During Hyperinflation Your Assets Can Become Liabilities – Do You Have an Escape Plan?

SGTreport has released an interview with a survivor of the Argentinean currency collapse.  Barry, who now lives in the Dominican Republic explains the hellish reality of hyperinflation as he experienced it in Argentina. He says having an escape plan is essential, without one, despite having firearms & prepping & stacking, you’re sitting on a 3-legged stool.

Barry states that when hyperinflation finally hits in the United States, your assets may well become liabilities, because the unprepared & desperate will want what YOU have.

Full interview below:

Comments

  1. Most of us can’t afford to leave the country, and you have to keep in mind that part of the reason people are extra nice to US tourists is because we spend money and they want money. Sure we have our flaws but i think it has more to do with the people in charge than the populace.
     
    Also he didn’t say anything about what he experienced during the Argentina collapse which i think was way more important than explaining why it’s better to leave the US. The only person i know so far that has detailed knowledge of the Argentina collapse is Fernando “Ferfal” Aguirre but i wanted to hear from more than one source.

  2. A few months ago Doc sent me a post from some authoritative people that gave me a good overview of what happens to some assets in hyperinflation.  Real estate can collapse in value because the cost of financing goes to such great heights that the only way someone can finance the purchase is by paying a very low price.  One note I recalled was about a home that originally sold for $800,000 or so but later sold for $90,000 because that is all the property income could sustain, all the buyer could afford since rates were sky high.
    One more thing to note. If you rent a property and not get into a debt situation there is a good chance that your rent will not go up nearly as fast as the inflationary rate. Residential properties can sustain only so much in real increases before they become MT. If it worked to your benefit you could actually rent a hotel suite for a reasonable price with all the amenities including daily maid service and on site facilities. If your silver and gold goes up faster than the inflationary rate, generally a given in those sorts of unsettled times, you would be able to situation yourself in a nice domicile and not break the bank during that bad time.
      It seems counterintuitive that a home or investment property could see such a large drop in price until you look at the prices of US property in the last 1970′s, particularly those in inflated areas such as the south This was during a nominal 10-15% inflation rate time period.  When the financing rates went to 15% for a standard mortgage, few people could afford the monthly payments unless the property was priced well under its asking price. In my career this enormous increase in rates crushed the sales prices of commercial property by 50-60%.   Unless there is a robust income coming from a specific piece of real estate, it is, in reality, a cost center, not an income producer.  If the holding costs of real estate exceed its income in inflationary times, the price usually drops, by 50% or more.  Unless a personl can hold this property indefinitely because of deep pockets, the property is usually dumped for  a loss before it bankrupts the owner, an event that takes place even when an owner is well heeled and very liquid.
      Therefore real estate can be an substantial anchor to a person trying to work themselves out of an hyperinflationary scenario.   That’s why it’s best to travel light with phyzz in your pockets, getting out of Dodge while the getting is good.

    • What you say is true, but I have often wondered about how to carry enough silver, with other essentials, and then the problem of troops doing searches. This reasoning show how much more valuable gold could be, but then you have the problem of using it for smaller purchases. Does not seem to be any one good solution that covers all possible outcomes. I guess being prepared as best you can is better than most will have, but the above argument about people taking it away from you is valid. There are many out there that is using that as their plan.

    • @agxiik – Certainly buying (or selling) a home during hyperinflation could be a bad deal all around; however, what if you hold onto your home and don’t plan to buy/sell?  My thinking is that when fiat paper currency is worth zero, and when the banks are not able to collect any worthy currency from their debtors, those who are stacking on tangible value like gold or silver may be able to go to the bank and say, “Hey, bank – I know no one is paying their debts and I know you need solid money – how about I give you x amount of gold or silver and you can call my loan a wash”.  Do you think that could ever happen?

    • “Therefore real estate can be an substantial anchor to a person trying to work themselves out of an hyperinflationary scenario.   That’s why it’s best to travel light with phyzz in your pockets, getting out of Dodge while the getting is good.”

      I would agree with that insofar as non-productive real estate is concerned… a house in town, for instance.  In my case, a small acreage 20 or so miles out of town on which I can grow some food and firewood will be just the thing.  Yes, I have a decent silver hoard as well but having productive land that I can use to sustain my family after the stored food runs out, which it probably will given that the coming hard times are likely to last a decade or more, is paramount to my strategy.  I will fortify the hell out of that place and defend it as if from all the minions of Hell.  Bug out?  Not on their lives!  My place will be THE best chance we have and everything we need will either be there or very close by.  No other place will offer as much in terms of survive-ability and most places will offer FAR less, if anything.  Also fortunate is that I will be paying cash for this place, so won’t have any kind of a mortgage to pay.  Yes, there will be taxes but that is likely to be negotiable in such hard times, as people will fight rather than pay more than they have.  Might even be able to do a food for taxes swap.  Who knows?
       

  3. buddy_boy  My thoughts exactly. That works if a person stays the course in their home through the inflationary period.  A ‘normal’ inflationary period might range from 3-10%  YOY for 10 years, kind of like the 1971-1981 time period. 
    Even if you  get hit by this inflation with declining wages and increasing prices, the chances are events will reset if you can stay the course.   Our 1970s inflation was really nasty but we did reset, and then went on the currrency deflation/debasement binge with $16 trillion in new debt.  If we get some harsh inflation now it could be extremely damaging to all of us with little chance of a hard reset that would get us past that event.  PM’s are, IMO, the way to get past the rough patch intact or at least limiting the damage to our well being.  Hyperinflation usually ends badly for the country as everything we have come to expect in our lives is thrown into the crapper and the country usually goes into a dictatorship with war and civil unrest.  See Weimar Germany and Hitler as the best example.  Germany was an industrial great power and a great country that squandered its birthright with WWI, Wiemar inflation and WWII.  It was a preeminent power and much like the USA at its peak. I would say it is better off financially, economically, socially and culturally than us too boot. 

  4. I would entirely agree with this opinion that you need to escape with your assets from countries or states that will break the people one way or another. The worst place to be when the dollar collapses, according to Chris Duane, are UK, Israel, LA, NYC and Washington DC. In USA, there are plenty of quiet states to go to, although you always have the problem of the Federal Govt. The UK, USA and Israel are police states, unfortunately.

  5. My house out in rural SW MN is paid for. I can’t afford to move so I am staying put. I can garden and have farm fields on 2 sides of the house with a horse pasture across the street. My small stack will tide me through at least a year and I have food. People around here know I am poor and won’t expect me to have supplies.

    • Bless you, Mary B.  You may be poor in assets but you are rich in courage and dedication.  Those will see you through most anything, God willing.

  6. All those ex-pat purveyors make it sound like such a great option.  Never do they talk about your being a “stranger in a strange land.”  My biggest concern with ex-patriation are people with machettes.  Some of my family have been ex-pats in Mexico for 20 years.  While they all get along fine they realize they are not “kin” and that there is a subtle but definate barrier that will never be completely gone.

    So what happens when the world economy crashes and fiat everywhere gives up its last breath?  Who is going to get blamed? You!  Well, America in general, but you are going to happen to be the closest proxy upon which all that rage and fear will be vented.  And don’t think for one second that there will not be hate-mongers whooping them on.  Just about every country you can ex-pat to has problems.  This would be a great opportunity for their politicians to do what politicians everywhere do.  Blame someone else.  Namely YOU!  

  7. I didn’t prepared for SHTF with food because I have an escape route. I can’t tell where it is but what I can say is that it’s a place where it is cold and you cannot do farmings because the soil is made mostly out of rocks but you have to do hunting to survive. The best part about it is that I don’t need to change countries to go there.

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