In 1980 it took 814 ounces of silver to purchase a median-price home in the US.1 In today’s dollar 814 ounces would cost you $13,154.2
If this happens again you’ll be able to purchase a home, free and clear, for $13,154 of today’s dollar if stored in silver instead of the bank.
This article is not about buying new houses. It’s about a technique to get out of debt and own the house you live in. The debt I’m referring to, here, is fixed: Your rate and monthly payments are the same for the life of the loan.
You need only track the remaining principal on your mortgage and the spot price of silver to come up with input numbers for my proposed technique. Whether or not you execute the plan will depend on your belief.
Belief is best when it comes from your own research. I’ll provide some points of departure for that research but want to focus on execution, here.
Perhaps your belief will come easier knowing that what I’m proposing is just a . . .
Faster Version of the ‘Same Old Thing’
As a debtor, inflation helps pay off your mortgage if your wages keep up.
Every monthly payment is worth less to the bank. The inflation (Theft) is slow enough that wages get a chance to catch up. They rarely do keep pace, but, the number of dollars you receive usually does increase over time.
Three things are happening here on a normal basis as you pay off your mortgage:
- Your getting paid more dollars from your employer or customers as you attempt to maintain purchasing power.
- Each of your fixed payments are worth less to the bank.
- The value of the balance due on the mortgage decreases by the principal portion of your payment and the inflation adjusted value of the remaining debt.
To speed up this existing process I propose that more of the the fruits of your labor be stored in silver to preserve (And possibly increase) its purchasing power. In effect, you’ll be speeding up step 1, above, by translating back your silver savings into dollars at some future date and paying down your mortgage. By that time, however, the dollar will have fallen and silver will have risen.
The silver you cash back into dollars will pay off a larger chunk of the currency your mortgage is denominated in: Dollars. Those increased number dollars may or may not have more purchasing power. But, you don’t need them to. All you need is for the silver to buy more fiat dollars to satisfy the mortgage. In other words, the mere act of preserving existing purchasing power will give the same effect as an increase in purchasing power when it comes to ‘purchasing’ debt.
In this one respect the falling dollar can be used as a One Trick Pony to help you escape from fixed debt.
Give to Caesar What is Caesar’s
As the dollar falls silver (And gold) rise in dollar terms to accurately reflect their unchanging value through the prism of a disintegrating metric (The dollar). Happily for you that disintegrating metric is what you owe the bank. Your mortgage says you owe dollars, not gold or silver. So store real value. When that real value is inevitably worth more tokens in the future turn them over to the bank to purchase your freedom.
Give to Caesar what is Caesar’s: The tokens he conjured out of thin air that now enslave you.
This Bubble’s For You
As people start to catch on and gravitate towards true value more will flee the dollar and buy up real assets. Silver is one of the prime candidates. The above ground silver available for purchase starts to disappear. This secondary event, in turn, causes more flight from the dollar which feeds an even more rapid rise in the price of silver. Then silver, itself, starts to rise even above its true value being one of the few worthy recipients of the flight from the dollar.
The amplification effect on price between silver scarcity and flight from the dollar continues until it takes the familiar shape of historical bubbles we’re now all familiar with. However, knowing this in advance and setting aside a modest amount of silver means that This Bubble’s For You.
I base this on . . .
A Radical Prediction that What’s Happening Will Continue
The Dollar Has Fallen 40% in the Last Eight Years. Contemplating another 40% decline in the dollar is no more outrageous than expecting things to continue as they have been.
If the dollar falls another 40% then a mortgage of $100K will be worth $60K in current value. Before shedding too many tears for the bank recall that the money they ‘gave’ you was conjured out of thin air because of The Awful Truth of How US Dollars are Created.
Apart from some temporary uptick the MSM will seize on as ‘proof of recovery’ do you know of anything being done that will save our fiat tokens?
Get On the Short List
You won’t fully benefit from the decreased value of the mortgage unless you can manage one of the following:
- Your wages keep up with Inflation. If you increased your wages by 40% from 2001 to 2009 it was due to your own efforts not the silly CPI adjustments referred to as your raise.
- You get paid the same wages in a currency that maintains its purchasing power. If you can manage this you either don’t live in the US or I’m reading your financial columns and watching your youtube videos. Thank you and enjoy the fresh air of the Swiss mountains or I hope your Mandarin lessons are going well, Mr. Rogers.
- You use today’s dollar to purchase an asset or commodity that maintains its purchasing power.
Bingo! Now, that’s I’m talking about. - You come up with a money making idea that brings in tons of dough. Creating value for our fellow human beings is what it’s all about. Please don’t get lazy and keep the fruits of your labor in tokens.
With sharp inflation it’s a challenge to keep wages up even if you own the company. Business owners walk their own tightrope raising prices. Will the inevitable price increases be passed onto employees, immediately? Actually, they can’t.
Conducting business with a volatile currency is an expertise more likely possessed in a Banana Republic. If you’re trying to acquire such expertise there’s a fabulous little book that has a place on your nightstand: The Hyperinflation Survival Guide: Strategies for American Businesses
Stay Tuned for Part 2 of 2
I’ll get very specific in Part 2 of 2 with:
- The Daily Grind
- Tax on Standing Still
- How Much Silver Do you Need?
- Step-by-Step Implementation
- If You Don’t Have the Money
- Belief is Good (And Downside Risk is Minimal)
1Guide to Investing in Gold and Silver, Michael Maloney, Page 152. Maloney uses the Case-Shiller Home Price Index January 1980 home price of $42,747 divided by the silver price of $52.50/oz.
2It’s 10/30/2009 and silver is $16.32/oz. The dollar index is 76.38.
