What To Do During A Hyperinflation
Want to know how you can maximise your position during a hyperinflation? Nathan says it is all about having the right debt to asset ratio.
Here is what to do during a hyper inflation.
We are heading towards a cashless society.
With interest rates likely to turn negative, the Australian economy is heading into unchartered waters – a cashless society where it will cost money to keep money in the bank.
According to Nathan, negative rates and the GFD are set to cause a hyperinflation where debt will become irrelevant and savers will become losers.
He says, this revolves around the fact that our economy is very weak – and has been for the past decade. In fact, Nathan says, our currency has been slowly dying since we moved away from pounds and pence in the sixties, before turning fiat at the start of the next decade.
The winners of the new monetary order.
Having never been through a hyperinflation before, Nathan can only look to examples from across the globe to see what typically happens. As money rapidly loses its value, those with no assets become poor.
He says those with the right amount of debt attached to assets will be much better off.
Which is why Nathan is happy to have $17 million worth of debt attached to $50 million worth of property. His portfolio also has a strong cashflow that will go up as inflation takes hold.
How has Nathan secured a strong position?
Property has been Nathan’s number one investment vehicle over the past 17 years or so – but it hasn’t been the only thing he has invested in.
He has invested in precious metals since he was a young lad and has more recently put money into cryptocurrency. But while both of these offer a good hedge against inflation, they don’t bring in an income like property does.
By buying the right types of property below market value, with a good upside for growth and a strong cashflow, Nathan has secured a good position from which to take advantage of hyperinflation.
During a hyperinflation, as assets and income goes up, debt loses its impact – and becomes much easily to pay back.
He says, he has also done the following things in order to maximise his position against hyperinflation.
- Kept his cashflow in check and ever increasing
- Lowered his expenses in order to streamline his position
- Chosen the right investment vehicles.
Debt is good.
Contrary to traditional popular belief, Nathan believes that debt can be good. It has enabled him to build a strong asset base and is set to become irrelevant in a hyperinflated economy.
He says we are moving from an asset backed economy to a debt backed one. Those who can use this to their advantage as interest rates drop below zero will be in a much better position than those who hold onto their cash over the long term.
What steps have you taken to maximise your position against a hyperinflation? Please share your experiences in the comments section below.