You gotta be nuts to buy an annuity today

I just saw a TV ad for annuities on Fox News.

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Jeez!

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First a definition: An annuity is a contract that promises to pay you a certain amount in USD usually monthly. They are typically sold by insurance companies. Pensions are also widespread annuities. The payments stop when the annuitant(s) die.

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Social Security is the most widespread annuity in the US.

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U.S. annuities are USD-denominated assets. In USD USD-denominated hyperinflation, USD-denominated assets are financial shooting stars. They burn up and turn to nothing at great speed. On the day the dollar dies, the salient activity is everyone frantically trying to turn all their USD into NON-USD-denominated assets. By definition, it is impossible to frantically turn your annuity into a non-dollar-denominated except a little bit each month as the monthly payments arrive.

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You know who was hurt the worst in the world’s most famous hyperinflation—Germany/Austria wheelbarrows full of cash 1921?

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Annuitants.

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Their checks, or now direct deposits, keep coming for a while, but they are a joke because you cannot buy a candy bar with your entire monthly check. Then they stop coming at all because they are not enough to buy anything and not worth the cost of sending them.

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I am okay with matching them up to mortgage payments. That is because both the mortgage payments and the pension or other Social Security check are fixed. BEFORE the hyperinflation hits, you get the mortgage using your pension and/or Social Security to show the income to qualify for it.

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During hyperinflation the annuity checks you get become worth little or nothing, but so are the mortgage payments for smaller amounts that you have to make. A marriage made in heaven for the borrower.

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The reason to get the house AND the mortgage is that in hyperinflation you make out like a bandit. That is because the value of your home roughly keeps pace with USD inflation and, this is the great part, AFTER inflation, your mortgage loan balance after adjustment for inflation falls to little or nothing thereby increasing your real equity.

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If you have any sort of private annuity like a pension, see if you can sell if for an adequate lump sum. If not, use it to qualify for an equal or smaller fixed mortgage payment.

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If you are considering purchasing an annuity. please tell your heirs that I am available to testify in court that you have lost your freaking mind financially and that a court should appoint a guardian or conservator to take control of your financial affairs henceforth.

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Indexation of Social Security is a joke. You get that in January based on the prices the prior August. That is okay for mild inflation, but it is ridiculous for hyperinflation—like an abortion clinic with a 36 month waiting list. Plus, during hyperinflation, the amount by which Social Security would have to go up would 1. be enormous and 2. itself be inflationary, like a dog chasing its tail. Surely, the federal government will renege on the promise to index Social Security. In WW I, they had trouble selling war bonds because of their using inflation (“greenback dollar”) to destroy the value of Civil War bonds—which was only about 50 years before WW I.

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So they made WW I war bonds gold certificates. That is, you could demand gold for all your interest and principal. Then, in 1933, after the Depression hit bottom, the US government reneged on that gold promise. https://www.bing.com/search?q=EO+6102&PC=U316&FORM=CHROMN