by
Jeff Thomas
International
Man

Recently
by Jeff Thomas: After
the Storm

Back in the
early 2000’s, the world was on a roll. Spending was at an all-time
high, and people were drunk with the belief that the party would
never end; that there was no limit to the amount that either they
or their governments could borrow and spend and still, somehow,
all would be well.

At that time,
in a reverse of the old adage, “It’s always darkest before the dawn,”
a small number of people were putting a wet blanket on this thinking,
with the prediction that, as history shows, “Bull markets do not
end with a whimper, but with an upside spike,” or, in simpler words,
“It’s always brightest before the crash.”

As one of the
latter group, it’s safe to say that, at that time, almost no one
was listening to us.

My own predictions
had been that, as the economic decline progressed, there would be
several major stages of decline. But, in addition, there would be
three major stages of denial by the great majority of people,
and it is that denial that is the subject of this article.

1.
The Initial Crashes

Although the
initial crashes that occurred in 2007/2008 were, by far, the easiest
aspects of the Great Unravelling to predict, their likelihood was,
predictably, rejected by the greatest number of people. The reason
for this is that the crashes represented a change of direction
– from positive to negative.

2.
The Greater Depression

Once people
have acknowledged a change of direction, it is easier for them to
accept that the trend may become more extreme than it is at present.
Correspondingly, after the 2007/2008 crashes, most people were now
willing to accept that a recession was underway. However, very few
were willing to accept the dreaded “D” word. The term “Greater Depression”
was coined by Doug Casey of Casey
Research early in the game and is, to my mind, the most accurate
two-word description of the economic period that we are now experiencing.

However, as
I have stated, the “D” word is so repugnant to most people that,
regardless of the indications that we are, indeed, experiencing
a depression, most people simply cannot face the term as a reality.
They prefer any number of euphemistic terms, such as “double dip
recession,” in order to avoid accepting the unthinkable.

This is human
nature. It seems that, whilst a small number of us would prefer
to face the music right from the outset and begin a plan to deal
with it, the great majority will accept the details of what is occurring,
whilst rejecting the overall reality.

3.
Food Crisis

In my belief,
people will only begin to accept the reality of this depression
after the next set of crashes has occurred, particularly a second
crash in the stock market. Historically, it is only after the false
recovery has ended in a major downward trend that people tend to
swallow hard and admit to themselves, “I guess this is for real.”

So, in a sense,
this may not be the time to raise the issue of what I consider to
be the third unacceptable phrase of the Greater Depression: “Food
Crisis.” However, recent developments suggest that it may be of
value to have a look now.

In July of
2011, International Man published an article entitled “Food
Crisis” (reprinted in May 2012). In this article, I outlined
the reasons why a significant shortage of food is possible and even
likely. At that time, I also pointed out the reason why a Food Crisis
is the third great event in the present economic debacle that engenders
almost universal denial by otherwise intelligent and informed people:

Historically,
there is nothing so chaotic as famine. As long as people have
a crust of bread and as long as it arrives regularly, there is
a chance that events may be controlled. It is the very unpredictability
of supply that causes panic. And the greater the concentration
of potential recipients, the greater the panic.

Small
wonder that, when I speak to friends and associates of The Great
Unravelling, this one facet often makes them recoil in a desire
to avoid the subject entirely.

In response
to that article, I received many predictable comments that essentially
said, “It can’t happen. They just can’t let it happen.” However,
I also received quite a few that said, “I haven’t even been considering
a Food Crisis, but it looks like I’d better. Can you offer suggestions
as to how we can deal with it if it happens?” Hence the companion-piece,
published in October, 2011 entitled, “Can
You Afford to Eat?“

This article
dealt primarily with the subject of internationalisation –
in effect, travelling in order to eat.

Some may be
saying to themselves, “But even if this occurs, it is a ways off.
Perhaps two years, or even more. We have enough to think about right
now. Can’t we deal with this issue when we get a bit closer to finding
out if it will become a reality?”

The simple
answer is, “Yes, you can.” However, a Food Crisis, if it occurs,
will have a greater impact on people than any other development
in the Great
Unravelling. Therefore, it would be wise to keep tabs on its
likelihood as events unfold.

As the reader
is likely to know, the world is experiencing the worst drought since
1934. However, even though the drought is on the evening news, not
much is being said about the overall effect that it will
have over time.

A failed grain
crop, especially if it continues for more than one season, warns
of several developments over the next few years:

• Shortages
  of staple grains – Any food that is prepared using
  wheat, corn, soybeans, rice or other grain will become scarcer
  and significantly more expensive.

• Shortages
  may not be limited to grain – Much grain is used
  as cattle feed. A failed crop means that ranchers will cut the
  size of their herds, as they deplete their storehouses of grain
  and rely on grazing. (Grass, too, is affected in a drought.) Beef,
  pork, poultry and all other meats are likely to be in shorter
  supply.

• Few
  people will have personal food supplies – In 1934,
  more than 30% of all people lived on farms, and many others had
  home gardens. Today, less than 2% live on farms. In addition,
  in 1934, it was legal to store food. Today (at least in the US),
  FEMA has the authority to confiscate food. There is no limit as
  to what they may confiscate, but, as the FEMA website states that
  two weeks’ food is sufficient in an emergency, they may regard
  this as the allowable limit. It remains to be seen whether they
  would exercise this power.

• Inflation
  – Due to shortages, the price of food rises. In a period
  in which the Chairman of the US Federal Reserve has stated that
  his solution to the problem is to create more money, inflation
  is not only possible, but certain.

  The most
  important commodities are food and fuel, in that order. Corn
  is used to produce ethanol, an alternative to fossil fuel. With
  a shortage in corn, there would be an equal shortage in ethanol,
  driving up the price of fossil fuel. Additionally, the Environmental
  Protection Agency requires that up to 40% of all US-raised corn
  be used to create ethanol. In a time when corn is experiencing
  a shortage, Larry Pope, CEO of Smithfield Foods, has called
  this “a government-mandated disaster.”

• Extended
  effects – No one can say how long the present drought
  condition will last. Should it become extended, as did the drought
  of 1934, another dust-bowl is entirely possible. Either way, though,
  farmers who have lost their annual crops will find it hard to
  recover, especially after more than just one year of drought.
  Likewise, it will take several years for meat-producers to build
  up their herds again until they have sufficient meat to fill the
  ongoing demand. Recovery will not occur immediately after the
  drought ends.

• Food
  Crisis – And here we come full-circle. When the
  world is already experiencing a major food shortage, nothing could
  be less welcome than a collapse in the food delivery system. If
  the events described in the “Food Crisis” article were to develop
  during the present drought, we would be facing a similar or worse
  situation than in the 1930’s, when a climatic calamity compounded
  an economic calamity.

  Almost
  no one in the First World has experienced such a situation.
  Small wonder that we seek to hope that, “It can’t happen. They
  just can’t let it happen.”

  It is
  left to the reader as to whether it is wisest to a) plan ahead
  for this eventuality, b) keep a close eye on developments, or
  c) simply “wait
  and see.”

  In the
  words of Robert Heinlein,

  “After
  three missed meals, most men are willing to kill for food.”

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Reprinted
from International
Man with permission.

August
31, 2012

Jeff
Thomas [send him mail]
is British and resides in the Caribbean. The son of an economist
and historian, he learned early to be distrustful of governments
as a general principle. He began his study of economics around 1990,
learning initially from Sir John Templeton, then Harry Schulz and
Doug Casey and later others of an Austrian persuasion.

Copyright
© 2012 International
Man