Monday, January 26, 2009

Uh, how are we going to escape hyperinflation?

8 comments:

William Weedon said...

Really a stunning video. I sent it to my brother-in-law - a financial guru of sorts - to see what he thought of it. Haven't heard back yet!

Pastor said...

I don't think we can escape hyperinflation. We'll be paying this money back through higher interest rates and ridiculous rates of inflation for a long time to come. It's the only way it works (not that it actually *benefits* the public).

Pr. H. R. said...

Gentleman, you are missing the true miracle in this video: it appears to have been able to teach Weedon how to understand math.

+HRC

William Gleason said...

Have you checked out the recent videos of Ron Paul on this and related issues that Lew Rockwell has on his blog page? They are all...shall we say, stimulating. :)

Bill +

Phil said...

Ron Paul is the only congressman to introduce a bill to abolish the Fed. Courage, my friends... And this man has it!
http://www.govtrack.us/congress/bill.xpd?bill=h110-2755

wmc said...

I always appreciate your economics posts. A couple of questions for a future post or two:

1. What is your recommended reading list for the economics of our times? Books preferred to blogs or YouTube clips.

2. What is your personal financial strategy?

Father Hollywood said...

Dear WMC:

Lew Rockwell has a bibliography at: The Depression Reader. I've read some, but not all of the books. I have some Rothbard, Mises, and Hayek in the queue.

I would also recommend Peter Schiff's two books, especially the first one: "Crash Proof."

We're just not taught how banking works in school - especially not the "Austrian" school of economics - which is market-driven over and against the "mixed economy" model favored by most mainstream conservatives.

As far as personal strategy, a few years ago, I put my frugal wife in charge of the finances. After seminary, we had about $25,000 in credit card debt. Five years later, our credit card debt is zero. She automated the bill paying so we never missed payments, she also shopped for zero-percent interest accounts.

We now use the money we previously used to pay on our credit card for savings. We pulled out savings from the bank (which we should have done long ago, as the interest we were making was more than offset by bank fees). When the market first tanked, and banks began to topple, I emptied out our savings and converted it all to gold.

We continue to be frugal, and in addition to gold, we're investing in foreign stocks through Schiff's brokerage, Euro Pacific. Schiff's strategy is long-term and conservative, not about speculation, rooted in buying to hold high-dividend yielding stocks in companies with solid fundamentals not denominated in U.S. dollars, in industries that traditionally do well in recessions. It isn't a "get rich" scheme, but is a way to weather the storm.

If (and when) the Chinese de-leverage their currency from the U.S. dollar and stop financing our debt, we will see foreign currencies rise precipitously against the dollar - which is presently (though probably not for long) the world's reserve currency.

Obviously, we (meaning my family) don't have a lot of money to save/invest (we're on one income), but being out of credit card debt is huge. I would say that should be everyone's top priority. When our car note is paid off, that will free even more money to save/invest.

Some people are saying to stockpile food - and having lived through a few hurricane seasons now, there is nothing wrong with being prepared. If you have stored food, the worst-case scenario is that you have food stored. That's never a bad thing. You're going to eat it anyway.

Hopefully, the economy won't crash and burn before we have enough put away. God willing, things will not degenerate as fast as they certainly could with such a huge influx of paper into the money supply.

And if we're all wrong, and socialism can make us all prosperous, what the heck. We'll still be out of debt and have some savings.

I think frugality is a good thing for everybody right now.

wmc said...

Thank you. Sound advice regarding savings, debt, and frugality.