Corrections and supplements to the book How to Protect Your Life Savings from Hyperinflation & Depression, 2nd edition
Updating life insurance during hyperinflation
In my book How to Protect Your Life Savings From Hyperinflation & Depression, 2nd edition, I said that you would need to repeatedly raise your insurance-policy limits during hyperinflation to keep them current. I also said that might be hard to do if you had to get a physical every time which I thought was required in life insurance.
I met today with our insurance agent and he said you can get term insurance in amounts below $100,000 without taking a physical, although the premium would be lower if you passed a physical. Also, people age 20 to 35 can buy term insurance without a physical, but they would get a better premium if they took and passed a physical.
I asked him about my failed efforts to buy life insurance denominated in another currency. He said generally citizens and legal residents of a country can buy life insurance there and keep it when they move away, but insurance companies in all countries that he knows of cannot sell to visitors who are neither legal residents nor citizens.
Our new BMO Canada banker
For years, I have been sending readers to my banker at Bank of Montreal in Vancouver, Canada: James Curran. He was transferred to their Delta branch on the U.S. border but near Point Roberts, not the mainland of the U.S. That was too far to go for me, but I could still call him and mail deposits to him.
But then four of the deposits I mailed to Delta disappeared off the face of the earth. So I wanted to start sending the deposits back to the main branch in Vancouver where I never had any trouble with them being received.
Last time I called James Curran, his message said he was on indefinite leave because of a family emergency. I have no idea what that’s about and hope it turns out all right. But that and the mail problems indicated to me that you readers and I need a new banker back an 595 Burrard Street where James originally worked.
After several unsuccessful tries at getting a new Burrard Street banker—they did not return my calls—I was called by a very nice woman who had already taken care of two problems I had even though she had insufficient information. She did her own research to find the needed information. I was impressed. I told her I needed a new banker there. She said, “I’m your new banker,” not like she had been assigned to be my new banker. She’s just a take-charge kinda gal.
I asked her to send me an email which would have all her contact info. She said she would but I initially had not received it. So I Googled her name online to see if it would come up.
With James, I felt I needed to warn readers about one unusual aspect of his appearance. He’s 6'5".
I need to give you a warning about our new banker’s unusual appearance, too. Her name is Tannaz Alesafar. The first Google result was her Linkedin profile. It had a photo. “My goodness,” I thought. “That is one very good looking banker!” I was apparently not the first to have that thought. As I read further down the search results, I found a YouTube of her. http://www.youtube.com/watch?v=_J4vrSuOKeo
She was the 2009 Miss Universe Canada!!
Here is her contact information:
Tannaz Alesafar | Financial Services Manager
BMO Bank of Montreal | Vancouver Main Office Branch | Transit 0004
595 Burrard Street, P.O. Box 49500 | Vancouver, BC | V7X 1L7
tannaz.alesafar@bmo.com
(Tel) 604.665.8837 | (Fax) 604.665.6614
Visit BMO Bank of Montreal online at www.bmo.com
Westpac Australia contact changed
I gave my Westpac Australia bank contact in the book. The person to contact has changed to Caden Blumenthal. He is at cadenblumenthal@westpac.com.au; +612 8253 3171, (The time there is five hours behind San Francisco Pacific Standard Time and it is tomorrow there so you cannot call on Friday or Saturday on our calendar, but you can call him on Sunday by our calendar.
Westpac Australia, Ground Floor, 60 Martin Place, Sydney, NSW 2000 Australia
Cheers, mates.
Canadian bank that does not require you to go in person to open a bank acount
A reader told me RBC is a Canadian bank that does not require you to go to Canada in person to open a bank account. All other Canadian banks do require you to go in person as far as I know. But a more recent reader says RBC lets you start the process to open the account online but that you still do have to go in person to complete it.
Australian deposit insurance
I said in my book that Australia does not have bank-deposit insurance. That is incorrect. They insure up to $250,000 AUD and have since 2008.
Question I got on my Web site and my answer
John, I’m interested in your specific thoughts of the S&Ps rating downgrade for the US to negative. Also, I am having trouble finding a MMDA to put my IRA into. The investment advisors I speak to at USAA don’t understand what that means. I even looked it up on Wikapedia and it essential refers to MMDAs as money market funds. Not confident I am going to purchase what I, and the fiancial person on the other end, think I am purchasing.
My answer:
Since I have some of my money in an MMDA at USAA, that is not encouraging about the competence there.
Remember that I am married to a retired FDIC bank examiner who unretired to become a Federal Reserve bank examiner, so I don't say uninformed things about this subject. My wife and another bank examiner both proofread the damned book. They had no trouble with the phrase FDIC-insured MMDA. Indeed, I went back and forth with my wife over exactly what to call it to be sure it was correct.
Try telling the folks at the bank in question that you want a money market bank account and make sure it's FDIC-insured. USAA Savings Bank can do that. USAA other departments cannot. If the bank to whom you are speaking says yes, we have FDIC-insured money market accounts, you have found what my book calls an FDIC-insured MMDA. The fact that they may not call it an MMDA is their problem. The reason I use MMDA scrupulously in the book is that money market funds are not FDIC-insured and therefore are not to be touched with a ten-foot pole. Money market funds are UNINSURED securities offered by all sorts of brokerage firms. Money market deposit accounts are FDIC-insured and only offered by banks.
I will have to put someting about this at the errata page for that book. Warning: bank employees of banks that have FDIC-insured MMDAs do not know they have FDIC MMDAs. You have to use other words to help them understand the question.
Jack Reed
American convicted of terrorism for making barter coins for his North Carolina region
Read this article to see how a guy in North Carolina may get 25 years in prison for making coins to be used in his area of North Carolina instead of U.S. currency. The U.S. government really does not like anyone messing with their ability to inflate the dollar.
Page 131 capital gain error
It should be $88,000 gain and a $24,640 tax.
Changes in the Dow
On page 190 I noted that the Dow has changed since 1932 so comparing that year’s Dow to today’s overlooks the fact that a number of the 1932 companies went out of existence and would have taken your money with them had you bought at the bottom. Reader Patrick Johnson points out that some chaged names. In particular he said Woolworth is now Footlocker and Westngihouse Electric is now Viacom. That sort of detail is outside my area of expertise. My main point about the notion of buying at the bottom is that it took a long time for stocks bought in 1932 to make their buyers happy and that the analysis on how much profit was made requires more than just comparing the Dow of 1932 with the Dow of 1962 or whenever.
Depression farmer not allowed to grow wheat for his own consumption
In How to Protect Your Life Savings From Hyperinflation & Depression, I said monetary issues like hyperinflation and deflation depression do not affect subsistence farmers (eat all of what they grow themselves and sell none of it) like my father’s family during the Great Depression. I stand corrected.
Reading Thomas Sowell’s book Intellectuals and Society, I came across his discussion of “Intellectuals and the Law”. By “Intellectuals” he means educated liberals who are in favor of big government.
In 1942, the U.S. Supreme Court decided the case of Wickard v. Filburn, 317 U.S. 111. Basically, Filburn was an Ohio farmer who grew wheat solely for consumption by his family and livestock. Wickard was the Secretary of Agriculture at the time. The federal government said he violated the Agricultural Adjustment Act of 1938 which artificially held down the planting of certain crops to try to boost their market price. Filburn planted about 12 more acres of wheat than the Act permitted. He argued that planting wheat on his own land for his own consumption was none of the federal government’s business and was not covered by the Constitutions’ “interstate commerce” clause because he was not selling it even within the state let alone across state lines.
The U.S. Supreme Court outrageously decided that Filburn wheat grown for his own consumption was interstate commerce because eating his own wheat and feeding it to his own livestock would cause he himself to buy less wheat from interstate commerce and he might sell it across state lines even though he never did and had no intention of doing so!
So add prohibiting living off your own land to the list of government reactions to hyperinflation and deflation.
Fed low on ammo
Readers of my How to Protect Your Life Savings from Hyperinflation & Depression are familiar in detail with deflation and liquidity traps. So they will probably understand and appreciate Alan Blinder’s column in the 8/26/10 Wall Street Journal. The column, titled “The Fed is running low on ammo” is about the Federal Reserve’s limited options at present to prevent economic stagnation. He does not mention liquidity trap but that is what he is talking about.
I continue to maintain that no one can predict whether we will get hyperinflation or deflation (depression) from our current fiscal madness. Most people I talk to are quite certain they can predict we are going to have one or the other. Okay, then Read Binder’s column. It sort of predicts deflation. Read it even if you are a hyperinflation true believer. Basically, strong arguments can be made in both directions. My book says to protect yourself from both and that is still my position.
Phillipines part of U.S.
My dates of the Philippines becoming part of then becoming independent from the U.S. are incorrect on page 113. They were ceded to the U.S. by Spain in 1898 and became independent from the U.S. in 1946. Don’t know how I got that wrong. I sort of knew that off the top of my head.
‘Who are quite’ not ‘whore quit’
On page 69 in the second paragraph under “Stable Mafia currency” I said “whore quit.” It is supposed to be “who are quite…” And I used five proof readers for this book—more than on any of the previous 89 books.
I misspelled von Mises
I quoted Ludwig von Mises and gave the address of the Institute named after him in my book. Unfortunately, where I quoted him, I spelled his name as van Mises (Dutch spelling) rather than the correct von Mises (German spelling). The spelling in my bibliography is correct.
China lets yuan rise against dollar
In How to Protect Your Life Savings from Hyperinflation & Depression I said China has been holding their currency the yuan at a fixed rate against the dollar. The week the book came out, 6/25/10, China allowed the yuan to rise somewhat against the dollar.
Billion not trillion
On page 2, I said John Paulson made $14 trillion for his hedge fund by betting against subprime mortgages. It was $14 billion, not $14 trillion. $14 trillion is the gross domestic product of the U.S.