THE THREAT OF INFLATION 57Of course, by 5:00 p.m. the price had probably doubled since
lunchtime. The point, however, is if you got the ham you don’t care
if the price doubles, quadruples or goes up a billion times. Think
about ham as a hard asset. I think of a bar of gold the same way.
Once you dump the dollars or whatever currency and get
the hard asset, you’re protected. You don’t really care. You might
care, but the money going to zero as it hyperinflates doesn’t hurt
you anymore because you’ve got the hard asset. In the case of a
family trying to get through the day, that ham might have been
dinner. Then they go out later that night and perhaps buy a loaf
of bread for the next morning. That’s how bad it was.
The point is people treat money like it’s radioactive dur-
ing a hyperinflation. You get some money in a paycheck but
you don’t want it. You want to dump it as fast as you can. And
when you give it to the guy who sells me the ham, he dumps
it immediately too. He pays the wholesale. In a hyperinflation,
money’s like a hot potato. You want to get rid of it.
The velocity pushes infinity, which means the currency
approaches zero. That’s the psychology behind it. So it’s not
all about money printing. It’s about changing the psychology.
Now, you need the money. You can run out of money. That’s
happened from time to time, but it’s the combination of the
two. It’s the printing money by the central bank and the change
in psychology by the people that can cause hyperinflation.
Today, we have the money printing — more than four tril-
lion dollars. The psychology hasn’t changed, but my point is
that psychology and confidence are fragile things.
They can change quickly. And when they do it’s very hard
to change them back. You need to be prepared for that.
We don’t have much inflation today. That’s a fact. And
there’s no sense arguing we do. The data says otherwise. But
we could have it suddenly and that’s the reason to have some
hard assets. Don’t go all in or fifty percent, but have a slice of
your portfolio in hard assets. That’s your insurance policy.