The horrible five stages of a US hyperinflation crisis today
Posted by John Reed on
The five stages of a hyperinflation crisis today:
1. The US dollar (USD) plummets in purchasing power and there is a worldwide run on the dollar. Everyone wants to turn the USD in foreign currency, gold or anything other than the USD.
2. Politicians enact The 5 Bad Laws. Politicians say they are doing this to save you. In fact, you are in a “burning theater” and these laws nail the theater doors shut so you cannot get out. The Five Bad Laws are
A. capital controls (ban bullion gold or foreign currency and taking USD outside of the US)
B. price controls (force all goods sellers to sell for less than their cost which they cannot do so their store shelves will empty in 24 hours—you may literally starve to death because of this law)
C. Rationing
D. Anti-hoarding laws (prohibit possession of more of something than your ration coupon lets you buy in a month)
E. Financial repression laws (force you to save USD in banks, bonds, or CDs that pay very low interest rates)
3. Unindexed capital gains tax steals huge quantities of your net worth. For example, your home is worth 160 American eagle gold coins (about $450,000). Hyperinflation jacks your home value up to 500 gold eagles. You sell it. Unindexed capital gain tax says you owe around 25% capital gains tax on your gain which is 500 gold eagles minus your original cost of the house, say, 100 gold eagles. That means you owe the IRS the USD then equivalent of 500 - 100 = 400 x 25% = 100. So your net worth in eagles drops from 500 to 400 even though you are no better off really because the price of everything went up the same as your gold went up. The IRS will not mention gold. As I said, it will be illegal. They will say your formerly $450,000 house was worth $1.4M when you sold it so you have a huge gain. In fact, the USD price of EVERYTHING from candy bars to cars to milk more than tripled. So in real (after adjustment for inflation) terms, you are actually no better off financially. Your true gain is zero. It’s called a “phantom gain” in real estate. But there is nothing phantom about the 25% tax you have to pay on your more than $1M phantom gain.
4. When the public gets hit with the unindexed capital gains taxes on phantom gains they will demand that the capital gains tax be indexed and they will get that. So try to avoid selling anything before the capital gains tax is indexed.
5. Hyperinflation always ends and it always ends overnight. It ends either by repeal of capital controls or introduction of a new currency that has a story behind it that makes it trusted. You must not own bullion gold or silver when this happens. They will plummet in value to like $300 an ounce for gold and $15 an ounce for silver. They now sell for $2,644.60 and $31.43 respectively. That plummet will happen because most of the value of those two metals today is due to fear of inflation. The day inflation ends, and it always ends, those two metals plummet in purchasing power.
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When hyperinflation hits the US, you must leave the US to avoid starvation. When it ends, you can come back.
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https://johntreed.com/collections/john-t-reed-s-book-on-hyperinflation-and-depression/products/how-to-protect-your-life-savings-from-hyperinflation-and-depression
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Have a nice day.
1. The US dollar (USD) plummets in purchasing power and there is a worldwide run on the dollar. Everyone wants to turn the USD in foreign currency, gold or anything other than the USD.
2. Politicians enact The 5 Bad Laws. Politicians say they are doing this to save you. In fact, you are in a “burning theater” and these laws nail the theater doors shut so you cannot get out. The Five Bad Laws are
A. capital controls (ban bullion gold or foreign currency and taking USD outside of the US)
B. price controls (force all goods sellers to sell for less than their cost which they cannot do so their store shelves will empty in 24 hours—you may literally starve to death because of this law)
C. Rationing
D. Anti-hoarding laws (prohibit possession of more of something than your ration coupon lets you buy in a month)
E. Financial repression laws (force you to save USD in banks, bonds, or CDs that pay very low interest rates)
3. Unindexed capital gains tax steals huge quantities of your net worth. For example, your home is worth 160 American eagle gold coins (about $450,000). Hyperinflation jacks your home value up to 500 gold eagles. You sell it. Unindexed capital gain tax says you owe around 25% capital gains tax on your gain which is 500 gold eagles minus your original cost of the house, say, 100 gold eagles. That means you owe the IRS the USD then equivalent of 500 - 100 = 400 x 25% = 100. So your net worth in eagles drops from 500 to 400 even though you are no better off really because the price of everything went up the same as your gold went up. The IRS will not mention gold. As I said, it will be illegal. They will say your formerly $450,000 house was worth $1.4M when you sold it so you have a huge gain. In fact, the USD price of EVERYTHING from candy bars to cars to milk more than tripled. So in real (after adjustment for inflation) terms, you are actually no better off financially. Your true gain is zero. It’s called a “phantom gain” in real estate. But there is nothing phantom about the 25% tax you have to pay on your more than $1M phantom gain.
4. When the public gets hit with the unindexed capital gains taxes on phantom gains they will demand that the capital gains tax be indexed and they will get that. So try to avoid selling anything before the capital gains tax is indexed.
.
When hyperinflation hits the US, you must leave the US to avoid starvation. When it ends, you can come back.
.
https://johntreed.com/collections/john-t-reed-s-book-on-hyperinflation-and-depression/products/how-to-protect-your-life-savings-from-hyperinflation-and-depression
.
Have a nice day.
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