Important Economic Trends During Anarchy – Week 7

2020 – Something Big is Afoot. Are You Prepared?

Stability in an Ocean of Change – Timberland

Fat chains.

I do not know who has been feeding them much less what they were fed, but I have a bucket of tow chains that have experienced some serious weight gain. I am not talking just a little weight gain, I am talking SERIOUS weight gain. I am surprised they have not had a heart attack serious weight gain. Perhaps I am uniquely stupid, but I have no idea how to put tow chains on a diet. I did not even know that tow chains ate anything much less could gain weight. But I have the proof.

Working remote is less efficient than being in my office. The primary benefit is the commute is a lot shorter with less traffic. Another positive note, I have been able to get a few things done by scheduling contractors to come on the days I am working from home. Among those was getting the floor of my tractor bay power washed. There were some places in that bay that were quite dangerous to walk because of the grease and oil from a piece of equipment that I have now sold.

The preparation for the power washer obviously included removing everything from that bay. The tractor was easy. The most difficult was the bucket with two tow chains. I remember carrying that bucket into that bay eight years ago. It was heavy, but not a problem. Thanks to those fat chains, I now have a hernia, thank you very much. Do you think I can sue? The Love of My Life thinks my condition is age related, but I know the real cause – “Fat Chains”.

While I have been helping folks with their land goals and getting a hernia, many of our cities have been holding what must be a form of reality entertainment called “PRVs versus Police Games”. PRV is my term for Protestors, Rioters, and Vandals. It must be reality entertainment because the PRVs keep doing this mindless activity over and over again. Is there a point system? Are there rankings? Maybe points are based on the dollar cost of the cleanup of the damage done by the PRVs. I am not interested in watching it, but is there PRVs vs Police Super Bowl?

As long as I do not have to pay for repairing the damage, PRVs vs Police seems like a total waste to me but perhaps I am wrong. It appears to me to be more dangerous than football. People are getting seriously injured and even killed. Other reality shows like running around naked for a month on some island also did not make any sense to me either but apparently some people found it entertaining.

The truth is the PRVs were never upset about racial inequality, that was simply a smoke screen. With just a little bit of research two facts become obvious:

1. The PRVs want to eliminate capitalism and replace it with a Marxist, Communist economic system, although I doubt many PRVs understand those concepts;
2. The USA is not perfect, but we live in the country that is the least racially discriminating on this globe, unless you are a white southern male (WSM).

We WSMs are the only segment of American society that is legally discriminated against. Even by our government. It is always open season on WSMs. Has been my entire career.

The only positive I can see from the PRVs vs Police Games is that we are getting a great look at the result of electing Democrats to public office. None of the cities with the PRVs vs. Police Games have Republicans in leadership. Not One. Perhaps real adults in those communities will step up and run for public office in them. In the meantime, the public is voting with their feet – Exit Stage Right! The last one out, turn off the lights, and good luck giving your home away.

I have read that apartment rents in the worst cities have declined more than 10 percent since March and home prices are declining even more. Interviews with household movers and REALTORS have confirmed the trend of migrating out of cities. Declining home prices is remarkable because everywhere else home prices are soaring. But capitalism works.

Commercial real estate in those cities is going to experience similar trends. Can you imagine the promotional ads in those cities for retail space – “Enjoy a complete turnover of your inventory every night!” Or for an ad for a restaurant space “Free nightly street entertainment – PRVs vs Police Games” or “Make going out to dinner a memorable adventure”. Funny, unless you own the business or the building. Those owners are the real victims, not the PRVs.

I remember watching some movies years ago that showed what was then an unbelievable future scene where our cities were desolate waste lands of destroyed high-rise buildings, controlled by roving gangs of thugs with tattoos and dressed outlandishly, with no police anywhere to be found. In a landscape reminiscent of contemporary bombed out middle eastern cities, the hero used weapons to ward off the thugs while striving to survive. Today, the BLM and the Democrats with their goal of “Defund the Police” are creating those cities here in America. Unbelievable, but it is real. The ripple effects are real also. Cinch up your saddle.

Even the City of Richmond will suffer. It amazes me that anyone thinks good leadership is displayed when a city with a public-school system often considered third class with the excuse of “lack of money” spends $1.9 Million Dollars to remove statues? Was that the best use of the city taxpayers’ dollars? I have not ridden down the defaced Monument Avenue but doubt that prices are increasing for homes on that formerly internationally acclaimed boulevard.

Among the ripple effects, a significant exit from urban to suburban and exurban communities. Rural areas without broadband known as “Broadband Deserts” will not enjoy the same level of positive demand as those areas that do have broadband available. In the wake of “PRVs vs Police Games”, the migration has just begun.

As we discussed last week, new home construction and industrial construction will both soar in the next few years. They will be the twin engines of economic recovery from the Wuhan Virus. As long as The Fed keeps the mortgage rates low, all will be well. The question is where do you invest if you are not in those two industries?

Short term my recommendation is to adjust your portfolio so you have some cash on hand to take advantage of what is evolving around us. Long term, my recommendation is to own at least one tract of Superb Land. There is no one set of characteristics that define “Superb Land”. Rather there is a matrix of different categories of land each with a variety of characteristics that equate to a tract of Superb Land.

One of those categories is timberland. A well located tract of timberland with good soils offers multiple benefits – an asset that provides inflation protection, the annual growth in the trees is an increase in their market value, and harvesting the trees provides a capital gain taxed income event (unless Biden gets elected and eliminates or raises that tax incentive to invest).

There are additional forces that can significantly magnify the potential increase in value. Likewise, there are forces such as timber market values that fluctuate according to the supply and demand for lumber, lumber imports, etc. that will impact the specific rate of return. There is no riskless investment. But with a long-term investment perspective, timberland offers many advantages including minor ones like the pipes never burst and the roof never leaks.

Since I was watching the Democratic Convention a few year ago when they voted to delete all references to God from their platform, a status that continues today, this Bible verse is particularly meaningful the week of the 2020 Democratic Convention.

“Beloved, do not believe every spirit, but test the spirits to see whether they are from God; for many false prophets have gone out into the world. By this you know the Spirit of God: every spirit that confesses that Jesus Christ has come in the flesh is from God, and every spirit that does not confess Jesus is not from God.”

(1 John 4:1-3 New Revised Standard Version, Oxford University Press)

Capitalism builds wealth, socialism consumes it in self destruction. I serve an awesome God. If God is on our side, who can stand against us.

Stay healthy,

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