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If you can read this article you can sell your house without using a realtor. I’m doing it now and its taken 2-4 hours a week to keep the sale on track. Selling without using a realtor will save you 4-7% on the sale price. The median priced home in the US in 2008 is $212,400. A 4-7% commission on the sale is $8500- $15,000! That’s a lot of money. How long would it take you to save $15K after you pay your mortgage, food, clothing, children’s school, insurance, car payments, income taxes, state taxes and pizza on Fridays? This is the story of what I did to sell my own house; how it happened, what worked, and what didn’t. I’ll tell you what I would do differently the next time, problems that had to be solved and tips I would offer other sellers who want to sell their house without using a realtor.

Worse Time to Sell, Ever!

There has never been a worse time to sell a house than now (10/8/2008). Truth be told: I had the ability to avoid selling at the wrong time, but, got caught for reasons beyond the scope of this article. I’m not complaining: At least I was able to sell, to find the buyer myself and for what I know to be the highest price possible. The excess inventory of houses on the market is huge, prices are down 30% and the average house is on the market for 11.2 months before being sold or taken off the market. What made the process harder for me was the constantly falling prices throughout the sale. If I can sell a house in this market, without a realtor, from three thousand miles away without even showing up for the closing then every seller has good reason to be optimistic.

Help-U-Sell Wouldn’t Return My Calls

The first thing I did was look for a company I saw on 60 minutes called Redfin. I liked their philosophy on breaking out realtor services into parts and giving the seller the option of choosing which services they wanted. Since I was selling from a distance I thought paying for the help would be a wise tradeoff. There were no Redfin offices in Boca Raton, Florida. So, I looked for a local Help-U-Sell since they break out their services, too. My wife used them to sell her house in California and had a good experience. She believes it saved her a lot by using them instead of a old-school realtor. They added her to the MLS, advised her on price, did several open houses which eventually produced a buyer. My first call to Help-U-Sell was not returned. My second phone call to Help-U-Sell was not returned. My friend David called a third time and they didn’t return his call, either. This is what lit my fuse and got me thinking about selling it myself. If they won’t return my calls maybe they won’t return calls from potential buyers, either? And after my wifes experience I didn’t want to have to pay the whole 6% commission to an old-school realtor.

Brief Summary of My Sale

I live in California and will be closing on the sale of my house in Florida, this week. I hired a friend to prepare the house for the sale, set the price, found the buyer, arranged for a Title Company to handle the escrow and the paperwork and will not be present at the closing. The title company is sending all the documents to me in California to perform what they call a ‘mailaway’ closing. I’m not bragging. It’s a description of what happened. My friend David spent two weeks at the property preparing the house, painting, putting up the sign, hanging a lockbox on the door, gathering info on the local market and fixing up the kitchen and bathroom. Excluding David’s work, its taken 2-4 hours per week to find the buyer and keep the sale on track.

The Steps

These are the steps you’ll be going through to sell your house:

  1. Preparing the House
  2. Setting the Price
  3. Finding a Buyer
  4. Negotiating the Details
  5. Doing the Paperwork
  6. Solving Problems
  7. Closing

If you’re like me you may think you need a realtor to help with every step. What I’m going to explain in this article is that realtors help you mostly with Step 3.: Finding a Buyer. I was worried about all the paperwork. All those contracts, disclosures and escrow forms. Don’t realtors handle all that? No, they don’t. The Title company does. Your realtor just calls one and turns it over to them. You can call one, just as easily. They make the paperwork a breeze. You have to manage all the other steps, anyway, whether you use a realtor or not. With a little extra effort you can find your own buyer (Step 3), too. If you do, you’ll be paid handsomely by saving yourself a large commission. To put it another way: Finding a buyer is the most expensive part of the process to outsource.

Warning: This Article Could Be a Book

Some books have one thing to say and take a book to say it. This article has a books worth of things to say and will take an article to say it. Update: I did have to make this article into a book. It grew to ~20,000 words and is now a mini-book. I’ll post a few more thousands words, here, and you can download the book, for free … Click here to subscribe A web search reveals that people have written books about this subject. I haven’t read them, so, can’t vouch for them. Searching Google turns up many articles about this topic. I found these articles to be encouraging, but, not conclusive. They don’t seem to be written by actual sellers who went through the whole process of selling their own house. The next time you search for articles you’ll find this one. Problem solved. The goals for this article are:

  1. To document and guide you through every aspect of one sale: My own.
  2. To be complete enough that you could make a decision to use, or not use a realtor for your own sale.

I’ll be as brief as the subject allows. When you’re selling your own house it won’t seem too long. Hopefully, it will be saving you time, effort and some money, too.

Terminology

A broker holds the licence for a Real Estate office. They are the only legal party eligible to receive the entire commission. It is harder to become a broker than an agent in that there are more tests involved and more legal requirements to keep the license active. An agent works for a broker and receives a percentage of the commission for conducting the sale. A realtor could be either an agent or a broker. This article will use the term Realtor, in most cases. It does’nt matter whether you’re working with an agent or a broker. They’re both realtors and, therefore, working for a commission.

Real Estate Commissions – The Last Dinosaur

The internet has destroyed or brought into the new millennium every commission known to man. Every commission, that is, except for what realtors take for connecting sellers with buyers.

Realtors Make More than Architects?

My brother was an architect. Architects earn one of the hardest BS degrees taking five years of college, not four. When they graduate they spend 5 years preparing for the boards. During that dues paying period they make half as much as a good waitress. When they finally get their board certification they still have to work another five years for another architect because its so difficult to establish a practice. Yet another another 5-year dues-paying phase. Architects design, draw, code, change, every aspect of material and space and attend to every imaginable detail to bring a building into existence. Their exposure to liability is insane to the point that many can’t afford the insurance. If an architect does manage to have his own practice the costs to run the practice dwarf those of a brokers office. What’s the architects commission on a building after this lifetime of preparation, exposure to liability and detailed work on the building, itself? Six percent. That’s right, the same commission a broker gets. How would you compare what an architect does for a building to what a realtor does for it? How would you compare the cost of education and training of an architect to that of a broker? Case closed. I’m not criticizing Realtors, agents or brokers. I’m criticizing the size of their commission. It’s disproportionately large for what they do compared to an architects work on the same building. How much work does it take you to earn the money your about to turn over to the realtor for finding a buyer?

The Biggest Deal of Your Life

Selling your house is the largest deal most people will ever do. Optimizing the 6-7% commission on that transaction should be a priority. I say ‘optimize’ instead of save because, if you do pay a commission, you should get the best service you can and pay only for the services you get. Many people would say they want to use a realtor because it’s the biggest deal of their life. After all, if you pay 7% to an agent that’s still leaves 93%. If you feel this way I still think you should try selling yourself for the first 30-days.

What About the Other Transaction Costs?

Can you save on them, too? Yes. But, why talk about them before you’ve gone after your biggest cost? The other transaction costs pale in comparison.

DIY, Not!

Just because I want to save the 6% commission to a Realtor doesn’t mean I want to conduct the whole sale, myself. No, thank you! These two things are not the same thing. Enlisting the talents of other people is a smart thing to do. And its a brilliant thing to do when selling your own house. I received (And paid for) an extensive amount of help on each step of the process. Several things motivated me to attempt the sale without using a Realtor:

  • My opportunity cost is currently low.
  • I’ve read a lot on the subject and am familiar with the process.
  • I’m an experienced buyer, but not seller.
  • I wanted to see if saving the 6% commission was possible.
  • I have another house for sale and could save 6% on that one, too.
  • If successful I could write this article and help others save a chunk of money in bad economic times.

And, like I said above, Help-U-Sell wouldn’t return my calls. Too bad for them.

Real Estate Expert, Not!

The subject of Real Estate is vast. One could devote a lifetime to all the various aspects to become an expert. Even then, a true expert would have to specialize because there are so many fields of knowledge involved. So, what?! I didn’t have to be an expert to sell my house, expertly. And, neither do you. A mere play on words? Not in my case. I’m selling a house, not running a business or a career. I suspect my perspective is more useful to other sellers because I’m not an expert. You don’t need to be an expert to have each step of your sale be expertly done.

Don’t Become an Agent

Becoming an agent to sell your own house is like “Burning down a house to make toast”. Total overkill. Not needed. In fact, being an agent is probably a liability, see below. Don’t become an agent just to sell your house.

Liability, Not an Asset

In 2002 I studied to become a real estate broker. I enjoy the subject, read all the prep material and thought about taking the tests. But, working as a broker or agent did not fit my personality so there was little point in getting the license. One of the things I learned is there’s a downside to being an broker: They’re held to a higher legal standard of performance. In practice, this means you’re exposed to more legal liabilities because its easier to accuse you of negligence if you have a license proving competence. So, why not just be competent without a license? I’m more interested in having knowledge and understanding than in having a license saying I do. Dishonesty at any stage of selling a house is more likely to blow the deal than anything. But, the law can often be an ass. Let it be an ass to someone else. Don’t get me wrong: I’m not claiming to know as much as a broker or an agent. They have their focus and I have mine. Theirs is to run a business and earn commissions. Mine is to sell my house for the optimal price and keep as much of the proceeds of the sale as possible. Those two areas of focus are not the same.

John T. Reed – Thumbs Up

Much more helpful than reading the material for the brokers license was reading John T. Reed’s books on the subject of Real Estate. I read all 20 of them and they’re the best survey of the field of Real Estate I’ve ever found. Each of his books describe a different aspect of Real Estate mostly for the benefit of investors, specifically. However, taken in total, the reader is given a practical overview of the subject like no other. What’s great about John’s writing is his readability when writing about a complex subject. He will tell you in two pages what would take another author an entire chapter if they had the knowledge to say it. In my opinion that makes John an expert’s expert. Although I highly recommend all of John’s Real Estate books I don’t think reading them is a prerequisite to sell your house without using a realtor. However, there is no doubt that you’ll do a better job of it if you do. You’ll have to decide that based on your goals and time available. It should go without saying that the cost of buying all of his books is nothing compared to the deal you’re trying to optimize. (Note: This article is a report from the battlefield of my sale. Don’t blame John for mistakes I made and write about in this article. At some point, we all have to stop reading and start doing. I read until I was blue in the face and still made mistakes. That’s just the way it goes when you’re in the ring and have to get the job done. Rest assured I made less mistakes, and lost less money, by learning from others experience and writings.)

How Do You Handle a Hungry Realtor?

By understanding what they do, what they charge, how they talk and what motivates them. You may even end up hiring one. If you do I hope you’ll be able to put their role in perspective and limit their service to the help you need to conduct the sale.

Realtors Want Speed, Not Price

Brokers use price when deciding what state, region, city, neighborhood or type of property to specialize in selling. After that its all about speed. Any broker in their right mind values speed over price. Brokers make more money if they sell more houses in less time. Even if they’re only selling one house it’s a better use of their time to sell it quickly. No problem, so far. Why tell you the obvious you may be wondering. Because the higher the price the slower the sale. In fact, if you know the fair market value (FMV) for your house and take 5% off that price John T. Reed refers to it as the ‘Quick Sale Price’. Its called that because you can sell it within a week if the market is efficient. Click here to subscribe

Doesn’t Higher Price Means More for Them?

Sure, their commission, based on percentage, goes up with the price. But, the amount the commission goes up as the price rises is small compared to the commission on the whole deal. Sure they’re supposed to represent your interests and a lot of that is getting the highest price possible. But advising you on the highest price you can get will almost always add time to the length of the sale. That may be ok with you, but, it is not in the realtors best interest. Even worse, setting too high a price is the most common reason for a deal not going through, at all. And setting the price, even for the ‘experts’ is not an exact science. Why take any risk at all, the realtor may conclude. I’m not making a blanket accusation of realtors, here. I’m merely pointing out there’s a natural tension between getting the highest price you can and the time it takes to sell. And you should know that the realtor cares a lot more about speed than you do about price. There’s little to no incentive for the buyer or sellers broker to hold out for a higher price. A realtor will probably tell you if what you’re asking for is too low for the area. But, its more likely a broker will need to talk a seller down in price. Some of that may be to correctly adjust a sellers unrealistic expectations, fine. However, be on the lookout for the suggestion being offered merely to increase the speed of the sale. If it is, make sure that’s what you want to accomplish. Unfortunately, its always to the brokers advantage to lower the price . . . to increase the speed.

6-7% and The Seller Pays It All

Realtors say they only charge 3%. But, there are two realtors: The buyers and the sellers. They each charge 3%. That makes realtor fees 6%. Most of the time the seller pays it all. The marketplace has decided the seller has more to gain from the sale than the buyer. I don’t like that, but, it makes sense when you realize the seller has one house to sell and the buyer has many houses to choose from. Why would a buyer pay broker fees if they can buy the same or similar house and negotiate those fees away? This has become standard behavior so sellers know they have to pay all the broker fees and most of the other closing costs, as well. The exceptions to this are when the buyer doesn’t have competing choices for the house or has decided they must have a particular house. Any situation that would inspire these feelings in the buyer have the potential for the seller to get the buyer to share in the broker fees.

Do I Have to Pay the Buyers Broker?

Not, at all. But, don’t blow a good deal over it. Even if you don’t use a realtor you may get a call from a realtor who has ‘found’ you a buyer. As with all people interested in your house I recommend you show it to them.

Don’t Let Them Screen You

Don’t let the buyers realtor screen your position on paying their commission before they show their buyer the house. If they don’t like what you say they may not show their buyer your house even if your house is perfect for their buyer. This would be a violation of their ethical code as a realtor. But, I don’t recommend you risk losing a buyer for your house by relying on their broker adhering to their own ethical code. On the initial phone call just tell them the truth: You’re willing to consider any offer, agreeable to all parties, that will make the sale go through.

Your Options

If their buyer is interested in making an offer you have the following options for paying the commission to the buyers broker:

  • Recommend the buyer pay since the buyer benefited from their service.
  • Agree to pay them a commission, but, you only pay X% to buying brokers.
  • Tell them you’ll pay if the buyer increases the sales price (Same as buyer pays).
  • Don’t pay them and leave the choice to the buyer (Probably resulting in splitting it).

It’s possible the buyer signed a contract with their broker. That’s got nothing to do with you. Don’t interfere with a contract the buyer may have signed with his broker. In other words, you have options, but not obligations, if a realtor shows up and wants money from you for a buyer.

Offers to Help With the Sale

When they find out you’re not using a realtor they may offer to help you conduct the sale in exchange for a commission. You should already be prepared to handle the sale, yourself. Tell them no thank you. They have enough to do helping their buyer find a house, a loan and guiding them through the sale. You’ve already got a Title company handling everything and don’t require assistance.

Be Prepared For Intimidation Tactics

You may get all sorts of intimidating advice from Realtors, at this point. All of it is aimed at trying to get you to use a realtor instead of finding a buyer yourself:

  • They may threaten to ‘take away’ their buyer (Which violates their professional obligation to act for the benefit of their buyer).
  • They may imply you’re a fool and know nothing about real estate and should let the experts handle it.
  • They may claim you’ll never sell the house if its not on the MLS, which they can generously put you on (For 3%).
  • They may throw escrow terms around in the hopes that you’ll be intimidated.
  • They may try to confuse you on the steps of the process.

Hopefully, you’ve read my entire article by then and don’t fall for any of it.

Divide and Conquer

This is how ‘experts’ do it: They talk fast and confidently, using terms you havn’t heard, about a subject that’s new to you. Your wife, or you, get nervous and says, “Maybe we should stick with the professionals”. The remainder of the conversation is you pitting your instinct up against their ‘expertise’ on a subject you haven’t yet studied. Even if you ‘win’ the argument they change the subject and say another misleading 50 words to start over again. Since you’re going with instinct and it appears the agent is going with ‘facts’ you get in an argument with your wife because she wants to go with the ‘experts’ because the deal involves so much money. I truly hope this article helps you with that situation. I will give you one example, and how I would handle it, below. However, I can’t address everything that may come up. If you do decide to talk with a realtor I recommend studying up on all the potential things that might come up before the meeting. Especially if your meeting as a couple. Why not print out a copy of this article for your wife? Heck, at the very least you can show the realtor this article and say, “Why can’t I do what this guy did?”. Maybe it will change the subject into a service you might want to purchase from the realtor. Something costing less than their entire 3%, I would hope.

One Example and How I Would Handle It

Here’s one example of the kind of misleading advice brokers give out. Its from an article on the web written by a Realtor named Elizabeth Weintraub on about.com. The title of the article is Who Pays the Real Estate Commission? How Does an Agent Get Paid? Elizabeth writes: “It can be argued and, quite rightfully so, that the buyer always pays the commission. Why? Because it’s typically part of the sales price. If the seller did not sign an agreement to pay a commission, the sales price might have been lowered. And therein lies the appeal of buying homes through unrepresented sellers because, given the same logic, those prices should reflect a net sales price without a commission. But those sellers haven’t quite figured this out yet which causes potential buyers of those listings to be consistently disappointed.” Ms. Weintraub’s advice is wrong, misleading, insulting to sellers and meant to intimidate potential buyers and sellers of FSBO (For Sale By Owner) properties. Let me explain why: (Note: This concludes the excerpt from Chapter One of the e-book,  “How To Sell Your House Without Using A Realtor”. It grew to ~20,000 words and is now a mini-book. You can download it, for free, from McGillespie Free Resource Library.) Click here to subscribe

The world discards ideas and people that present multiple standard deviations away from “normal”. And yet, Reality has always been phenomenal and noumenal. To ensure you’re able to thrive in the artificial chaos of this generation you’ll need to be an outlier, in many ways. Here’s “The Outlier’s Handbook” to optimize your trajectory.

The Outlier’s Handbook

(Thriving in Artificial Chaos)

Table of Contents

Part 1 — What Outliers?

“Let Your Reasonableness Be Known to Everyone”

  • Ockham’s Razor: Benefits & Limits
  • The Bookends of Normalcy Bias & Cognitive Dissonance
  • “This Book Goes Too Far!”

What Outliers?

  • Outliers Defined
  • You Know You’re An Outlier If . . .
  • Outlier Benefits
  • Outlier Costs
  • Personal Secession and Other Outlier Mindsets

Part 2 — It’s Your World, Boss!

This Is Where You Live

American Roulette

  • The Constitution is Safe!
  • A Bank with Social Services Around It
  • Democracy: The God that Failed
  • The Corporation
  • The Deep State
  • Fascism, American Style

Lifecycle of Nations

  • “Poverty of Nations” Report Card
  • Imperial Collapse Playbook

Danger, Will Robinson!

Technocracy: The Trojan Horse of Global Transformation

Regional Bloc Head Mercantilism

  • Gee, Maybe Nation-States Weren’t So Bad, After All
  • Solutions Amidst Global Fascism
  • Change Happens Like This, Now

Part 3 — The Usual Suspects

Call Them As You See Them

Origin & Story of Rulers and Authorities

  • Angelic Gen 6 View: Consistency & Insights
  • So, Who are “They”?
  • The “New” Face of Evil (Follow the Blood)
  • Long Term Trends Require Spiritual Unity
  • The Minions
  • A Working Structure of Oppression

They Walk Among Us

  • Serial Killers
  • How Can You Spot One?
  • Political Ponerology
  • 7 signs you might be dating one
  • Protection From Them
  • Speech Patterns
  • I, Psychopath
  • The Hidden Cost of Killing Psychopaths
  • Beware the Backlash

Elements of Their World View

Their Goals

  • ”Ye Shall Be As Gods”

Their Methods

  • The Moral Code of Evil
  • Inversion
  • Undisclosed Adhesion Contracts
  • Counterfeit Money
  • Controlled Markets
  • Technocracy
  • Stacked & Interlocking Pyramidical Structures
  • Consolidation
  • Democracy
  • Eugenics
  • Perpetual Fear
  • Long-Term Planning
  • With Methods Like This, Who Needs the Occult?

Part 4 — Acquiring Immunity

Move #1: Acquire Personal Immunity

Personal Matters

  • Purpose is Everything
  • Managing Outlierhood
  • Growth
  • Ethical Time Travel

Health Matters

  • First Do No Harm
  • Clean Food, Water, Air & Place
  • Nutrient Dense Diet
  • Gut Flora, Probiotics and the Second Brain
  • Optimal Exercise
  • Stress & Breathing
  • Life Extension & Blood Sugar Management
  • Sensible Health Insurance
  • Putting It All Together

Spiritual Matters

  • Intelligent or Random Design
  • Oneism (Monism) vs. Dualism
  • CINO’s & MINO’s
  • Christianity Leads To Science, Islam leads to Murder
  • Gandhi or Jesus?
  • Get Blessed
  • Get Uncursed
  • Supernatural Immunity: The Mind & Way Of Christ
  • The Whole Council of God
  • Spiritual Warfare
  • Practical Examples of Spiritually Based Solutions

Locational Matters

  • The Best Place to Live
  • Where Not to Live
  • Should you relocate?
  • The World is Yours
  • The Illusion of Ownership
  • Mobility
  • G.O.O.D Project – Lessons Learned

Family Matters

  • Instrument of Recursive Perfection
  • Spouse Choice
  • Children
  • Extended Family
  • Friends Worth the Title are Family
  • Community

Legal Matters

  • Natural Law
  • The Constitution is Safe!
  • Jurisdiction Matters
  • Where is the Agreement?
  • It’s Hard to Be a Free Man
  • Unraveling Your Liberty

Financial Matters

  • Money is for Immunity & Purpose
  • Business as Extension of Purpose
  • Tax Penalties for Fear and Poor Planning
  • Mortgage Slavery, Repealed
  • Austrian Economics is Real Economics
  • Investments in Immunity & Purpose Have the Highest ROI
  • Asset Protection

Political Matters

  • Terms of “State” & “Government”
  • The Diversion Of Left – Right Thinking
  • The Votes that Matter
  • Optimal Government = Perfect Self-Government
  • The Chief Asset Of The State: Fear & Belief In It’s Necessity
  • All Matters of Liberty Are Related
  • Caveat Viator: Libertarianism and Anarchy are Aspects of a Complete Worldview
  • Govern Thyself Perfectly and Hold Death Dear

Perspective Matters

  • The Most Valuable Commodity on the Planet
  • Philosophers On Donuts
  • Terms of “Freedom” & “Liberty”
  • Equality & Authority
  • Freedom & Structure
  • Peace Does Not Flow From Passivity
  • Proof and Truth
  • You Can’t Beat Everything with Nothing
  • “Let’s Just Split the Difference and Find a Middle Ground”
  • Stoicism
  • The Opportunity in Uncertainty
  • If Swamp Rats Can’t be Exterminated Why Can You?
  • What About America?

Doing Matters

  • Tony Robbin’s Best Trick
  • Think Spiritually, Act Locally
  • Getting Things Done
  • Low Hanging Fruit
  • Tragic Flaws of Conventional Prepping
  • Expert Tips
  • How To Lose Without Fighting (An Outlier’s Not To-Do List)

Part 5 — Ants & The Human Mosaic

Change The World in Four Moves

  • Humans as an Ant Army
  • Move #1: Immunity
  • Move #2: Specialize
  • Move #3: Move
  • Move #4: Cooperate
  • Humanize the Best Attributes of Animals & Insects

Part 6 — Problems: Solutions

Move #2: Specialize & Pick One

Personal Concerns

  • Training Disguised as Education
  • Shortening Attention Spans
  • Media Agitprop

Health Concerns

  • Eugenics
  • Vaccines Vs. Immunity
  • Socialized Medicine
  • Food Fascism & GMOs
  • Fluoridated water
  • Nuclear Waste & Meltdown Disasters
  • Geo-Engineering
  • Disease(s) Cured

Spiritual Concerns

  • Psychopathy
  • Moral Relativism
  • Odious Debt (Slavery)
  • Wars of Conquest
  • False-Flag Attacks
  • End Times Decoder Rings
  • 501c3 Churches

Locational Concerns

  • Agenda 21
  • Scientific Control Grid
  • Power Grid Fragility

Family Concerns

  • The State as Great Father
  • Broken Families

Legal Concerns

  • Patent Squelching
  • Webs of Undisclosed Adhesion Contracts
  • Drug Wars
  • Licensing
  • Militarization of Police
  • Surveillance State
  • Monopoly
  • Bonus: Beating Traffic Tickets

Financial Concerns

  • Fractional Reserve Banking (The Theft of Human Labor)
  • Disappearing Middle-Class A.K.A Unemployment
  • Currency Wars
  • US Bankruptcy
  • World Banking Systems
  • Institutional(ized) Theft
  • Market Manipulation
  • Global Cooling, Warming …Climate Change?
  • Technocracy

Political Concerns

  • Collectivism
  • Globalism

Part 7 — Appendices

  • In Case of Emergency: Read First!
  • Four Ways to Parse Solutions
  • Reading List for Outliers
  • Outlier Creeds
  • Sovereignty & Law
  • Agorist Manifesto in 95 Theses
  • Agorist Road-map Kyle Bennet
  • 100 Ways To Leave Leviathan
  • Wayne & Barry’s Guide for World Rulers

This is a re-post of a summary of Catherine Austin-Fitt’s financial detox plan as given to Max Keiser five years, ago. The 15 pieces of wisdom extracted from the video are timeless. If you had started working on them in 2009 it would have had a dramatic impact on your life. Five years from now the same will be true about starting to work on them, today.

Catherine Austin Fitts is a breath of fresh air.

With a keen understanding of the links between politics, corruption, and money she is unmasking economic con-games, one by one, for the benefit of us all. Give her 15-minutes and she’ll explain the most complex schemes and enable you to see right through all sides of the rhetoric we’ve been hearing all our lives.

Not only that, but, she offers powerful solutions and action plans that can be implemented within minutes of watching one of her videos.

Listen to her describe her “Bailout Plan” in the video, below, which I found on The Edge with Max Keiser.

1. – Save Time

  1. Cut out TV and corporate media. They’re a brainwashing waste of time. You’ve got better things to do and think about. Get radical about cutting this out and save 5-10 hrs a week of “bad training”.
  2. Get corrupt people and enterprises out of your life. They get access to your data and money. Consider carefully the banks, brokerage houses or institutions you do business with.
  3. Control personal data. There is no privacy. Think through who you do business with and who has access to your data.
  4. Compliance – be impeccable with compliance. In a situation with highly complex rules and no privacy it’s easy to get caught up in a dragnet.
  5. Simplify. The less things you’re responsible for the better.

2. – Get Smart

Implementing 1. gives you time for 2. and 3.

  1. See things as they truly are.
  2. The greatest wealth creating entity of all time is the family. Think strategically about your family and friends.
  3. If you’re not in a conspiracy you need to start one. Conspiracy means to breathe together. Start a conspiracy with your family to benefit each other and keep corrupt institutions out of all your lives.
  4. Network with other people who know what’s going on. Nobody is as smart as all of us.
  5. If you have time, understand history. What’s happening today is logical if you understand the history of things like narcotics trafficking, mortgage fraud, etc.

3. – Reposition Your Assets

  1. The goal of the games of economic warfare are control and equity.
  2. Build your equity. Invest in your health and your knowledge. Think strategically about managing these key assets.
  3. We’re leaving a large bubble and now people want hard assets. Shift out of phony financial instruments into securities and hard assets with solid economics.
  4. Stick with long term trends. Follow the tapeworm. Don’t be confused by economic nonsense into investing into anything that is not long term and high quality like food, water, gold, Precious metals.
  5. Demonetize. We put money into financial assets, get yield, then buy things. This is a losing proposition.

Catherine Austin Fitts is always worth your time. Check out her blog which she calls, The Solari Report.

An item with money qualities might be a good barter item. To be an Optimal Barter Item it must also directly fulfill multiple human needs in the circumstances of the barter.

For each scenario under consideration ask yourself what items would directly fulfill multiple human needs and be widely accepted in trade in excess of the trader’s need. If the item is also transportable, divisible, storable, measurable and hard to counterfeit then it’s a winner: An alternative form of money in the circumstances of the barter.

Since anything can be used in barter it’s worth making an equation as a tool to separate the wheat from the chaff:

(M * N * LP)1-n = Optimal Barter

Where M are the money qualities, N is how directly the item fulfills a need and LP is the Life Priority of the need fulfilled. Note the 1-n subscript. That’s because an item can fulfill needs across multiple categories of life. In fact, the best barter items do.

Money & Substitutes – (M)

One way to compare barter items with each other is to compare each with money and rate them according to how they measure up. The top items on the resulting list are possible money substitutes. Their fulfillment of human needs, however, is another matter entirely. See ‘Ammo vs. Money’ where I compare ammunition with all the attributes of money.

When barter is king money is dethroned: It takes a backseat to the direct fulfillment of human needs. The concept of money and its substitutes is still useful, however, because many items that fulfill human needs are also decent money substitutes.

Water, food, syringes, antibiotics, IV Lines, portable water filters, firearms, ammunition, batteries and radios are worth more than the money used to buy them even in good times. In a crisis some of these are needed so badly they might overcome the biggest stumbling block of barter: The lack of a double coincidence of wants.

Direct Need Fulfillment – (N)

Water quenches thirst, Food satisfies hunger, Tarps block rain and wind.

The more direct the fulfillment the higher quality the item. I’m a big fan of substitutes but they’re not as easily recognized in the midst of a crisis as the real thing. Since barter items are best stocked after covering the essentials for your family it’s best to focus on items that fulfill needs, directly. There’s one exception to this line of thinking.

The best barter items span multiple categories of use: They directly fulfill some needs and indirectly fulfill others. Water is an easy example: It directly quenches thirst and cleans skin and has an almost infinite number of other uses. Water’s indirect uses multiply it’s desirability as is the case with other Optimal barter candidates.

Life Priorities – (LP)

It’s a constant burden to mankind that choices must be made with imperfect knowledge. With perfect knowledge ordering priorities is a cinch. However, wait too long for specifics to prepare and risk not being prepared, at all.

My Life Priorities are the same in good times and in bad. In a crisis I’ll rely on intuition to reorder priorities according to the scenario. For instance, although Water is #1 the urgency in finding a source is greater in a desert than in a rainforest. Medicine is #5 though in the absence of sickness or injury securing communications might pay bigger dividends. These are not compromises; just working flexibility and a trust of intuition after being prepared, in general.

For the purposes of preparing in advance for a non-specific crisis I’ve chosen to order life’s priorities in the following categories:

  1. Water
  2. Shelter & Clothing
  3. Food
  4. Security
  5. Health & Medicine
  6. Communications
  7. Power
  8. Hygiene & Sanitation
  9. General Tools
  10. Transportation

Going through your own reasoning process and placing these categories in order is surprisingly useful. Knowing your priorities is key in making disciplined and balanced choices when allocating limited resources.

Narrowing Down the Barter List

  1. Think through your Life Priorities and order them into categories (As many as you find useful).
  2. Consider the bolded items in the Comprehensive Barter Item List as barter items worthy of consideration (And please send me your suggestions).
  3. Group the resulting items from step 2 that strike you as filling the most pressing human Needs into your life priority categories.
  4. Sort items within each category by your sense of its importance.
  5. Use your Life Priority categories and assign a primary category and then the secondary categories that the item serves.
  6. Take each item compare it with the attributes of money and assign a value where 10 = Money and 0 = nothing in common with money.
  7. Keep sorting using the criteria in steps 4 thru 7 until you narrow the list down to 20 to 50 items or however many you’d like to use as input to the Barter Equation.

The resulting items are the best items to use as input to the equation.

Consider Three Scenarios

Consider narrowing down your preparation scenarios to three:

  1. The most likely threat to your physical location.
  2. The threat that comes to mind when consulting your informed intuition.
  3. The everyday potential threats and outages that normal life presents.

For example, my three are Fire, Dollar devaluation/Inflation and Electrical Power Outages.

Applying the Equation

Grabbing some promising barter items from the Comprehensive Barter Item List for my three scenarios here’s my impression of the values that should be assigned to them for each variable in the Barter Equation. The equation has not yet been applied. They have merely been sorted by their primary Life Priority category and then by their respective Money qualities. This is as far as people usually go when when considering barter items.

  • The higher the N the more direct its fulfillment of LP1 (As Ordered by my Life Priorities, above).
  • The higher the M the more qualities of Money the Item has.
  • LP1 is the items primary fulfillment category (In my opinion) and LP2 thru N are its secondary fulfillment categories.

Sorted by Primary Life Priority, then by Money Qualities

Barter Equation not Applied.

Item N M LP1 LP2 thru N
Water Packets 10 7 1 3,5,7,9
Portable Filters 5 5 1 3,5,7,9
Duct Tape 7 7 2 4,5,7,8,9
Tarps 8 6 2 4,7,8,9
Aluminum Foil 4 8 3 5,7,9
Coconut Oil 10 7 3 5,7,9
Eggs & Milk 10 6 3 5
Baking Soda 3 5 3 5,7,9
Ammunition 8 8 4 3,6,9
Syringes 5 6 5 7,9
Alcohol Wipes 6 6 5 7,9
Antibiotic Lotion 8 6 5 7
Fuel 8 6 7 4,5,6,9,10
Generator 8 2 7 4,5,6,9,10
Soap Bars 7 6 8 5

 

Applying the Optimal Barter Equation (First Dimension Only)

Here is where the items rank after using a spreadsheet to apply the equation to each items M, N and the LP of their primary category only. In other words, this is where the item would rank if its fulfillment of needs in other life priority categories was left out of consideration.

(M * N * LP) = Optimal Barter

Rank Item N M LP1 LP2 thru N
1 Water Packets 10 7 1 3,5,7,9
2 Coconut Oil 10 7 3 5,7,9
3 Eggs & Milk 10 6 3 5
4 Ammunition 8 8 4 3,6,9
5 Duct Tape 7 7 2 4,5,7,8,9
6 Tarps 8 6 2 4,7,8,9
7 Antibiotic Lotion 8 6 5 7
8 Aluminum Foil 4 8 3 5,7,9
9 Portable Filters 5 5 1 3,5,7,9
10 Alcohol Wipes 6 6 5 7,9
11 Fuel 8 6 7 4,5,6,9,10
12 Syringes 5 6 5 7,9
13 Soap Bars 7 6 8 5
14 Baking Soda 3 5 3 5,7,9
15 Generator 8 2 7 4,5,6,9,10

Applying the Optimal Barter Equation to All Dimensions of Each Barter Item

Applying the equation now to both the primary and secondary life priority categories the item serves. Notice the increased liquidity of items that serve a broad number of categories.

(M * N * LP)1-n = Optimal Barter

Rank Item N M LP1 LP2 thru N
1 Water Packets 10 7 1 3,5,7,9
2 Duct Tape 7 7 2 4,5,7,8,9
3 Ammunition 8 8 4 3,6,9
4 Coconut Oil 10 7 3 5,7,9
5 Tarps 8 6 2 4,7,8,9
6 Fuel 8 6 7 4,5,6,9,10
7 Eggs & Milk 10 6 3 5
8 Portable Filters 5 5 1 3,5,7,9
9 Aluminum Foil 4 8 3 5,7,9
10 Antibiotic Lotion 8 6 5 7
11 Alcohol Wipes 6 6 5 7,9
12 Generator 8 2 7 4,5,6,9,10
13 Soap Bars 7 6 8 5
14 Syringes 5 6 5 7,9
15 Baking Soda 3 5 3 5,7,9

The above fifteen choices were chosen only to show how to apply the equation. It would be interesting to apply the equation to all barter items and see the results. If there’s enough interest that would be a fun exercise for another article.

The resulting Top 10 items of your application of the equation are most worthy of your barter resources. They will directly fulfill the needs of your family while providing a backup form of money or trade liquidity during barter economies. Your proposed trades with these items are more likely to be accepted by fellow traders than those who haven’t gone through the exercise.

Whiskey, Cigarettes & Chocolate

These three items have proven themselves to be good barter items in real barter ‘economies’. The equation handles them well if you add them to your Life Priority list and give them a high “M”, which they deserve.

For instance, perhaps you would swap my priority of “Transportation” with “Vices” to account for Whiskey and Cigarettes. You would also rate these items high in “M” because they do fair well as money substitutes.

Chocolate fits naturally in the Food and Health categories and has a high “M” if the climate is not too warm.

The value of everything varies continuously in time. That doesn’t mean there’s no value in evaluating their relative standing in the only moment we have: Now.

Optimal Barter Items are like Superfoods

To be honest I had a different equation written when beginning this article. After going through the entire process it became obvious that some items are to barter what superfoods are to health: They provide a kind of comprehensive nourishment; they fulfill multiple high-priority needs!

I did not rig the equation to favor items that met multiple needs. I only discovered that no item that fulfilled only one need could compete with the liquidity or desirability of a barter item that fulfilled needs across the spectrum of life’s highest priorities.

The Trade Trumps the Traded

As with the use of money trade is more valuable than what’s traded. Who makes that judgment? You do by making the trade. After all, if you’d rather keep the items you’re exchanging then why don’t you? Even protesting ‘no choice’ admits you value what you get more than what you give. And, your fellow trader feels the same, no?

The Trade Trumps the Traded, every time, as evidenced by the fact that the Trade was made.

Human Needs Trump Liquidity

The purpose of your Optimal Barter Equation is to zero-in on the barter items most worthy of your limited resources. They’re the most liquid components of your preparedness plan. Since the top candidates are also essential it’s a judgment call to decide when you have enough. While your overall preparedness will be well served with these items be careful not to prioritize barter items over the broad range of essentials needed by every family.

Copyright © 2014 by Terence Gillespie. Permission to reprint in whole or in part is gladly granted, provided full credit and a live link are given to McGillespie.com

The money printing bailouts have only just begun.

Yes, we’ve had some deflationary bankruptcies to help decrease the money supply, thank God. But, as you can see, even the most staunch conservatives are now begging the government to crank up the printing presses. As history predicts, they just can’t help themselves.

Most of the strongest advocates for the bailouts know what they’re doing. They know that pumping this much fiat money into the economy will lead to hyperinflation. But, whoever gets the money first can use it to purchase valuable assets while it still has some purchasing power left. By the time the money makes its way to you and me its purchasing power will be mostly gone.

But, there’s still time. . . (As of 9/25/2008) . . .

. . .To Depression-proof your hard earned money, savings and retirement plans from the upcoming hyperinflationary depression.

If you know what to do it doesn’t take long to:

Move Your Money From Here . . .

  • Bank Accounts
  • Savings Accounts
  • CD’s
  • Government Sponsored Bonds
  • Money Market Accounts
  • US Domestic Stocks
  • Financial Stocks of Any Kind, in Any Country
  • Treasury Bills
  • Municipal Bonds
  • Mutual Funds Made Up of Primarily US Domestic Equities
  • Bonds and/or Bond Funds of Any Kind
  • Under Your Bed
  • In Your Backyard

. . .To Here

  • Swiss Franc Bonds
  • Foreign Stocks that pay dividends
  • Agricultural Indexes
  • Gold
  • Silver
  • Real Estate (Low Prices and Hyperinflation can payoff your house!)

It might only take one hour to preserve a lifetime of savings!

Talking Heads

Judging from the reactions and interviews on TV many wealthy people were blind-sided by the financial crisis’ of the past week. After those talking heads get off the air you can bet they’re moving their money and assets around to protect themselves.

I like Ben Stein. He’s a smart, likeable and decent human being. He’s also more wealthy than the average Joe and is frequently seen on TV commenting on economic and investment issues. Unfortunately, Ben didn’t see this financial crisis coming.

When history is used to predict or avoid an outcome the correct past event has to be chosen as the model. The dollar is losing its status as the world’s reserve currency. Central banks around the world are covertly dumping dollars and purchasing gold and other real assets. And the US government is largely powerless to do anything about it. In fact, the stewards of our currency are printing up their own personal bailout packages just prior to their exit from the world stage.

This is not a normal recessionary business cycle we’re witnessing. The talking heads on TV telling you to “Stay the course” are giving you the correct advice for the wrong time. If they didn’t warn you of a financial crisis of this magnitude then why would you trust their advice now?

Return OF (Not ON) Your Investment

In times like this the perfect is the enemy of the good. If you haven’t already reallocated your investments then you don’t have time to be a perfectionist. Think in terms of preserving the purchasing power of your money and consider any increase a bonus. Look at the list of destinations, recommended above, and choose one you’re comfortable with.

Brokerage Accounts

Correctly choosing the particular holdings in your brokerage account is much more important than choosing the brokerage firm, itself. People who were using Bear Sterns or Lehman Brothers to hold their investments did not lose the holdings in their accounts. It was the stock of the brokerage firms, themselves, that plummeted, not the investments they held for you as custodian. I don’t use this firm myself, but, one company that is getting it right is Peter Schiff’s Europac.net. Check them out if you’re looking to make a switch.

Banks

Even with a bank you’ll probably get money less than $100k back if you want it. You may have to stand in line, be limited to partial withdraws and be inconvenienced, but money you have in the bank will most likely still be returned to you. But, the dollars may not have much purchasing power when you get them back. The FDIC does not have enough to insure all the deposits in banks that are about to fail. But, the government will just create more money for the FDIC to keep functioning when they run out.

If you want to be spared any inconvenience for your short term banking then choose one with a high star rating at www.bankrate.com.

Silver May Not Be an Option

In the Bailout Plan sent out two months ago I recommended silver as my personal favorite way to store and preserve value. There is very little physical silver left for purchase. I still recommend calling your local coin shops to check. However, you may end up having to purchase gold instead of silver. If so I recommend gold eagles, austrian philharmonics and any denomination of bullion bars from a well-known mint.

You could purchase shares of the silver ETF SLV, but, this is a far less attractive alternative to keeping the physical metal in your possession. See my article SLV is Not Silver for more on the pitfalls of investing in SLV.

For a broader perspective on precious metals read my article Silver and Gold Do Nothing or Why is Gold Money?

How Much Inflation and When?

10% and now. One, three, six months from now? Increasingly more. But, isn’t 14% and climbing enough?

Start making decisions now while your dollar still has enough purchasing power to purchase things that have lasting value.

Checking Account Alternatives

If you’re losing 14% a year in your checking account due to inflation then even simple things around the house start to be a better “Investment”. You should probably have at least three months of expenses in your checking account. After that, if you’ve already paid off your credit cards and reallocated your Retirement account then here are some alternatives for the money left in your checking account:

  • Food That Stores for Long Periods like cereal, canned goods, rice
  • Water, Water Filters or Storage
  • Computer Upgrades
  • Software
  • Prepaid Utilities like gas, electric, cable, cell phone
  • Prepaid Property taxes

Or anything else you’re going to have to purchase in the next year or two. Why not purchase them now while the purchasing power of your money is stronger and you still have a job?

Web Resources

This article is an update on the Your Optimal Bailout Plan I sent out at the end of July. See that article for more background.

www.europac.net

www.shadowstats.com

www.lewrockwell.com

www.allamericangold.com

www.silverstockreport.com

Copyright © 2008 by Terence Gillespie. Permission to reprint in whole or in part is gladly granted, provided full credit and a live link are given to McGillespie.com

Last April, I sent an urgent e-mail to my friends and family urging them to consider taking protective measures against the collapsing US dollar. Now that I have YourOptimal.com up and running I’d like to put forth a more formalized plan and make it available to a wider audience.

(For an update of this bailout plan, see Depression Proof Your Money)

You don’t have to agree with my future predictions to be inspired to protect yourself from our current 10% inflation rate. Do nothing and your $100 today will be worth $86 next year if its in the bank. I will be adding more articles, links and resources that will explore optimizing various aspects of life in light of the dismal state of our US and world economies. The purpose of the plan, below, is to provide an Optimal plan of action in case you are already convinced that action is required to protect yourself from the coming Hyperinflationary Depression. Here’s the plan:

  1. Pay off all debts, within reason.
  2. Move out of all investments dependent on US dollars.
  3. Move all but 3-months of expenses out of banks into tangible & liquid assets.
  4. Decrease your monthly overhead as much as possible.
  5. Get rid of all physical objects you don’t need.

That’s it. Although the economic problems we are experiencing may appear to be very complex Your Optimal Bailout Plan for protection need not be.

Ninety percent of the protections you can achieve from the collapsing US Dollar will come from your complete and thorough implementation of the above 5-Steps. In fact, if you live in the US it may not be possible to save the remaining 10% of your assets since you need to keep some US Dollars in the ‘pipeline’ just to conduct your everyday affairs.

There are many non-financial aspects of the crisis that we are entering. I look forward to addressing those in future articles. For now, there is no point in complicating the plan until you have a handle on the above 5-Steps. Let’s go into detail about each of these steps.

Pay Off All Debts, Within Reason

Since we are entering the most inflationary period in all of US History we have to look at debt a little differently. During hyperinflation some debts become assets for the debtor. You may stand to gain more by making the payments than paying them off. That’s because your debts are denominated in a currency that is losing its value on a daily basis. The contract you have with the bank to pay off your house requires you to pay US Dollars. The actual value (Purchasing power) of future dollars is much less than the value of the dollars now in your wallet. If you can find a way to preserve the value of your dollars, today, then you can exchange that value for many more dollars, tomorrow, and make your future monthly payments much easier.

To give an idea of just how much you can benefit from this technique let’s look at the history of the US Dollar from 1950-1990. The US Dollar lost 82% of its purchasing power from 1950-1990. And it has lost 47% of its 1990 value as of 2007. So there is nothing extraordinary about predicting it will lose its
remaining value. Seventeen other countries lost 99% of their currency value during the same period and Fifty-two fiat currencies lost even more value than the US Dollar! This is business as usual for any paper fiat currency. The worst performing currency on the list was the Argentinean peso. Here’s an interesting comparison between Argentina and the US.

Hyperinflation Can Pay Off Your House Loan

If the US Dollar is worth 50% of what it is today (7/15/2008) in 5 years then a mortgage of $100,000 today will be worth $50,000 in July of 2013. If you make your payments for the next 5 years you will have paid down your mortgage by whatever principle your payments could manage and the inflationary decline of the US Dollar will make an additional $50,000 payment for you!

The reason you rarely hear this advice is that its very tricky to manage. You will have to make sure you can manage all of the following variables:

  • Store your current dollars in something that maintains its current value.
  • Keep enough dollars on hand to make the debt payments.
  • Keep enough dollars on hand to pay for all of your other expenses.
  • Monitor the value of dollars and the value of your tangible asset.
  • Be willing and able to translate your tangible asset back to dollars.
  • Manage your bank account(s) so that you have just enough to meet expenses.
  • Have the mental and emotional fortitude to stay the course.

Using silver as an example, 1000 ounces of silver could have purchased a median value home in 1980. Some say it will again as as we enter this second round of the most hyper inflationary period in US History. You can purchase 1000 ounces of silver today for $14,000. As the dollar value falls you cash in the silver to make your house payments. If the economy goes like it did in 1980 that’s all the silver you need to purchase the note. But, make sure you buy the actual silver and keep it in your possession. The same technique can be applied with gold, of course.

Most financial people don’t want to get into these complexities. They want to keep things simple. They also know from experience that most people are overwhelmed with the details of everyday life and have limited time left over to tend to the financial aspects of their lives other than their job. You may also not be able to make your debt payments if you lose your job.

If you think you can manage all of the above variables then my advice would be to not payoff or accelerate the payoff of your fixed rate mortgage. If you have an ARM then this advice does not apply. In the case of an ARM you might want to consider a short sale while the climate is socially acceptable and you get the special tax break of not having to pay taxes on the amount that the bank let’s you off the hook.

If you have other long-term debts with an interest rate less than 7% (Student loans?) then you should probably not pay them off either. This is assuming you take the same approach as outlined above by purchasing other tangible assets that can be used to make future payments.

If you have long-term debts greater than 11% then you should pay them off despite the upcoming hyperinflation. Just getting free of the burden of these debts is enough incentive to pay them off. You’ll also be left with that much more resources to put towards the other 4-Steps of this plan.

Between 7 and 11% is the gray area and you’ll have to decide how well you can manage the complexities, above, in holding onto debt during periods of hyperinflation.

Move Out of All Investments Dependent on US Dollars

In 1944 we made an agreement with Saudi Arabia to provide military protection for them as long as they agreed to accept only US Dollars in exchange for oil. Since every country needs oil for energy, and many other things, every country had to start stockpiling large amounts of US Dollars to pay for their oil. This little known backdoor negotiation, along with the Bretton Woods Agreement in the same year, is how the US Dollar came to be the world’s predominant reserve currency.

Its important to understand the ramifications of the US Dollar being the world’s reserve currency in order to evaluate whether any given investment is dependant on the US Dollar. It gets even more complicated when other entire countries peg the value of their currency to the US Dollar. The effects of the good, bad and the ugly management of the US Dollar ends up getting exported to entire world in one way or another.

Because the US Dollar has a world effect unlike any other currency in the history of the world the US had the potential to effect the world in a very positive way. Unfortunately, the US defaulted on its international promise to exchange dollars for Gold in 1971.
This made every currency in the world into a fiat currency overnight. No longer tied to any objective value they have been freed to float at the whims of politicians, Central Banks, the World Bank and the IMF, ever since.

The history of fiat currencies, however, has proven that once a paper currency is not backed by any objective value the issuing government cannot resist the temptation to print more and more of them. Unfortunately, the US has been no exception to this historical rule. We did, however, manage to take the creation of US Dollars to a whole new level by skipping the difficulties of the printing press and going right to computer! And since other countries have to use Dollars to buy oil, and some even use US dollars as a backup or primary currency themselves, we’ve been able to get away with printing far and above the amount of paper dollars any country ever has before causing the currency to collapse.

As of 7/19/2008 the charts showing the value of the US Dollar against gold is remarkably similar to the charts of other countries just before they entered the final stages of hyperinflation. Here’s how it played out in Germany between 1919-1923:

What this means for moving out of any investment dependant on US Dollars is that almost nothing is safe. Conducting business during hyperinflation is very difficult and most US companies do not have the experience to manage the difficulties. To make matters worse, the individual equities of even the best run companies are psychologically tied to the broad market of all equities. When the broad market takes a hit so do all the rest, whether they deserve it or not. Therefore, even the stock of well run US companies is not a safe haven for your money.

Even moving US Dollars into another currency is dangerous because all the currencies of the world are fiat currencies. Although its the US and Zimbabwe in the news, lately, our mismanagement is already causing inflation around the globe as other countries continue to purchase our debt instead of investing the money into their own economies.

Bankruptcies and hyperinflation seem to be the plan for dealing with this crisis. Bankruptcies are the quickest way to deflate the amount of currency in circulation, either real or on the computer screen. And hyperinflation makes all of our debts much cheaper to pay off. What better way for the US to avoid defaulting on their unpayable debts then by paying them off with dollars made worthless through hyperinflation?

But, we don’t even get much of the benefit of the deflationary bankruptcies to balance out the inflation because the Fed conjures up however many billions of dollars necessary to ‘provide liquidity’ for failed large banks and mortgage lenders.

For all theses reasons I believe the only safe thing to do is to park your money in tangible commodities that preserve value. My personal favorite is silver, but, there is also oil, cotton, tobacco, sugar, wheat, copper, steel, gold, brass and anything else China and India need to keep their countries on the rise. If silver is your choice here’s how you can invest in silver.

The worst place to have money is in US Dollars, Checking or Savings accounts, CD’s, US Equities or indexes, T-bills or bonds.

Move All but 3-Months of Expenses Out of Banks Into Tangible & Liquid Assets

When you get a dollar in your hands that you don’t need for the next three months of expenses spend it on something of real value as fast as possible. Pay a bill, pay off a high interest debt, see if you can pay monthly bills in advance for the whole year, upgrade your slow computer and maybe even purchase food items with a long shelf life. When you’ve done all that and you still have money left over then its time to purchase more well known tangible assets.

I can only recommend Silver and Gold to fill this role because I have direct experience with them. The process is difficult enough without complicating it further by trading in and out of commodity stocks and keeping track of the tax ramifications. With silver or gold you can trade in and trade out as much as you need, almost anywhere, with no tax problems to worry about. The VAT makes it difficult to do this in the UK although I’ve read that you get it back upon selling.

If you have a 401K you can’t withdrawal without penalties then consider investing in a commodities ETF, Agricultural index, Natural resources and anything else that mankind requires and cannot do without like cotton, sugar, wheat, steel, iron, brass, silver, gold, corn, etc. If your 401K is limited in its options to invest then you have limited options to protect it.

Decrease Your Monthly Overhead As Much As Possible

Any extra money you have right now should go into purchasing tangible commodities that can preserve current value for when the US Dollar collapses. Therefore, any unnecessary monthly expenses should be cut back or stopped completely. Here’s a beginning list of things to get rid of:

  • Cable channel subscriptions you don’t watch
  • Internet subscriptions you don’t benefit from
  • Expensive Coffee
  • Excess minute plans for your cellular phone
  • Consider dropping phone land lines, altogether
  • Magazine subscriptions you don’t read
  • Eating out too often
  • Drinking out too often
  • Going to the movies when you can rent a DVD
  • Over insuring your house, car, health, life
  • Driving too far from home or work for errands or services
  • Overusing the A/C or Heater when fans, windows or firewood would do
  • Work at home a few days a week to cut down commuting time & money

Any money you save could go towards paying down debt. If you’re out of debt then consider taking the money saved and purchase silver coins at your local coin shop.

Get Rid of All Physical Objects You Don’t Need

Anything you own that you don’t need or use is a drain on your limited resources of time, effort, money, space, insurance, storage fees., etc. Your life will improve whenever you get rid of things you don’t need, now more than ever

  • Clean out the garage
  • Sell, donate or throw out the items in the garage you don’t need
  • Sell any cars you don’t use or need.
  • Hire a student or family member to put items on ebay and manage the sale
  • Donate items to others that are too bulky to sell

Copyright © 2008 by Terence Gillespie. Permission to reprint in whole or in part is gladly granted, provided full credit and a live link are given to McGillespie.com