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Comment by mcfly1985 | Hacker News Reader

mcfly1985

As someone who's lived through significant inflation in his lifetime, American's are ill prepared. In my experience, the government will do everything possible to hide the fact that inflation is even happening. "Official measures" of inflation won't begin to capture the problem until the damage is already done. People buying debt at these absurdly low interest rates have, quite frankly, lost their minds.

There's not many options to protect yourself either. Stocks? Maybe, but a lot of companies will go bankrupt. Gold? Maybe - but if you're investing in paper gold it likely won't be there when you need it...if you're attempting to hold physical it can be easily stolen.

Preparing for this the second time in my life, I'm opting for Bitcoin and real estate (with nice fixed-rate mortgage debt to purchase). Fingers crossed...

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Real estate and gold always work out, as long as you don't need to cash out without any hindsight.

Bitcoin makes no sense,it wasn't a good store of value when things were stable and it won't be when things are unstable. It's a bet, and every cent put into it should be a cent you're willing to lose.

Default safe stocks are probably the safest thing to put your money into, spread it all over the top index instead of one or two bets. If the entire top index fails, then you have bigger problem anyway because the economy of your country has disappeared

If you had bought a hundred dollars worth of Bitcoin back in April of 2011 (parity with the US dollar) and sold it at it's most recent all time low on December 16th 2018 you would have $320,000. If you sold it today you would have $971,900. Volatile? yes. Good long term store of value? All available data indicates yes.

> People buying debt at these absurdly low interest rates have, quite frankly, lost their minds.

how does this jive with

> I'm opting for...and real estate (with nice fixed-rate mortgage debt to purchase)

Honestly, I don't have a finical background. But isn't a mortgage just buying debt that is slowly paid off. I don't think real estate is a terrible strategy, but it does not always raise in value. 2008 was a reminder of that for a lot of people.

People buying debt are the people buying bonds. Would you lend 100k to someone for 30 years at 3.25%? If you do, I think you're foolish.

However, if you're borrowing 100k from someone at 3.25% for 30 years you'll likely be very happy you did.

Thanks for the answer. That appears to be a logical answer.

A mortgage is selling debt, your own debt.

Another way to think of it (sadly) is that companies that are over-levered can do well, since their income stream is in real value, but their debts are in dollars. If you want to cynically think America is kleptocracy for the elite, and the elite are heavily invested into over-levered companies managed by PE firms, then you might even expect this to happen for their sake.

Bitcoin has certainly never crashed in the past. ;-)

I strongly considered purchasing gold. I don't trust the paper-gold markets. I just don't know how to store it safely in my apartment. Bitcoin for sure has its faults...but for whatever reason I feel safe with it.

> Stocks? Maybe, but a lot of companies will go bankrupt.

Exchange traded funds aren't that vulnerable to individual drop outs.

> ...if you're attempting to hold physical it can be easily stolen

If your only argument against physical gold is an inadvertent change of ownership then I have good news: They offer insured safe deposits now for a couple of bucks :)

Yea, maybe an insured safe deposit box is the way to go. I'm not pretending to know the way to survive what's headed our way. There's a lot I like about bitcoin, but I don't know that it's the right choice. Just my personal decision.

Safe deposit box: an asset of the bank in case of liquidation, the contents is not yours when you'd most need it. Insured: Also a counterparty risk: solvability of the insurance company.

At least here where I live (Germany) deposit content is not an asset of the bank (“Sondervermögen”). It cannot be used for liquidation if things go south for the bank. I assume this is true for most parts of the globe.

Why are you confident that your bitcoin will be there when you need it? Have you followed all 793 (and counting) steps in the latest 'how to secure your bitcoin' guide? Epoxied all your USB ports? Buried your private key backup USB stick in your garden under the birdbath? etc etc etc...

It's not that hard to secure Bitcoin these days with a hardware wallet like Ledger. If you use a passphrase, you don't even really have to worry about your recovery phrase being stolen (although it would be a good idea to move your coins).

What did you experience the last time significant inflation occurred? Did you observe any early indicators then on that you're looking out for now?

Luckily I was young and didn't have much to lose. We didn't experience hyperinflation, maybe something like 40-50% change in prices. I was hourly at the time but it took a while before I felt like my purchasing power was back to being on-par with what it was prior. When people started to feel prices were rising, everyone ran out to buy electronics -- tvs, stereos, anything. The hope was they'd be able to re-sell them at a good price. I've learned that inflation is uneven - it doesn't uniformly increase prices everywhere. In the US I just watch the charts of M1.

Everyone tries to flee into real estate. That just brings on the next real estate bubble.

The point is to have a large amount of fixed-rate debt that'll evaporate due to inflation. If there's another asset class I can borrow money at a fixed-rate of 3.25% I'd love to hear it.

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