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Finance, Banking & Insurance - 2017 economy has developed into an $80 trillion Ponzi scheme. Alarmed by this history, I have been looking into which strategies a smart investor needs in order to hedge against and benefit from this Fiat arrangement. Recently, I was researching various crypto currencies. One option interested me because it is being backed by gold, each ‘coin’ is backed by a gram of gold. With each trade a fee is charged. As the charges are earned, it is used to purchase more gold and thereby make the currency increase in value, backed by a real asset - gold. As confidence in Fiat currencies declines and regulations increase, it is easy to see why various crypto currencies have become increasingly popular. Bitcoin is the most famous example, but is by no means the only one. I have also met the founder of a company whose aim is to protect HNWI wealth. He is doing so by keeping wealth in a physical form totally outside of the system. His analysis of the current economic situation is most banks and currencies are bankrupt. He questions why would you place assets with a bankrupt company or in a bankrupt system? He has bought some underground nuclear bunkers, and uses them to store gold for HNWIs. It is fully insured and served by its own airline strip. For a minimum of £500,000 in gold, the investor is able to keep a store of wealth entirely outside a risky system. Like death, we know that the system will fail one day but it could be tomorrow or in two hundred years’ time. So, it does not make sense to hoard all our wealth in a nuclear bunker. This should be a hedge.
Meanwhile, my observation is that the best way to benefit from this Fiat currency driven system is to seek assets that are genuinely limited by supply. This means that the investor positions himself in place where inflation and debt drive demand up while supply is fixed. In this scenario, in the long run, as long as the entire system does not collapse, prices will go up. Seek, therefore, mature cities where planning regulations are tight and byzantine, land scarce and the political climate unable to deliver a revolution in housing supply. Also pay close attention to the long term demographics such as population and the number of persons per household. This is why London, in spite of periodic blips, has been a rich den of deals for five hundred years. In summary, in order to accumulate and preserve real wealth, one must make the transition from Fiat currency to real assets. These should include gold, and property. Gold is a firm hedge against Fiat currencies, as it has been used for millennia, and its use as an instrument of trading as been around longer than any Fiat currency in existence. Property is the other obvious real asset. It has the added
advantage of being able to generate a monthly income which gold does not. There still is a chink in the system which can be exploited, which is the home buyers scheme. The conditions are it is only open to new buyers and home movers. Here the government will give you up to 40% of the deposit money in order to purchase a property up to a value of £600k. The rest of the money will come from mortgage providers.
All that is required is the 5% deposit. This enables one to transform Fiat currency, into a real asset. It’s not just that this money ultimately does not exist, the majority of the money which does not exist does not even belong to you. It comes from the government and the lending institution.
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