Reader comments on How to Protect You Life Savings From Hyperinflation & Depression, 2nd edition
The reverse mortgage analysis is worth the price of the 2nd edition alone.
[Reed note:] That would only be true for those who now fit the age/propery-value/equity profile where the HECM works or will in the future.
I re-read your "Best Practices for the Intelligent Real Estate Investor" while working in Bangladesh and then visiting Beijing, China. I originally read it in 2009, I think. It's funny; in instances when I didn't follow your advice, I later wished I did! Even though world events are occurring quickly, the principles in your book apply today as they did in 12/08 when you wrote it. As always, I appreciate your wit, your direct and no-nonsense writing style and your use of logic, science, math and ethics. Thanks again for writing your books; I've also read "...Hyperinflation and Depression" and "How to Manage Residential Real Estate..." I've allowed trusted friends and family to also read them, as they have guided many of us in our investment activities. The advice from your books helped me successfully navigate through a rough couple of years as a landlord. So thanks again!
From Beijing, China
Thanks again for what you do, John. Thanks for helping me to see deeper.
Regards, Bryan Rush
I can't express my gratitude enough for your book on hyperinflation – best money ever spent on a book; and perhaps the most important financial planning tool I've ever come across!
Thanks again for all your insight on these matters – you are doing a very great service to so many of us out here trying to navigate the spin of the rest of what is published about financial and real estate matters.
…an interesting manual of information spanning the abstractions of economic theory and financial planning, yet putting the ideas in a context of practical analysis for the average reader.…carefully moves from topic to topic ad contrasts what he most prudent strategies might be depending on which financial breakdown might occur. [Reed] wants you to see outside the narrow box of recent events, to stop thinking our government masterswill take care of things, and realize it could go in either direction. He wants to stretch your view beyond the familiar conventional thinking to consider the possibility that something really frightening might happen…
awesome book. i found it to be very helpful and well-written. we feel much better now having taken some of your advice and thus far it's really paid off.
Gregg Petty from Facebook
Jack Reed has self-published many excellent how-to books over the years, but if you are concerned about recent government fiscal policy, this one is for you. He summarizes 2,000 years of financial crisis history before providing steps one always should take that also provide liquidity, the key to financial survival when equities, bank accountn, bonds and annuities become worthless.
Julian Olejniczak, West Point class of 1961, Editor, Assembly Magazine (West Point alumni magazine published by the West Point Association of Graduates) October-December 2010 issue
My brother-in-law let me begin reading your book while I was visiting my family in Ohio last week and I couldn't put it down. You are writing about what I've been saying for the past two years. Keep up the great observations and analysis. I pray someone is looking out for us all.
I found your book to be extremely valuable to me and my family. Thanks for sharing such thorough and insightful research! You may be the only person in print with this data who is not trying to use it to sell gold. :-)
I also have an MBA from a top 25 school, yet sadly 70% of the material in your book was either completely new to me or at least proved other information to be incorrect.
Thanks again, I'm approaching 15 years in investments and you opened my eyes to several risks I hadn't considered.
You did a very good job of presenting the information. Your book dispelled some notions I had and I am following a lot of the advice.
I very much enjoyed reading your excellent new book, How to Protect Your Life Savings from Hyperinflation and Depression.
It's difficult to express how much I appreciate your observations and opinions. I particularly appreciated your distinction between the direct and indirect consequences of deflation and inflation, and also your explanation of the concept of two-way indexed assets.
I have happily recommended your book to many friends and relatives.
We LOVED your latest book How to Protect Yourself from Hyperinflation & Depression. I would recommend it to anyone.
Jennifer Higgenbotham Hunt (on my Facebook page)
The Inflation/Deflation book was exceptionally thought-provoking. Well-done.
I have just finished my initial read of your 'flations book. I will need to read it a few more times before I can digest all the work that is in it. But I already can tell it is a keeper.
I find it useful to keep and occassionally re-read John Bogle, David Swensen, William Bernstein, and Jason Zweig. Most every other personal finance and investing book I scan at Barnes & Noble is an inferior, dumbed-down, less-well-supported version of what these guys have to say.
Your book will join them on my shelf.
1) It is OBJECTIVE INVESTIGATIVE JOURNALISM. It appears you just "started digging" and let the facts take you wherever they took you. And then put together a logical picture that fits with as many facts as possible.
For the few other articles or books I can find, the author appears to have reached a conclusion first, then went on an "evidence hunt" where they ignore anything contradictory, halted their research when they got to just 10 facts, and then wrote an incendiary ranting screed using circular reasoning. Reading them reminds me of listening to someone who says "I know for a fact that you are trying to poison me. It's just that I have not yet been able to find any evidence...probably because you have been hiding it from me".
2) It recognizes the reality that some critical things are effectively UNKNOWABLE and not even subject to meaningful probability calculations. Like the specific year that the herd of Treasury bond buyers will flee in panic. Or whether the U.S. future will be more like Japan (deflation) or Argentina (hyperinflation).
3) It is UNIQUE in that it is PRACTICAL. There are various academic talking head pundits on TV (Roubini, Krugman, Rogoff et al) who make a good case that "a hurricane is forming out in the ocean and may make landfall", but have absolutely nothing to say about what the average citizen can realistically do to mitigate the damage if the hurricane does arrive. You do.
4) It is CREDIBLE, and not a paranoid fear-based rant. I know, I know. Saying your book is "not paranoid" is faint praise....perhaps like writing a restaurant review where I feel compelled to mention I didn't get food poisoning!
But your book is the only one at present operating in the cognitive space that exists between "complete denial and helplessness" at one extreme and "put on your camouflage and patrol the perimeter of your Idaho compound" at the other extreme. Either of these responses would have been useless 80 years ago during Weimer hyperinflation or U.S. depression. And in more modern times, Japan (deflation) or Argentina or Israel (hyperinflation).
There is a big credibility difference between an insurance agent who says "Your house might catch on fire. Stuff happens.The odds are increasing. And here's why..." versus "The forces-of-evil and The Dark Lord (i.e. Obama) are gaining strength and seeking the chance to set your house on fire."
5) You offer a NEW course of action that is balanced and rational. Before your 'flations book, "the experts" seemed to offer just 3 equally unattractive alternatives.
A) "Do nothing. Prepare to bend over and kiss your ass good-bye."
(The implicit recommendation of the economist talking head pundits).
B) "Buy Gold"
(at the top-of-the-market with a fat mark-up paid to G. Gordon Liddy, Dann Florek, etc)
C) "Move to rural Idaho".
(Buy and bury 400,000 rounds of .30 cal rifle ammunition for use and bartering. Build a watchtower and sit in it scanning the horizon with binoculars waiting for "the hordes" to appear.)
You deserve a good citizenship medal for spending the time and effort to research and report upon a range of useful actions with various costs and consequences that one can take. At the very least, I hope your book turns a decent profit for you.
All the Best,
In the email below, I have put my answers in red.
Dear Mr. Reed,
I very much agree with Vince Boston's sentiments as posted on the reader comments page related to your new book. I am forwarding the link to my wife to read it, so she understands that what I'm asking her to help me with is not as extreme or kooky as it seems at first blush. (I shared your own wife's comments after proofing the manuscript, but she wasn't persuaded.)
I have several questions that I thought some of your other readers might share, if your inclined to comment on them on your new book's page (or offline, direct to me, if not):
1. In hyperinflation, if people didn't have enough money to pay off their mortgages, do you think they'd (insanely) try to refi (cash-out), or would lenders likely not even let them? [In hyperinflation, it’s hard to imagine someone not being able to pay their mortgage. Income from salary or your own business roughly adjusts to inflation, unless the federal government slaps wage and prcie controls on us. If prices, say, go up 500%, your mortgage payment stays te same but your income goes up 500%. That would be the equivalent of your mortgage payment getting cut to one-fifth of its former amount. If you canot make the payments you would not qualify for a refi.]
2. Do you think a reverse mortgage for an elderly/retired person w/an outstanding HELOC would be a good idea for freeing cash for liquid hard assets without risk of home loss (even in NJ)? [Every time I look into reverse mortgages I am amazed at how little the monthly payment is? All loans are extremely dangerous to your solvency and liquidity during deflation. In the event of high inflation, the annuity from a reverse mortgage would be a colossal joke on you. The monthly payments would not buy you a candy bar. If the balance of the reverse mortgage adjusted to fnlation, it would be an even bigger joke on you. All fixed-rate mortgages, onthe other hand are great deals for the boorower during hyyperinflation. But since you cannot tell in advance whether we are going to get hyperinflation or deflation, you need to protect from both. That eans get rid of debt, don’t add it.]
3. Do you know if cash was ever lost in safe deposit boxes of banks that closed for bank holidays and never re-opened? [I have never heard of such a thing and researched the various financial crises extensively, but I did not research that patricular question. I believe the law is well-established that the contents of safe deposit boxes belong to the box tenant, not the bank or its creditors. They probably force you to remove your contents and take them with you so they can shut down the maintenance of the boxes when they liquidate the bank. Since the alternative is storing valuables in your home, I will answer the corresponding question. Yes, I have heard of people who stored valuables at home losing them to robbers and burglars. That almost never happens with regard to safe deposit boxes.]
4. Can you suggest a way to calculate how many months living expenses (beyond goods purchased in advance) might be sensible to hold in junk silver (against inflation) or actual cash (against deflation), per person? [No. There is a table of durations of bouts of inflation on page 118 and 119 of How to Protect Your Life Savings from Hyperinflation & Depression. They are the general answer to your question. There are also issues like can you grow, raise, catch, or kill your own food from farming, huning, or fishing?]
5. Do you have any recommendation on the mix of such things as cash in safe deposit boxes, FDIC-insured MMDAs, and junk silver? [ Cash in a safe deposit box is great in deflation and get it out and spend it ASAP in hyperinflation. MMDA may adjust for inflation. We have to wait and see because they are so new. Junk silver is great stuff to have in hyperinflation and OK in terms of purchasig power during deflation, but it’s a little bulky for a safe deposit box].
6. Have you found a junk silver dealer you believe to be particularly fairly priced? Tulving seems to price at spot, plus about $0.30, which seems good (all things considered). [No. I have not searched. Best prices are probably used jewelry but then you have the issue of assaying the weight and purity of the actual silver in the item. You’ll have to do your own shopping around. If I anointed a selvir dealer, he would raise his prices because I anointed him.]
7. How would you go about estimating the percentage "insurance premium" that all of these steps may cost one? (I realize of course the more of your assets stuck in retirement accounts, especially what I think of as "employment-locked" ones, the higher the premium. I'm already looking at in-service distribution rules and penalties to figure out the options and associated costs.) [The “insurance premium” is the opporunity cost of missing out on the interest that assets with no inflation or deflation protection would earn—assuming inflation or defation do not strike. At present, the opportunity cost, and therefore “insurance premium” for protecting yourself seems lower than ever in U.S. history. Also the danger of hyperinflation or deflation are probably greater than ever. Great obvious situation except that most people seem incapable of understanding the danger and the way of insuring against it even when I explain it to them.]
Many, many thanks for taking on this vital subject.
P.S. Here's Steve Wynn on CNBC talking about the insanity in Washington. (I think he's dead right.)