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Changes to the first edition of How to Protect Your Life Savings from Hyperinflation & Depression in the 2nd edition

Improvement or updates to the 2nd edition (2012)

  • Three pages longer than 1st edition (2010)
  • Advice in foreign currency chapter changed from not recommended to recommended with much detail about how to open foreign accounts and which countries to open them in—This is extremely important!
  • I replaced the chapter on college savings (529) accounts with one on the Home Equity Conversion Mortgage. 529 plans have become a very complex, mixed bags requiring their own book. Also, they are very dynamic with some being discontinued and others changed. And many states are in financial difficulty. On the other hand, I discovered the HECM because it is an annuity in kind, a very valuable thing during hyperinflation. About the worst thing you can have in hyperinflation is to be reliant on a dollar-denominated annuity, the main examples of which are Social Security and other pensions. An annuity in kind is NOT dollar-denominated. In this case, you have what the law calls a life estate. That means you can live in your house until you die or move out for more than one year as long as you pay the property taxes and homeowners insurance and maintain the property. The hyperinflation benefit is that over time in hyperinflation the rental value of the house would skyrocket. But as the owner of the life estate, you don’t have to worry about that. You get to live there until you die or move out. If you rented the same house, and paid the rent from your pension checks, you would be out on your ear after hyperinflation began because the rent would go up but the pension checks would not. The HECM is somewhat complex but fantastic hyperinflation protection. It is also great in case of deflation. Read the book chapter on it.
  • Here is a list of new material in the 2nd edition: update ongoing stats and prices; the 90% debt-to-GDP ratio tipping point; the 2011 debt ceiling fight; boiling frog syndrome; morality play guilt aspect of past hyperinflations; ejection criteria; 10-year bond interest rates in Eurozone after their debt-to-GDP ratios exceeded 90%; Hauser’s Law which is crucial to understand tax policy with regard to deficit spending; whether China and Japan will be number 1 economically; how CPI calculation has been changed to hide Jimmy Carter level of inflation; dealing with bankers who incorrectly say they have never heard of money market deposit accounts; the three places you can be during hyperinflation: your urban/suburban home, a farm or ranch in the U.S., in a foreign country that has a stable currency; 1970s gasoline shortages and rationing in the U.S.; how shocks trigger runs on weak currencies; MIT’s Billion Price Project; Quantitative Easing II; more on velocity; Eurozone effect on the U.S.; the great benefit of owning foreign currencies and getting income from foreign employers or customers; what it will be like the day the dollar dies (chilling); how Germany went after those who profited from hyperinflation after it ended; investing in greater-than-normal inventory levels if you have a business selling goods; how much each type of worker was hurt by hyperinflation; lessons from the book When Money Dies; hunger; menu fatigue; inability to know value during hyperinflation; The Street of Sorrow movie about hyperinflation; stocks in Austria and Germany in the early 1920s; disappearance of bankruptcies; Zimbabwean hyperinflation; getting out of the U.S.; lengthy discussion of how Roman Emperor Diocletian did the same old hyperinflation stuff in 235 A.D.; rationing and anti-hoarding laws; cooking and heating during emergencies; making passive use of high and low outdoor temperatures; emergency electricity; live-aboard RVs and boats; selling used items via craigslist, pawn brokers, eBay; volume, cost, and weight of large quantities of metals or stored food; commodities not traded on exchanges; how gold was almost never used in actual hyperinflated countries; the surprising popularity of Tide liquid detergent in barter; how stocks performed in past hyperinflations; renouncing U.S. citizenship; German rent control during the 1920s hyperinflation; back to basics business strategies for crisis times;
  • A big factor in my changed views on foreign currency and some other aspects of hyperinflation resulted from my reading five old books that had been translated from German and watching one old, German, silent film, starring Greta Garbo, about Austrian hyperinflation in the early 1920s and filmed in 1925. Especially instructive was the diary of Anna Eisenmenger, a doctor’s wife living in Vienna in the 1914-1924 period. You can’t buy that book. You have to track it down through interlibrary loan, which I did. I can’t believe it has never been made into a movie or miniseries. It had me in tears several times. And it scared the hell out of me. I thought hyperinflation was awful. It’s far worse than I thought. Four of Eisenmenger’s family members died violently or from hyperinflation-induced illness during the period of the diary. It ends with her in the hospital saying, essentially, “I give up. I’d rather be dead.” and that was after the hyperinflation ended. Did you know that hyperinflation ending, which it always does overnight, also crushes people’s life savings if they do not own the right stuff? You will read a lot from Anna Eisenmenger in the 2nd edition. I discuss leaving the U.S. if and when it becomes impossible to live here which it surely did in places like Austria, Germany, Latin America, etc. Which countries are the best ones to put your money in. When putting currency in a foreign safe deposit box makes sense. The fact that foreign currencies in well-run countries are the best liquid assets to protect against hyperinflation. List of countries that currently have capital controls. Debt ratios, GDPs, and corruption ratings of many countries. Financial and economic freedom ratings of various countries. U.S. reporting requirements for foreign financial accounts and assets. IRA and revocable trust issues with regard to foreign currencies.
  • I added a new chapter on storing food, fuel, and other necessities and living off a farm or ranch. In the first edition, I said to buy everything you will ever need in the rest of your life now. I noted that was easier said than done. Since then, I learned a lot about the nuances of food storage and rotation and the processes like UHT pasteurization and freeze-drying that packaging that give extraordinary shelf lives. Also, I have learned that growing your own food on a farm or ranch is a lot harder than it was 80 years ago, maybe to the point of impracticability. Risks to stored food and valuables.
  • To fit much more text and information into the book, many dozens of subheads were eliminated. I shrunk the type size in the bibliography to fit in all the additional books I read and recommend and also to give readers the names and contact information for five foreign banks in the good countries. I and/or my readers use and recommend these bankers. The increased amount of information in the book is reflected by the fact that the index is now five pages longer.
  • Because of more text and information, almost all chapters now have a full or nearly full final page
  • In the history chapter, additional details of pertinent events before 2011 were added as well as new events that have occurred since the 1st edition was printed in June 2010.
  • The following chapters have been expanded by the number of pages stated:
    • Overview 5
    • Hyperinflation 14
    • History of inflation & deflation 3
    • Advance purchase and sale 4
    • Gold and other commodities 1
    • Real estate 2
    • Foreign currency 6
    • Bonds 3
    • Pre-bankruptcy planning 1
    • Retirement accounts 1
  • Chapters from 1st edition that were removed:
    • Non-federal money
    • Financial engineering
    • Diversification
    • College savings accounts
    • Action plan
  • New chapters that were added to the 2nd edition (2012)
    • Storing necessities and living off the land
    • Life estates