all right welcome to season five of inside my canoe head this canadian podcast it's all about the integration of leading an incredible awesome life individual responsibility individual emergency preparedness and how do we navigate life's incredible wild disruptions that we see among us sit back grab a beverage and enjoy the episodes all right welcome back to the auto studios of inside my canoe head thanks again for all of the suggestions on last week's episode a great number of responses about disaster response what you need to do and we're going to try to be a little bit more prescriptive in the future here so instead of talking in general generalities let's talk a little bit more prescriptive what actually can you employ what actually can you do and if you want more detailed information on this we have sources all across the board 130 episodes of this podcast are all available at inside my canoehead.ca so today thought it would be appropriate to sit back and take a bit of forecast let's have a look at what winter 2022 23 is going to look like we're gonna frame a lot of the discussions in the north american context but try to make you navigate the ideas of how do these things happening in the world affect my ability to manage through the cold and challenging season so sit back grab a beverage let's get at it so again a lot of things we're gonna talk about today are in north american context but try to take the ideas and extrapolate them to where you live on this incredible globe we're gonna start off today's discussion with the economy the economy is really important because pretty much every country around the world is facing an inflationary pressure now we don't need to get into a long drawn-out detailed economics lesson the point being that uh increasing inflation or a high rate of inflation even if that rate of inflation is decelerating what it causes is central banks to respond with increased interest rates it's one of the only tools they have to combat inflation and so what we see is that increased inflationary rate causing uh central banks to raise the interest rates now basic economics what happens then is you have a drawdown or reduction in investment and investment is not you and me putting stuff in our tfsa or our stock portfolio investment is corporations taking out capital loans to create new factories and new productivity that will inevitably result in higher rates of employment so because companies have to borrow the money off the banks at interest rates as the interest rate is risen by the central bank to combat the inflation companies find it more expensive to borrow money so companies invest less when companies invest less and they produce less goods that has a corresponding effect on unemployment you will see a rise in unemployment throughout the winter season and this invariably to some degree or another will lead to a north american recession now a recession in economics is two successive quarters of negative gdp growth now i know the current u.s administration has been trying to change the definition of recession so that they're not in a recession because that's bad for the november re-election politics in the united states that aside a recession generally has a higher degree out of unemployment and so what a lot of central banks do to combat that is they lower interest rates to spur capital investment so a lower general interest rate encourages companies to borrow money and encourages company to then invest in society which irrevert which just creates jobs now with a high rate of inflation central banks cannot reduce interest rates to spur investment they have to keep interest rates higher to suppress demand all of this means is that the economic woes that we see right now in our society are only going to get worse and they're going to get worse likely through all of 2023 before we see some significant relief interest rates of an average should be around 4.7 to 5.3 for your mortgage that's standard when you look at the long-term trend of society what we've experienced in the last little bit is simply just joyous purchasing and we have low interest rates we saw what happened to the corresponding house prices when it's cheap to borrow money it inflates the value of assets right that's why everybody gets rich when interest rates crash not because all these companies are greedy and steal all the money it's because as soon as you crash the interest rates all everybody's assets value goes through the roof so on the books they look like they gain massive amount of wealth through the pandemic but it's just the inverse perversity of the relationship with interest rates that being said what matters to you is plan for your financial future for the coming winter this is simple right we've spoken at length about the need to have a plan when you get fired right you're a great employee you do wonderful work you're very intelligent you're not a drag on the business but remember march of 2020 remember the pandemic a lot of wonderful people lost their jobs due to absolutely nothing their employer or they did it was an exogenous shock that came in and knocked the business off its rails this winter has the possibility and the probability of having increased levels of unemployment and it could be your industry that is significantly affected and for that you need to have that plan squared away for when you get fired what is your plan what are you going to pivot to exactly what job are you going to pivot to how are you going to increase your lines of income how long is it going to take you to pivot to that next employment details to you exactly the size of your emergency fund if you're going to swing fire over to do a different job in a different type of industry and look at the industry to make sure it's an industry that is very resilient to economic shock so i mean there are things that happen all the time people have to work at grocery stores people have to you know plumbers carpenters whatever it may be whatever that decision you've made is to go to the next employment what are you going to do if you can't do what you currently do for a living and it's going to take you three months to take that transition and be up and running and earning income in the new employment then you know your emergency fund has to be at a minimum of three months that's why dave ramsey's six months and all this stuff is really good but if you want to design a plan that fits for you for your preparedness for your blanket of preparedness for your financial freedom know how long it's going to take to your next investment and your strategy can't be i'm going to wait for the government to give me free money so i can pay my bills we just went through that and all that spending good bad or indifferent is one of the primary reasons we're living in this inflationary world now because all the governments around the world like i said good matter different you can have your belief on that but this is the price you pay for printing all of that money and creating all of that wealth without any product associated with it so really make sure that your financial world is squared away i have no problem asking you if you want fries for that at age 51 if i have to pay my rent and feed my family i have no problem even though i'm a couple of months away from finishing my phd to go flip a burger right to ask you if you would like a box of timbits with that no problem whatsoever no reservation and neither should you have a backup plan hopefully you'll never have to enact it hopefully you keep your finger and your pulse and do the things with your business and your bosses to make sure that your employment and your business carries on that is incredible have the plan remember the supply chain shortages are about a reshoring and a reorganization of the supply chain right it's not a crisis in the supply chain they're in the midst of reorganizing all of the global supply chains into regional supply chains and therefore here in north america you are going to be exposed to a number of shortages in niche products so these are products that come in with a significant transportation bill attached to them so take some time to think about the products that you rely upon on a day-to-day basis and where they come from where they manufacture it and how do they get to your grocery store no i'm not talking about the staples that keep you going regular food items your toilet paper in north america is going to be fine we have the most robust industry around uh your staples are going to be fine like i said in previous episodes you know there may be things like coffee is one thing that is very susceptible to uh disruptions in transportation or transportation costs i love my coffee i have to be aware that coffee prices may go up if you have a niche product right if you have a niche product that you really really enjoy it's never a bad idea to grab an extra bottle of it at costco or whatever it may be to make sure you have it if you have something that's important to you and it comes in from central and southern america you may be okay but if it comes in from overseas or you are planning to procure a new iphone or something for january i would probably suggest that's not likely going to be possible because the next part is there's a conflict major conflict in the world everybody has been looking at the conflict in ukraine we're gonna talk about that but there's conflicts at various different stress points around the world that are getting pretty close to the breaking or breakout position now in economics we know there is what we call a conflict premium or a conflict price that is fixed in a lot of large trade goods number one is oil then you have imported goods um and the basic premise is to understand that the first thing the conflict affects are the people involved in the immediate area and i completely understand that having been to war zones in my life the point is is that those of us like here in north america that don't live in a conflict zone and are not going to be exposed to the conflict are going to have the effect of having a conflict premium added to all of our imported goods so right from our gasoline to our oil to our diesel to um propane not natural gas not because natural gas is a north american built product um but demand for can influence the price obviously but you get a conflict premium that's added to everything on top of what i talked about the disruption in niche products you're going to see things that are outside of your immediate area start to cost a lot more and become less and less available and again we talked about this as a key preparedness measure in your world is whatever it is you love and whatever it is products you consume that you use etc you need to take the time to understand their supply chain you need to try my recommendation has always been to make sure that the products you rely upon are products that are produced in very close proximity to where you live so i live in north america i live in canada i live in ottawa so my food all the food that i eat is produced within 100 150 kilometers of my house right sure i'll grab a couple of niche products uh off the shelf etc but other than maybe ketchup and a few other spices everything that consumed in my house is from 150 kilometers so there could be a massive drought in california or a massive early freeze in florida that does not affect the food that i eat now if you eat a lot of that imported food then you are opening and exposing yourself to that risk profile you don't have to it's a choice you've made but that's cool just understand that as conflict is rising around the world it starts to put a premium on this so with the winter coming and understanding that inflation interest rate rises following investment leading to higher unemployment a coming recession which may affect your ability to remain employed in your current job and you've got that squared away you understand what you're going to pivot to you've taken a look at all of your niche products and all the products that you rely upon to understand those that come from a distance and understand what will have an impact in a conflict price most reliably and certainty is going to be the price of fuel for your vehicle uh that is just it's just going to continue to rise and if we have a conflict premium out of something significant that happens in the ukrainian conflict or in the south china sea you're going to start seeing significant premiums on oil products and potentially here in canada gasoline prices back up over two dollars as a constant how you use gasoline for your life hey that's completely up to you you set it up in a certain way just understand what does two dollar and 25 cent gasoline due to your current plans are you going to be able to absorb that cost and if not make the plans now to set up the adjustments necessary so when it happens you have a lead into that and you're not waiting that's the big key to a lot of things that we do in preparedness is we think ahead this winter is going to be disruptive it's going to be difficult the almanac is calling for an incredibly here in canada an incredibly cold and incredibly heavy dose of snow so i'm going to be probably looking at quite a number of power outages that are going to last a couple of days over the winter what does my preparedness plan for that look like etc so understanding that we have to turn to the world events that have everybody on edge right now which is the ukrainian conflict now i'm not going to get into the politics of who's who in the zoo but let us know other than uh the president of china and elon musk there doesn't seem to be anybody in the world who can significantly want who nobody else is calling for peace not the canadian government not any of the european governments uh certainly not uh the american government uh they all of them see this as an incredible economic activity because the massive amount of weapons that they're providing to ukraine is just magic money for the defense industrial complex forget the fact that uh you know you're funding the war you don't have to do any of the killing and dying part ukrainians are doing that for you you just fund and everybody gets rich in north america who has stocks and investments in the defense industrial complex until we look at the possibility that this goes tactical nuclear now i'm not going to get into a long drawn-out debate as to whether i think it will or whether it won't if it does it does tactical nuclear weapons are designed to in the russian doctrine simply to turn the tide of the battle so if the russians in their doctrine are losing the fight on the battlefield it is okay and acceptable to use tactical nuclear weapons to kill large amounts of the enemy and then be able to retake initiative now you think radiation all that you what a lot of people don't understand is tactical nuclear weapons and basically all nuclear weapons in strategic warfare are largely used as airburst munitions there really isn't a great deal of radiation uh at the site that comes from them think of a bomb going off about five miles in the air and a cone of destruction coming down with an unimaginable amount of energy that destroys everything in that cone but much of the the vast majority of radiation never comes back down to earth that's a tactical nuclear weapon you detonate it over top of five six thousand troops in the field you kill all five six thousand troops in the field but you don't irradiate the ground totally so that it's okay in the next day for you and your troops to roll through right and retake that ground since nobody's left alive in it the same thing happens when a airburst munition is used as an electromagnetic pulse it basically destroys everything with an electrical current to a certain extent in a developed area and basically if you did something like that over the capital of kiev or the city of liv or kharkiv or something like that you basically shut down all of the critical infrastructure when you shut down the critical infrastructure in a modern society your army can't be out on the border fighting your army has to come back to the city to save lives to deliver aid to distribute aid to feed people to house them and provide medical assistance basically a tactical nuclear weapon used over top of a populated area achieves the same it doesn't kill the soldiers but it withdraws them from the battlefield back to help the home so it's well within the russians if they do it they'll do it it's a tactical part of their battle space management uh not ours in north american doctrine but it most certainly is russian doctrine so unless you're in uh eastern or central europe all that's going to happen with that is a massive increase in your conflict premium that i spoke about on goods that come from away right there's going to be mass panic and i would most certainly do an episode exactly what you need to do in the event of a likelihood of a nuclear detonation in your area i can do that episode drop me a line at if you'd like to hear the honest no bs what somebody should be uh considering for that i'll do it if you guys are interested otherwise i'll just leave it uh to you to find on youtube somewhere But the real premium is going to happen for the rest of the world. Other of those directly affected by it are going to have a huge increase in conflict premiums for imported goods around the world, namely fuel. In that situation, you might even see $3.50 gasoline here in Canada per liter, which would not be out of the question. The point being is that really your insulation against events like that, if you're not in an area of a conflict zone, is to, again, is your exposure to international products.
As the Stoics say, there are things you can control and things you cannot. You cannot control what the secondary and tertiary effects of conflict around the world, what it will have on the supply chain, what it will have on your interest rates and unemployment rates within your country, the fall of investment. A definite recession around the world would come out of a use of a tactical nuclear weapon or some type of escalation like that. You can't control that, right?
That is outside of your purview. What you can control is your exposure to what is likely to suffer as a result of that kind of event. So like I said, all of my food is within 150 kilometers and none of the imports come from outside of there. I'm good to go.
All kinds of bad things can happen even in North America to the food supply. And I'm perfectly fine. I've got everything taken care of. I don't need outside of there.
You know, other than basic product, I keep a little bit of extra of a little bit of few extra things. And I'm moving, you know, I've talked before about moving from 60 to 90 days supply within my preparedness. That also includes shampoo. That includes toilet paper.
That includes a vino cream. It includes all the things that you need in the daily running of a household that are external imported goods. I have three months of supply in the house. So if an exogenous shock happens like a significant event that causes a spike in pricing and a fall in availability of a niche product from around the world and it's something I rely on, I'm good for at least three months while I find a substitute.
That's all you can do, right? You can't wrap your head around, oh my Lord, the world's coming apart at the seams and building your own anxiety and stress. Remember, mental health is one of the four quadrants of your blanket of preparedness. If you allow this stuff to take over control, you're going to be full with anxiety.
Do the free preparedness things that we talk about as a counter to that and that will lessen your anxiety. You will feel horrible for the people who are going to experience these difficult conflicts wherever they come out in the world, but you are going to be able to manage your own little world because this is what you're responsible for, your own outcomes. And that's what we mean when we keep saying you are responsible for your own outcomes. So if you take this preparedness ideas, get set and ready for winter 2022, 2023.
If you make sure that you're well organized for your supply, you don't have to stock up on months and months of everything. Only those niche products that are exposed to a long and difficult supply chain, those that may be immediately disrupted. And if they're important to you, sure. But other than that, source locally, get what you need locally, simplify your supply chain, simplify your activities.
If you rely heavily on gasoline for a vehicle to execute your employment function, you're going to have to prepare your budget for a potential doubling of your gasoline cost. It could happen. And so you need to do that. You need to make those preparations.
So let's sit back and talk about the very last thing, which is COVID-19. There's a lot in the news about it right now, the Pfizer trials and the Pfizer hearings at the EU parliament. And the end result is, is that COVID-19 is currently causing a major disruption in what's left of global supply chains, not because it's infecting people, but because of the Chinese zero tolerance, zero COVID policy and shutting down shipping and shutting down entire cities of millions of people has turned the global supply chain on its head. It's one of the reasons why it's regionalized and reshoring or friendshoring as they refer to it.
And you know what? COVID-19 is a infectious disease, a virus. It will come and go. Your best fight against it is to talk to your medical advisors, to take the advice, to do a little research.
One thing you can most certainly do is keep yourself in the best of physical health as possible. Take whatever precautions you feel appropriate for your own risk profile and stop yelling and screaming at everybody else on the internet because they don't listen or believe the same things that you do. So hopefully what we talked about here today on this episode was helpful for the winter 2023. Just understand that the big difficulty this winter is going to be economic.
And the most important thing that you can do for that is understanding the difficulty you may have if you get fired or the risk that your job, what kind of industry you're in, what kind of can affect it, what is your boss planning for for the winter to get through disruptions. You might have shortages in these products, but generally the requirements of life in North America are going to be fine. Less so in Europe. We have lots of gas supply and we can heat here.
That's not a problem. Conflicts are going to arise. And this is going to be a fighting season. And where they pop up may not be important.
The most important is the conflict premium that is going to be put on imported goods like oil, coffee, and a whole bunch of other things. Be prepared for very expensive lives this winter, which behooves you to simplify your acquisition to what is produced locally and is less exposed to price shocks. So hopefully that helps keep the comments coming. We appreciate all of your ongoing support to insidemycanoehead.ca.
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