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May 05, 2016

What to expect from hyperinflation

Steven posted an essay on the topic of the unavoidable hyperinflation coming to the U.S., and I have little to disagree with his lead-in about the situation we're in. However, hyperinflation is not going to cause a societal collapse. Governments may fall, but they'll be replaced. There may be a civil war, but its sides will quickly organize. Look no further than the People's Republic of Donetsk that arose out from nothing in a month in 2014, and took over providing basic services - police, emergency medicine, even garbage disposal. Or what the heck, consider the Islamic State. In the U.S., we don't even need anything like that: every state in theory has a government that can take over on a short notice.

Now of course the above means that a government will preserve, old or new, but its subjects have no such guarantees. There's going to be a certain lawlessness for sure. I'm somewhat familiar with the "roaring 90s" in Russia that ended in the 1998 default. Based on that experience, I don't think stockpiling ammunition is the answer beyond basic 10,000 rounds or so, which you will need yourself. It's just not physically feasible: it's too bulky, too heavy. You need an easy access to good places to hide it, because houses are going to be broken in.

So, I have a different set of suggestions. First, move to a capital city. Citizens of it will have it easier than the rest, guaranteed. Yes, there will be lack of food and basic necessities, but worst comes to worst, the government will send foraging squads that will rob everyone else and bring the food into the city. Next, you have to be in the system somehow. Surviving on your own is pure fantasy, it's not possible when hordes of the hungry ransack your hiding place. People who think they can hide in a cabin delude themselves. You either need to work for a big corporation that is joined at the hip with the government, or work for the government itself. Being a LEO is not a bad lot, but a bureaucrat is okay too.

My grandmother survived The Siege of Leningrad by working for the police, NKVD. This is an interesting example, for those not familiar. People were dying left and right, yet there was no societal collapse. Okay, so the dead bodies were littering the streets, because nobody had calories left to dig graves, but only in the cold period. Government formed teams to collect bodies when it became warmer. When people resorted to cannibalism, the government found and caught them, then they were executed. The executioners then put their rifles on their shoulders and walked to their barraks, slowly, not wasting energy. Then some of them died. But the rest dragged the bodies into the frost in the winter, or into an open segment of the big grave trench, then went to get their orders to execute someone else.

My grandma wasn't executing anyone, just filing reports about executions, how much ammo was expended at executions, the available manpower for executions — basically the usual bureaucratic work. For that she was given her 250 grams of rye bread every day. That is how you survive, not by holing up in the woods with ammo and canned foods.

In our days, it wasn't even that dire. I even worked as a computer programmer, and was paid in U.S. dollars. There was a lot of crime. But a societal collapse? Hardly.

No matter where you look, from Argentina to Zimbabwe, people live through hyperinflation. There are lessons in that.

Posted by: Pete Zaitcev at 08:44 PM | No Comments | Add Comment
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