[Paracelsus]

(12-08-2016 07:00 PM)Leonard D Neubache Wrote:  

When the currency disappears then you will simply have people trading by other means. Currency can be anything small and portable with a good, recognised value per unit and a long shelf life absent diminution in value. You could fairly easily use branded alcohol as currency for minor transactions as long as you were careful with the transportation and storage. In that instance the government would catch on after the various reports filtered up to the idiots in charge, and by the end of the year you would see limits on transactions at bottle shops and/or I.D. logging for sales above $X whereafter people would start buying less but more frequently like they do with ammunition here in Australia. Regular people will get shitty with the government as a side effect. Meanwhile our nations will more and more begin to resemble the old soviet union, with the government strangling all free enterprise, impoverishing the citizenry and blaming it all on criminals and dissidents.

John T. Reed also recommends as insurance against hyperinflation a stockpile of small consumer goods that are essential or highly desirable and which don't require much room for storage. Having big consumer goods is stupid: generally the black market doesn't exactly give you change, so thinking you can cruise through hyperinflation with that Rolex or a Ferrari is wrong-headed. You could be forced to give them away for two bags of potatoes.

Alcohol is one idea: I'd say cigarettes would be even better because they're legal to own while also being addictive and therefore desirable, you don't have to keep them at a certain temperature, and you get a lot of density of product in a small space; after all, prison economies are built on it. Toilet paper is an idea, although by the time it hits you'll be able to use fiat money for that purpose, but tampons are another as well.

Gold's main advantage is the density of value you can achieve: you don't need a lot of it to hold considerable value. Its disadvantage in hyperinflation is similar to the Rolex issue above: you can't get change, and because fake gold will get whipped around at great speed when hyperinflation hits, people will start demanding that you assay the gold you provide as tender.

Old silver or nickel coinage might not be as compact as gold, but it has a certain inbuilt stop-loss until hyperinflation hits because you can always redeem it for the face value of the coin if the arse drops out of the silver or nickel markets.