Land as a currency hedge:

Paper currency is known as fiat currency. The word "fiat" means "let it be done" in Latin. Fiat currency is money because governments declare it to be. Fiat currency has no intrinsic value, is not convertible to any specific object and is not fixed to an objective standard.

The US dollar has been one of history's greatest currencies and it has been an important tool in American economic growth. It is convenient and safe to use and it is respected worldwide as an international reserve currency.

But it has steadily declined in value, especially in recent decades, and it will continue to decline, possibly at an increasingly rapid rate. Even if the real value of a piece of land does not increase over time, its value as measured in dollars will increase dramatically. The value of land must increase over time because the unit used to measure its value, the dollar, is a fiat currency.  

The price of gold serves as one measure of the dollar’s value. Gold correlates to many things in the short term and its movements are not always tied to dollar stability. However, in the long term gold is the same metal it’s always been. An ounce of gold was worth $38 in 1970 and that same ounce is worth more than $1200 today. Gold hasn’t changed, however. The dollar has. 

Fortunately, the devaluation of the US dollar has been relatively steady. Many other currencies have become completely worthless in a short period of time, such as the Zimbabwe dollar, or the Vietnamese dong of the 1980’s (and also the pre-1975 Republic of Vietnam piaster). 

Some currencies remain viable after sudden and dramatic drops in value. In 1997, the Indonesian rupiah lost 80% of its value. The Laos kip lost 87% of its value from 1997 to 1999. Those two currencies are alive today, but are worth a great deal less.  

The Tsarist ruble of pre-1917 Russia simply became worthless, as did the German mark of 1923.

While Americans have been fortunate in that our currency has devalued steadily, and not overnight, the faith we have in our currency can make us slower to recognize how quickly a currency’s value can vanish. An immigrant from Lebanon who had seen the Lebanese pound go worthless in the 1980's would be under no illusion as to the stability of currency. He would use currency to make transactions, of course, but the idea of storing wealth in currency is a concept that would seem to him to be absurd. 

The examples of fiat currencies that have gone to zero are many: nearly all fiat currencies have eventually lost all of their value. It is more difficult to find exceptions to the rule: the British pound and the currencies of some of of the British Commonwealth countries, and the US dollar, are on this small list.

Our best hope is that the dollar doesn’t devalue too much, too fast.

Academics point out that most fiat currency is not in paper form. It is transacted via securities and bank transfers, credit and checking accounts. When the government inflates or devalues its currency, it does not actually run a printing press overtime. But because that is what is effectively happening, the mental picture of irresponsible politicians running a printing press is accurate. When a government wants more money, it "prints" more of it. 

Academic theories which described inflation as the result of peoples' expectations - that if people expected high inflation, their behavior in response to their expectation actually creates inflation - were once prominent. Today, most economists agree that inflation and the debasement are a question of how much of that currency a government creates. When the government prints too much money, the money becomes worth less.

Because compromise is such an important feature of our political system, the likely result of today's massive government overspending will be a compromise between higher taxes and the devaluation of the currency. As of late 2016, governments around the world were competing to reduce the value of their currencies in the short-sighted belief that that will stimulate exports. 

Investment in land will protect against the continual erosion in currency.