I recently had dinner with a bunch of old friends. I found out that one of them has become something of a prepper. I don’t actually know how much “prepping” he has done, but he was talking about an Armageddon-type scenario.

I have never known him to be political in the past. Maybe he still isn’t, but he is paying attention on the economic front.

I said I thought we would have a big recession and mentioned the inverted yield curve. He said something to the effect of, “Forget a recession; it will be a depression.”

I have written about prepping before. It is a good idea to prepare for events that may or may not happen. It is always a good idea to have some extra water, food, and cash on hand.

I think most people don’t fully realize how much trouble most Americans would be in if there was a complete breakdown of the division of labor. Even most people who identify as preppers go to the grocery store. If there was a complete breakdown in civilization and the trucks stopped delivering food to the grocery stores, I don’t think it would be an exaggeration to say that the majority of the population would be dead within 6 months.

The Good News, If History is Any Indication

The worst scenario any place can experience is war. You would not want to live in Ukraine or Yemen. You would not have wanted to live in Iraq or Afghanistan, and you probably still wouldn’t.

If there is no nuclear war or a major war on the soil of your country, then you are probably doing better than others around the world.

Barring a crazy scenario such as a meteor strike, then the biggest threat is your own government and the economy that you live under.

But even looking at some really bad situations in the past, life somehow went on for most people. Think about hyperinflation in Germany in the 1920s. Think about the more recent hyperinflation in Zimbabwe.

Maybe Zimbabwe isn’t the best example because it was already a poor country to begin with. But even in the worst hyperinflation scenarios, most people figured out a way to survive. It was a terrible experience, but they managed to live.

I don’t think we will have hyperinflation in the United States, but I can’t rule it out with complete certainty. But even in this situation, people find a way to barter or use other things as money.

As long as the government isn’t brutally authoritarian, some commerce is likely to continue.

Prepare Without Making Yourself Worse Off

If you want to be a prepper, I certainly have no objection. I would just recommend doing things that will make your life better even if the worst-case situation you envision doesn’t come to be.

If you store up extra food, then make sure it is something that you will eventually eat. Even if we just end up with 10% price inflation, then you will benefit from having bought your food earlier. But you don’t want to buy boxes and boxes of food only to see it wasted because something horrible didn’t happen.

When it comes to your finances, it should be the same way. You don’t want to have all of your wealth in gold, or cash, or guns, or real estate, or whatever you think is the best way to survive.

Ask yourself how things will turn out if we just have a deep recession, the government bails some people out and runs up more debt, and then life goes back to somewhat normal. Will your portfolio be higher or lower than when it started?

No matter what happens, almost all of the time the fundamentals are still the best path to follow. This means paying off debt and not taking on too much debt. It means having a diversified portfolio such as the permanent portfolio that will hold up in virtually any economic environment.

Conclusion

I think it is positive that many people are anticipating bad times ahead. It’s not because I want people to be pessimistic, but because I want them to be realistic.

It also means that more people are waking up to the threat that our own government poses. As long as government is somewhat held in check, then Americans can survive almost any situation. There will always be a marketplace where people voluntarily come together and trade.