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I am currently writing a book on inflation and deflation. Seems timely and I am worried about both so I was researching the subjects anyway.

Free book if you suggest the winning title or subtitle

As previously, I will give a free copy of the book to the person who gives me the winning title and/or subtitle. If more than one person gives the winning title, first one wins. This time, unlike previous books, I have not yet thought of any myself. As always, the title must be accurate. A look at my other titles will show you the kind I like.

John T. Reed will be speaking at Freedom Fest in Las Vegas July 8-10, 2010 on Best Practices for 2010 Real Estate Investors and How to Protect your Net Worth from Hyperinflation and Deflation.

Video of a speech I gave on inflation and deflation

Here are parts 1 and 2 of a speech I gave recently on inflation and deflation.

Clever and/or catchy is great

The kind I do not like are those that use words like those listed in my Real Estate B.S. Artist Detection Checklist item #20. I also do not like obscure references that you do not get until you are 2/3 of the way through reading the book. The book What color is your parachute? is very successful, but I hate that sort of title. It’s about changing careers. It was probably in the skydiving section of the book stores for years.

Black Swan is another bad title. The book is very educational and I recommend it. But the title does not help sell it. Since the media often only mention the title and nothing else, I cannot afford a title that gives no clue as to the content or subject of the book, or worse, one like What color is your parachute? that actually suggests it’s about a totally different subject.

Complex, scary stuff

Initially, I thought it might not be long enough for a book—maybe just an article. Ha! Boy was I wrong. It’s scary, very complex stuff.

Last night I heard a famous real estate guru say he is OK with one-year notes, but not two or three years, because he is afraid of inflation. If you own a million dollars worth of one-year notes, and we have, say, 10% inflation as we did most recently in 1981, you lose $100,000 of purchasing power during that one year. I don’t know about you, but I am NOT OK with that, especially when it can easily be avoided.

Then there is the fact that our nation’s financial ratios are now a lot worse that 1981. We could have inflation of 20% a year or even hundreds of percent a year. It happened here in the Confederacy near the end of the Civil War and in the American colonies generally during the Revolutionary War. It has also happened in recent history in Israel, Argentina, and so on.

No one knows the probability of hyperinflation in the U.S. in the near future. But we darned sure know it’s a possibility. And I am learning in my research for the book that you can protect against it. And you should.

Inflation and deflation are relatively easy to protect against, if you think about them, take note of their histories, and arrange your balance sheet intelligently before it hits the fan. After it hits the fan, the government will quickly slam shut all the escape hatches as they did during the Great Depression and the Great Inflation of the late 70s and early 80s. For example, President Roosevelt issued Executive Order 6102 that required all Americans to turn in gold to the Federal Reserve bank for $20.67 per ounce—a below-market price—by 5/31/33. Failure to do was punishable by a fine of $164,000 in today’s dollars and/or a prison sentence. Nixon reacted to inflation in the 1970s by imposing federal wage-and-price controls.

Table of contents

Here is the tentative table of contents:

  1. Overview
  2. Causes of inflation and deflation
  3. Effects of inflation and deflation
  4. History of inflation and deflation
  5. Hedge against inflation by buying everything you need for the rest of your life now
  6. Advantages and disadvantages of hedging against inflation by buying commodities including gold and other precious metals
  7. Price indices
  8. Real estate
  9. Bonds
  10. Stocks
  11. Deflation
  12. How to protect yourself

    13. Appendix: Books about inflation and deflation

Description of the book

The idea of the book is to understand inflation and deflation including the history of when they occurred in the past, how they affected people, and how various governments reacted to inflation and deflation and people’s efforts to protect themselves from them. I was surprised to learn that the government deliberately causes inflation to avoid raising taxes openly. Inflation is a hidden tax on certain groups, generally the older, wealthier people. They also use inflation to avoid unemployment and to make it easier to pay off government debt. Since the government is doing it deliberately, they cannot have citizens structuring their affairs to avoid the effects of inflation. Doing so reducing the ability of government to get away with it. That’s why the history of inflation, eveninthe United States, is full of government actions like confiscation of gold and silver, wage-and-price controls, controls on sending money overseas, protectionism, and so on.

John T. Reed

Copyright by John T. Reed