It has come to my attention thru various readings that do to the increase in government spending and debt the dollar is slowly turning worthless. Here is one such article. So what are we supposed to do to protect ourselves? I bet alot of you fatwalleters will have good ideas on investing to avoid this and probably turning all of your assests over to a different currency I guess.
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I know the sky is falling but I don't see the problem.
Say the dollar drops 10%, I buy all my goods in USD. When I buy something the first thing I do is NOT to immediately go convert it to Euros, go to Europe and buy the good, then bring it back here. Even if the dollar drops 10% against the Euro inflation on my basket of goods might only go up 3-5%.
On the other hand, my basket of foreign stocks should go up 10% in profitability in terms of the USD which is the currency I need to buy things. Also I own many US companies who generate 50% or more of their profits in foreign countries. When these companies convert these profits to USD they should get a 10% bump.
I'm not really seeing the problem. Falling dollars makes it easier for the US to repay their debt and makes American companies more competitive in the world marketplace.
ifyouhavetoask said:Think about what the masses will do, and then position yourself to profit from it.
Those GoldKit.com ads on tv are a good example.
Thanks, I like that idea. The problem is, what do you do about investments and money in bank accounts that are constantly falling? (other than vacuuming them up)
What makes you so confident that the future is so easily predictable? I recall when the Euro was introduced...the common 'wisdom' was, who would want that? Look how storng the dollar is, it's just going to get stronger...IME when everybody decides something is a given, it's time to get to the other side of the boat.
WalStMonky said:What makes you so confident that the future is so easily predictable? I recall when the Euro was introduced...the common 'wisdom' was, who would want that? Look how storng the dollar is, it's just going to get stronger...IME when everybody decides something is a given, it's time to get to the other side of the boat.
How Contrarian you are. Logically I think the info is in and that the dollar has no choice but to fall due to our economic policy. I think the plan is to inflate away our debt and that the Fed is hoping this happens with a soft landing. The problem is I am highly Contrarian and with everyone coming to this conclusion I am not sure what to do. I have taken a Buffet, Jim Rogers approach to this. 1 I am borrowing as much free money as I can (credit cards, student loans) in hopes that inflation will make my loans worthless. 2 I am investing most of my money aboard or in companies that do business abroad, 3 I am fairly bullish on Commodities (Mostly Oil & Steel).
ScootyPuffSr said:I know the sky is falling but I don't see the problem.
Because the corporate profits aren't being trickled down to the masses, and the masses are being pushed to their limits. When they snap, and consumer spending goes into the dumper, the dollar's decline will feed on itself.
These problems can be delayed...7 year car loans, 40 year mortgages, no payments for 18 months on furniture, etc... but the music eventually stops.
Who knows, maybe we'll have 10 year car loans and no payments for 48 months on furniture.
the dollar collapse. lmfao. must be another Russian or eastern European trying to cause panic. lmfao.
what makes you think the dollar hasn't been ENGINEERED to this level to help corporate profits. american companies that export have an advantage because of the weaker dollar. american companies that generate returns in other countries show greater profits in american dollars because of the exchange rate.
here is food for thought. how about the collapse of the british pound and the euro. those are two currencies that are EXTREMELY overbought.
the dollar has been weakening for five or six years. Have you had your head under a rock?
It's about time to start accumulating dollars as yields are on the rise.
Remember when the dollar "collapsed" versus the last "new dominant" currency? It was 94-95, and the dollar collapsed over a few months from 105 yen to 80 yen. The world collapsed and every American was forced to live in tent cities and refugee camps for a few years.
last time the dollar collapsed, I read a thread about it here
I think the op has a good point. If the US dollar is weakening then we have less money in the big picture and less buying power on a world scale.
Personally, I have found that my COGs have gone up as the dollar has weakened against foreign currencies. I am trying to hedge against this by opening up businesses in markets where the US dollar is weak to capitalize on the currency arbitrage and bring home more US dollars relative to just a US business.
But on the flip side why would you want dollars. The US government is in a bind. If they raise rates then spending which for years has been propping up our economy will slow but, if they don't then who will buy our low yielding dollars / debt. China has already started to diversify there holdings and has shown via Blackstone Group that they would prefer to own our assets (Companies, Bridges, Ports).
My problem with trying to analysis the situation is that there are too many variables. The currencies are based on far too many things (economies, supply and demand, fiscal responsibility) for me to be able to predict them. I do know that if our economic policy doesn't change (tax cuts and increased spending) then our currency is likely to keep falling. No country has been able to relentlessly print money and sustain a high valued currency. The dollar is basically worth what people are willing to pay for it and right now that ain't much. Business will do well as the dollar weakens but, that won't solve the underlying problem because it is unlikely that this profit will pass down to the government.
Again I love going against the grain but, this one considering the current governments fiscal responsibility / insanity (deficits don't matter) is hard to argue with.
kcm18 said:It has come to my attention thru various readings that do to the increase in government spending and debt the dollar is slowly turning worthless. Here is one such article. So what are we supposed to do to protect ourselves? I bet alot of you fatwalleters will have good ideas on investing to avoid this and probably turning all of your assests over to a different currency I guess.
all money is slowly turning worthless (that is call inflation) --- that is why you own assets that are slowly turning worth more (that is called investing)
kcm18 said:It has come to my attention thru various readings that do to the increase in government spending and debt the dollar is slowly turning worthless. Here is one such article. So what are we supposed to do to protect ourselves? I bet alot of you fatwalleters will have good ideas on investing to avoid this and probably turning all of your assests over to a different currency I guess.
You must have been reading for a very long time as such rhetoric had been around for a long time. My guess is that they have been calling for the demise of the dollar for over 30 years. Maybe its time has come, but maybe not.
If the dollar continues to fall then there will be significant inflation occuring. This will be a bad thing for most but in my opinion can be a good thing for some if they successfully prepare for it. The best way to fight inflation is to obtain tangible assets (gold, real estate, etc.) and foreign investments which can be used to offset the rising costs of inflation. Granted, when it comes to foreign investments you would actually be making the situation worse if you were to invest a significant ammount of money (several millions of dollars), however (no offense) I dont think anyone reading this board will be conducting activities of that nature as they are usually conducted by major corporations and or hedge funds.
A good example of a way to fight inflation is the following example.
Let's say that you have a home which has a mortgage payment (excluding interest, pmi, taxes, etc.) of 1300.00. 30 years ago in 1977 that same home would have a mortgage payment of $383.36 (less than 1/3rd of the dollar ammount today). Although the dollar ammount is different the value is the same. With home mortgages however, you can lock interest rates and refinance when interest rates go down which actually works out in your favor because in the end the inflation (factoring job market keeping up with inflation) is letting you pay your debt significantly faster and thus opening up your home or homes for income related uses (landlording, renting, etc.).
Once again, this is all assumming that the job market is keeping up w/inflation.
not going to happen. If anything, corporations will send even more jobs oversea to reduce labor costs.
Except that a "cheaper" dollar and a more expensive foreign currency is only going to make outsourcing more expensive and reduce marginal benefit to doing it.
If anything a falling dollar should reduce the outsourcing you are talking about.
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