This is a repost of an article published originally back in September 2007. It is worth republishing it.

1. Avoid, to the extent it is possible, selling goods at a fixed price to be paid in the future
   1. Remember that if you work for somebody you are selling your work at a price set in the past and you will be paid in the future, so, during hyperinflation, you will be robbed daily
2. Do not loan money at a fixed interest rate
   1. Remember that when you put money on a 401k, bank account, etc., you are loaning money at a fixed rate (bank account) or at a zero rate (401k), the same is true if your are an employee
3. Take loans at a fixed interest rate
   1. Good luck with that (see 5)
4. Do not save! Every penny you save will lose value on a daily basis
   1. Remember that if you work for somebody you are saving no matter what (you give your work today and your employers keep the money they owe you for your work in their bank account, and they pay you without interest at the end of the week, etc.)
   2. The longer it takes for you to spend your money, the more you lose
5. Owe interest free money
   1. Try to buy goods and services and pay for them in the future
   2. Take as long as you can to pay your debts and, if your creditors complain, tell them that you are facing a liquidity crisis
   3. The best candidates for this kind of transactions (if you have no power) are your friends, so be ready to change friends frequently

That said, here are the informal chances of survival and thriving based on the income class you belong to:

1. If your only source of income is the sale of your work and you have adjustable rate debt: 0%

You will survive, but it is called slavery (you will have enough money to feed yourself so you can go to work)

1. If your only source of income is the sale of your work and you have adjustable and fixed rate debt: 5%

You will survive, and have a very expensive house/ car, or whatever else you are buying on a fixed rate. As soon as you refinance that expensive house or car to get all that equity you will go back to 1.

1. If your only source of income is selling your work/services as an independent contractor/professional and you don't charge cash: 10%

You can always raise your prices every day; however, you will lose money in every non-cash transaction

1. If your only source of income is selling your work/services as an independent contractor/professional and you charge cash: 20%

Of course, it also depends on your debt situation

1. If you sell goods you paid cash for: 30%
2. If you sell goods you will pay at 30, 60, 90 days: 40%
3. If you loaned money at a variable rate: 50%
4. If you have employees and you pay weekly: 60%
5. If you have employees and you pay bi-weekly: 70%
6. If you have employees and you pay monthly: 80%
7. If you have employees, you pay monthly and they give you money for their 401Ks: 90%
8. If you are Wall Street: 100%

Of course, we are not even close there yet. Nevertheless, my guess is that the current policies being implemented with the excuse of the Wall Street-created liquidity crisis will move us a few inches forward in that direction.

Ah, and if you do any of the above, don't say you did it because I told you to do so. This column does not intend to be any kind of financial advice.

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Last update : 04-02-2008 19:42

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