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More statements promising higher inflation from the White House and the Fed

Posted by John Reed on

A recent Wall Street Journal story said the Fed is now planning to letting inflation go above 2%, the previous long-term target. In 1971, Nixon ended the Bretton Woods U.S. gold standard. Around that same time, he instituted price controls because inflation was so high. How high? 5.84% in 1971. Inflation subsequently reached 13.29% in 1979.

The key question if you have USD in interest-bearing accounts is what real (adjusted for inflation) interest rate are you getting. If it’s negative, your net worth is going down the tubes.

Another recent Wall Street Journal story said that Trump stated fiscal plans would double the national debt. They said it would take a while. I don’t know why. Obama doubled it in eight years and Trump’s first projected deficit is about what Obama’s was going to be.

The Journal also said that the debt-to-GDP ratio was going to reach 150% (probably correct), but added that was the highest ratio since World War II. That is false. That ratio peaked at 122%—the highest ever—in 1946. So you can pay the WSJ $400+ a year for inaccurate info or read the accurate stuff here for free.

Are we going to get high inflation? Probably.
How To Protect Your Life Savings From Hyperinflation & Depression, 2nd edition
When? No one knows but the first sentence in my book How To Protect Your Life Savings From Hyperinflation & Depression is correct. It says “It could happen tomorrow.”
And my article The Day the Dollar Dies was declared correct by an emigre from Eastern Europe who said it happened to his country’s currency when the Soviet Union collapsed.

My book does not tell you to place a bet on hyperinflation so that you lose everything if it does not happen soon. Rather, it is a sort of homeowners insurance strategy. Low cost and low risk. You house CAN burn down but probably won’t in the next year, yet you buy a one-year fire insurance policy annually. Why? For the peace of mind. Smart. Do the same with hyperinflation risk. My book tells how.

Hyperinflation means the following assets of yours become worthless: US cash, US checking and savings accounts, US CDs, life insurance, bonds including TIPs bonds, annuities including Social Security. Kind of a big deal, don’t you think?

Because of Trump’s fiscal plans and the Fed’s recent behaviors, I find myself recommending this book a lot. No one has complained about too many advertisements yet, but I expect some have thought about it. The financial situation of my wife and I would not be perceptibly affected if the sales of my hyperinflation book tripled. We literally would not notice or change our spending.

But YOUR financial situation could go from rich or affluent to destitute depending upon the details of your asset allocation. My book is about the correct asset allocation to protect you from this disaster.

And if it does not happen, or happens much later, no harm no foul. So you owned some hard assets (other than gold or silver which I do not recommend) and foreign currency and long shelf life food. You can still eat the food. You can spend the foreign currency abroad where it has not lost any purchasing power even it has lost some vis a vis the USD. And your real estate equity will probably be worth the same or more in real dollars if there is no hyperinflation.

If you buy gold or silver to hedge against inflation as William Devane and others urge, and you do not time it exactly right, which is impossible to do, you could lose something like 80 to 90% of that investment.

Think about it. Hyperinflation always ends and it always ends overnight. And when it does, what do you think happens to assets whose only trick is to hedge against inflation? They fall off a cliff.

My book says what to buy, and maybe equally as important, what NOT to buy. And, astonishingly, most Americas who buy anything to hedge against inflation, buy precisely the WRONG things: gold, silver, and TIPs bonds. There are ads on TV telling you to do that and none telling you to buy the correct assets. It drives me nuts. I am scared for my readers.

If you are not scared, read Blockade by Anna Eisenmenger. It is so old a book—1920s—that it is free on the Internet. ( She lived through the notorious hyperinflation in Austria and Germany in the early 1920s. It is a diary. I think it would make a far better movie than the Diary of Anne Frank. The child who dies in Anna’s book is younger than Anne, and the child is not the only one who dies. And see how many times you read about gold in the book—almost zero—in the midst of horrific hyperinflation.

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