Saturday, April 25, 2020

What To Do During a Hyperinflation

Hyperinflation, burning money for fuel
Kevin K. emails:
Hi Bob,

In your (excellent!) "Rethinking The Dollar" interview, at 34:15 you mentioned that you always try to talk to people who survived the inflation in Yugoslavia and Zimbabwe:

"I always talk to them about what it's like living under those conditions and who survives.  It's people who have the wealth in a form that everybody else wants.  And if you have that kind of wealth you're going to do well for yourself.  You have to know how to do it low key and stuff like that"

Any chance you can share what you've learned about this?  (in particular, "how to do it low key")
RW response:

First, I want to make clear that I am not forecasting hyperinflation for the US in the near term.

I see price inflation hitting 5% to 7% and maybe as high as 15% on the extreme end but that is about it.

What you learn from people that have experienced hyperinflation is that you move out of cash the minute you are paid, almost any asset is better than cash.

They also take all their credit cards to the max because it will be easy to pay the debt back with depreciated currency.

You also want to have the personal phone numbers of your barber, your butcher etc. because governments printing money rapidly often put price controls on, which results in many businesses going underground.

If you know how to contact these people, you will in many cases be able to maintain your old service network.

You also want to have some of your gold and silver coins in lower value/weights. That is a bunch of 1/10th gold coins and also one-ounce silver coins rather than just one-ounce gold coins since the one-ounce gold coins will be so valuable that you won't be able to use them in small transactions.

As for being low key, you just don't want to let anyone know you have a stash of gold and silver coins during such a period. Just keep it low key as though what you are buying is with the only silver coin you have.

A book could really be written about how to prepare and how to survive in hyperinflation.

There is one that comes very close. Gary North in 1978 published a book, How You Can Profit From the Coming Price Controls, which is very valuable in advising how to prepare.


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