THIRTY-FIVE FREQUENTLY ASKED QUESTIONS ANSWERED 251
Is there another country where a person could
open a savings account that would be safe to hold funds?
I do like the Swiss banking system. The problem is you’re
not going to be off the radar screen. I don’t, obviously, counsel
any kind of tax evasion. But if you’re a U.S. citizen and you
have a foreign bank account, you have to check a box on your
U.S. tax return, and that would certainly attract the interest of
the U.S. tax authorities.
From a safety and soundness point of view, however, I like
Switzerland because I think they have a well run banking sys-
tem and well run economy. But don’t think that that’s going to
get you off the radar screen because it will not.
In the coming bad period is it good to be a lender, a
borrower, or neither? Should investors pay off their mort-
gages now, for instance?
That’s really asking whether inflation or deflation is going to
prevail. If inflation is going to prevail, you really don’t want to
pay off your debts, at least not accelerate the payments, because
those debts could be worth a lot less in an inflationary world.
But right now, I see deflationary forces prevailing. My ad-
vice would be, if you have a legitimate reason to borrow, such
as to finance a house or something like that, and you can
afford it and you’re not overleveraged, that’s fine. I wouldn’t
necessarily run out to prepay a mortgage, though.
I would not be going out and borrowing a lot of money right
now to lever up. That’s a strategy that does work in inflation —
but the inflation might not come right away. We might be facing
prolonged deflation. My approach is to have a balance of hard
assets and cash. The hard assets protect you in inflation. The
cash protects you in deflation and reduces volatility. It’s hard to
know which one we’re in for, so I like to prepare for both.
When you say ’hold cash’, do you mean banknotes?
If so, what currency?”