War time is frightening to anyone and all of us watching the current global situation of Ukraine and Russia can see that there are many uncertain events that will take place in the near future. How do citizens of these countries as well as people worried about potential conflict in their own lives, or an economic down turn prepare?
I want people to be prepared for terrible situations and this post may be helpful. This is not advice, it’s just my perspective.
There are more important things than money, however money is one of the most critical tools for modern life. Many of us would not be able to survive without global markets and the ability to spend our money at stores and shops near us.
What do you do with your money during war time, and how can you protect yourself from corrupt governments and global conflict?
I want to disclose that many Americans alive today are very confident in our current financial system. Many of us also don’t see a future where war will take place on American soil. I also hope we continue to thrive, however these are possibilities and in that case it’s important to be prepared for that kind of situation. Not a doomsday situation, but maybe 1% of your wealth dedicated in a manor for you to be able to drop everything, and go anywhere in the world while maintaining access to some personal capital.
We may claim to not trust banks or even government representatives. But, what we do with our money speaks louder than our words. Americans trust the stock market in general, so we invest in stocks. Americans trust that the U.S. Dollar will not collapse, so we keep a lot of our money in dollars at U.S. banks. This trust may be warranted, but it’s only been a few decades that our system has not been modified. It could quite easily be modified once more for a variety of reasons.
What I’m about to discuss can apply to the U.S, but I’m going to manly talk about other countries and people that can benefit from this today. Not a hypothetical future United States.
What happens if you have your money stored in gold and your government needs it to fund a war? They take it. Plain and simple. You may have the honor of getting some government bonds, yay. Your wealth has been revoked by the swoosh of a pen, here’s some paper saying we will pay you back someday. Throwback to ‘greenbacks’.
If you refuse to give up your gold you have a few options. You can either hide the gold (and not leave the country), or you can smuggle the gold out of the country (or at least try). Many times in history this very thing has happened. People would save in gold, there would be a war, and the government would confiscate their gold. You either had to lie and hide your gold, lose your life savings, or try to flee without being caught with your savings.
In my eyes, this is a major flaw with gold, and by the way, gold was confiscated from U.S citizens in the 20th century (the 1900’s) so it can happen today too. (Even though most people don’t even have gold, it’s just to point out that gold isn’t a “hedge” because it gets constantly taken from citizens) Gold confiscation has happened in nearly every country at one point in time.
The next option is to store your wealth in cash. Whatever country you are from, you can store your wealth in that currency and hope that you don’t get destroyed from inflation during the war. Hundreds of currencies have failed miserably. Wars typically don’t help a fiat currency in the short term. Wars did indeed help establish the US dollar as the ‘global reserve currency’ for now.
Fiat money, like Dollars and Euros are both quite new (Euros 1999 and Dollars (not back by gold in 1971), and they could easily collapse with a war (out of all currencies, these will probably be the most resilient over time and the last two standing). Humans prefer to have real assets during horrible times instead of IOU’s like the US Dollar. Things like Gold, Diamonds, Art, etc.
If you look at Russia, in the last few weeks the Russian Ruble has de-valued over 30%. It is likely to continue to fall, and fall, and fall as long as this war continues.
You can store your wealth in hard assets other than gold, but like we discussed it is quite hard to move valuable objects across borders without them getting taken. On top of that, if you have a significant amount of wealth it’s very difficult to bring a semi-truck worth of goods with you and remain anonymous, especially when you aren’t exactly trying to take your time, you want to GTFO of the country.
Stocks and bonds crash with the government. During every major war or crisis, stocks and bonds tend to deteriorate the longer a war effort lasts. Of course this could be considered a good time to purchase those assets, however you need enough confidence that your country will actually win, otherwise those assets will likely go to $0. We’ve been very fortunate in the US.
Real Estate cannot be taken anywhere. If a hostile takeover happens in your country, you need to be very lucky and hope the new leader will allow you to keep your claim over the land you ‘own’. Many times in history land has been seized and many times in the future it will happen again. You only own your land for as long as the government allows you.
Once again, many Americans have a hard time understanding this concept. Most humans are not as fortunate as we are.
In summary, physical assets are not very useful to bring across space (across the country, world, or universe) in large quantities, sure you can probably get away with a gold watch or a piece of art, but we’re trying to figure out how to move a large portion of your wealth.
What’s left? Bitcoin.
The reason Bitcoins’ price has been pumping the past week is because many Russian and Ukrainian citizens are trying to get their money out of the country and protect themselves and their family from losing everything they’ve worked so hard for. They want assets that cannot be stolen from them. They want assets that can travel across time and space beautifully and flawlessly. Bitcoin is the only way to do that. By memorizing 12-24 words, you can take your Bitcoin anywhere your brain can go, and only you have access to it. On top of that it is by far the most secure computer network in history.
Sure, we Americans may not be able to understand or even believe in a situation where we have a war on our land, or have a corrupt government seizing all of our assets and savings, but in many countries this is their current reality. Much of Africa needs a way to save. Much of South America, India, China, Russia, the Middle East, and the list goes on, need a way to save long term.
These people need Bitcoin and they will eventually find it. Once they do they will have a way to save money for the long term and their governments can’t stop them. They will be given true property rights, not from their government, but from Bitcoin and its network.
Bitcoin is hope. www.Hope.com
Buy Bitcoin, store it in your own wallet, protect the private keys, and have a real hedge against everything. This is more than just inflation, this is more than protecting against war, or corrupt governments. This is a way to protect yourself and your family against catastrophes and it is guaranteed property without the need of a government to give you ‘property rights’.
My hedge for this war, and my hedge against all black swan events is Bitcoin. On top of that, it’s also a great investment in my eyes.
*I want to be clear that profiting off a war is not the goal, it’s to preserve your wealth and to not suffer more than anyone already is.
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