62 THE BiG DROP
assets and prestige to stay informed on behind-the-scenes devel-
opments on the political landscape. Buffett is now positioned in
much the same way that Stinnes was positioned in 1922.
If hyperinflation were to slam the U.S. today, Buffett’s results
would be the same as Stinnes’. His hard assets would explode
in value, his debts would be eliminated and he would be in a
position to buy out bankrupt competitors. Of course, the middle
classes in the U.S. would be wiped out, as they were in Germany.
My advice to you when it comes to billionaires like Buffett
is to watch what they do, not what they say. Stinnes saw the
German hyperinflation coming and positioned accordingly.
Buffett is following the Stinnes playbook. Perhaps Buffett sees
the same hyperinflation in our future. It’s not too late for you
to take some of the same precautions as Stinnes and Buffett.■ Should You Be Borrowing Money?
A common question I get from readers is, “Should I be borrow-
ing money, given the threat of hyperinflation?”
My answer is that if you have a legitimate reason to bor-
row, such as to finance a house or something like that, and you
can afford it without being overleveraged, that’s fine.
But I would not advise you go out and borrow a lot of mon-
ey right now to lever up. That strategy only works if we do, in
fact, experience inflation. The trouble is that the inflation might
not come right away. We might be faced with deflation. That’s
why I recommend having a balance of hard assets and cash.
When I say cash, I’m not talking about money market
funds or bank CDs. Instead, I mean the highest-quality instru-
ments you can get. If you’re a U.S. investor, that would be U.S.
Treasury bills or 1-year notes.
Then get hard assets to protect you from inflation. The
cash protects you in deflation and reduces volatility. It’s hard
to know which one we’re in for, so you should prepare for both.