The Survival Economy

Investing in companies that will rise after the collapse of the US economy.

The experiment that is the United States is coming to an end. And I believe it will result in catastrophic failure for a significant share of it's citizens. There is no one culprit, there isn't a partisan group that isn't as much responsible for it's failure. The fault lines are structural.

Unfunded Pension Fund Liabilities: There are more than a trillion dollars of unfunded pension fund liabilities across city and state pensions. Most pension funds have less than 50% of near-term liabilities covered.

Federal Entitlement Programs nearing insolvency: Most economists had modeled key entitlement programs insolvent by 2023 but this is currently accelerating.

The Human Capital Revolution: We are nearing the cresting point of the Technological Revolution. While this sounds absurd to those deeply entrenched in technology, the seismic shifts are now just starting to make shockwaves through the World. Those of us that were around in the era of the "Unfulfilled Promise" (roughly 1997-2005) saw what happened when even a relatively small percentage of capital got re-allocated from industrial assets to human-capital driven assets. That capital quickly retrenched back to industrial assets but has steadily re-allocated again especially after the 2008 meltdown and is now here to stay. We have reached the moment of historical separation from the industrial revolution to the human capital revolution. There is no going back. I will expand on this over time. The short summary is that many people and many local economies will be completely incapable of surviving the transition.

Consolidation of economic superclusters: There is going to be increased migration to a relatively small number of economic superclusters (urban density and sub-urban feeder cities) and with it, a disproportionately high concentration of national consumption activity. This means a significant decrease of tax revenues for many cities and states, which when combined with the aforementioned pension fund liabilities, will cause a number of insolvencies.

The death of "Main St, USA": We see a fundamental reshaping of physical space in communities that is changing not just malls but the "Main St" of every city in America. We see a significant capital depreciation in hard assets that are reliant on traditional lease models. We fundamentally believe that most cities are already over-built.

A widening labor market gap: We see the current trend line in the United States being that employers will increasingly take on the burden of providing essential services to their employees. To the extent that this becomes normative, the already visible gap in "on-demand" work and contracted employment will only increase, leaving on-demand workers more vulnerable to constantly shifting market forces.

Retrenching of global trade: Our current view is that most countries will continue the emerging trend of nationalist and protectionist trade policies. We believe a sad irony is playing out where the World is increasingly connected and yet citizens are becoming more isolated and becoming less aware and thus less concerned about the needs of others. This trend is certainly already evident in the United States and we believe will only be exacerbated by continued economic stresses.

Continued and increasing weather shocks: We expect to see an increase in weather shocks that bring significant economic disruption and could also play a significant role in reshaping local economies.

Continued capital outflows to decentralized currencies: We believe there will be a continued outflow of capital to decentralized currencies and that there will be a widening gap between those who can earn and spend with digital currencies and those who are reliant on increasingly unstable national currencies.

From an investment thesis perspective, we are looking to invest in companies that we think could significantly alleviate the pressure of these particular market forces and also to invest in companies that can help Americans thrive in a post-collapse scenario. We coined the term "Survival Economy" because we believe that to survive, it's not about guns, bunkers and gold, but rather what are the community models and the tools and services that help people continue to thrive.