Create your own foreign exchange ‘index fund’ to save you from hyperinflation.

I advocate seven foreign currencies to hedge against USD hyperinflation. Initially, I got some criticism about flaws in one or more of the seven. That ended when I insisted critics state what better currency should replace the one they are criticizing.

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Recently, a reader ignored that rule and persisted in criticizing my choices.

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My seven foreign currencies are supposed to be a sort of mini foreign currency index fund. That means the average of the performance of all is the metric by which they should be judged.

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Furthermore, I have said a zillion times, I am trying to create “hyperinflation INSURANCE.” There is no such thing as a hyperinflation insurer or a hyperinflation insurance policy. And insurance policies are to be judged by the likelihood that the “insurance policies” are likely to pay off in the event of a claim or when the claim is filed DO pay off. Within currencies, hyperinflation insurance is more accurately called a HEDGE.

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If the USD hypeinflates and the other currencies do not, all their values in terms of USD will explode upward rendering any previous value irrelevant.

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Pay off in currency hyperinflation hedging is that the hedge currencies do NOT also hyperinflate. I do not think any of my seven foreign currencies are likely to hyperinflate. The reason I have seven is I am not sure which if any will also hyperinflate. They all have lower debt-to-GDP ratios than the US. The highest is Canada at 94% according to World Economics. But Canada gets extra credit for letting us have bank accounts, being less than 1,000 miles from my house, and have no bank failures in the Great Depression when the US had 9,000.

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Price changes among my recommended currencies since 2010 are irrelevant. Trying to pck currencies that are going to appreciate against the USD is akin to picking what common stocks are going to rise the most. I believe the extensive research that says picking stocks that will outperform the market is impossible. Warren Buffett and others accused of being stock pickers also urger their followers to buy index funds rather than try to predict which stocks will outperform. Same is true of market timing which is also impossible. And it is true of picking or timing currency purchase.

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I AM worried about hyperinflation of the USD. But that is not based on likely corporation earnings or irrational exuberance or despair like stock picking. Rather it is a CREDIT ANALYSIS. Politicians have turned the US into the equivalent of an irresponsible credit card applicant with too much debt and too little income and savings.