Letter Re: The Consequences of Mass Inflation

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Jim:
I never paid much attention to warnings of [mass inflation or] hyperinflation. Because most discussions about hyperinflation only mention the loss in value of savings, and I have none (in the form of dollars, anyway) I blew this off as a threat that wouldn’t affect me.

But I recently realized that the threat of hyperinflation to folks like myself, who live paycheck to paycheck is not the loss of value of our savings. Rather it is the time it takes our pay-rate to catch up with the new price of the goods and services we purchase… if it catches up at all!

I think my best hedge against hyperinflation is a small business venture that would prove successful during poor economic (and possibly downright primitive) times.

Thank you for the great blog and books! – Sam F.

JWR Replies: You are correct. In anticipation of mass inflation and wild swings in the valuation of international currencies, the safest approach would be to invest in inflation-proof tangible goods that would be the core of your business inventory, or the raw materials needed to make a product. Although you will still be at the mercy of inflated postage and shipping costs, at least your inventory will hold its value, even as the Dollar itself melts away in the blast furnace of inflation.

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