Throughout history, big events have big consequences. Paradigms shift, and so too does the direction of society. The epidemic that is COVID-19 and the global reaction to it will likewise result in a massive disruption to life as we know it.
I expect the big three changes are going to be:
- Economic collapse
- A shift in the global powers, possibly caused by war or other strife
Let’s take a look at these one at a time and explore what you as a prepper can do to prepare and protect yourself.
The Economic COVID Collapse
In 2021, you will notice that everything will cost more, with the possible exception of energy. Food prices are up and they will continue to rise. Takeout meals will be more expensive. The cost of goods will increase, from clothing to appliances and vehicles, as production is curtailed due to the coronavirus and international disruptions. You may get your vaccination paid for, but your other medical costs will rise. The costs of combatting COVI19 will be passed along to the consumer by businesses large and small, and it will not be pretty.
I am calling the economic recession we will see in 2021 and beyond the COVID Collapse because it will be brought on by the disease and our governments’ reaction to it. The collapse will be brought about by a combination of factors, some of which we wrote about yesterday.
Millions of people have or will join lose their jobs as a result of business closures caused by COVID-19. Small business owners will lose their livelihoods and may be forced into bankruptcy, leaving them with little or nothing to show for years or even decades of hard work. Renter will be evicted and home owners will face foreclosure. Homelessness will rise. Retirements will be postponed or become impossible, forcing the elderly to work longer than they expected. As the costs of food and goods rise and government indexes undercount the rate of inflation, people across a broad swath of the economic spectrum will find it harder to sustain their way of life. Consumer spending will be dialed back, which is a primary contributor to recession.
A recession on top of the damage caused by shut downs and closures will be a double economic whammy and perpetuate the COVID collapse. Even if the surviving restaurants snap back at full capacity, it will take several years for the number of tables to return to normal. This will hurt every supplier in that market. This translates to lower sales for everyone that supports the restaurant business, from food distributors and their suppliers all the way back to the farm, to the credit card processors, the apps that take reservations, the brewers, distilleries and wineries who sell to them, and so forth. Add to that people who have left the cities, families who now prefer to cook at home, and those that have gotten out of the habit of eating out, and you see the issue at hand.
Now repeat that for the airlines, for cruise ships, for hotels, for business conferences, and every other industry that has been hurt by COVID-19. Does anyone really think shopping at malls, working in an office, traveling to a business conference, or flying to Italy for vacation will bounce back to prior levels?
I do not see how we can avoid a recession throughout the developed world. If you add in increased taxes, such as the Biden Administration supports, it could be even worse in the U.S.
How to Survive the COVID Collapse
Other than putting money in the bank, it’s difficult to prepare for a recession and almost impossible to do so quickly. Build your cash reserve and your emergency fund. Cut you debt. Live below your means. Look for side gigs and try to build one into a business that can sustain you if you are laid off. Pay off your car and if possible, your house. Look for ways to reduce your costs. Consider moving to somewhere that has a lower cost of living.
To be as bulletproof as possible, you must own your land, be able to produce your own food, have an income stream, and have as few liabilities as possible.
The COVID Migration
Mayors need to realize that it is the restaurants, bars, live music venues, and clean and safe streets that have led to the renaissance and revitalization that many cities experience in recent decades. Forcing small businesses to close, forbidding restaurants and bars to serve patrons, closing gyms and yoga studios, eliminating the convenience, fun, and excitement of today’s hip city neighborhoods is killing the goose that laid the golden egg. Without these features, cities will backslide and blight will fall again.
Regardless of whether COVID-19 is “cured” by the new vaccines or not, we believe the COVID collapse is coming to a city near you. We expect urban area and their residents will be hit the hardest by the recession. Many of the very same hourly workers considered “essential” who go to work every day while others work from the safety of their home, will be the hardest hit by inflation, job loss, and erosion of their buying power. Add in increased automation and even doubling the minimum wage won’t save them.
Cities Will Be Hit Hardest
As their tax base evaporates with the closure of small businesses, cities will be forced to cut back on basic services like garbage pickup, mass transit, police and fire personnel, social services, etc. These service cuts result in a deteriorating quality of life deteriorates for residents. Crime rises as does drug use. Trash piles up. Rats and vermin appear. Repairs are unmade. Businesses close. Buildings are boarded up. Before long, anyone who can rub two nickels together, including businesses, leaves. This inner city flight just exacerbates the problem as tax revenue falls further.
After this downward cycle continues, you get a Detroit or a Baltimore at their worst, with abandoned buildings, decreasing population, rising drug problems, and failing schools. Before long, a generation is doomed.
Some municipalities are already crushed by the burden of unfunded pensions. Add the burden of COVID-19 and they could default on bonds and be forced to declare bankruptcy. The only thing that could save them is a Federal bailout which would just shift the burden from the states to the Federal government, spreading the deb over all of us instead of only those who live in Illinois or California.
What the COVID Migration will Look Like
We expect to see:
Urban Flight to Suburbs: People who leave cities for all the reasons enumerated above but still work in the cities will make the short trip to the suburbs. This migration will be supported by the increased number of rental homes owned by large corporations. Those that benefit from the better school systems, the wider array of shopping, and lower costs will find themselves settling in permanently.
White Collar Workers Moving to Small Towns: If white collar workers can work at home, no one will need sky scrapers and office towers with 50 floors of cubicles and corner offices. Sprawling office parks will become unnecessary. Living near your office will become passé. We will see people who clustered in and around urban centers disperse, revitalizing small towns at the expense of big cities. It will change the demographics of America and disrupt the commercial and residential real estate markets.
Mobile and Remote Work Will Increase: This flight from cities coincides with the emergence of new satellite internet service from Elon Musk’s SpaceX and Jeff Bezos’ Project Kuiper which will improve remote internet connections. This could result in the emergence of a mobile workforce that can literally work from anywhere, including their RV parked deep in a national forest. In the short term, this will open up rural and remote locations. In the long term, low-latency internet services combined with increasing 5G cellular coverage and the eventual emergence of self-driving vehicles could result in a class of remote workers that live in and work from their autonomous vehicle.
The Lifecycle of a City
Cities have grown, fallen, recovered, collapsed, and experienced a renaissance just about every other generation. We can’t predict what trend will bring cities back in 35 to 50 years, be we can predict that they will suffer over the next few years; a downward slide brought about and accelerated by COVID-19.
How to Prosper from the Migration
Here’s our advice for how to do well in light of these migratory trends:
If you own an expensive condo or similar property in a major city where COVID-19 wreaked havoc, put it on the market before prices collapse even further. Yes, our advice is if you can’t beat them join them; get out of town like everyone else.
Likewise, if you are a landlord or own commercial property in large cities, look to cash out. Even if your current client base is paying their bills and you have a high occupancy rate, there is no guarantee that this will continue if we go into a multi-year recession, or worse. Take your money off the table, but if you insist in keeping it in play, buy farmland.
If you live in the suburbs and have wanted to move to the country, do it as quickly as possible. This wave is building and prices are rising, especially in places like Idaho and Montana.
If you are perfectly happy living in the suburbs, then refinance your mortgage with a new, low rate and work to pay it off as quickly as possible.
A Shift in Global Power
Empires rise and fall, often as a result of war but occasionally due to other forces. COVID-19 could be one of those outside factors that shakes things up. Just as the World Economic Forum sees COVID-19 as an opportunity to institute their Great Reset, others may try to take advantage of the situation.
It is entirely possible that COVID-19 could cause the failure of governments or even of entire countries. As anger and frustration rise, it could tear a country up from the inside as anger and frustration rise. It is also possible that a country could start a war, either because they think COVID-19 has weakened their foe or because they want to distract their populace.
A shift in global power as a result of COVID-19 is much harder to predict than a recession or migration, trends which have already started. Nothing may happen to cause a shift in global power, but there are hot sports where flare ups could occur. A good prepper needs to be aware that war could break out and will create or worsen a recession, disrupt global trade, send the price of certain commodities on a tear and potentially crash financial markets.
Take precautions to insulate yourself from short-term financial disruption. Fall back on your prepping basics and make sure you are ready to weather the unexpected.
You are a prepper. Prepare for the worst, but hope for the best. It’s the mantra we live by.