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How to Prepare For Inflation and Hyperinflation By Buying Ahead
Man Going For a Loaf Of Bread In Zimbabwe
Inflation and the even darker prospect of runaway hyperinflation is now more likely than ever in our history according to a number of top economists such as Stephen Leeb and Nouriel Roubini. Because of the fact that governments around the world have released trillions of dollars of new money into the financial system to counter the effects of the financial collapse it may be hard to reign in all of the effects of that release in time to prevent runaway inflation.
Inflation refers to a loss of the buying power of a currency. Hyperinflation is a runaway collapse of a currency where the value decreases very rapidly over a given period of time. In countries like Zimbabwe it now takes a wheelbarrow of paper money, literally billions of dollars, to buy simple items such as a loaf of bread. The likelihood that this will happen in the United States and other developed countries is slim but nevertheless we could see a return inflation and of high consumer prices in relation to salaries such as we had in the 1970's.
How Can You Prepare For Inflation or Hyperinflation?
There are some things you can do now, if you are still earning a living and have not been laid off due to the financial crisis. If you can afford it, begin to purchase things that you will need in the future to hedge against inflation. Those things should have lasting value and should not be perishable. Take an inventory of your home and look for all the things that you can purchase now that will last for a long time. Next, join a wholesale club such as Costco or Sam's and buy multiple items, such as paper towels, toilet paper, dish and laundry soap, etc. Things like mop heads, fabric softener, razors, dried beans and fruit, spices, socks, underwear will last for months or years. Stock up on personal hygiene products and home health needs as well.
To prepare for future inflation consider buying "forever stamps" from the post office. They will be good at whatever the cost of postage is in the future and you can purchase them at today's prices. Buy motor oil and oil filters for your car and items that you need for yard care.
Goods From China At Lowest Price Level In History
As countries such as China recover from their own economic crises and begin to recover, there will be greater demand for products produced by their factories within those countries. If the U.S. dollar is much weaker than it is now we will lose the purchasing advantage that we have now. Things like $1.99 hammers at Harbor Freight will become a thing of the past once inflation appears on the scene. . There are many sales and specials on things like tools made in China. Avoid things like cheaply made electronics and gadgets and focus on hard goods like hand tools, power tools, etc.
Getting Your Financial House In Order To Prepare For Inflation
Now is the time to begin getting rid of bills before inflation or hyperinflation appears. You will be less able to pay off credit cards and other debt when consumer goods cost so much money. Typically when inflation strikes an economy, wages do not keep up with price increases. Start by paying off your smallest debts first and after the bill is paid off, say a credit card balance of $1000.00 with a $50 monthly payment, use that fifty dollars plus whatever else you can spare to target the next balance. Keep on working your way up the line until you are paying off your mortgage early. This is an easy system to follow and you don't need to pay for a $100 course to teach you the simple principle of paying off the smallest bills first and working your way up to the larger ones. In addition to paying off bills you should be eliminating unnecessary expenses such as internet on your phone, premium cable channels, etc. Being a smart consumer is important even if inflation never appears.
For more on how to prepare for inflation and on how to get your financial house in order see The Thrifty Living Bookstore
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