Guest Posts/OpinionEconomy/FinanceInflation
How to Navigate Hyperinflation and Survive
April 4, 2022 428 views0
by Fabian Omar | The Organic Prepper
Brazil during the 1980s and '90s was a period marred by hyperinflation, stupid policies implemented by various governments to contain it, unrelenting economic turmoil, and social unrest. Now it's time to see how it ended and go over some tips we can use to stay informed and prepared for what's coming.
We're living in a similar context today. Some experts defend that the economic setup is similar to the 1940s. Others say it's more like the 1970s and '80s. I'm of the opinion that this matters little to common people like you and me.
What I care about ultimately is how bad this can get, how it will affect me and others around me, and what I can do to protect myself and mitigate the suffering these situations inevitably bring.
Whether inflation will rise, reaching hyperinflation levels, or whether we witness deflation (which is equally damaging), the scenario is grim. It's astonishing, but we're in this pickle not only by the worsening of various extraneous circumstances but in great part by the design of our own governments: they wanted inflation and worked to get it.
Let's go back to the story to see what happened to the economy and the population when the plan instituted in 1986 by the government to counter inflation started to sink.
The moment stuff disappears, social unrest starts bursting at the seams.
That's when life becomes hell. Goods were being withheld. In response, the government started confiscating. At the height of hysteria, the military was deployed to search and seize cattle on the farms.
All sectors got affected. Strikes and riots became frequent, putting the government and the whole production and supply chains under even more heat.
Companies got fined, and commerce and businesses were sued and persecuted by authorities and civil organizations. More protests and riots came. Crime surged as well. Every day was hard.
History teaches us that we don't learn from history.
The torment dragged on in the following years. With the economy in disarray, the yearly inflation topped at a mind-blowing 1,700 percent in 1989. That's hyperinflation territory by all measures.
In 1990, the population elected an unknown young politician who based his campaign on promises of slaying inflation (then at monthly 84 percent) and jailing his corrupt peers at once (corruption always goes hand-in-hand with inflation).
Instead, another "freezing" came. Yet this time, it wasn't prices nor wages that got trapped, but people's savings. Without warning, over $45 billion of liquid assets got locked overnight.
"Everyone with bank deposits worth more than $1,250 was told that the government had "borrowed" their money and would not give it back for 18 months" [SOURCE]
You might be thinking, "There's no way such a massive official steal would stick." But you'd be wrong, because it did. And that's how these things happen. People still think no one trusts politicians, but the population keeps falling for the same. Never say never.
How inflation was defeated
After a brief dip, inflation bounced back, and the economy entered a recession. The president rapidly lost support from all sectors. The population took to the streets and demanded his resignation. Engulfed in scandals, he was impeached by congress on the grounds of corruption and malfeasance.
Between 1992 and 1994, a group of luminaries assigned by the vice-president devised a more sound plan to promote a structured transition between currencies to stabilize inflation, among other measures. No more sudden surprises and hurried, half-baked magic solutions based on fluff and deceit.
A virtual monetary unit of reference was created to act exclusively as an anchor for the transition. It was called URV and was similar in principle and functionality to a CBDC in many ways. It worked. Inflation was slowly and consistently brought down. In 1994 when the first phase of the plan was successfully concluded, the real became our official currency and has remained so for almost three decades.
It's worth noting that the real was the 12th Brazilian currency since it became a Republic in 1869. In the span of 122 years, twelve "currency resets" were enacted to try and beat inflation and hyperinflation. That's what governments and institutions are scheming about when they start talking of new currencies, digital currencies, big resets, "we need better money," and such.
(If you want to be able to eat during a time of hyperinflation, you need to read our free QUICKSTART Guide to building your 3-layer food storage plan now.)
A series of factors contributed to the success of the stabilization plan that took Brazil out of the pit.
This matters, and I'll explain why. Initiatives like the Washington Consensus, public austerity and fiscal responsibility, consecutive trading surpluses, and increasing reserves gave support to an otherwise good stabilization plan.
The dawn of globalization, relative geopolitical stability, the rapid advancement of technology in telecommunications and production (internet, smartphones, mechanization, etc.), plus a string of other positive conditions that allowed most of the world to advance and prosper since the 90s, also worked in Brazil's favor.
This is worth noting because this can help forecast trends and glimpse into the future, and perhaps help us with adjusting sails. Favorable or unfavorable "winds" and "windows" may dictate the nature (how good or bad), severity (how deep or shallow), and the duration (short or long) of a recession or depression – like the one forming right now.
There are always even more powerful natural forces behind the powerful human forces. Things like the climate, demographics, the zeitgeist, and so on. The correct and effective policies make all the difference. But they too are influenced by the alignment (or misalignment) of secondary factors that may help or muddle results. Anyway, this is beyond the present scope, so I'll leave it at that.
Now let's move on to some lessons and tips to prepare for the storm ahead.
Hyperinflation tends to boomerang.
Let's say that things get good again. Everybody cheers up and thinks the worse has passed. Then suddenly, things get bad again. We saw that with the pandemic. It's the same with the economy – especially during high volatility cycles and periods of instability and change.
In the period narrated here, inflation would dip for a few weeks or months, only to return with a vengeance. No boom or bust happens linearly. Unresolved issues will come back or pop up elsewhere, and the situation can get even worse than it was before.
A lot of people successfully weathered the first storm, only to get wiped out the second or third time around. Expect the best, but plan and prepare for the worst. And keep your guard up. If good times come, take the opportunity to build reserves. Keep saving and investing. History shows this is the right behavior.
Don't think "Hyperinflation can't happen here" or "I can't be affected."
Volatility is widespread. Globalization is taking a step back now, but the world's still very interconnected. Nations depend on one another for all kinds of resources and products. This won't change. The pipings and channels of the international financial system also won't change overnight. But they can freeze, and even the population of developed countries can get impacted.
Mind the timing.
Governments are highly sensitive to anything that puts votes away, and inflation is one of the biggest because it impacts the everyday of population directly and relentlessly. They will strategically dress and time their policies with the objective to win elections or gain support during specific moments (like the midterms, for instance).
Short-sighted policies are favored because they're political fast food: easy and quick to produce and pass, cheap, popular, and they satiate the populace for the time necessary for them to achieve their immediate goals. But they're low in nutrients and full of bad fat that will stick for a long time and be painful to burn away.
Mind the language and the empty promises.
Terms like "temporary," "freeze," "control," "tax increase," and the like are absolutely red flags for coming hyperinflation. Above all, be wary of the propaganda and official narrative. The government will always try to sell these and other pernicious, devastating measures as "good for the people," "necessary," and "important for the cause." Or some other BS. Ten out of ten times, we're being taken to the slaughterhouse. I don't believe in simple solutions to complex issues. Stay grounded and critical.
Populism flourishes in periods of hyperinflation.
Easy-selling solutions and measures like "tax the rich" and the like are also greatly favored by bureaucrats and politicians in these times. The population may not be aware, but the ruling classes are machiavellian and extremely mindful of the power of divisiveness. Expect every trick to be deployed to manipulate opposition and social tension to achieve their goals.
Follow the money.
If you want to stay informed about the situation where you live, look for things like the fiscal status, the public deficit, the debt-to-GDP ratio, trading balances, currency-issuing, bond yield curves, and so on. Follow investors and macro analysts: they are preppers in essence, as they work and save resources during good times to be used during bad ones.
I've simplified things for illustrational purposes. It's not my intention to sound esoteric, but this can be a complex issue, and there are always a lot of orbiting factors influencing and dictating the dynamics of events in the economy and finance of nations.
Other practical suggestions for surviving hyperinflation
This convoluted tribulation was not exclusive to Brazil, of course. I've narrated what I saw and lived for half of my life, just that. Many other countries went through something similar, or even worse. Much worse. Research what happened to them and how this affected the lifestyle and everyday routines of common people like you and me. It's a good way to get useful insights and prepare.
Some will revolt against what on the surface look like sheeple-y acceptance of the nefarious "own nothing and be happy" WEF agenda. But there's really nothing we can do individually or even collectively to change reality, in the short term at least. But bringing Selco's thoughts up once again, we can still work to improve our life by focusing on the small circles. Keep at that. Live frugally. Move closer to work. Share. Stockpile the stuff you might need in the future. Not just food, ammo, or medicines, but also (and above all) tools, clothes, electronics, appliances, and other durable extras.
There's a lot we can do to weather these storms and improve our situation. The Organic Prepper Learning Center is an amazing source of knowledge on that. At the very least, learn and experiment with producing some food, even the basics. If things get to that point in the near future, you'll be glad for it.
My final thoughts on hyperinflation
I understand that hyperinflation is a rather un-sexy topic for many. I'm sorry. But if you get anything from what I'm saying, make it this: the world is trapped, and there's no easy or painless solution. We're being governed by mendacious, incompetent, and sociopathic borderline criminals that have no clue and will make things worse. I see the storm forming, and it will come from what has already been done, not just from what is happening now. Make your own history, and you should be fine.
And keep enjoying life while things are still normal and good. That's important, too.
What are your thoughts on hyperinflation?
How do you intend to navigate hyperinflation? Do you think we're going to see it here? Do you have specific points of concern? Share your thoughts in the comments.
Fabian Ommar is a 50-year-old middle-class worker living in São Paulo, Brazil. Far from being the super-tactical or highly trained military survivor type, he is the average joe who since his youth has been involved with self-reliance and outdoor activities and the practical side of balancing life between a big city and rural/wilderness settings. Since the 2008 world economic crisis, he has been training and helping others in his area to become better prepared for the "constant, slow-burning SHTF" of living in a 3rd world country.
Fabian's ebook, Street Survivalism: A Practical Training Guide To Life In The City , is a practical training method for common city dwellers based on the lifestyle of the homeless (real-life survivors) to be more psychologically, mentally, and physically prepared to deal with the harsh reality of the streets during normal or difficult times. He's also the author of The Ultimate Survival Gear Handbook.
You can follow Fabian on Instagram @stoicsurvivor
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