John T. Reed’s news blog

One of the things I learned about researching hyperinflation is Gresham’s Law. That says that in inflation, people want to PAY with the inflating currency and GET PAID with a non-inflated one. The original form of Gresham’s Law related to paper currency versus coins and later coins containing precious metal versus base metal coins. Inflated money is the current incarnation of being forced to use currency that is worth less than other currency. . https://en.wikipedia.org/wiki/Gresham%27s_law . We have legal tender laws in the US. . https://en.wikipedia.org/wiki/Legal_tender . Those sort of capital controls for certain transactions. . https://en.wikipedia.org/wiki/Capital_control . Capital controls...

The WSJ'S Jason Zweig has another column recommending TIPS today. I wrote a book on hyperinflation. Do I recommend TIPS (Taxpayer Inflation Protected Securities—federal government bonds). . Hell, no! . I bought a bunch when I wrote the 1st edition of my hyperinflation book. . https://johntreed.com/.../how-to-protect-your-life... . Then, when writing the second edition of that book, I read the fine print on them. . When I got done cursing, I sold them all forcing me to pay $50k of tax penalties. . 1. They adjust the maturity value of your bond for inflation annually. The interest rate never changes, just...

WSJ’s home buying hater Nicole Friedman is still on the job. Today’s front page article laments that the number of homes sold went down. Is the WSJ mainly a periodical read by home builders? Nope. It is mainly read by the 80,000,000 home OWNERS, not the nation’s 412,020 home builders. .She says unit sales are down because of “stubbornly high interest rates:” 6.96% now she claims. “Stubbornly?” She is anthropomorphizing the mortgage market? I think those rates are set by a Fed trying to knock down inflation. Do homeowners want inflation knocked down? I am sure they like appreciation in...

Diversification in finance is not understood properly. There is no such thing as generic diversification..You diversify for a particular risk. For example, going from owning a rental house to owning a duplex gets you some CREDIT diversification: two tenants whom you hope will pay the rent instead of one..What about diversifying by buying a second rental house in an adjacent town? That gets you a little bit of MUNICIPAL LAW diversification and first CASUALTY diversification. If the first town passes rent control but not the second, you have diversified from municipal risk and you have reduced the risk that a...

Reed’s rules of investment1. No one can predict future asset values.2. If it sounds too good to be true, it is not true.3. Minimize or eliminate transaction fees.4. Minimize or eliminate gains taxes.5. Minimize or eliminate income taxes.6. You should own multiple uncorrelated assets.7. Some of your assets should be hedges against inflation, like real estate, coins, foreign currency, forever stamps, inventory, raw materials.8. Some of your assets should be hedges against deflation like coins, preferably coins with high-melt value to face value ratios so they also protect against inflation.9. Borrow a mortgage to buy a principal residence from a...