Scary news reports seem to be coming out every day. Many analysts are now saying that this recession (when will they start calling it a depression) will last into 2010. Other analysts are telling us to brace for a hyper-inflationary period. It is easy to find ourselves paralyzed with fear or indecision. Now and again over the last year, I have found myself unable to move forward with future plans.  However, I finally found a way to overcome that fear, and move forward with my proactive plans for the future.  Here is what I did in three easy steps.

1.  TAKE RESPONSIBILITY

Seems that wherever I turn, I hear people looking for someone to blame. The politicians are blaming the CEO’s. Taxpayers are blaming the politicians. The CEOs are blaming the borrowers. Where does it end? I’ve made the decision that in my life, it ends with me. I will not rely on a big corporation to provide me with a pension. For that matter, I will not rely on my government to take care of me during my retirement either. It is my responsibly to take care of myself and my family. The very first step is to stop looking to the government, a corporation, or a boss to solve your problems for you.

It is also time to stop looking for a guru or a financial planner to make your financial decisions for you. Take it upon yourself to become educated about money and make your own financial decisions.

Once the decision has been made to take responsibility for your own finances, it can be a lonely road to navigate. Where do you begin?

2.  MAKE TWO PLANS

Begin with laying out a plan. Actually, lay out two plans. Make a plan for preservation. This is your safety net if things go really bad. What will you do if hyperinflation hits? What will you do if the deflationary period continues? The nice thing about the plan for preservation is that once the plan is in place, it doesn’t take much extra time or effort to follow through with the plan. Once the safety net is in place, it is time to focus on your second plan – the plan for prosperity.

“In Chinese, the work “crisis” is made up of a combination of two characters.  The first signifies “risk.”  The second stands for “opportunity.”  – Jim Rogers  A Bull In China

Start focusing on the opportunity that exists all around you. Once you open your eyes to opportunities and make the decision to focus on them, you will start to notice them all around you.

3.  SET GOALS and MASTERMIND

Now that you have your two plans in place, set some goals – and join a mastermind group. Your mastermind group will not only help hold you accountable for your goals, but they will also help you troubleshoot, find additional resources, and generate new, bigger ideas to help you reach your goals.

The economy can seem scary… but it is only scary if it feels out of control. If you make the decision to take control of your own destiny, the scary feeling will go away, and be replaced with an excitement and optimism for the future.

The last year, if nothing else has taught us that nothing about our economy should be taken at face value.    We have seen “unthinkable” after “unthinkable” take place.  One thing is certain – we are not out of the woods yet.  It seems we are balancing on a very thin line, with hyperinflation on one side and deflation on the other.  The Feds have shown us, time and time again through their actions, that they want to avoid deflation at all cost.  This means a very real possibility of hyperinflation.   As residents of the US, we all need to be aware of what hyper-inflation is and how we can survive it.

During Hyperinflation, the cost of goods goes up rapidly, as the value of the currency drops.  There are several examples of hyper inflationary periods, but sometimes a picture really is worth a thousand words.

Woman Buring Currency in Germany.

This woman is using her currency as fuel.   The cost of to purchase an equal amount of fuel would have been much higher than simply burning the money.

Strategies for Surviving Hyperinflation

• Food Storage and Production.   The bottom of the pyramid is survival; food and shelter.  Take care of your basics by providing them for yourself.   Store food and produce your own, where you can.
• Hard Metals and other commodities.   Traditionally,  as the value of a currency goes down, gold, silver and other commodities will go up.
• Foreign Currency. When we are looking at a potential dollar crisis, it makes sense to hold a different currency. The entire world is in a state of economic flux, so research thoroughly.

Business Strategies During a Hyper-inflation

• Borrow money at a fixed rate, or if you already have loans, be sure to lock them into a long term fixed rate now.  Rates are historically low.  If hyperinflation sets in, the Feds will start to raise rates.  You want your payments to stay fixed.  Remember, if hyperinflation sets in, you will be able to pay that debt off later with your “declining-in-value” money.
• Lend money at a variable rate.  During hyperinflation, interest rates are likely to go up.
• Control your own intake of money (don’t work for someone else) – this way, you can adjust your fees as necessary.  Do not get into any long term contracts with your customers.  You want the ability to raise rates to keep up with inflation
• Fix your contracts with your vendors and other expenses for as long of a period as possible.
• produce and sell goods or services that will be in demand in a difficult inflationary period.  People will be getting back to the basic survival needs.  Some entertainment and other inexpensive distractions may also do well.  People will need a break from the stress.

A hyper-inflation may not happen, but if it does, you don’t want to be caught with your pants down.  There is no harm in being prepared.