For years, Ive been writing about Venezuela, describing it as
the movie by which we can view the future of other jurisdictions
that are presently in decline.
The reason is that declining nations follow the same pattern,
time and time again, over the centuries. This is not coincidence.
The pattern exists because human nature never changes, regardless
of the era or the locale. Political leaders make the same mistakes
as their forebears, and the people of a nation react in kind.
For this reason, countries have a sort of shelf life. They rise
in prominence, due to work ethic and productivity. They then go
through a period of abundance, which eventually deteriorates, due
to complacency and apathy. Finally, they collapse into a period of
If we recognize that this pattern has played out countless times
over the millennia, we can track any given country and assess where
it is at present, in the pattern. For example, Europe and North
America are presently in the last
stages prior to collapse, Venezuela is in
the process of collapse and Cuba is in
the post-collapse recovery.
But, although this may be historically interesting, of what
value is it to us in terms of our own lives and the choices we make
for our future?
Well, we can observe Venezuela and see the effects of the
present policies evident in our own country, if we happen to live
in one thats on the verge of collapse.
For example, we can see that ever-increasing largesse by a
governmenton the backs of productive taxpayersis a major
destructive trend. Protective tariffs and capital controls also
lead to collapse. And excessive debt is a pathway to economic
We can see from the recent history in Venezuela how these
political mistakes caused their collapse, and we
can now observe how that collapse plays out.
But, going back to the title of this essay, how do we invest in
Well, the reader will be familiar with the investment principle
of buy low, sell high. This means that the investor should not wait
until an investment is already popular. He should invest when its
at its least popular.
So, lets look at that a bit more closely.
The principle would suggest that, in the main, the US, in its
final, declining stage, is a poor country for investment, but that
Venezuela could be a far better possibility.
But at what point should investment take place? Well, there are
a few basic assumptions that might be made. First, investment is
difficult at a time when theres massive unrest. If a boots on the
ground assessment can be made fairly safely, this can be a very
advantageous time to begin studying possibilities.
Also, during a collapse, local businessmen and government
officials are desperate and will cut virtually any deal with
anybody, just to get a bit of money into their hands. Such deals
are normally cancelled wholesale by th...