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Get into inflation protecting configuration or lose your life savings

Posted by John T. Reed on

I am glad to see the WSJ and a few others now giving inflation the space it needs. But they are still tiptoeing around the basic problem. Mind-boggling amounts of deficit spending must be stopped and surpluses must be generated to lower the debt-to-GDP ratio.
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This cannot be done because the scale of the excesses have been prohibitive. The current discussions of inflation danger seem to be aimed at giving the experts on such things intellectual cover when the ’flation hits the fan.
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I do not worry about this at a policy level. I have opposed the responsible policies all along. I am solely about you as an INDIVIDUAL avoiding financial disaster.
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You must divest of US dollar-denominated assets and invest in non-dollar denominated assets. You must also maintain enough liquidity to pay your routine and rainy day USD expenses. You cannot eat your house or buy gasoline with it.
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The main liquid non-USD-denominated asset is foreign currency. It is quite liquid. And you can still buy massive quantities of it at cheap prices. I recently needed to bring it back from abroad to buy a home with my youngest son. I simply went online and wired it to my US bank, $10 fee for each wire. About 48 hours and it was here and converted to USD. That is liquidity.
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Is there risk in foreign currency? Yes. Two.
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Currency risk which is the risk that the foreign currency will fall in value in relation to the USD. That has happened with the AUD, CAD, and NZD I have bought since 2012. My European currencies have NOT fallen in price against the USD. But that only relates to my spending that money in the US. If I spend my foreign money in other countries, including the countries that produce that currency, I believe there has been little or no drop in purchasing power.
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The other risk is inflation risk in the nations in question. That is why I have seven different foreign currencies and they all have lower national-debt-to-GDP ratios than the US. I have AUD, CAD, CHF, DKK, GBP, NZD, SEK. I also have EUR from having traveled there but I am getting rid of that.
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The basic thing you must do if and when we get hyperinflation is leave the US. To do that, you need a US passport that is not expiring soon and plenty of foreign currency held abroad to support yourself when you leave the US.
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At the border, when you are leaving the US, the border guards of the nation you hope to enter will initially suspect you of being just another American beggar trying to escape your deadbeat nation’s profligacy and trying to take a job away from someone in his country. “No, sir. I have money in the following non-USD currencies and I will be living off that while I am in your country.”
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You will need to prove that. You can probably do that by sticking your foreign debit card in an ATM in the nation you hope to enter with the border guard seeing your balance. I predict he or she will then smile and say, “Welcome to X. I hope you enjoy your stay here.”
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Your fellow Americans who did NOT put money abroad will be turned away and forced to remain in the US. That will be disastrous because the US will have empty store shelves due to the combination of price controls and hyperinflation and obtaining money that any seller will want to accept will be illegal and impossible.
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That is why 20% of the people of Venezuela recently fled that nation. That is why the average Venezuelan adult has lost 24 pounds. Americans without foreign currency will starve. Furthermore, your foreign currency must be abroad. If it is in the US, it will be confiscated by the US government, as will gold bullion.
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Why is the Journal not telling you this? They are afraid of precipitating the hyperinflation and being blamed for it. Is that an adequate excuse for doing that? Hell, no! They know you rely on them for advice like this. They are too woke in their non-editorial pages and too in the tank for the Dem party to tell you what you need to know.The editorial pages are still honest, but they stick to scolding the federal government and do not give how-to advice.

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