Moving money out of the dollar

[speakeasy]

I realize these guys in this video clip are "worst case scenario" guys, and reality usually gravitates towards the middle not the worst case, but still, I think these guys are spot on about a lot of things and I tend to learn towards their opinion:

http://www.youtube.com/watch?v=HTkPYnNmOBM


Well, I hope these guys are wrong! I'm far from rich, but I have a sizable nest egg that I'd trying to protect from being eroded away by hidden inflation and a falling dollar. Bernanke is now lowering rates again, further eroding the value of any money we have in the bank. Some estimate that when you include the things that the government leaves out of core CPI, inflation is running at about 10% a year. I'm considering options for a safe place to put my USDs. I don't trust the stock market, I'm don't think I'd diversify anymore than 15% into precious metals. I'm thinking of maybe opening an account in Europe in foreign currency, but I have to figure out how much of hit I'd take in exchange rates, what their taxes are like and such. I need to move now though, for the first time, the Canadian Dollar is worth more than ours. I remember it was ONLY a few years ago that you needed 2, yes 2 Canadian dollars to make a greenback. I have no more faith in our country's economy.

 

[ChapStick]

Great youtube link! Thanks! Rep points!

 

[Last Man Standing]

USA is being "set-up" for a fall through its currency and will be a regional currency soon with the North American Union!! Put your money in Gold - or the "GLD" stock - as a hedge towards a devalued currency!!

Converting to euro currency will equal out due to exchange rates - but in the long run the euro will be better- as plotted many yeaRS AGO!!

HAHAHAHA, THEY ARE BLAMING BIN LADEN - A DEAD MAN - blame a MUSLIM - what a joke - fvcken DEVILS!!!!!!

 

[speakeasy]

Don't worry. Doomsday theorists are pretty much wrong 99% of the time.

The thing is, those that predicted the crash of the dotcom bubble were called doomsayers as well. That was back when everyone was calling the massive gains of the late 90s a "new paradigm". Now with hindsight, we see who the real hysterics were...those that were sinking their money in pets.com.

In any case, my arm chair analysis is that the U.S. dollar will probably fall a little more. In any case, you should have close to 30% of your equities in foreign markets; this will help with the risk profile of your portfolio, as foreign equities are not perfectly correlated with U.S. markets, and hedge against a falling dollar. Also, having some commodites makes sense (gold, silver, oil), but only as a small portion, say 5-10% of your total portfolio. This makes sense if you want a back up for a worst case scenario/prolonged market crash.

About 10-15% into metals is what I was thinking. Greenspan when asked what he would do with his own money and whether he'd keep it in the dollar said that he'd diversify it into different currencies. That indicates that he has little faith in the dollar himself. Is there any medium that would allow one to easily hold a basket of currencies? I'm worried about exchange fees eating away gains.

 

[Francisco d'Anconia]

Good link although I don't see all the "doom" that people are talking about? What they're talking about isn't anything new (remember the depression). Understanding how money works meaning "don't put all your eggs in one basket" will allow most people to remain solvent and make the most of the opportunities that the current monetary situation is creating.

 

[~attrACTION~]

Great link.

I am financially preparing for this as well. I don't think it's a "doomsday" theory at all. It's very much a reality that Americans are facing, and it's unfortunate that few people actually care.

 

[Last Man Standing]

The future of our country is in the hands of a few outsiders who control the world currency - and instead of protecting the dollar's value, they trash it by lowering interest rates - super-inflation ahead! These people are traitors!

 

[dirtyvibe]

The future of our country is in the hands of a few outsiders who control the world currency - and instead of protecting the dollar's value, they trash it by lowering interest rates - super-inflation ahead! These people are traitors!

No-

Private parties in other countries control the debt and private parties in the U.S are responsible for most of the debt. We borrow money from other people in foreign countries in the U.S, there is no conspiracy anywhere and it's not just a few outsiders who control all of the debt- it's many, many private parties.

 

[azanon]

.... A good reminder that it makes sense to invest globally. Investing in just one country, even the USA, is a very risky thing to do.

 

[Francisco d'Anconia]

.... A good reminder that it makes sense to invest globally. Investing in just one country, even the USA, is a very risky thing to do.

I said this in another thread but it fits here too:

Don't ever rely on any one thing.

 

[Last Man Standing]

No-

Private parties in other countries control the debt and private parties in the U.S are responsible for most of the debt. We borrow money from other people in foreign countries in the U.S, there is no conspiracy anywhere and it's not just a few outsiders who control all of the debt- it's many, many private parties.

I'm not talking about bonds. They have doubled the money supply in the last ten years through low interest rates - and are printing too many dollars to finance our wars! America is trillions of dollars in debt and we have very little savings, as Americans - we spend but don't save! So who is printing all these dollars and why would they keep doing so when the dollar is losing it's value on the world market!!

Other nations are moving away from the dollar because of this deliberate policy to bankrupt the dollar and thus America - the private bankers know better than anyone else that this policy causes devaluation of the currency/inflation! We are heading for a fall! Of course it'll be blamed on someone else -- they'll just create a new NAU currency and then make war and create a world currency!!

 

[Last Man Standing]

Haha, wutang - you can't be serious? The Fed are private bankers and have no loyalty to the US!!! They are loyal to their agenda. And no, lower interest rates are not good for the dollar!! This is why you are getting out of the dollar! All we need is a cataclysmic event for all hell to break loose and see the dollar plummet --- other countries - china and other nations - are slowly getting out of dollars!

 

[Last Man Standing]

I'm not happy about fed activism either, but what are you talking about? Sounds like a retarded conspiracy theory by someone who has never studied monetary policy in their life.

First, the market for money is not controlled by the fed. The U.S. is an open economy. The value of the dollar is determined by global market forces. There's close to 2 trillion dollars in daily trading volume. The fed only controlls a few billion.
Never mind. Have fun.

You read too many Matrix text books, as other economists on this site do! Read real books - "The creature from Jekyl Island - a second look at the federal reserve" http://www.amazon.com/Creature-Jekyll-Island-Federal-Reserve/dp/0912986212

Know reality and not what is taught to you!

 

[Play the Game]

I say let it fall.... those europeans are shaking over there because their wonderful airbus will go out of business as american planes become cheaper.

This is good for the economy! As the dollar declines America might actually regain it's industrial strength and stop importing so much crap.

 

[speakeasy]

I say let it fall.... those europeans are shaking over there because their wonderful airbus will go out of business as american planes become cheaper.

This is good for the economy! As the dollar declines America might actually regain it's industrial strength and stop importing so much crap.

It's more complex than that. If out dollar keeps falling, other countries are going to stop lending us money, and that will have serious economic implications. Plus we inflation eroding away at our purhasing power. And if the OPEC nations say fvck it and get off the dollar, we are in deep sh1t.

 

[speakeasy]

I never said that we won't experience recession. In fact, if the yield curve is any indication, there is a very high likely hood of recession. I'm short lenders and homebuilders at this very minute, as I expect problems to worsen. I don't think you have to worry about hyperinflation though. In fact, the probability of hyperinflation or a complelely devalued currency is almost zero. The American dollar is still a reserve currency for most countries around the world. The U.S. economy is still the largest in the world, and we have the most autonomous, trust worthy central bank. If our currency was at such a risk of being run on, Bernanke would never have lowered rates. As far as inflation, the fed is predicting 1 to 2%, so we can lower rates as a countercyclical measure against slower growth without causing "hyperinflation". Being a hysterical nutcase might be more fun, but it only confuses people looking for sound advice.

Also, nobody in China or India wants to see our currency collapse, as then it will destroy their export based economies. Thus, nobody holding our debt has any incentive to run on U.S. assets. That's the good think about a liquid, globally integrated economy.

In any case, I would move 30% of your equities into American Depository Receipts, i.e. international stock, so that you can hedge against currency risk in the U.S. dollar (as the dollar falls, your ADRs will move up in price to reflect the new exchange rate). Gold, Oil, etc. also act as an automatic safe haven. If you want some last resort, liquid currency buy Swiss Francs, as the franc is seen as a refuge currency in crisis. You could also buy Euro notes, if you want some interest paying vehicle in another currency.

Personally, I've been moving assets into the Canadian Dollar. I would check out some Canadian income trusts. In any case, panic selling, especially when you have no idea what your doing (no offense) is how your average Joe loses his shirt in the market. People who sold at the bottom of the tech crash are sure kicking themsleves now, but that's human nature. A good investor should NEVER act on emotion or sensationalism. Keep your money in the market-if there's inflation, this will be reflected in corporate earnings. In fact, the market is the best place to have your money when anticipating inflation, with bonds typically being the worst...

Wutang, I think you make good points. I disagree with inflation rate only being 1-2%. I think the inflation rate is MUCH higher. I don't trust the feds numbers as they exclude many things that are volatile. I know I'm paying way more for rent, food, gas, healthcare and other necessities than I was even a few years ago. If I were still in school, I'd be complaining about skyrocketing tuitions. And let's not even get into how much home prices have inflated. I think the feds numbers are cooked to make inflation look lower than it its. Anyone that looks around knows things have been getting way more than 2% more expensive a year.

 

[Last Man Standing]

Inflation at 1% - that is some funny shyt!!! GET OUT OF THE MATRIX NOW!!!!!!!! People believe lies over reality - we are in trouble!!!!