Depression Proof Your Money

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?