Inflection Points In The Long Descent
Recently there has been a lot of worry in the prepper community, and society in general that things are about to turn radically worse (aka SHTF). The two-year global pandemic, now followed by the war in Ukraine, has upended the way we view the World and the way things normally happen. Periods of normality followed by a crisis, then another period of calm are normal but periods of larger crisis are predicted by John Michael Greer as something which happens with increasing frequency in a collapsing society. Greer likens it to a staircase, leading downward. Each crisis is a sudden drop, which is followed by a period of recovery.
This model of economic activity is something we here at Green Wizards believe will be the shape of things to come for us. Actually that it's been happening like this for some time now. At least since the 1970s when "The Limits of Growth" said, we had reached Peak Oil.
Are we though, at the start of a small downward drop, or is this "The Big One"? Before we make any assumptions, let's look at the basics of "Inflection Points" and Collapses.
What Are Inflection Points?
April 3rd, well know preparedness and sustainable living writer Sharon Astyk posted "Inflection Point: What We Do Now", where she says:
"I think we're about to hit a critical point of change in the larger system, where collapse picks up and moves a lot faster and the world becomes very different, very fast. And I think it is coming between now and autumn. Maybe even on the sooner side of that. Now what I'm talking about could be called a lot of things. Inflection Point, Regime Shift, Black Swan, Tipping Point, Critical Transition, Threshold Moment - all of them are terms from various disciplines to describe roughly the same things - the point at which change speeds up, shifts out of even the perception of control and things that seemed impossible a six months or a month or a week earlier suddenly are completely plausible."
The image she uses is a bit misleading so let's use this one instead.
Now I'll admit this graph is a bit misleading as well and requires some clarification. Unlike the first chart, which shows the crisis and recovery action as straight lines, up for resource recovery and down for resource access loss, this chart shows the process in terms of the comparative positive or negative resource access.
The green bar during the 1st year is the range of monthly resource access. Economists use the gross domestic product as a stand-in for this because they can quantify it as a number from general economic data like corporate profits and tax revenue. Green Wizards though, look at a broader and less easy quantifiable category of resources. Things like personal income, the ability to have a home, access to affordable food and energy, even your state of mind and level of stress, all of the things it takes to live in society.
The blue dots represent the monthly GDP, while the red line is the average, and the green bar is the range of monthly GDP. This color combination is for positive GDP growth. Note, the yellow bar and red average line, and red bar with green line represent the same thing, just that the yellow represents periods of inflection and the red, periods of negative GDP. The larger the variation, the wider the green bar. Notice the 2nd Quarter, 2nd Year yellow bar is quite wide, as GDP sharply dropped. In larger graphs like the first one, this micro-level data gets dummied down into one simple macro line. For now, we want to remember that there is a fluctuation in access based on conditions you can control and ones outside of your control.
You can see the three periods of general growth direction at the top. First a period of positive growth, a crisis that results in negative growth, then recovery and the beginnings of positive growth again.
One thing to remember, there are downward inflection points and upward. An inflection point is typically meant to be the point that which a specific measured data changes from one state to the other. In this example, from positive to negative growth, or negative to positive. Both are important. We just tend to focus on the downward.
This chart is roughly modeled on the actions of the economy during the recent pandemic, though I didn't go find out the specific and actual GDP numbers. Whether 3rd Quarter, 2020 GDP was +1 percent or -1 percent, isn't as important as getting the general idea of the way the economy moves. This chart does that.
Post Questions if you have something that isn't clear for you in the comments please.
It's important to point out, that the length of time of positive growth and the length of negative growth following a crisis will vary greatly. Some can last a few months, and others last years. There are things that a government, company, or person can do to shorten the negative periods. Notice the two blue dots in the 2nd Quarter, 3rd Year, which are meant to represent the stimulus checks people received during the pandemic. In some cases a big enough positive stimulus will be enough to change the growth from negative to positive. In other cases, as we had during the pandemic, too small or misdirected stimulus won't have any effect.
Why Are Periods Of Negative Growth Followed By Recovery?
While it happens that a downturn of negative growth can last a long time and that it can be a series of downward drops spaced closely together, it is more typical that a crisis will be followed by a period of positive growth.
Downturns have a way of freeing up resources. Either by causing a company to shed marginally profitable activities and then consolidating or by removing people from the pool who are trying to access a particular resource cutting down on competition. and lowering the price that can be charged.
EXAMPLE 1: A company that sells dairy products (milk, eggs, etc.) has a variety of routes and markets. Some of them are in areas with large populations and close distances (think urban cities) and some are in areas with smaller populations and longer distances to travel (think rural towns). In a period of positive growth, the more profitable routes subsidize the less profitable ones. When a crisis happens that decreases profits or increases costs, the company will often sacrifice the less profitable (or even money-losing) routes and consolidate. When the pandemic made it harder to get drivers, you had fewer resources to make deliveries. When a gasoline crisis happens, driving up the cost per mile, then the cost associated with delivery rises. In both cases, if the company sheds the lesser profitable routes, it frees up money and resources to service the other routes. Growth then turns positive as profits rise and you have a period of recovery.
EXAMPLE 2: The pandemic caused demand for products and services (like fast food) to drop. Businesses responded by laying off workers. No jobs meant people had no income. No income, no way to pay rent. People lost their housing and became homeless. Homeless people have a much harder time getting jobs. The supply of empty houses and apartments goes up, and landlords have to lower the rent to attract tenants. Fewer people seeking housing, less cost. Growth turns positive as people pay less for housing and have more disposable income.
Now, yes, I realize in the recent pandemic, rents didn't drop. That was because large monied players, investment houses, and hedge funds were flush with cash, and could take the time to play the long game. They bought foreclosed homes and rental properties that came on the market at a discounted price, with the intention of holding them for a few years, expecting the demand would return.
EXAMPLE 3: You get laid off but have some money in the bank and a side job. You cut expenses sharply to conserve, which increases the amount of money you have to use for more important resources or actions that you should have been purchasing / doing before the crisis. Your personal downturn then leads to a positive outcome later.
This brings us to the first important thing YOU need to do when faced with a crisis,
Have An Emergency Fund and/or Long Term Resources
You will hear this piece of advice over and over, "Have an emergency pantry of at least a few months worth of food".
Another piece of advice you will hear is "Have an emergency fund of at least 6 months of your expenses".
Both of these are the foundation of preparing, and both get ignored too often by both newer people first getting into preparing, and sometimes even by more knowledgeable and experienced people. Boxes of ramen and putting a few dollars away every week first, are just not as sexy as that newest water filter or talking about what's in your Bug Out Bag.
The thing is, those of us who have access to either or both of those simple things, are in a much better position to weather a crisis than those without them.
The pandemic showed us that those with money were not as harshly affected by the downturn in the economy as those who were poor. They experienced less disruption, and less loss to regain their access to resources much quicker than those who had to scramble and claw to hold their economic position in a period of negative growth.
As an example, I went out on early retirement for health reasons in October 2019. Just a few months before the pandemic began. I had a sizable nest egg in money in a savings account, but also I had access to several credit cards. I was able to use that access to increase my resilience and pay for things like PPE and medical supplies that were not normally something I had in my emergency supplies. I also had over 6 months of food and normal expendables (toilet paper, lol) in my pantry.
I should note that some of that food, is as a backstop for family members who don't prepare. My general preparedness plans include the fact they don't prepare. I'll also note, that no, I don't have a bunch of fancy survival gear, nor many guns beyond a couple for home defense. I am not ready for the Zombie Apocalypse.
Because I had access to resources going into the crisis, I was much better positioned to survive.
Second Important Thing - Do NOT Become Homeless
You can eat less nutritious food, you can hold off buying that new gadget, and you can turn down the heat and put on a sweater as long as YOU KEEP A ROOF OVER YOUR HEAD.
The number one thing I saw that made people disappear was becoming homeless. During the pandemic crisis, and the wave of layoffs that were the early result, I don't know how many pleas for help I read on Facebook. They were out of money and facing either foreclosure or eviction. Once this happens to you, the hole you drop into is very hard if not impossible to dig out of. Our American society is not set up to assist people. Not in any meaningful manner. We are a cruel and nasty country when it comes to helping our fellows.
You have to keep a place you can stay safe. You can live in pretty rough poverty as long as it's not in your car, or in a tent.
But Is This The "Big One"?
Short answer, I don't know.
The longer answer, I don't know BUT there are definitely factors that point to a sharper than normal downturn coming. One that could sneak in quick and hit us hard.
The war in Ukraine is progressing completely out of predicted models. I spent 3 years in the US Army and was stationed in Europe. A broader war that brings in the rest of Europe and NATO is a sheer nightmare that could escalate out of control. The rhetoric from both sides and the outside groups that seem to be pushing for a larger conflict, OR are ignoring any negative consequences of such a war is scary. The casual way people are talking about nuclear war worries me but we've had five decades of a nuclear stalemate, and the results of even a very limited nuclear exchange are well known by the politicians in charge. Also, the Russians have done a monumental job of fraking their invasion up. While they may feel their backs are against the wall and they have to save face with a victory they know the technological edge NATO has over them. NATO can enforce a no-fly zone and there is nothing they could do to stop it.
While they may feel that the Americans will not commit troops, even if the Russians use WMDs, chemical primarily but also a small tactical nuclear bomb, they aren't facing just the American nuclear response. People keep forgetting (or ignoring) that there are two other nuclear-armed nations, France and Britain, who are much closer and would take a much harsher view of any use of nuclear bombs in the conflict. If Russia used a smaller nuclear bomb to attack a sizable Ukrainian advance, I could foresee France responding with 1-2 of their own, destroying a Russian military base or ship force.
I do not see even that though escalating to the point of global nuclear war.
Domestically, we are beginning the run-up to the 2022 mid-terms in a period of large inflation and even larger partisan politics. Republicans seem to be embracing their advantage in State governments to keep themselves in power even with an increasing minority position. Democrats though are continuing their long-standing tradition of standing in a circle and shooting themselves. Why they can't play hardball effectively just confuses me. Both sides seem intent on playing to their fringe bases while ignoring the moderate center.
With inflation taking away any wage gains the working poor got from the lack of employees returning to low-wage jobs, many Independents are mad and looking to punish someone. The social war is out of control as well, as each side refuses any sort of moderate position or any sort of compromise.
Recommendations: Keep your options open. Make no long-term commitments of money or time. Fatten up your core resources. Put off anything you can do without.
Ohhh, yeah, read more Green Wizards...