Tuesday, June 16, 2009

Practical Advice for Hyperinflation

Greg, on The Holy Cause blog, lays out the strategy for survival when "Hurricane Fed" comes ashore. It is based on his personal experience with hyperinflation in Zaire:

Rule #1 – Don’t hold cash, treat it like a hot potato, let it rot in somebody else’s hands. The key to surviving hyperinflation is to not hold cash while it is being inflated. When you receive cash, convert it to a “hard” currency, consumer goods, or “hard” assets immediately. In Zaire in the 90s, the hard currency was dollars, and the wise quickly converted excess Zaires to dollars.

In hyperinflationary America, holding the dollar will not be an option. Perhaps gold will protect? But will it be easy to trade? Perhaps other currencies? Which ones? It is hard to say, several other major currencies are significantly at risk just like the dollar. Just don’t hold an inflating currency - pass it on to the next guy like a hot potato, let it rot in his hands rather than yours.

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