How each of us interprets these facts is a personal journey. We could have all manner of beliefs about what the future will look like. The system presented here is meant to provide some guidance for how to prioritize action based on whatever our beliefs may be.

This idea was inspired by the work of Chris Martenson, a research scientist and businessman who offers a calm and well researched free presentation called Crash Course. According to Chris, he thinks it is “the clearest and most straightforward explanation of how our economy, energy systems and environment interact — how we got to where we are today, and some reasonable expectations for the future.”

If you have not yet watched Crash Course, I recommend you look into it as soon as possible. It can be viewed online or legally downloaded as a DVD via Bit Torrent. Knowing the information presented therein will make the ideas here much more relevant to your life. When you are done, be sure to check out Chapter 20: So What Should I Do?

Regardless of whether you take the time to watch Crash Course, this pragmatic system of decision making will help you weigh the benefit and risk of pursuing or not pursuing various options in your life. You will see that winning at cards requires precise action based on what one knows to be true about a situation. In all matters, cards included, our evaluations are based on a certain degree of opinion and speculation unique to each of us. But when it comes time to move from evaluation to action, the system poker players use can benefit almost anyone.

Poker is, at its core, a remarkably simple game of making practical decisions based on known probabilities. Movies and television often present a glorified and unrealistic picture of the game being mainly about intrigue, bluffing, and intuition. In fact, 90% the action in poker is boring and straightforward. All it takes to be a decent poker player, even a winning player, is to understand some basic math and to make risk/benefit decisions based on that understanding rather than being dragged around by hope or fear of the outcome. Despite the excitement that luck provides, a successful poker career is largely an exercise in stoicism and prudence.

To better understand what I mean, take the following example.

It is the last round of betting on a hand. This is a classic game of hold’em where each player holds two pocket cards, which are kept secret, and there are five community cards face up on the table. Whoever can make the best five card hand between their two pocket cards and the five on the table wins the pot.

I have a good hand, but not the best. Let’s say I am holding the nine of spades and the king of diamonds. We could represent my hand as:

(9s, Kd)

On the table is:

(10h, 8h, 9d, 9h, 3s)

My three-of-a-kind is a good hand, but since there are both three-in-row on the table (8, 9, 10), and three hearts on the table, my opponent could have a flush or a straight that would beat me. There is also a chance that he could have a full house or a better three-of-a-kind. He could even have the rarest hand of all, a straight-flush. If these terms are unfamiliar to you, then you could either look up poker hands or just keep reading. You need not understand every nuance of the example to appreciate the concept below.

Now, I have to ask myself two basic questions. First, what is the risk of playing the hand; that is, how much do I have to pay in? Second, what would the potential benefit be; how much money do I stand to win? Then, we simply compare the risk/benefit odds (called “pot odds” in poker) against the odds that my hand is actually better than my opponent’s.

In this case, let’s say I have to call a $10 bet to end the hand, and there is $50 in the pot. That $50 represents the potential benefit of calling this final bet, and the $10 is the risk I have to put out there to see this thing through. That means I have a 5:1 benefit to risk ratio. I stand to win five times as much as it costs me to play. These are extremely good odds in poker, a typical finale can offer pot odds of 2:1 or worse. The math says that if I think I have better than a 1 in 5 (20%) chance of winning, then I should definitely call the bet, and maybe even raise. If I think I have a less than a 20% chance of winning, then I should definitely fold. There isn’t really any grey area.

So I estimate the overall probability of all the different combinations of two cards with which my opponent could beat me. Maybe, if I have been watching him carefully I adjust my estimate based on his playing style as well.

My chances aren’t great. I think there is at least a 60% chance my opponent has a better hand than me, but I would need to be over 80% sure to fold this hand. I have to call.*

It’s that simple. Even though I know I probably cannot win, the potential benefit of winning is too large for me to ignore the opportunity. If I call (or raise) this kind of hand every time I run into it, I will lose the hand most of the time but, over time, the occasions when I win will net me positive earnings.

So, what does all this have to do with planning for economic, environmental, and energy collapse? In the final chapter of Chris Martensen’s Crash Course, he invites us to use exactly this kind of logic in planning for the future.

Maybe the chance of government services stalling, or the dollar hyper-inflating to near-worthlessness, seems pretty outlandish to us. We think that there is only a 5% chance that we would “lose” by not preparing for that sort of thing. But wait, what are the “pot odds” here? Consider how much you actually risk by taking steps to build more resilience into your personal life and your community against the benefit you would gain should a major financial collapse occur. If this risk/benefit ratio is greater than 5% (20:1), then the time-tested and pragmatic logic poker players use every day makes the answer clear.

It might seem a little intimidating to think about things this way. After all, aren’t there thousands of little contingencies that we should be preparing for? The truth is yes, of course. This is why we buy insurance or put away savings for a rainy day. We cannot mitigate every possible catastrophe. For instance, in the poker hand above, the astronomically low chance that my opponent landed the straight-flush is never going to significantly affect my decision making. After all, a straight or a flush alone would beat me. When planning for the most likely scenarios we can sometimes also mitigate the more extreme ones.

What we can do is take a good solid look at our circumstances and make evaluations of where we are most vulnerable from the risk/benefit perspective. In any area where the risk of taking action is significantly outweighed by the potential benefit, action is prudent.

For one person this might mean raising awareness of the issues and engaging in re-skilling efforts. For another it might be investing in hard commodities and starting to practice a less carbon-intensive lifestyle. All I ask is this: Whatever your rational evaluation of the future is, act prudently on it, rather than hiding in fear of possible change or grasping onto hope that everything will work out, without you doing much at all.

Given this view, I want to again encourage you to view Chris Martensen’s Crash Course. No, I have never met the guy, and I am not getting anything out of this. He offers this work entirely on a donation basis. I suggest you watch Crash Course because the benefit of what you will almost certainly learn by doing so is way over the top of the risk that you will be wasting your time.

With love in the dark ages,
Matthew

*In fact, in this example I might well raise because that adds the juicy possibility that I can scare him into folding a hand better than mine, but that is a deeper lesson than we need here.

Special thanks to Ethan Kuhlman for proofing this article.