New World Order Part 2: Embracing the Permanent Changes

James West

When the financial crisis of 2008 hit, I built a chicken coop, bought 25 chickens, and transformed whatever I could of my rocky west coast island retreat into gardens. That year – summer of 2009 – I grew amazing cantaloupes, and got so sick of eggs I don’t think I’ve eaten more than a dozen since. But the changes wrought by the financial crisis and the follow-on response by central banks i.e. print money like mad – meant the great apocalypse I had prepared for was not going to arrive.

Instead, a revised version of the booming economy ensued. One where commodities like gold and steel, copper and zinc had no clout, while fairy-tale synthetic assets like ETFs and Futures ruled the day. The S&P500, Dow Jones Industrial Average, and NASDAQ were the ultimate main beneficiaries of the government printing machine. (I use “government” and “central banks” interchangeably, because, contrary to what we are told by government and central banks, they are two wings of the same bird.)

So the only think left for me to do was to give up my makeshift farm, move back to civilization, pick up a glove and get my ass into the game. Again.

Many who have followed my progress through Midas Letter know that I rode mining all the way into the ground, and when there was literally not enough left to buy chicken feed, I moved to the city (Toronto) and went to work  on a partnership with the Financial Post as their first and only financial newsletter writer. Unfortunately, Postmedia Networks, the paper’s parent company, was suffering its own version of a financial meltdown, and they couldn’t maintain the editorial pace I set and subsequently, the enterprise ran out of momentum and died a quiet death.

But! I was back in the mix, and the cannabis industry came rising up out of black market obscurity into the light of legality, and a whole new chapter in the Midas Letter began. One that didn’t really involved mining too much, though I did keep a finger in the pie, just cause once mining is in your blood, you can never really turn your back on it completely. Plus, I’d made too many long lasting and really great relationships in the industry to just walk away completely.

So when the cannabis industry began its Great Contraction in the Spring of 2019, I was well equipped to recognize the signs, and unlike the mining meltdown, where I rode all my holdings to nothing, this time I bailed on all my positions and was essentially out of the cannabis stocks completely. And now, with Coronavirus in full pandemic mode, that financial downdraft just got the mother of all black swans added to its horrible vortex, and here we are: in a truly new world, where our way of life is likely permanently changed, though most of us are encouraged by government and media to think of this as a temporary phenomenon, and one that will end with a return to normalcy.

This is a false hope.

I’m not saying that I know what the future holds and the government and media don’t.

What I am saying is that I’ve been through a sufficient number of economic shocks from the perspective of a business whose key skill set is pattern recognition to recognize what has been killed off, what has mutated, and what has emerged as a new permanent feature of the matrix we call the world economy.

And here’s what I’m doing differently this time in response.

Last year, I bought a farm. Never mind a chicken coop. This time, I’m going all in.

Not a massive, big shiny operating producing agricultural enterprise, but a run down, derelict, steal-of-a-deal piece of agricultural property covered in vines, swamps and poison ivy (which I am actually right now enduring endless itchiness and blisters from) that is best described as a rehabilitation project. It has an old house on it built in 1910 that has never had a concrete floor poured in the basement. There are 6 old greenhouses, two of which are repairable, and 4 of which are going to be bulldozed. There is crushed and torn plastic ground into the dirt from years of neglect.

But thanks to COVID-19 and the Great Depression we are entering, I have moved up my timetable as to when I am going to move to the farm by a full year, and we are high-tailing it for the countryside in the next six weeks.

That’s because the changes in the pattern visible in the world economy suggest to me that there is a whole lot more than 20% unemployment, overwhelmed hospitals, and a meat shortage coming down the pike; there is a full scale famine comin

And unlike previous famines that have reordered the geopolitical landscape, this time, a good portion of the population is armed.

And that’s a very dangerous reality. So I’m buying a gun. Again.

My first gun was a Winchester Cooey .22 calibre long rifle. I bought it when I was sixteen years old to shoot gophers, for which I was paid $0.50 an ear by my uncle when I worked on hist cattle ranch in Manitoba.

For those who don’t know, ranchers want to kill gophers who dig holes that their horses break their legs in. It took a lot of practice to get to the point where one shot was equal to one gopher every time. And then I had an epiphany and realized that if I sat quietly behind the gopher’s hole with my rifle pointed just over the opening, it would just be a matter of time until the gopher popped his head out and I didn’t even have to aim. They are always looking down the slope when they stick their heads out of their hole, and so if you just sit still and be patient upslope from the little bugger and BLAM!

Two ears, one dollar.

But I digress.

Stock markets go up and go down. Financial crises will come and go. But the whole objective of everything you do is to build security for yourself and your family. And that means knowing when to take some money off the table, and build something that can’t be wiped out in an instant by a change in the geopolitical order or by a new virus.

And that’s my point: The world has changed irrevocably. Ignore that reality at your own peril.

Because unlike the last financial crisis, this one is going to see the line between the “haves” and the “have nots” grow wider. And we are in the process of discovering that the system that has evolved around us is not designed to ensure a basic quality of life for all. It is designed, by nature, to ensure the survival of the fittest. And historically, through the evolution of all life, we see no sign that the long term survival of the fittest involves weapons. Though weapons can help you defend what you build.

Rather, ingenuity, and hard work, along with some genetic good fortune, are the hallmarks of survival over the long term.

So on my derelict piece of land, where nothing now grows, and no animals forage, I will use what sliver of ingenuity I can muster, and through hard work, attempt to transform the land from a barren and unproductive piece of swamp into a verdant, productive, and ultimately, self-sustaining operation capable of providing for me, my family, and my greater community.

I think I’ve reached the point in my life where that, in all the patterns I’ve recognized over the last 50 years, that ability is the most worthwhile one to achieve.

James West

James West

Editor and Publisher

James West founded Midas Letter in 2008 and has since been covering the best of Canadian and US small cap companies. He covers global economics, monetary policy, geopolitical evolution, political corruption, commodities, cannabis and cryptocurrencies. As an active market participant, James is not a journalist and is invariably discussing markets...
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