Banks and corporations default all the time. That's why we have bankruptcy laws and plenty of lawyers and judges to plead and administer them.

A bleak future for some does not have to be a bleak future for you. Read up on the history of the Great Depression and you will find that rural folks, although dirt poor, still had the means to survive, some - outside of the Dust Bowl states - to actually prosper. Food on the table, wood chopped and stacked, think not so much about prosperity, but survival first.

More to come...

At the Close, Tuesday, April 21, 2020:
Dow: 23,018.88, -631.56 (-2.67%)
NASDAQ: 8,263.23, -297.50 (-3.48%)
S&P 500: 2,736.56, -86.60 (-3.07%)
NYSE: 10,706.44, -297.44 (-2.70%)