Gold bugs and bitcoin maximalists agree on one thing and, perhaps, ONLY one thing. You cannot rely solely on a centrally controlled currency.
Personally, I like both gold and bitcoin. Which is better? That depends and, frankly, the answer is irrelevant for our discussion today. What matters is the key characteristic they both share. Decentralization.
In this, Part 3 of our “Thrive Strategy” series, I make the case for decentralization. And not just the easy stuff like buying bitcoin. No, today, I make the case for disconnecting from as many critical centralized systems as possible. And, while you still can.
Centralized Systems Dominate
Today our lives are dominated by centralized, complex systems. Those systems are poised to sting all of us who’ve come to rely on them for… well, virtually everything.
But, maybe you’re the independent sort and have this topic covered? If so, I wonder what your plan is for:
Food (if, for instance, Whole Foods couldn’t keep the shelves stocked or due to your beliefs ‘your kind’ aren’t welcome there anymore?)
Energy (When the power grid is attacked or simply fails. Like last year when the US grid logged 1.33BILLION outage hours.)
Transportation - When commercial travel systems require credentials you don’t possess?
Income - When your employer gives you an ultimatum, “Take part in a medical experiment or your fired.”
Dependence on complex or centralized systems pose under-appreciated risks. And actions taken to diversify/decentralize your dependence reduce that risk.
It also produces many new and unexpected benefits.
Overly focusing on the downside risks we face leads us to a very dull life. I am concerned with thriving not just surviving. If you’re with me on this, than you understand that we need to focus on both upside and downside. We need to reduce risks while seeking out opportunities and upside.
The good news is: Decentralization can do both.
Globalization and Decentralization
Globalism was an act of decentralization.
Rather than being restrained by the resources, production, legal framework, and talent pool of the local population in a particular geographic area. Global decentralization launched waves of innovation and economic resilience.
The free(ish) movement of goods, capital, education, and human talent opened up huge opportunities for billions of people. New companies were started, new technologies discovered and deployed lifting billions out of poverty and increasing the standard of living everywhere.
Perhaps it was the inclusion of China into the WTO? Or, perhaps it was the corporate rent-seekers? Or maybe it was simply an inevitable?
However it happened, globalization switched from a driver of decentralization (and the innovation it produces) into it's opposite - stifling centralization where efficiency and control dominate.
Today, government sanctioned International bodies provide central systems of governance for global trade. With the easy growth gone, Corporations consolidate through mergers and expand earnings through financial shenanigans.
Almost everywhere, efficiency driven concepts like "Just in time inventory" and "outsource-everything" dominate decision making.
With this Switcheroo all innovation became “financial innovation” and short-sighted rent-seekers took the helm happy to build layers upon layers of complexity.
In a complex system, unknowable risks take root. These risks grow and overlap and compound over time. Eventually, a butterfly flapping its wings in Taiwan results in supply chain carnage everywhere.
The Short-Sighted Idea of Efficiency
Is outsourcing bad? No, of course not. But, there are tradeoffs. And the current leadership at the helm of governments and major corporations either lack the ability to weigh those tradeoffs - or they plan to be pull the ripcord on their golden parachutes before the tradeoff risks hit home.
Here’s a few examples of tradeoffs now hitting home:
Ford's August sales of its new vehicles declined by 33.1% from a year earlier in the U.S. due to an ongoing global shortage of semiconductor chips.1
Overwhelmed hospitals? Covid gets the blame for hospitals being full. But, in fact, US hospitals are short of nurses in part because 30% of registered nurses are "travel nurses"2. Hospitals, pursuing the efficiency dogma, outsourced not just the janitorial services, but even their most critical jobs3 - Nurses. Short-sighted administrators embraced the idea thinking that they could easily hire temporary nurses when needed.
An old business - railroads, got in on the short-sighted game too. “After railroads had spent six years shedding employees in order to tickle Wall Street analysts and pump up stock prices”4 they now find themselves desperate for qualified staff.
The production of all medicines, from complex therapies to common pharmaceuticals like painkillers and antibiotics, relies on secure access to active pharmaceutical ingredients (APIs) Unfortunately, A recent study revealed that over 80% of APIs for essential medicines have no US manufacturing source.
Why do we outsource everything? Anthony Sardella, senior research advisor and author of a recent study5 on United States reliance on foreign sources for APIs says simply, “the economics did not lend itself” to manufacturing within the States.
My guess? The economics ‘didn’t lend themselves’ to building a US chip plant or planning for and investing in a skilled workforce either.
In the Uber-era of anything you want on demand, we fell into an obvious trap - the foolish notion that tradeoffs don’t really exist. It’s as if we thought everything was Upside.
The greatest centralized risk we face is Government. Doug Casey came to this conclusion In the 1970’s and it’s why he wrote The International Man.
The ‘rona lockdowns showed us governments will set aside precedent, legality, civility, rational thinking, and even tax revenue in a grab for power as soon as the opportunity arrises.
If it wasn’t clear before, it is now - it’s important to be diversified beyond one political jurisdiction. Doug has long spoken of the benefits of international diversification. One should, ideally, earn money in one country, while being a legal resident in another, a citizen of a third, and a tourist yet another. It could mean having bank accounts outside your primary country of residence and a bolt hole in a place you like spending your vacation.
Diversifying one’s political risk applies domestically too..
As lockdowns kicked in, Doug commented about the many wealthy New Yorkers who headed for the hills of Aspen where the rules were less draconian. It wasn’t just Aspen that experienced an influx of people seeking a form of political asylum. Joe Rogan and thousands of other Californians escaped to Austin, TX and Miami, FL.
After the riots in 2020, people moved out of big cities to pro-gun rural areas where freedom of movement was still permissible.
If there is one risk we should most seriously consider today, it’s political risk. And, as much as possible, we should diversify and decentralize those risks.
That might mean obtaining legal residency in Mexico as a backup, relocating to a better state/county, or pulling up stakes altogether and moving to a new country.
Here’s a short and very incomplete list of how the government centralization stifles innovation and creates risk.
Building and zoning laws (housing shortages)
Limits to trade
K-12 Public education (Indoctrinate the population)
Interest Rates (Controlling the price of money)
Monopoly Power with regard to anything it chooses (Money comes to mind)
Misallocation of “public” funds (bridges to nowhere, disastrous wars)
Destructive financial incentives
Too Big to Fail Bailouts
Criminalizing behavior previously classified as legal
Patents and Intellectual Property
The centralization of government power is the greatest threat you’ll face in the coming months and years. Taking action is a no-brainer if you’re in a position to do so.
And remember, moving overseas isn’t the only way to reduce and diversify your political risk.
We’ll discuss specific areas where you can reduce your dependence on centralized systems… from money, to food, to education, and communications. Stay tuned.