The posting about the suggestion to *NOT* pay off a mortgage concerned me. That being my only significant debt, I thought eliminating it would be prudent. As background, I live in the DC suburbs, and have two choices #1) take prudent Gary North style precautions (water, food, shelter, location, location, location) and get divorce or #2) stay put, buy some extra rice and "pray like hell". My wife believes Dan Rather. Her opinion won't change until she sees collapse. I choose #2.

Finally, my question:

I have a fair amount of cash in the bank, and a lot more in U.S. Treasuries (buying gold, or taking out cash would risk divorce). If the U.S. sort-of (!) gets its computers working, but the "non-western" nations go "belly-up", do I lose everything, or does King William "just" ration banking-transactions?

-- Anonymous (Anonymous@anonymous.com), August 11, 1998

Answers

Regardless of whether you move or not, take the Gary North style precautions. Since you have lots of cash, why not invest in another house where you won't be so vulnerable. Find a strategic location, that is away from any large city. Maybe your wife will go for weekends away at your own little retreat. Maybe call it your "romatic get away." If you don't want to risk divorce then don't do anything that will push you in that direction. I believe as time goes by and we get closer to Y2K, there will be a lot of divorces and probably a lot of reconciliations during and after. There will definately be a ration on bank transactions. According to Gary North, for every American household, there is only $160.00 in circulated cash that can be given out. I would keep some cash in small bills ($20, 10, 5). Your ATM card won't work, and your credit cards may not be accepted anywhere. I guess if you do none of the above, I would pray like hell too, cause you will be in deep doo doo.

-- Bardou (Bardou@baloney.com), August 11, 1998.

As with everything else to do with Y2K, impossible to tell.

US Treasuries are as good as the US government's word. They'll be worthless if the US government collapses, or repudiates its debt. The former is probably TEOTWAWKI, the latter is unlikely but a close approximation thereto is serious inflation or hyper-inflation. If you want to guard against that, buy some index-linked govt. securities ... or gold, which doesn't rely on a government promise for its inflation-resistance.

A third scenario is deflation. If that happens, your treasuries will make you a richer man whereas index-linked (and probably gold) will go down in absolute value.

Not very many years ago, conventional wisdom was that 5 to 15% of every portfolio ought to be in gold. Can't you get your wife to agree that far?

-- Nigel Arnot (nra@maxwell.ph.kcl.ac.uk), August 11, 1998.