One of the things many people are probably thinking about right now is whether to convert whatever cash they may have into something valuable. Or – better put – convert it into something of enduring value.
Which cash may not be for much longer. More precisely, for who-knows-how-much-longer. It is not improbable that the $1,000 you have tucked away today will be much less valuable a month from now.
It might be value-less two months from now.
This can happen when the value of money is a function of how much of it is printed – and the related willingness of people to accept it as valuable in exchange for things of value.
I touched on this a week or so ago in my article about buying things like tires, brake pads, oil and filters today – because they might not be available tomorrow or they might cost twice as much tomorrow.
This can – it has – happened. Many of us remember reading about people pushing wheelbarrow loads of German Marks to the bakery – not to buy the bakery. To buy a loaf of bread. Before it took two wheelbarrows to buy it.
Fungibility is key in a meltdown of the value of printed money subject to inflation – at the whim of those who control the money. You may possess the physical notes. But they possess the ability to render them value-less by papering the country with a literally infinite hurricane of them.
They can make as much paper money as they have paper. The ones you have quickly become as valuable as the paper and ink they’re printed with.
It is harder to make things of inherent value – the things you can’t just print more of. Like tires and brake pads and oil and filters.
And tools and supplies. Ammunition. Firearms. Vehicles. Food – and the things you may need to supply yourself with more of it when none of it is available anymore. Or when the paper you’ve got doesn’t exchange for much or any of it anymore.
These things are both valuable as such – as well as not under the control of forces completely out of your control. You have control of the physical items you’ve stored away. Other people will always value things like tools and supplies and food. They are fungible – meaning, they can be exchanged on a value for value basis.
Money,of course, operates on just the same principle but it’s a principle that’s undermined by fiat money – paper money.
Printed money.
Because it can be printed in any amount, any time. It is fungible and variable as well as inherently ephemeral. A sturdy diesel tractor that can plow a field and which doesn’t need anything much beyond the fuel it consumes (and which you can grow, if need be) can be worth its weight in gold or silver, depending on just how bad times get.
Silver and gold are less ephemeral than fiat currency, of course. Their value cannot be inflated to the degree that the value of paper money can be, because you can’t just print gold or silver.
But its value, as such, hinges on what you can swap it for. If people need ammo or tractors – or tools or food . . . well, you can’t eat gold or silver and bars of the stuff don’t fix much.
When – if – civilization re-asserts itself in the aftermath of a tsunami of barbarism, specie – gold and silver – is a much better (because much less susceptible to theft-by-inflation) basis for fungible currency. But in the near term, neither might buy much if people don’t regard them as valuable – as such.
It might be good to stock up on the things people will always value – even if civilization doesn’t come unglued. Things like ammunition and firearms and tools and so on may be worth less after you buy them – and it turns out you didn’t need them. But there is much less chance – no chance, really – that they will ever be worthless.
You will always be able to sell them – or trade them – for other things of value. Perhaps not as much value as what it took to acquire them in the first place. But much more value than nothing.
And that might be worth a lot.
There is only one real way to protect against the money printing – GOLD. Silver is okay but it is super volatile. Platinum is still a bargain. But gold is, well, the gold standard. Bitcoin is better than US dollars – and I own some. But gold is the one thing that nobody can devalue. There is a good reason why regimes that devalue their currencies always outlaw owning gold. That could happen here but I think (perhaps wrongly) that enough people already own gold and cryptos and will not allow it. You’ve got a well armed population that is being pushed to the limit and more people today understand currency devaluation then ever before. So I don’t think it will happen. But it never hurts to have a plan – break glass in case of emergency.
Hi Krista,
I continue to have this debate with myself about converting some of the rainy day fund into metal. The reluctance I’ve got is that the price of gold and silver has jumped – for all the obvious reasons. Still, better to buy high with paper still worth something before the paper is worth nothing.
Bitcoin, by the expert economist view, is going to hit a wall at $100K and won’t survive. We’ve seen twice in the last 10 years or so the Fed, since it has unlimited money, has destroyed the price of gold and then begin to buy it back. Same with silver, the only reason either of them have headed to the toilet after huge gains over a long time.
I have decided that physical things are going to be the best things you can have. There’s a huge difference in investing in gold and silver and actually buying the metal itself, in your hand sort of thing. But if you do that, they make sellers of both to record the transaction so find yourself a hidey hole so they can’t make up some shit and take it…..cause they will and have done so with many people. The only way you can bury it is to have a some place you don’t own or isn’t in your name since the stuff is easy to find. It’s even easy to tell what metal is buried. That’s the reason if you’re going to bury weapons, you need to follow the same method and if you bury it on your own place you need to dig through a big pile of various scrap metals that appear to be an old site that was dozed into a hole so you come back with all sorts of metals. It’s amazing what you can do with a $1000 metal detector and that’s not the top end either.
There is a metal you can buy and not get put on a list and it will retain its value and that’s copper. You could invest in titanium and it would take a lot of money to have much of it in your hand.
Just remember the reason the price of gold and silver has fluctuated to much and it goes back to a rigged system that’s too big for an investor to control. Remember the Hunt Brothers.
If I didn’t own any gold already then I am not sure what I would do right now but it is probably still a good idea to be buying now because the government doesn’t look to be curtailing the money printing and strangling of the economy anytime soon. And even if they do stop, the trillions they have unleashed will be sloshing around driving up prices for a very long time. Those trillions aren’t going anywhere. The Fed isn’t going to take them back and shrink the balance sheet and the federal gov’t sure isn’t going to start running surpluses to try to drive the value of the dollar up. So the price of gold and silver only has one way to go. They can try to manipulate the prices but at some point, reality is what it is. It is quite likely that the price of gold and silver is still artificially low – even at these high levels.
In the year 2000, Argentina’s peso was tied to the US dollar, one-to-one. Now, twenty years later, it takes 135 pesos to buy a dollar on the black market (locals call it the “dólar blue”).
In other words, the Argentine peso lost more than 99% of its value in twenty years. That’s what inflation averaging 28% annually will do.
At a restaurant in Buenos Aires where the prix fixe luncheon cost 10 pesos in 2004, the same meal today would cost close to 1,000 pesos.
Locals invest in real estate because it’s the only asset that roughly tracks high, unstable inflation (though with the usual overlay of business cycle and credit conditions). Perpetual shortages of foreign exchange make imported parts hard or impossible to get. Local “Industria Argentina” products are crap; lower quality than the scarce Chinese imports.
If the US and China get into a deeper trade war, items made mainly or only in China likewise may become scarce, expensive, or unavailable in the US.
No perfect inflation hedge exists. But as Eric says, ammo, firearms, tools and essential parts are a great place to start.
You don’t need no PhD Econ to see that the US dollar is being managed almost as recklessly as the Argentine peso. As the US slides back into developing country status, life here increasingly resembles the Third World, with shocking surprises every day, and only the sketchiest rule of law.
We coulda been a contendahhh …
If one reads first hand accounts of those who experienced the Wiemar catastrophic inflation, one particular thing will jump off the page at you. It did not happen gradually. One week, things were bad, but not extremely so. The next week all hell broke loose.
Precious metals will retain value if there is any economy to speak of, but there may not be. Their value will return when such an economy does. Similar in effect to savings. The most critical thing we use is the hardest to store. Power. Electrical power can barely be stored at all. Solar and wind systems aren’t terribly reliable. Fuel is far easier, but does have a limited shelf life, and is not the safest thing for one to store. Even if one rightly commences growing food for example, it’s not such an easy thing to do with hand tools alone. How many acres can one turn with a shovel? Things are likely to get hard, very hard, and many, like this 66 year old with rheumatoid arthritis, or the abundant Snow Flake SJW Wokesters, may not survive. The very best thing we can do is to educate as many as possible how we got there. That handing power to a gang of psychopaths is not a viable method. We’ve been through this before and haven’t learned. But this time it will be different. This time it will be on a world wide scale, because the whole world is using fiat currency. There will be no place to escape to.
Planted about 300 pounds of potatoes this year. Have about 75 zucchini plants out there in the garden patch.
50 celery, 300 pepper plants of all kinds, three rows of carrots, three rows of beets, green beans, three rows of cucumbers about 120 feet long each, dry beans, sweet corn, three rows of cabbages, two heads are better than one, even if one is a cabbage head, broccoli, cauliflower, artichokes. Squash, always in demand. Tomatoes are requested the most.
A lot of people do not want to do the work to have the fresh vegetables, aren’t able to, whatever, and rely upon someone else to do it for them. Supply and demand explains it all. An empty stomach rules. Translates to plenty of buyers.
Potatoes and cucumbers are the number one sellers, then tomatoes. If you don’t charge an arm and leg, it all sells in a heartbeat.
Besides, I have a warehouse filled with arms and legs, don’t need any more anymore.
Also have about thirty tobacco plants, just for the fun of it, probably will cure them all this year.
Yes, it’s a commercial garden, and everything sells pronto. I’m an essential worker, or so they say. I do plenty of it.
You learn to be patient. I want patience and I want it NOW! har
Actually, everything you do is work. Every. Single. Thing. Chewing is work, you have to work to obtain food, no doubt about it. Breathing is work, everything you do has a work factor from the beginning to end.
Had to buy a new pump for the water well, it cost 1000 dollars plus the labor.
If you don’t have water, you are in a world of hurt. Counts the most of all.
Forgot about the fungibility part. What is fungible, something of value that can be used for trade, basically. The reason for the comment.
Fortunately and unfortunately, clownbux are the coin of the realm these days. You get as many as you can because you need them all, there they were, gone. lol
What does it matter? A buck, a yen, a franc, a pound, it makes the world go round.
If I have to dump the clownbux out of the wheelbarrow and have the wheelbarrow, it will get good use, then so be it.
Fungibility at work right there.
Every time they create a unit of currency that unit robs a tine bit of value from the other units in circulation. A currency backed by real money like gold or silver or other commodity is controlled by the amount of the commodity on hand. This prevents governments from printing to infinity. A commodity governed currency will also prevent wars and economic woes. They will have to tax you more to wage their wars and they don’t like that as you are in control,,, not them. It will also control debt as they will be limited as to how much credit they can issue.
If you think this will somehow limit progress consider the US was on a gold/silver system of sorts until 1971. Many inventions including a healthy space program took place.
The US defaulted in 1971 because it was attempting to wage a war in Viet Nam and fund the war on poverty at the same time. The other nations, especially France, saw the US printing excess currency and started to demand gold as was the agreement.
The US avoided a major catastrophe with the petrodollar guaranteeing Saudi Arabia’s security while they only took dollars for their oil. Today the US is using it’s currency as a weapon so it won’t be the worlds currency much longer.
Today the US is printing so much currency that only a default will cure it but the pain of it will likely destroy the country. Best to get them to stop the printing but good luck with that.
For future reference never ever give politicians or bankers control of your money. They will destroy you with it.
A good store of cigarettes and liquor is a good bet for trade. These items are always in serious demand. An immigrant from Russia said his family survived their depression with those and other items of that sort.
Lots of empty shelves at Cabela’s ammo department yesterday. Not that I was looking to buy, just wanted to gauge the opinion of the populace. Oh, and there was a line at the handgun counter. Lots of coolers and camping gear in stock though. Clothes too.
I keep seeing stories about farmers plowing under crops that aren’t wanted by restaurants. Makes me think there must have been a whole lot of waste in the entertainment food sector. I wonder where we’ll be in 6 months? Why couldn’t that food be stored for later? Sure, frozen vegetables aren’t as good as fresh, but when you’re hungry food is food. Maybe the farmers are hoping destroying their product will lead to inflation?
Government had farmers doing the same back in the Great Depression trying to hold prices up. Didn’t work and there were food shortages then. Sure there were recessions, usually caused by bankers, before the Great Depression but what made the Great Depression stand out was all the help from the government and central bank.
All one has to do is look at the response of governments to the fake virus to understand just how bad they can screw up an economy. And only in six months.
The Orange Ass and the merry band of imbeciles in Congress are at it again, fighting over how many trillions to print up and dump into the stock market – the only metric Orange Ass cares about. Once the Chinese stop financing our debt (will be soon, let’s just keep on provoking them) and/or the dollar is out as the world reserve currency, the economic collapse will accelerate. $1200 in cheese will only buy another three months or so, convenient to November 3. Then with Biden and a Democrat congress, it will be reparations and lots more money printing for everyone. Free stuff!! Oh boy are we in for one helluva ride!!
What the hell are you going to buy with all that inflated currency? Masks? I’ve been waiting 6 months for a radio component that was being manufactured in Wuhan. The supplier is now saying mid-September for a ship date, but very noncommittal. The whole of the world has shut down production for the last 4 months and is in the process of retooling their factories for social distancing. Rumors are flying about Apple not shipping their new phones until late November, which basically means they’re going to miss a large chunk of the Christmas buying season. Food processors are having to run odd shifts with half the workforce.
We’re getting all the shortages of a Soviet style command economy but all the vodka distillers are making hand sanitizer so we can’t even become alcoholics.
Hi BAC,
It’s beyond depressing. But the Sophie’s choice we’re faced with is vote for the Orange Man or do not vote for the Orange Man. If he is re-elected, the election of a senile proxy for Woke Socialism is kept at bay. It will still be vile, but perhaps slightly less vile.
Anyone ready for a swim in the sewer?
Doesn’t matter who’s selected this time. According to the “trustworthy” pundits Trump won’t accept the results and will declare himself 1st Emperor of the Republic (or some such nonsense).
Never mind that in actual practice the Democrats are the ones who aren’t willing to accept the results. Al Gore, Hillary and later this year, Biden.
“Wat je zegt ben jezelf, met je kop door de helft”
Hi RK,
A balcony like the one at Palazzo Venizio ought to be erected for Orange Man/Il Duce to gesticulate from: https://www.youtube.com/watch?v=RTEN06p6Rqk
Wearing his Face Diaper, of course.
It would be funny except it isn’t.
China has to be stopped…..so say politicians. War is much better than trying to pay back debt with money we don’t have. See, I paid attention in skule.
Notice nobody is warning about nukes these days because it’s a real possibility along with more plandemics. We need to bring back the old signs like they had at the barbershop, a bit of parody to the ones we had at school.
IN CASE OF NUCLEAR ATTACK, SIT DOWN, BEND OVER WITH YOUR HEAD BETWEEN YOUR LEGS AND KISS YOUR SWEET ASS GOODBYE. I always enjoyed going to the barbershop for lots of reasons, not the least of which was it was male only. No signs saying it but everyone knew women were not allowed.
Lots of good stories and jokes back in those days. Now everyone can’t speculate having sex with certain people since one of them is probably cutting your hair and has a razor within reach to boot.
BTW, gold hit an all time high today and silver is finally going back up after years of lingering
Yep, I seen the same thing too. The fools in gubment getting ready to print another 1 trillion dollars to “stimulate” the economy. When the next shoe drops; that is when OPEC drops the dollar as the international currency, Katie bar the doors. We won’t have to worry buying toilet paper. The dollars in your possession will work great as an alternative.
Used tools are usually great bargains. I’ve been buying them up for years at farm auctions and rummage sales. Admittedly prices often go berserk at auctions, but if you keep your head and never spend more than you want (I never spend more than half of what i figure something is worth- that way if there is hidden damage or i’ve misjudged it’s still not a catastrophe).
Same with used weapons without unnecessary paperwork- they usually sell at a slight premium, for SOME reason. Be sure to obey your master’s every rule on every transaction.