Today I had the pleasure of speaking with Arpad of Star path Academy.
We went over Arpad and his family’s experience in post-communist Romania in the 1990s and what they had to cope with during that tumultuous period of change.
I highly recommend Arpad’s YouTube channel Star Path Academy: https://www.youtube.com/channel/UC_8L…
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See Full Interview Transcript Below
Mario: Today, I have the pleasure of speaking with Starpath Academy while our pad that’s his name. And I was referred to Starpath Academy first by my wife, she said, Oh, this guy’s really good. He’s he used to live in Romania. He’s talking about hyperinflation. And then I got quite a few comments from the viewers in the comment section about start bath Academy. And as many of you know, I’ve been caught covering the monetary system, the fiat currency system. I’ve spoken a lot about the hyperinflations we’ve seen historically. But from listening to a lot of our past videos on Starpath Academy, I feel he has a really good grasp on explaining his experience, basically surviving economic collapse hyperinflation in 1990s, Romania. And even though I grew up in Brazil, and I was there during inflationary times, my experiences were very different. I think Brazil didn’t suffer as much, maybe as Romania. So, Lately, I’ve been asked by a lot of viewers, what can we do during an hyperinflation, and I thought, what better person to have then Starpath Academy. So welcome our pat on the channel, and thanks for accepting my invitation.
Arpad: Thank you very much for the invitation. It’s great to be here on your channel. And thank you for the invite.
Mario: You’re welcome. So let’s start first, like maybe with a little bit of history about Romania, because a lot of people maybe don’t know the history, they don’t know that Romania was under communism, from basically after World War, I guess World War Two, up until 1989. And then Ceausescu was of course deposed in 1989. I remember that really well. Being you know, in my 50s, the photos of him and his wife, how they got rid of Ceausescu. But yeah, the thing about revolutions, and when things change, you don’t know what you’re gonna get. So maybe you can go over a little bit, the history of your own country, you know, a lot better than I do. So from so we can from there explain what happened in Romania.
Arpad: Sure thing. So, very good introduction. That’s exactly true. Since the second world war has ended, Romania has become a communist country. And we had two rulers. And the second one was Ceausescu. And the rule ended on 89, the end of 89. And before that, Romania was a monarchy. So we had a king, and was totally different. Everything changed since the Second World War. When I talk about my experiences and my family’s experiences, I like to bring up that my family went through multiple hyperinflations, especially my grandfather and father. So there was a hyperinflation during the Second World War, the fendley. And the cause of second cause of the Second World War at some parts of Romania were parts of Hungary back then. So I talked about the hyperinflation of the Hungarian currency, the pengar, which my grandmother and my grandfather talks a lot about, not knowing, of course, during 89, and the 90s, we will experience another hyperinflation. So I have a lot of stories from both these both of these areas. And, of course, the 19. The 89th and the 90s. hyperinflation in Romanian was not even close to that levels. However, it was enough to kind of reset everything and everyone to a very basic, very poor level. And this came with also the regime change and the economic change of Romania, turning from a communist country into what some would like to call a capitalist but was more of a socialist government now That was installed. And so I just wanted to mention that that do these calamities like hyperinflation usually come also with political changes, and that was definitely true in the 48, and the 50s. And also in the 90s, of Romania, on so after the execution of childcare school, and in 89, there was a couple of months of euphoria in the country, a lot of people felt that we were liberated that a lot of good things are coming now to Romania. And before that, we had periodic lock downs, we had a lot of restrictions during communism. So the Flashpoint of the hyperinflation was definitely the execution of Ceausescu. And it took us sort of six months to experienced the high inflation that has started and the restructuring of the economy. And I like to mention it that it was a four zero inflation, that means that the currency lost 10,000 of its value, basically, something that would have cost, one lead during or maybe even less than one leg. In the night in early 90s. By the seven years of hyperinflation, it the cost of that was around 10,000. So a four, four zeros was the difference. And that comes a lot of like, that also means that if you had savings in the bank, we only had one bank, everything was nationalized, and centralized. It was the CEC, the was a central bank, which eventually got a bank holiday and the capital was locked in there. And by the time you could get that money, it was the value of it was inflated away. So if you had a $10,000, or Romanian Lei, what we had in the bank during that time, by the time you could have got it out, it purchased just around a loaf of bread by the time the everything ended.
Mario: So I guess it’s the inflation started in the early 90s, after Ceausescu was gotten rid of it. And basically it took seven years really, to, you know, in accelerated and culminated in 97. And it’s interesting that you said that there were a lock downs, and the economy was shut down after a revolution, which is, which seems to be what is happening now. And you also noted that you only had one bank, it was the central bank. And what we’re seeing, especially here in Europe, for example, in the UK, we only have four or five big banks. After the oil crisis, a lot of banks collapse, one of the big banks, RBS was taken over by the government. It’s now called that West, but it’s basically part I think it’s 60% owned by the government. So and we’re hearing now talk of getting central bank digital currencies are almost as if we’re going the reverse of what you guys went through and that they want us to be dependent on one central bank. And that doesn’t bode well to me. What are your thoughts on that?
Arpad: Definitely. So when I have my videos or shows about the hyperinflation in Romania, and how our families fared during those times, or even society, how it was changed. I mentioned often times that it was coming going from a very controlled state into a more liberalized and classical sense of liberty liberalized economy, whereas now I feel and most people would agree with me, I hope that we’re actually turning back the pendulum is swinging back towards a more control more centralized economies, more government control the kind of economies. So when I talk about what could have been good investments or strategies during that time, while definitely the calamities would be similar at the people level, on shortages and so on, what would follow in my opinion, there are differences between the two scenarios and I do hear that a future hyperinflation also be somewhat globalized. Instead of what we had a localized economy, a satellite state of the Soviet Union.
Mario: Yeah, and I have spoken many times, and I have a few books that I tell people to read about the death of money and now there’s like fear money inflation in France. The death of money is about why Mar hyperinflation, it does talk as well about the hyperinflation other central European countries like Austria, and even Hungary, I think it after World War One. And in France, it was the same thing in the 1790s, you had the US in yachts, you had a collapse of the currency there. And they were all related to big political events in 1790s, you just had the French Revolution. In 1919, the German Emperor had abdicated Germany became a republic, the Austro-Hungarian Empire collapsed as well. So and the more I look at things these days, even in the UK, and the US and France, where we’ve been having all these protests for the last three years, it seems to me that there’s a lot of social unhappiness about the political system, there’s a lot of division as well, of the public. So and we have as well, the monetary policy, the central bank’s printing a lot of money for the last 50 years, and especially since 2008. And last, last March, we have the government’s borrowing trillions of dollars. So I would say that, from what I’ve studied, and what I’ve experienced, in my life, in the West, we haven’t had, as good, you know, recipes for hyperinflation as we have now, because some people think hyperinflation is when costs go up very quickly. Yes, they do go up. But it’s more a loss of confidence in the in the political system, that issue that currency.
Arpad: I completely agree on that. That was our feel on the street as well it, of course, the effect of it was costs going up. And that kind of went into a self feeding loop, where if the products are of some certain companies that they are selling, are going up in price, at some point, you have to wonder how much better it is actually not to sell it or sell it at towards a later point, which again, drives up shortages drives up price again, and so on. So prices did have their sort of waves of going up. And it was always going up. But what we felt what the average people on the street felt was actually losing faith in the currency that you have. Because you would know that as soon as you got your pay, if you still have the job, you would run and physically run on your feet to the store to immediately spend it and buy something, because you would know that two weeks from now, one month from now, the same amount would buy less. So the confidence was lost. And also at some point, the confidence in government was lost that they could actually help us, quote, unquote, help us a lot of people did look for government to solve this issue, and why we can talk about high inflation and what tools government has to kind of slow inflation down, or that sort of stuff. Once your confidence is lost in the government to solve the issue. Their tools are very limited. Because at that point, no matter what they do, you still won’t believe it. A lot of like the central banks, the fed the Federal Reserve in the United States, is it’s also perception management, is their one of their best tools. Yes, of course, they can contract and they can expand the currency supply. But as you saw, especially last couple of years, it’s actually then talking about what will they do in two years, managing the perception of the free market, trying to manage Of course, if that would be lost between the free market and government, their tools would be much, much less effective. And people would not care, because they would rather have that whatever they can buy, maybe a house may be golden silver, may be whatever, even farming equipment, you would rather have that now, instead of whatever they promise what they would do in two years, five years or whatever.
Mario: Yeah, I think the Fed is playing a very dangerous game. They keep saying that. The rising prices that we’re seeing now and I use the term rising prices, because I think inflation is something that’s created by government and the central bank. It’s when they make credit and money very accommodative when they try to manipulate the natural rate of interest in the market. But it’s also because we’ve been off a sound money system for almost 50 years. Now, the anniversary, of course, is August 15. And we’ve had this inflationary environment. And now we’re starting to see it move into basic commodities, basic commodities, basic consumer goods. And if you look at the ownership of wealth in the United States, or and even here, probably, it’s like the top 10%, that own almost 90% of all the stocks and bonds, and that kind of inflation, you know, the inflation that they’ve created is flown into those, those financial assets, but I not, but I now think it’s attorney and flowing into these consumer goods. And the general public, we’re starting to see, not just in the States, we’re starting to see shortages. They’re telling us the shortages are because of the health crisis that we’ve had. But that might be slightly so but I think it’s a little bit to do with all the money and credit they created in the last year or so. I mean, people subconsciously, I think business people, they see when there’s something wrong, they hold back.
Arpad: Yeah, so regarding shortages, we experienced that even during communism. And one way or another, that was actually somewhat good, because people were more prepared for calamities, because it was normal for us to have shortages here and there. So the pantries were much more stock than how a Western society has it right now, the average person in the Western society. So in that sense, we actually had a better chance of going into hyperinflation, and also, the trust in media was already lost. So at some point, the prices or indicators and newspapers or something like that would not mean anything for us, because everything would have to price one noted down somewhere in a in a newspaper, but also the street price would be completely different. And that would mean regions and everything would be different based on different regions, what they produced. And, and it was just the breakdown of the economy. So in some way inflation or slow inflation can help more there are opinions that they can help businesses. And if it’s, of course, slow rate of inflation, it can help businesses grow, or take on credit and pay it off later it cheaper price. However, as soon as that inflection point happens to hyperinflation, it becomes totally a different game. And a lot of the industry of Romania broke down. Within weeks. It was it’s very hard for businesses, and especially factories and those who produce stuff to manage these situations. And of course, not even talking about when our own currency depreciating against foreign currencies, we would no longer be able to import anything on so it’s a totally different situation than what a high inflation would mean.
Mario: Yeah. And I guess, being under communism for so long, and having shortages was, I guess, a kind of a blessing in disguise, so that you could prepare for the hyperinflation, not that it was great. And maybe that’s what they’re trying to do to us, they know that we’re going to get hyperinflation. And they’re using this crisis as a cover for shortages. And I mean, here in the UK in the last week. They have this app is called the NHS app that people have millions of people have downloaded it. And they get notified if they were close to someone who tested positive. And in the last week or so. This app is going crazy. And a lot of businesses are having a tough time because people are not going to work. So yeah, I think there’s some of that going on. But listening to a lot of your videos, I found the interesting thing is that no matter what happens in an economic collapse, or hyperinflation, because hyperinflation is just a collapse of money and currency and money and currency. They’re human creation. And they’re very easy to, I think, once confidence collapses in the think that the system breaks down. It’s easy to start again, and the infrastructure, the economy, the people are still there. So I don’t think it’s the end of the world. It’s actually a good thing to cleanse the old system. So With that, maybe you could calm the viewers because people get worried what am I going to do? If this happens, my feeling is that it probably wouldn’t last for too long, the really bad hyperinflation, it would be a peak, maybe at the most 18 months, and then things would start recovering, or so could you tell us? I know, Romania is completely different than Western Europe. But I think is, it’s still a pretty advanced economy, I’ve looked up. It’s in the top 30, I think in terms of GDP, per capita, and total GDP. So it’s a pretty advanced economy. But what was the most important thing during the economic collapse in Romania and the hyperinflation in terms of survival, in your opinion?
Arpad: Sure, I would just like to mention two things that you touched upon. One was that the infrastructure remains there even doing hyperinflation isn’t necessarily always so because the factories, a lot of the buildings, and everything sort of deteriorates during these times. And to mention, Romania did not have a have any international debt. When we went into hyperinflation and after hyperinflation, we had multi generational debt that we still have and probably won’t ever be able to pay off. So certainly, things that you think are there will no longer be there, in sense that the economy and the engine of the economy was completely broken up sold to foreign investors, and breaking down. And the second thing was that this could be a training, what is happening at that kind of hit the nail on the head from my point of view, because whatever happened during the pandemic, and during these years, a lot of bells rang that, oh, I already lived through this once. And oh, I already felt this, especially in the United States with the shortages. And even as funny as it is with toilet paper shortage, we have that. So we already any Romanian can tell you that we had that, whether it was hacked. pipelines or something like that. And of course, that could be true known. I’m not questioning that. But saying like having these shortages during Romania actually helped us prepare. And I could think that this could be also used as an opportunity to kind of do stress tests on yourself and your family or even on your business. How would you fare if the pipeline would break down again? or What would you do if there would be food shortages, because we did see a lot of these calamities in time, the frequency of the problems would kind of indicate that some bigger issue is coming down the road. So we totally agree on that. first important thing was having connections, having family and having that the framework in place to help others and others helping you was probably the most important things, as you mentioned, as hyperinflation hyperinflation, as bad as it can get, or as bad as it can be. People live through worst times in history, right? So it wasn’t like our hyperinflation wasn’t as bad as the hyperinflation that my grandmother lived through, or, you know, a couple of 100 years back again, it was different, but what did they have, right, that we might not have, it was usually self reliance, connections, and, and just the capabilities of taking care of yourself and your loved ones, and not relying on centralized solution. So that was there before and that is why they could live through these times. And that is why we could live through these times because the family unit and the even the social structure of Romania was completely different, where since then, we have more went into an individualized the more compartmentalised and a different path, I should say where people are more reliant on these bigger services, bringing you the parcels right ordering something online, you thinking that you’re able to take care of yourself, just because these structures and frameworks are in place. But once these breaks down, you will see how what actually human nature is when these things are missing. So being prepared for that you know, knowing what your neighbor is What are your neighbors? capabilities? Or who would need help in this situation? Having connections with family is I would say the most important thing, because if you have this network of people, then you can live through almost anything I would say,
Mario: Yeah, that’s what I thought was really important when you said that the community going out and being nice to people. So you’re making more friends with your neighbors. Yeah, the other day, I was really well actually was yesterday came out there. They’re talking even in the UK now, because of this problem with the pain pinging the app. They call it a ping-demic. There are people warning that we could have food shortages, because people working at food processing plants might not be going to work and they might have to shut it down. So yeah, maybe they are doing this as a trial run and getting people to get ready. Because I think in 2019, that’s when the financial crisis really started not in 2020. Because I don’t know if you follow the markets that much. But we had the repo crisis in September of 2019. And the Fed had to stop unwinding the balance sheet, they had to stop raising rates, and they started, they used to call it not QE. And then all of a sudden, all of a sudden, we have this crisis. And it gives them the excuse in March to start, you know, doing massive, massive amounts of QE, their balance sheets, go from three and a half trillion that now we’re over a trillion. So I think they might have known in 2019. If we have to do all this QE to save the system, again, we’re gonna have hyperinflation right away. What’s the way to delay that a little bit, maybe while we shut down the economy? And maybe that’s how they found an excuse or reason for this crisis? I don’t know. But could we maybe go over a little bit of things like prepping? Because I thought what you said the other day in one of your videos is quite interesting to start small. So could you elaborate a little bit for the viewers because you’ve given me some ideas, but you have a lot more experience. Of course with that.
Arpad: For just to iterate on your idea, I do believe that the pandemic and all of these issues that we have had a strong deflationary effect that could have also offset a hyperinflation that was in the brewing and I’m in, they might even overdo it with completely stopping the economy to the point where I believe there could be a deflation first, before we go into a totally different scenario. As for prepping, so our situation was different back in Romania, just looking at the average houses in the United States, comparing the their pantry size to their closet size is completely different than what we had in Romania, in our ancestral houses that were built way, way back where the pantry was completely different. The attic could be used to store food and other items as well. But what we had was, you know, we have been canning and farming ever since pro from the Middle Ages, and that was passed down to generation to generation and different skills for the men and the women, of course, but that was our sort of edge that we had, that much of that has not been lost. And I do follow a lot of prepping shows and I look up to some of those people, most of the people that they do get things right, but of course, the American way or is always to kind of overdo things and then purchasing stuff that that survival stuff, which is important because we don’t know necessarily know how bad it can get. But kind of weighing in what is the most probable and then what is less probable in your in your prepping probably makes sense because everyone has a limited budget. So doing it in small steps. And having a rolling pan three would be the best in this case, because if nothing happens, you have you didn’t bought a lot of solar cookers or some other stuff which have their own purpose in some of these scenarios, but that is more unlikely, at least in my perspective. So actually, just whatever you’re accommodated to consume and buy on a weekly basic, weekly basis, you could stock up on those. So if you’re If you’re buying, you know whatever soups or chicken or whatever you are familiar with, or even soap, it doesn’t always have to be food, just making sure that you buy enough that if you are unable to go to the store, tomorrow, you have enough for three months. And that might seem a lot, but it’s actually not, you know, if you think about it, you cannot store everything. But if you have skills, you can buy flour, you don’t have to buy it, buy the bread, right. So having these basic skills of preparing food, from the grain, from the raw food items, is very important. Having a method of storing food without electricity, from root cellars. to smoke houses, we had everything already in place in Romania. Right. And it doesn’t necessarily mean that everyone had it, but you knew someone who knew someone who had it. And then you could trade or barter where you could use that smokehouse until you build your own. So whatever you’re accommodated to just having more of that makes total sense to me to the minimum of three months. And that’s even good. If nothing happens in the sense of economic issues. It could be a hurricane, it could be outages, it could be anything, just having that used to be normal sense, you know, common sense back in the day. But now we have been accommodated to this modern life where we are kept up by systems. And then whatever the system asks from us, we will gladly trade because we are we have a dependency on that. So not being dependent on the internet too much not being dependent on electricity too much. And having those food items will be the best thing. But also, in our case, in Romania, Romania was still mostly a rural country. So we had access to homesteads farms, that were actually producing many items. farming in the United States now could look like it’s a huge industrial farm with soybean and nothing else, you know, acres upon acres, that was not our case, of course, we had corn and some other stuff. But people also had their couple of acres of homesteads, where they grew potatoes, where they grew vegetables, raised animals and that sort of stuff. So having that would be really nice. Of course, I understand that not everyone can have that in the city, the best you can do is probably prep with food and tools and some other stuff, but also thinking about maybe owning some land out there, just in case, if a situation would change, you have maybe a couple of months worth of resources right now so that you can get that homestead started. And our homestead was very basic. Our house there was made from mud bricks, we didn’t have running water. So people say, Well, you had a homestead, when it was probably different than what you imagined. But it was enough to where we could go there, prepared that place and get it started within a couple of months to where it would produce and also bartering and knowing other people helped a lot.
Mario: You said that I think you lived in the city. But the homestead was outside in the countryside. And you spoke about one of your neighbors or someone in a block who which is the high rises in Romania right? Like that block that he was making wine from his balcony.
Arpad: That’s correct. That’s great. So the life city life becomes a rural life without the infrastructure. And without, I guess, whatever people have, without the space without the space. So it became very different. That would mean that people in the city would actually start living like folks outside of town where they would store food wherever they could. They would sometimes butcher animal right in front of the apartment places and process the animals up in the apartment. So it changed a lot in in Romania.
Mario: Yeah, I also remember you said that, try to think of something that you need all the time, you know, and maybe buy more, more of that VAT when you go out to buy stuff like clothes. So just simple things as well, I think is important. That’s because you said there was a shortage of clothes in Romania, wasn’t it during that time?
Arpad: Yes, definitely. So a lot of things were imported into Romania. So it was a satellite state of the Soviet Union. And it was centrally governed from Romania but also centrally governed from Moscow, which meant that Of course, Romania was producing more food. However, maybe Kazakhstan was producing other stuff. So they would manage where we would have these treaties and, and other stuff during communism, and whence every once everything kind of broke down, we didn’t have a lot of stuff that would be normally produced in another Soviet state, that would be important to us. So actually, clothes were different. But you have to take a look at what your country what you can produce or what you’re producing now, and what would happen, if you would no longer be able to import? What are your items that you know that you’re importing maybe from China or from other countries that you would no longer be able to afford, or even if the economic structure would break down.
Mario: Yeah, I have a feeling what we’re we could be experiences the fall of the Pax Americana, because, you know, prior to the Soviet Union, collapsing, it was the United States versus the Soviet Union. And then the Soviet Union collapse and Warsaw Pact countries of which Romania was a member, all those countries, they went through a lot of difficulties, you know, the changeover over quite a change from communism to whatever else came was very difficult. And all the supply chains broke. Economically, it was very difficult look at Cuba, Cuba had a lot of problems back then. It’s having problems now as well. But I have a feeling that if there is a collapse of the dollar system, it’s gonna hurt a lot of Western Europe, it’s probably going to even hurt Romania now, because Romanians become more dependent on that. With that, I wanted to talk about like, local currency substitutes, because you spoke about how, in the beginning, your family wasn’t aware that you could have another currency that would protect you more than that, how eventually, they learned that having Deutsche Marks was a good thing. And it was the same thing in Brazil, growing up in Brazil, especially in the 80s and mid 80s. If you had access to US dollars, you would do okay, because even though the Brazilian currency was going down the drain, if you had dollars, you live very well. And you kind of wonder now, I personally think the substitutes for when the reserve currency like the dollar is in danger of collapsing could be precious metals. I know it wasn’t in Romania. But could you give the viewers an idea of what happened in Romanian, and how you used to use the Deutsche Mark, and also how pricing things became really difficult that you had to price items versus items. And that people who talk about, you know, silver, now, they talk about $150 silver, but you said you might not even have a price in the in the dollar for silver, you have to price silver versus other things?
Arpad: That’s correct. So I come from a fairly poor family. We were not economically educated, we didn’t know necessarily know what was happening only by the time the inflation hit food prices, affects us all. And at that point, we knew that something was wrong. But that was probably too late by that time. Because usually food prices is one of the last things or probably the last things right before the salaries or something else. That has to increase as well. However, what happened when the economy broke down was a lot of skilled labor actually left the country. So you can imagine that engineers doctors who were skilled left the country completely, and what where they went to well, the Western countries of course of Europe, and Germany and some other countries were as well, skilled labor was first but then everyone who was able to and try to work outside of the country did and how foreign currencies were introduced to us was this way that they sent foreign currencies back home because you would think that you will be able to trade but nobody wanted the Romanian lay nobody would actually want Romanian lay for the German marks back then even from Germany, right. So what you would be able to trade is your own skills, or sometimes foreign investors would come in by purchase of land or something like that. But we suddenly learned that Well, hey, these foreign currencies act as mediary is act as actual currency or could act for currency. For us, so suddenly what happened that when you were selling your car, or maybe some real estate, you would actually price it in German marks and not in Romanian lay. And of course, if you worked for Romanian lay, then you would have to exchange that to something else, then that’s something else into German marks and then use the German marks to purchase whatever you want it. And that is still like that in parts of the Romania that where I came from that was such a shock back then that people still remember, a lot of real estate in the Transylvanian part of Romania is still like that, even on websites where you would go and look for apartment buildings, or something’s, most of the time actually, it will see, you will see the prices in euros. However, this was a bit later. I mean, people have to go outside work couple of months, maybe years, some never came back, so on. And the influx of foreign currency was very slow. So we did use barter. A lot. However, what people think about barter is that you will just go walk up to someone and ask them what you want. And then you switch products, that doesn’t work like that, there has to be a certain level of trust, for barter to work. So it would work mostly in smaller towns where you would be bartering from your wife, second cousin, right. Or you would have sort of verbal or nonverbal contract, that hey, I will be working for you this weekend to raise that barn or that smokehouse or something like that. And at the end of the day, I’ll have a live chicken that you will give me and you will also come back to my place and fix the leaking roof, you know, two weeks from now or tomorrow or something like that. So skills were bartered much more often than actual items. And when items were bartered, you have to have that level of trust, because you would need to know that you can rely on that person that they will actually hold up their end of the deal. It will be very hard because trust in government fell but also trust between people fell a lot. So you would be it would be very unwise to go up to someone and flash your silver or gold, Hey, what are you willing to give that to? For me for this, because they would probably know that you have more habitat. And then that would be very hard to do that we did had trade silver, we gold was illegal during communism in Romania, however, people did have silver jewelry on. So that was legal to hold and people don’t have that. However, silver and some other precious metals are going up in price so fast that you would not want to train that way, you will trade anything else but what is actually holding its value. So you wouldn’t be trading, in our case, my family grew potatoes, we would rather want to trade potatoes, right? Instead of trading silver. Now, of course, if everyone would have silver, and it would be a different scenario, and everyone would be knowledgeable of the price of silver, it could definitely act as as currency. But I would think that the lower quality currencies would be more circulated instead of what you actually want to hold. When we did trade currency, it wasn’t like you could go into a bank or it would go you would go into a house. Now we have trading houses in Romania where you can trade currency, it would be you know, a man in an alley with two bodyguards, who has the local cop paid off. And you would go there maybe with two of your friends and you will barter do what you would get. And in our case, everybody knew sort of had the understanding if you’re trading gold, or your gold jewelry, that means that you probably already traded everything else that you had, and you have, you’re desperate now, so you would not even get the fair price for that. That was definitely the situation the early months or early years later on since more of these people showed up and sort of the cup took opportunity of this it got balanced out where you would get that was to be people still didn’t want to trade away what was actually valuable and gaining value and the relative price of things It was very hard to know. And because regions are different. We grew potatoes but some other regions in Romania they grew corn or sunflower seeds they was totally different. So the price of now we are used to that there’s a global price. There’s a commodity market you know exactly the price of bacon, right? But that’s not like that in calamity everything. You have to Make up the price there and then kind of negotiate how you will trade that. So at some point, the price of the precious metals went up really high as the currency was falling, and we were losing the our trust in government. But at some point, you didn’t even necessarily knew what was the price of gold, or price of silver because people didn’t want to trade and we would not know how much it is worth. Right? You would and then towards the later parts of the hyperinflation are my family was actually lucky enough that we were able to acquire some gold during hyperinflation towards the later part where my father was able to work for foreign currency. And we trusted gold and silver more than even the foreign currency. So we wanted to trade some of that back. However, during the early periods of the hyperinflation, we lost almost everything. And one thing that we lost right before we were able to purchase some gold was a homestead that my grandmother’s sister had. And just to know, just to say that prices are very relative in these. In these scenarios, everything goes up in the currency. So the price of that home stuff could have went up 1000s times, 100 times or even more, however, compared to gold, it actually fell off compared to food it actually fell. So just to give you a concrete example, was that when we had to sell that property, there was around 2 million Romanian lay. But that doesn’t tell you much. Because eventually, 8 million lay was the minimum salary. Right. So in depending on, depending on the timeframe, that was, that could have been a lot that could have been a little bit to compare, eventually, in that year, within that year, 2 million Romanian labor as a gold chain. So to compare the price of gold to real estate both went up, however, relatively at that point, the price of gold was much, much, much more, and that we bought that chain as an investment, because nobody knows how long this period will go. And what could happen to the German mark, because as soon as more and more German Mark were flowing into the Romanian economy, even that was losing somewhat value.
Mario: One really interesting thing you talked about, and I think this is very relevant for people who are still holding a lot of local currency savings in the in the bank, you spoke about one of your relatives, how they, they had saved so much money in the bank, and then eventually he could barely buy a black and white TV. Who could you go over that? A little bit?
Arpad: Yes, for sure. So some relatives in the family had an inheritance from my grandfather, who did very well, with farming and some other stuff. And the inheritance was enough at some point. Right around 89, actually, right before a hyperinflation happened was that that amount of local Romanian currency could have purchased three regular homes in Romania, without any mortgage, so cash down they could have purchased three different houses. However, it was some conflict, what to do with the money, how to divide it and what to invest it in, of course, and that money was sitting in the check in the bank, the Romanian bank, and as soon as a hyperinflation happened, and the accounts were frozen, the bank holiday was on by the time the currency we were able to, they were able to take that out that same amount of Romanian lay bought a black and white television set. So just to give you an idea how fast it can go, and also to what I don’t talk too much about the stocks. So because the economy went down really bad. The company’s so in communism was within with different you will not be trading stocks every day all day on apps like how we do it now. But people who worked at bigger factories, they would have shares given to them so it would kind of be on top of the nationalized, pension plan they would be able to have, but my mother’s stock in the factory that she worked for, which would have been a good pension plan. Eventually, when she was able to cash that out. Eventually the factory went down. She was able to purchase a person with bath money. So I’m just to say that pension plans and stocks people think that Oh, they will always call up yes in inflation. But hyperinflation is a totally different game. action that was provided by government kind of didn’t really track inflation as well. It was always not enough, not even barely enough for food for the elderly. Because the company was majority state owned, the company was majority state owned. However, Romania during the 80s was a totally different communist country than it was in the 50s. So communism kind of shifted between these years.
Mario: Okay. could we go over a little bit your ideas about golden silver? I know, there wasn’t much of a culture in Romania for precious metals. But what do you think, could happen if we were to have a hyperinflation because I agree with you. And even though I think a lot of the symptoms, and you know, ingredients for a hyperinflation are there, it’s not guaranteed that it will happen. But we could have like inflation like in the 70s. And then someone steps in and lattes rates go up to 20%, like Paul Volcker, and then they and then that kill the economy, there’ll be a collapse, but that wouldn’t be hyperinflation. But you spoke about gold, being timeless. I thought that was really interesting. Maybe you could go into that a little bit. Because I think like me, you are very interested in the precious metals as well.
Arpad: Yeah, that’s absolutely true. So even during communism, we would fantasize about owning gold, or how nice it would be to have silver coins or something like that. But I was, of course, not never really that reality. For us during Romania. However, my went from my grandmothers and grandfathers experience, we knew that in the previous hyperinflation in the previous situations, or when, during the war times how well people did who were able to acquire that precious metal before the war times or before the Bengal hyperinflation, and were able to keep that however, it became illegal during communism, so you would have to wait probably around them, or 60 years to use that gold again, if you wanted to do that in Romania. However, in from our perspective, gold and silver would not be money investment that you would sell in four years, or five years. Or if it goes up in you sell it, because I do see a lot of YouTube videos on YouTube view titles that silver will go to 150 pounds. I’m like 150, you mean 150,000? You know, it’s if it’s hyperinflation, but that won’t matter, because you don’t know if that’s a good price or not. So what you have to think about in these scenarios is that gold and silver, to me, at least, or insurance policies that when a government collapses, or when the economy collapses, it is outside of the system, it is essentially timeless. Government goes on for a long time, as my grandmother used to say, there’s never has been a song that never ended. And people live during communism they were born and probably many of them died during communism in D never saw anything else about communism. So they could have thought that it will go on forever. However, it always changes the system always refreshes. And sort of having that gold and silver, outside of the casino of governments and economies gives you that stability that you can go back to after the calamities are over. So in my perspective, on being able to hold these precious metal investments through the periods where, you know, to do day’s work was paid within a couple of pounds of potatoes, being able to hold through these periods, and then use it again, after the economy and government said tools would be the best case to have gold and silver. So it’s an insurance policy against the loss of faith in government, I would say it would be something that you could acquire, in my opinion, you could acquire multi generation wealth, because we knew stories about other families who did that. And they did very well. Of course, that wasn’t our case. But the knowledge was passed down to us as well.
Mario: Yeah, and I guess the trick is holding on to it during those periods if that’s the most difficult thing to do.
Arpad: Yes, that’s exactly what I wanted to say. So you’re absolutely correct that when these calamities happen, those who have no food storage or no place to go or no connections, they will be forced to trade, whatever assets they think they have made that be even gold or silver, or whatever investments that they think has value, they will be or they will need to trade that for necessities. So having that base covered, where you have those basic necessities taken care of, you have the connections you have the ability to self sustain, or go to somewhere and build the ability Then, during these times is much more important than having a lot of, quote unquote, investments because it will be it will be traded away for potatoes or corn, if you’re if you’re starving, or if your children are starving.
Mario: Yeah, so I guess golden silver will be ammunition for when the dust settles, so you can start again. So you might have to use a little bit of it during the crisis, but you need to try to hold on to as much as possible. Our pad, it was really nice having you here. I think we’ve almost been speaking for an hour. So I think that that should be enough. I’d love to have you on the channel. Again. I wouldn’t mind coming on your channel if you’d like. And anything you’d like to say to the viewers some final, final advice or thoughts?
Arpad: Thank you very much. It was nice being here. Yes, I do have a final thought is that don’t let fear take over you a lot of these channels. And a lot of people who have good intentions and they share good information. Do play into fear, whether they want it or not. And fear kind of locks you down or makes you do unwise decisions or invest your money where you would not want to or invest too much in something that you think will perform good or not. So having level had not getting too into the world of politics. That’s at least for me, but actually being able to step back a little knowing that these two these scenarios do play out, but they’re not one day from one another, you will still have some time to prepare. And as long as you step back, take a look at things as they are not what your perception is or what you were trained to do in good times but look at them as they are realistically listening to other people other advices and then distilling what is truth out of that. And then making your decisions is much more important than acting on fear.
Mario: Great, thank you very much. Have a great weekend and I’ll talk to you another time.
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