The only "Crap hit the fan" plan that I believe is workable is to own land and enough basic equipment to exploit that land to support yourself. Land in this sense is not a townhome in a urban environment; its rural farm acreage. Throw in a little gold/silver/guns and you would be able to survive almost anything other than a complete destruction of the earth.

In short:
1) Physical assets
2) Skills to exploit assets
3) Means to defend assets

You can stock pile food, water, and such, but you can only save so much. At some point you have to be able to create more of it.

Xnarg said:manuvns said:buy land in high population density areas . Real estate will appreciate due to shortage of landLike maybe downtown Detroit or south central LA?Those areas do not have a shortage of land - housing demand has dropped due to weak local job markets, leading to an excess supply of land, resulting in depressed prices. And since those local job markets will be weak forever, there is absolutely no chance demand for housing will ever go back up in those areas.

kamalktk said:tazzy531 said:Hyper inflation? I'm getting ready for Ludicrous Inflation!
You need a Helmet for that!The economy has gone to plaid!

jayK said:Several months ago, a loaf of bread in Zimbabwe cost 1.6 trillion dollars. THAT'S hyperinflation. Annual inflation in the range of 10-15% (which is a possibility in the US) is considered high inflation, a very different concept from hyperinflation.

Zimbabwe is indeed the extreme, but we could see something more the line of the Russian currency crisis in '98 - the Rouble went from 6r to 25r to the dollar in about a month. That was due to issues relating to currency pegs, but we have other problems that could take us that direction...

Explained:
I believe that the Fed intends to inject enough money into the economy to prevent a deflationary recession. There are no signs that the Fed intends to stop injecting money until we are out of this recession (Congress seems to want to help as well - they are always good at spending money).

The problem is what happens once the recovery begins - the Fed will not be able to quickly withdraw those funds from the economy without risking the recovery. This will result in inflation (I would suggest in the 10-20% range).

Right now people are buying treasuries like crazy, primarily because they are looking for safety (a "flight to quality"). Given that 70% of our federal debt (and most of the $$ supporting the Fed at this point is federal debt) is held in foreign hands (much of it owned by government or quasi-government agencies), what happens when we get to 10-20% inflation? Those foreign owners will realize that there is not safety in treasuries, and they will pull their money as quick as they can.

As soon as ratings agencies get a whiff of this risk happening soon, they will cut the rating on treasuries, increasing the yields we must pay. If we don't increase yields fast enough or happen to get to the point where there are not enough buyers, we will be in deep trouble. Unfortunately the Fed will not be able to yank interest rates high enough on the bonds without putting us back into a Recession, so they will sit (or make small changes).

Realize also that before this crisis, over 1/3 of every tax dollar went to pay interest on the national debt. Given that current bailout efforts have increased debt levels significantly, the need for more money to keep the government running will be huge. They will raise taxes and cut programs, but it will not be acceptable to the public to go too far with those approaches.

The only easy option remaining will be for the government to start "printing money" more directly to pay off the debt (and I think the geniuses in Washington will take the easy route vs a government default or failure).

jayK said:
As always, the best way to weather this situation long-term is to live within your means, maintain emergency cash reserves, and invest in a diversified portfolio. If you are constantly reallocating your portfolio to make directional bets, you will likely end up with a lower overall return at the end of the day.

On the other hand, if the Fed decides to start printing a quadrillion dollars every week, then it's time to hoard food and other supplies. Of course, you'd better make sure you're very well defended, because independent militias and rogue military units will be roaming the street confiscating your supplies.

It is defiantly important to live within your means, but I have been unable to imagine a "diversified portfolio" that will work well if inflation gets above "high inflation" and into the "hyperinflation" realm. Part of the reason hyperinflation is so difficult is that it is nearly impossible for either businesses or individuals to plan ahead and make good long-term investments. This would be particularly difficult for the US, as we have focused so highly on efficiency ("just-in-time inventory", etc) that we don't have much slack left in our economy...

Personally, I believe that now is the time to plan for what you and your family will need in a hyper-inflationary time. It may not be time to invest tens-of-thousands of dollars to cover this, but there are a number of things we can do right now that won't hurt too bad if things somehow manage to improve.

Some examples:
- Do you have security concerns around your home that you wanted to resolve anyway? Now may be the time to invest in raising that wall a bit or installing a better security system.
- If you don't want to eat canned food, I'm sure the food pantrys will be happy to take a donation of a few hundred dollars worth in 12 months.
- Having a gun around the house (stored safely) is not too expensive, and gives you some security (I'm not advocating a large arsenal)
- Getting plans together on where you would go or how you would live takes some time, but doesn't cost much and would be invaluable if necessary.

There are many more examples, but a good starting place is to go over lists like this, and see what makes sense to do now (what may have value even if things don't go so bad, and what would be particularly worthwhile for you or for trade if they do):
http://www.thepowerhour.com/news/items_disappearfirst.htm

Look at what happened when gasoline went up with oil in the stratosphere - the economy weakened, people cut back on everything, and people even stopped driving as much (by 12 billion miles in the U.S.).

We have such a supply of goods, and such a relatively high living standard compared to past generations that hyperinflation will simply crush the economy as we quit spending any money on all but the most basic necessities - and even those things may suffer deflation, rather than inflation, as we find ways to maximize efficiencies on those (parents will move in with their kids, young adults will move back with their parents).

You can't get water from rock.

ardentazn said:Would moving money out of the country be a good idea??? such as converting to RMB, HKD, etc...

2x leveraged ETFs started by ProShares today, in both directions, for EUR/USD and JPY/USD.
Good hunting: News Release

JesseLivermore said:Look at what happened when gasoline went up with oil in the stratosphere - the economy weakened, people cut back on everything, and people even stopped driving as much (by 12 billion miles in the U.S.).

We have such a supply of goods, and such a relatively high living standard compared to past generations that hyperinflation will simply crush the economy as we quit spending any money on all but the most basic necessities - and even those things may suffer deflation, rather than inflation, as we find ways to maximize efficiencies on those (parents will move in with their kids, young adults will move back with their parents).

You can't get water from rock.
Actually with hyperinflation, we would not quit spending but spend money as soon as we receive it since its value would substantially decrease over time. Though I will reiterate that hyperinflation is not likely to happen and most of those saying it will do not seem to understand what actually IS hyperinflation.

Second, your post makes no sense as you seem to be saying that hyperinflation will lead to deflation?

Finally, as far as getting water from rock, have you heard of Moses? See Numbers 20:11. It may require an act of God, but after all our money does say "In God We Trust" so that means that our current leaders may be expecting divine intervention.

mttatkns said:JesseLivermore said:Look at what happened when gasoline went up with oil in the stratosphere - the economy weakened, people cut back on everything, and people even stopped driving as much (by 12 billion miles in the U.S.).

We have such a supply of goods, and such a relatively high living standard compared to past generations that hyperinflation will simply crush the economy as we quit spending any money on all but the most basic necessities - and even those things may suffer deflation, rather than inflation, as we find ways to maximize efficiencies on those (parents will move in with their kids, young adults will move back with their parents).

You can't get water from rock.
Actually with hyperinflation, we would not quit spending but spend money as soon as we receive it since its value would substantially decrease over time. Though I will reiterate that hyperinflation is not likely to happen and most of those saying it will do not seem to understand what actually IS hyperinflation.

Second, your post makes no sense as you seem to be saying that hyperinflation will lead to deflation?

Finally, as far as getting water from rock, have you heard of Moses? See Numbers 20:11. It may require an act of God, but after all our money does say "In God We Trust" so that means that our current leaders may be expecting divine intervention.

Actually, everything I said is consistent with the economic law that 'the best cure for high prices is high prices,' and that any hyper-inflationary period would burn itself out and be short lived.

...by 'short lived,' I mean time measure in roughly a year or less...and by 'hyper-inflationary,' I'm speaking of 8% but likely closer to 12%+ inflation per annum (some undeveloped or developed parts of the world would consider that normal, but is 'hyper' by western standards, where we've targeted less than 2% as normalized).

nyarrow said:Agreed - 10-20% is not hyperinflationary itself. However, a 10-20% rate of inflation may be enough for all of the investors who bought in looking for the "safe" investment to leave when better options become available or safety is no longer the first concern.So where would these investors move their money to? Why would safety no longer be a concern? If safety remains a concern, what investments would be considered safer in this environment?

The USD hyper-inflating would be a global issue. However, the rest of the world could recover much faster by moving away to some new "global" currency (or more than one).I disagree. Pegging to a different currency would not resolve the fundamental root causes of this economic crisis.

The dollar is fundamental to our economy (and the debt is ours), but it is less fundamental to the rest of the world.In the current state of the global economy, when looking on a macro level, the USD is just as fundamental to China and other creditor nations as it is to the US. It's basically a symbiotic relationship.

nyarrow said:As soon as ratings agencies get a whiff of this risk happening soon, they will cut the rating on treasuries, increasing the yields we must pay.
Chances of this happening...Zip.

The gov't carries a big stick on the rating agencies: since they were complicit in this credit implosion, the second one of the big three thinks about stripping the US of its AAA, you'll see nationalization in the guise of "government credit regulation to insure that derivatives and other leveraged products shall never again put the US financial system at such grave risk". The end.