Comment by rdl | Hacker News Reader

Comment by rdl | Hacker News Reader

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This is horrible advice.

It's worth keeping physical currency immediate needs in the case of a storm, earthquake, banking glitch, etc. (For most people, maybe $500-1000; the crazy thing is I know plenty of people who do nothing but use credit cards and just have $0-20, which sucks even if their bank just freezes their ATM account or credit card for 3 days!)

Otherwise, physical currency is exposed to the most serious risks (devaluation, inflation), plus physical loss, plus is relatively inconvenient to use. If you want a hedge against USD shenanigans, the things to do are:

1) Reduce ongoing liabilities (debt or expenses), particularly those which might adjust

2) Invest in income-producing assets which have pricing power

3) Potentially, hedge by investing in assets in foreign currencies or non-currencies, or assets in foreign countries, etc.

#1 and #2 are generally reasonable no matter what (buying energy efficient appliances, buying foods/etc. in bulk, education, being in good health, improving your skills, building products or companies...)

Reduce ongoing liabilities (debt

FYI, during the Weimer inflation, it was those who went into debt (ie, shorted the Mark) and bought real assets who profited the most. There's no real good advice during a currency collapse for unsophisticated investors. Filling your basement with Jack Daniel's whiskey is as good as anything.

That said, a FRN crisis, if any, is many years off.

The difference is fixed-rate, vs. things which could adjust. It's all about being on the right side of optionality :)

It's better to own a subsistence farm than to have something which requires purchasing market-priced inputs and to sell at long fixed-term prices.

Similarly having long term fixed-rate debt (mortgage) is better in a market where rates go up than having to refinance every few years with short-term debt (or, say, rent, in a place where there's no rent control). But a disadvantage of owning vs. renting is that you can't move as easily to take advantage of opportunities.

Reducing mandatory ongoing/recurring market-rate purchases seems like a win; usually that requires either spending capital now or some form of (ideally, fixed-rate) debt. Like borrowing at 3% to buy a fuel-efficient car or live close to work/transit is probably worthwhile, if you get 10-15mpg now and need to commute to work.

I think you missed the part where he recommends holding physical currency in pre-1965 90% silver coins (commonly called "junk silver"). I agree with him that Ag will hold value very well in such a scenario.

Ah, yeah, junk silver is reasonable.

You really haven't convinced me. Inconvenient to use? Whe dollar will get heavily devaluated you will see the green paper you hold in your hand losing value. People will be trying to get a rid of it. You know what happens when more people wants to sell than buy; make yourself the rest of the story. Meanwhile silver or gold is an "international" currency. IT will hold more or less same value in each country. Using silver coins will be very convinient to use.

Holding green paper is just to handle short term disruptions in electronic systems in supply of green paper, which is. Most likely situation for a 1-2 week non financial crisis, which is the most likely (if least severe) crisis.

Stockpiling unproductive assets is just not a viable long term strategy, nor does it work for society if everyone does it. It makes sense to keep a certain amount in reserve, and to slightly increase that during times of uncertainty, but working and buying gold coins and putting them in a safe isn't a useful financial strategy in isolation.

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