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Where to put money with a hyperinflation Sword of Damocles hanging over the US

Posted by John T. Reed on

This is my answer to a facebook reader question:
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My Schwab money is not insured by FDIC because it is in a Schwab index fund and a Schwab REIT index fund. FDIC insures against loss of the deposit, not the deposit’s purchasing power disappearing. In hyperinflation, $250,000 will buy you a candy bar.
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In hyperinflation, dollar-denominated assets like savings accounts become worthless—guaranteed by definition. In that event, FDIC is irrelevant. The Schwab index fund is not guaranteed to do better than zero by contract, but stock market history in hyperinflated countries was that stock markets in those countries went up, down, and sideways. That is nerve wracking and maybe a net loss. But it beats zero.
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What I need is an asset that is protected from inflation and also has VALUE IN USE. A home is useful. The other financial assets with some inflation protection—stocks, commodities—are not useful to me. I can eat long-shelf life food, but I do not need hundreds of thousands of dollars worth of it. You can’t eat real estate, but you can live in it. Barter items, nickels, junk silver, and foreign currencies CAN provide grocery-buying and other bill-paying liquidity.
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So at present, a diversified portfolio of foreign currencies is a sort of wild card that can accept hundreds of thousands of dollars. There is currency risk. The currency in question can go down in value in relation to the USD.
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So my portfolio is now inflation averse and heavy on liquidity because I am not sure what sort of America is coming out of all this. Stock and REIT index funds are a sort of lame diversity away from having all foreign currency.
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We have a six-figure annuity income from social security and pensions. They become worthless in hyperinflation. I would like to diversify away from them. But we cannot. 
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So-called financial advisors are all about securities—stocks, bonds, commodities, annuities, cash. Nice, neat, tidy, digitized things that do not get their hands dirty. But three of them are worthless in hyperinflation and the other two get slapped around in inflation and hammered in depression/deflation.
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I am a real financial advisor. I include real estate. The three-piece suited guys don’t like real estate because it is dirty and not digitized. But a home or farm is the main financial asset and main source of financial security in hard times. It also has enormous value in use. Ditto a business and business inventory—more assets the “financial planners” don’t want to get their hands dirty with.
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And the commission-paid financial planners do not want to recommend any thing they cannot get a commission on like nickels. And they also do not get their hands dirty by taking delivery of commodities like junk silver or nickels and taking delivery of commodities is about the only way to own them. To the suits in securities, commodities just refers to futures contracts which are of limited duration and very risky.
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When you fear hyperinflation, the assets to own and avoid are clear. When you fear a Marxist takeover of the US, you need a broad diversification and more liquidity.

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