Hedge Against Hyperinflation

Inflation and hyperinflation is basically the same thing; it's just a matter of degree. Inflation has been occurring in the United States since the founding of the nation in 1776. One example of hyperinflation would be what happened in Germany in the 1920s, when a cup of coffee cost the equivalent of $100. Today, it is important for everyone to understand how to hedge against hyperinflation.

First, let's review the history of inflation in the United States over the last 50 years. Fifty years ago, in 1961, $1,000 purchased $1,000 worth of goods and services. Today, however, according to the U.S. Bureau of Labor Statistics, it takes $7,500 to purchase the same goods and services that $1,000 purchased 50 years ago. That means that over the last 50 years, the U.S. dollar has lost approximately 87% of its purchasing power.

What caused the U.S. dollar to depreciate so much in value? This inflation occurred because the federal government printed new U.S. dollars faster that the corresponding growth of new goods and services.

How can a person hedge against hyperinflation? Simply by exchanging dollars—that the federal government will forever be printing more of—for finite assets, such as land, that can't be reproduced. For a simple example, assume a person has $50,000 in the bank. Every time the federal government prints more dollars, the existing dollars in circulation become worth less and less. Conversely, let's assume the person exchanged the $50,000 in cash for 1,000 acres of land. In this case, every time the federal government prints new dollars, the 1,000 acres become worth more and more (because land is a fixed supply and the government couldn't create new land in the same equivalent supply as it created new dollars).

Every American citizen needs to understand how to hedge against hyperinflation—especially during a time when the federal government is committed to printing and spending trillions of new dollars (in order to service a huge and growing national debt)!

TTo view land that can be used as a hedge against hyperinflation, please click here.