Even if you are already wealthy, some thought on this topic is worthwhile. What would you do if some act of God or of government, a catastrophic lawsuit or a really serious misjudgment took you back to Square One? One thing about a real depression is that everybody loses. As Richard Russell has quipped, the winners are those who lose the least. And as far as I'm concerned, the Greater Depression is looming, not just another cyclical downturn. You may find that, although you're far ahead of your neighbors (you own precious metals, you've diversified internationally and you don't believe much of what you hear from official sources), you're still not as prepared as you'd like.

I think a good plan would be to approach the problem in four steps: Liquidate, Consolidate, Create and Speculate.

Step 1: Liquidate

Chances are high that you have too much "stuff." Your garage, basement and attic are so full of possessions that you may be renting a storage unit for the overflow. That stuff is costing you money in storage cost, in depreciation and in the weight of psychological baggage. It's limiting your options; it's weighing you down. Get rid of it.

Right now it has a market value. Perhaps to a friend you can call. Or to a neighbor who might buy it if you have a yard sale. Or to some of the millions of people on eBay. A year from now, when we're out of the eye of the financial hurricane and back into the storm, it will likely have much less value. But right now there's a market. Even if most people are no longer wearing those "He who dies with the most toys, wins" T-shirts that were popular at the height of the boom, there are still buyers. But the general standard of living is dropping, and mass psychology is changing. In a year or two, you may find there aren't any bids and the psychology of the country has changed radically. People will be desperate for cash, and they'll all be cleaning out their storage units (partly because they can't afford the rent on them).

Liquidate whatever you don't actually need - clothes, furniture, tools, cars, bikes, collections, electronics, properties, you-name-it. You'll be able to re-buy something like it, or better, cheaper. Just as important, you'll feel light and mobile. Unburdened by a bunch of possessions that own you and weigh you down. It will definitely improve your psychology, which is critical to the next stage. And the cash it generates will be helpful for the rest of the plan.

Step 2: Consolidate

Take stock of your assets. After Step 1, that should be a lot easier, because you'll have less junk but a lot more cash. You'll already feel more in control and empowered. And definitely richer. But your main assets aren't money or things. It's the knowledge, skills and connections you possess. Take stock of them. What do you know? What can you do? Whom do you know? Make lists and think about these things, with an eye to maximizing their value.

If you're light on knowledge, skills and connections, then do something about it - although if you're reading this, you probably already live life in a way that builds all of those assets daily. But there's always room for improvement. Think the Count of Monte Cristo. Or, if you're not so classically oriented, think Sarah Connor after she met the Terminator.

Part of this process is to look at what you're now doing. The chances are excellent there's a better and more profitable allocation of your time. Even successful rock stars tend to reinvent themselves every few years. You don't want to get stale. That leads to Step 3.

Step 3: Create

Remember, the essence of becoming wealthy is to produce more than you consume and save the difference. But it's hard to maximize value working for somebody else. And when you're given a job, it can be taken away for any number of reasons. There is cause and there is effect. You don't want to be the effect of somebody else's cause. You want to be the cause for everything in your life. That implies working for yourself. At least turn your present employer into a partner or an associate.

Perhaps go through the Yellow Pages (while they still exist), page by page, line by line, and see what you can provide as a service for the businesses advertising there. I promise you, they're all looking for someone to come along, kiss their world and make it better. Think like an entrepreneur at all times. Remember that there is an infinite desire for goods and services on the part of the 6 billion other people on the planet. Find out how you can give them what they want, and the money will roll in.

I've said many times that I believe you could airdrop me naked and penniless into the heart of the Congo, and by the time I emerged, I'd not just have survived, I'd come out wealthy. And, believe me, I don't think wealth is by any means the most important thing in life; it's important but should be considered a convenience, not an imperative. Not that I'd want to be airdropped into the Congo at the moment; I've gotten a bit lazy, I have other interests, and you can't be everywhere and do everything.

But now that I think about it, if I wanted to make a real fortune today from a small base, I might prefer Africa to any other continent. As an educated Westerner, you can quickly meet anyone, on an equal level, much more easily than you could at home. If you have a reason that makes any sense at all, you can be in the office of the president within a week. These countries are all plagued with incompetence and corruption, they need everything, and they're full of untapped resources and talent. This all inures to the great advantage of a foreign entrepreneur.

Here's an idea. For your next vacation, book a trip to Cameroon, Togo, Gabon, Zimbabwe or Angola. Go through the Yellow Pages in the capital and meet everybody who is anybody. The chances are good you'll come up with several deals in the first week alone. If you can't find the time, send your kid who's just out of school and idiotically thinks he may want to misallocate time and money getting an MBA. This idea alone should be worth a million dollars. Or, as I would prefer to think of it, 700 ounces of gold.

But to an economist, money, like all goods, has "declining marginal utility." In other words, the more of something you have, the less you need or want the next unit. Of course more is always better, but it's unseemly, even degrading, to pursue anything beyond a certain point.

When I was in Toronto a couple months ago, I spoke with a Chinese friend who, I believe, is worth at least $250 million. As he waxed philosophic, he allowed that he didn't feel he really needed more than 30 extra large to live exactly as he liked. I agreed, in that meals in the best restaurants, the finest clothes, cars and houses only cost so much. And it's well within a conservative return on that capital, without ever even touching the principal. Is it worth it to get more? Perhaps not, unless your interests in the rest of life are entirely too narrow. The point of money is to allow you freedom, not make you crazy with getting more.

That doesn't rule out speculation as an avocation, however. More - everything else being equal - is still better.

Step 4: Speculate

You've got money. Now you have to keep it and make it grow, because staying in the same place amounts to going backwards. That's partially because the world at large will continue getting wealthier, even as the dollars you own lose value.

In the past, I've discussed why a lot of old rules for success are actually going to prove counterproductive over the next few years. Saving with dollars will be foolish as they dry up and blow away. Investing according to classic rules will be very tricky in a radically changing economy. Most people will try to outrun inflation by trading or gambling. The markets, which are the natural friend of productive people, will perversely prove very destructive to them in the years to come. You'll know when the final bottom in the stock market has come: The average guy won't want to hear about the stock market, if he even remembers it exists. And if he does, he'll want it abolished.

Instead of becoming a victim of inflation and other politically caused distortions in the marketplace, you can profit from these things. Rational speculation is the optimum approach.

What to Do If You're Already Wealthy?

Perhaps, however, you've already covered all the financial bases to your satisfaction. Quo vadis? I have several thoughts on the meaning of wealth. You may find some of them of value as prices of everything fluctuate radically in the years ahead.

First, recognize that wealth is a high moral good. Don't feel guilty about having it or about wanting more.

If you've already accumulated and deployed enough capital to allow you to jump off the golden treadmill, congratulations: chances are high that you are an exceptional human being. I say that because the moral value of being wealthy is underrated. I don't mean that in a Calvinistic way, in that Calvin believed Yahweh rewarded the righteous by making them rich. But I do believe that productive people - people who work hard to provide goods and services for others - definitely tend to be wealthier than unproductive people. They deserve to be. And since we don't live in a malevolent universe, people generally get what they deserve. So, yes, wealth is definitely one indicator of moral excellence.

Sure, some wealthy people got that way by lying, cheating and stealing. But they're exceptions. It's much easier to become wealthy if (in addition to having virtues like diligence, competence and judgment) you are known to be truthful and honest. Those who automatically think ill of the rich are, at best, paranoid fools. Put it this way: Rich people may lack some virtues, but they definitely have at least a few that made them rich. Poor people, on the other hand, will certainly lack some virtues, and they'll definitely have some vices that kept them poor.

I'm a fan of some aspects of Gurdjieff, the late 19th to mid 20th century Russian mystic, who was also a merchant adventurer at some points in his colorful life. He said that anyone who successfully employed at least 20 other people must be considered at least partially enlightened and a type of guru. That viewpoint always resonated with me. Self-made wealthy people may not be saints or mystics or intellectuals or even especially thoughtful or moral. But they've proven they're better than the average bear in at least one important way: they can create and conserve wealth. And they've thereby eased everyone's path to further accomplishments.

Second, figure out your purpose in having money.

Sure, money makes life easier. And it's nice how it enables you to assist people you like with material things. But I strongly suggest that you not take too short a view on this matter. Accelerating advances in medical science are not only lengthening human life expectancy, but new developments now in the works have the potential to vastly improve your capability and health as well.

Is it possible to live to age 200, with all the wealth, knowledge and wisdom that implies, while maintaining the body of a 30-year-old? Not yet. But the prospect is on the horizon. It will, however, be available only to those who can afford it. Ray Kurzweil makes a case that the Singularity is near, and I buy his reasoning. It would be tragic indeed if anyone frittered away his wealth, thinking he wouldn't live very long, and then succumbed to a self-fulfilling prophecy, not because of medical difficulties, but because of financial difficulties.

Third, don't give your money to charity.

Entirely apart from showing a lack of both imagination and foresight, it's a complete waste of good money, pure and simple. Contrary to popular opinion, it rarely does any good; it often does great harm. The whole concept of charitable giving is corrupt and desperately in need of a complete rethinking.

Fourth, if you do care about posterity (who knows, you might be reincarnated...), and on the chance you don't make it to the Singularity, carefully consider how to dispose of your estate.

For one thing, there's no reason to automatically leave anything to your children - unless they deserve it. The notion that someone should inherit just because he shares your genes is flawed and thoughtless. The example of Marcus Aurelius leaving the Roman Empire to his worthless son, Commodus, should be instructive. Wealth should be left to someone who is most capable of increasing it - at least if you want to benefit humanity in general. And, yes, I'm quite aware that humanity in general may deserve absolutely nothing.

At a minimum, consider that memes are far more important than genes. It's wiser, therefore, to leave your wealth only to individuals (related to you or not) who will carry forth values you hold dear and are worthy of the wealth. If nothing else, make sure you disinherit the government.

Also consider that dividing wealth dissipates it and generally makes it less useful. If you have a million dollars, you could leave a thousand dollars to each of a thousand people. But apart from the fact that it's unlikely anyone knows a thousand worthy people, that much money is only enough for a modest vacation or a few baubles. The larger the pool of capital, the more ways it can be used, the more creative power it has, and the more likely it will be conserved and used creatively. I favor the Roman system, in which one could adopt children of any age - but always after you could see what their character was. You might want to do that if your own kids don't make the grade.

The Bottom Line

If you want serious money, you have to get serious about money. You need to understand these fundamentals and never forget them. Don't let all the garbage reported in the financial media you read, see or hear confuse you about what money really is. Don't consume more than you make: save! Don't spend: invest!

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