I think the risk of the USA having hyper inflation is in the fractions of 1%.
I think the chance is about 1% annually, which puts it at about a 50/50 in any given person's lifetime. Although perhaps "currency crisis" or something would be better than strict hyperinflation.
Significant currency events in the US include the Revolutionary War. Of course at the time the economy was much different, but if that happened today it would would create a currency crisis. In the Civil War the Union issued greenbacks, paper currency without PM backing, and let in Nevada, whose only redeeming aspects were a pro-Union stance and loads of silver. The Confederacy issued lots of currency and bonds which became worthless when it was forced back into the US, a true currency crisis. As I recall the highest annual inflation in the US actually happened at the end of WW2, when metals were presumably also in short supply, and bond rates were artificially low. The tail end of the 70's didn't count as hyperinflation, but inflation was high, and silver prices made a nice pointy tippity top. So that is four candidate periods in US history already. The US was very mild compared to the rest of the world, which even did things like actually lose world wars. Expanding the scope to the rest of the world in this period and other empires in history, I think a possible currency crisis in our lifetimes isn't far fetched. Just read history and look at the major events and ask "if something like that happened today, what would happen? How often did things like that happen?"
That doesn't make it a productive asset. I have insurance. It is worth it, and a valuable service that I pay for. It is not a productive asset.
Ok, what about TIPS, or even bonds that are paying 2% when inflation is 2.5%? Those are not productive assets either, right?
I think precious metals as an investment are a lot like a zero-coupon, zero-interest, inflation adjusted, bearer bond, of infinite duration, issued in a foreign reserve currency, with very high bid/ask spreads, and a fairly large annual expense ratio. The things that make me question PMs are the ongoing expenses, large spreads, zero coupon, and "bearer bond" quality (anybody can take it and it then becomes indisputably theirs). Benefits include inflation adjusted and foreign reserve currency status. Infinite duration cuts both ways.
No one really went into the reasoning as to why non-productive assets are poor long term investments (as a general rule) but I do agree with that assessment. To me it seems fundamental so I don't really know how to defend that stance other than the basic reasoning that's already been given. Productive assets create and non-productive assets don't. If I invest in something that doesn't create, I'm fighting for my slice of pie. If I invest in a bakery, they just keep making pies. You get a pie, and you get a pie, everybody gets a pie.
So to be clear here, you are saying that bonds are non-productive assets, especially when they are at or below inflation?
And thus bonds are poor long term investments.
(I actually kind of agree with this)
I think bonds are a productive asset, but not necessarily a good investment. If I buy local municipal bonds, I lend the city (or local entity) money to expand the airport or refurbish the sewer treatment plant. Those are both productive uses. Almost any bond is productive, even if it later turns out to be a bad investment. It is productive because it pays somebody to go out and do something. That is not any different than stocks really, which individually often turn out to be unproductive and quickly fold, but in aggregate succeed. Silver is only productive if put to use conducting heat or electricity or killing little buggies, in which case it loses its currency/bond aspect. Maybe add "convertible" to the list above :).
