I believe within three years the Dollar will have tied the all time record for the longest period of time a fiat currency has survived, until being replaced, or reset back to commodities.
What are your predictions: Will the dollar break records? Be replaced? Be reset back to a commodity basket? Reset to gold?
What is life going to be like if/when it does reset. Two currencies taken at the supermarket: old dollar and new dollar? Will we hear/read the price of gold announced in all media forms, every hour?
Inquiring minds want to know!
Fiat currencies have crashed consistently and repeatedly for thousands of years. It does not mean the world becomes mad max. But what will it look like during the transition?
I predict dollar goes down..gold goes UP and I have no idea whether or not the U.S. dollar gets replaced as the GO TO currency to hold. Will take several years though.
I'm happy as LONG as we don't go to a world wide universal currency. >: (
Joshua Dorkin, BiggerPockets, Inc. E-Mail: webmaster@biggerpockets.com Telephone: 877-831-4704 Website:http://www.biggerpockets.com Be sure to check out the BiggerPockets Blog at http://www.BiggerPockets.com/renewsblog/
The Amero is coming (North America Currency Union). Sooner or later it will come. I'm with Matty. If I had cash, I'd put it in commodities and RE. Right now all my cash is in RE. Here is the good news: Your fix rate mortgage will make mortgage payment so low, that you could pay off your property much sooner then 15 or 30 years. Meanwhile, the rent will go up trying to catch up with inflation. I don't expect it to happen for at least two or three years though.
Interesting thread and great article, Joshua.
There have been other threads on BP about being prepared for the worse. I suggest we ressurrect some of those on a regular basis, since there are so many newbies constantly joining in. Diversity will always be the best, imo.
Real estate, both free and clear as well as mortgaged, cash, gold, silver, food, water, and tradeable commoddities: spices, salt, soaps, matches, etc. Then, no matter what happens, you should be fairly prepared, imo. Rich.
There have been other threads on BP about being prepared for the worse. I suggest we ressurrect some of those on a regular basis, since there are so many newbies constantly joining in.
As usual, I will point out that you also need guns (handgun, rifle, shotgun) and ammo in addition to the items Rich mentioned. Furthermore, if you live in a city, I would also have a "Get Out of Dodge" bag already packed that will provide at least 3 days of critical provisions. That is especially true if you live in NYC, Washington D.C., Chicago, or L.A., as these are prime spots for a terrorist attack with weapons of mass destruction. Of course, it is also needed in hurricane prone areas as the people of New Orleans found out.
Back to the topic at hand, I am sure that the dollar will lose it's status as the world reserve currency in the near future. We are destroying the dollar with all the wreckless printing of money (from thin air) and unsustainable spending. Why would China or any other country want to hold dollars when the dollar is losing value right before their eyes
That doesn't even account for the trillions of dollars that "free" health care and 'cap and trade' will cost. Furthermore, the middle class is being destroyed right before our eyes as socialism is instituted. What's going to happen to the dollar? It's going to be destroyed and the economy is going to collapse!!! It's happened over and over throughout history and is happening now right before our eyes.
Currencies are unlike other assets in that they are priced relative to each other. Therefore, the value of the dollar will depend on which currency you are comparing it to.
If the other currency is from a country with equally poor economic policies (there are many like that), then the dollar need not decline relative to that currency.
In the very long run, currencies tend to reach an equilibrium when the nominal exchange rate equals the purchasing power parity (PPP) exchange rate.
Right now, many emerging nations, such as China, have undervalued currencies based on the PPP vs nominal exchange rates and we can expect those currencies to appreciate relative to the dollar. This is particularly true in countries such as China that have a good record of controlling inflation. On the other hand, there are emerging nations such as India which have undervalued currencies and a poor record of keeping inflation under check. For those currencies, the jury is still out because the undervaluation can possibly be eliminated by inflation.
Finally, I would have to state that most of us will probably live in just one country the rest of our lives and therefore the key issue is to maximize our wealth in our own currencies and not worry about the exchange rate. In my own personal case, because I spend a fair amount of time in two different countries, the exchange rate is an important issue.
Vikram, there is one flaw in your assertion. We don't live in a vacuum. We trade. And although US product will be cheaper to export, imported goods which we all depend on, will be expensive (Mainly commodities but also final products). It will eventually cause inflation here. I do agree with you that in the long run there will be an equilibrium between the US dollar and the other leading currencies simply because we still have the means to manufacture and innovate, but that is a distant future.
To MikeHo. If we get to the point when I have to rely on my gun to live, I will find another place to spend the rest of my life. It just not worth it. At that point Cosa Rica would look much greener. I personally don't think we'll get to this stage in my lifetime, but I have an "Exit strategy"... literally...
Eddie I'd love to hear more about your exit strategy...Just in case!
I agree with Eddie. Inflation on many goods - not ironically hidden from the CPI - will be through the roof if the dollar keeps tanking. It's not just about exchange rates/a weak dollar in other countries.
In more exciting news: Gold broke its nominal all time high in USDs today. 1045. Though inflation adjusted it is way below it's all time USD high. Inflation adjusted the high is above 2200.00
Matty- where is gold going? I have a good assortment of the 1/10, 1/5, 1/2 1nd one ounce coins, as well as junk silver bags. I have no intent of selling.
Vikram- what is your second country? Mine is Mexico, which is the only one I've found that our money is still strong in. I've considered splitting my residency.
Eddie- as an owner of real estate, I'd love to see high inflation again, like the 70s-80s. Doubling net worth annually!!
I still believe in hopeing for the best and planning for the worst. I have both a local exit strategy and an international strategy. Rich in FL.
I believe up. I think somewhere between 1100 and 1200 before the end of the year. Against the U.S dollar maybe a much higher than that next year.
I like to hope for the best. I am not a perma gold bug. I'd rather have real estate. For metal I'd rather invest in silver, as it has more utility and is historically undervalued against gold right now.
I believe we're in a currency pickle for at least a couple years. Based on history/cycles it seems gold has nowhere to go but up during a currency crisis (which hasn't really manifest yet, but seems inevitable).
My perception is that China will hold the price floor above 1k for a while. The Chinese Gov is encouraging its citizens to invest in and take physical possession of precious metals. Something the U.S Gov would never encourage here. Seeing four digit gold priced in USDs no longer looks strange to me psychologically. A couple weeks ago 985 looked psychologically strange (low), after holding 1k for most of Sept.
I do believe timing will be super crucial when it is time to exit gold. I believe we may see 5k gold in the next three years. But I have trouble believing we will see 5k gold for more than two to three month period. I don't think the U.S will become Zimbabwe. Perhaps more like the transition to the Euro was in Europe. The Dollar to Ameros. So at the supermarket bread = 35.00 USD or 1.50 Amero.
I believe gold will go high fast in the next year or two. Probably near a 1/3 to 1/1 ratio with the Dow. But also skyrocket back down just as fast if we get Volker-esque 80s economic policy back in place: Which seems very unlikely with helicopter Ben in the mix. But it seems the powers that be will do SOMETHING to take it down, perhaps even confiscation again. I am long gold for a couple years. And it appears much bigger/stronger hands than mine are long gold now.
Silver on the other hand I am probably keeping.
Peter Schiff, Jim Rogers, Ron Paul, and Kiyosaki: Their positions on gold - and commodities in general - make a lot of sense to me. And of course real estate, and everything I've learned from people here.
C'mon guys - what's all this talk about an exit strategy (from the country). Where's your loyalty? This is OUR country and we are not going to allow it to be destroyed. If things get bad, how about fighting for your country??? Two hundred years ago, our forefathers put their lives on the line to start this country? Are we not willing to do our part to keep it free?
Yes, Mike this is all nice and patriotic talk and I would agree with every one of your words when it comes to foreign invader, but if we brought it upon ourselves and I have to fight my neighbor, or protect my possession from a fellow American, this is not a country I want to live in.
Matty, I agree with your assessment 100%. It drives me nuts when people are talking about the "great recovery" and that "recession is over" ...EXCUSE ME!!??? Only a year ago we were on the verge of global economic collapse and in less then a year "we are back"? Simply impossible. Two options: Either we were never that bad to begin with or we are not even remotely close to be out of the woods. I'd take the second probability.
10% unemployment, federal spending of money no one have seen yet, two costly wars, we practically produce very little tangibles. No empire can sustain that and no one did in the past.
The founding fathers revolted against central banking. That is something I could fight for/be loyal too, yes. If I actually saw Americans turn off American Idol. If most Americans knew what they were revolting against. Sure, I could get behind that and fight, too.
Today's America is not what our founding fathers stood for, it is exactly what they fought against. I am having trouble feeling loyalty to today's America. Most people still think this is an issue of democrats versus republicans and issues with free market capitalism. I don't blame them completely. It is supposed to be very confusing and the media is supposed to dumb us down.
The job of educating a good percentage of Americans on what it is they should be revolting against seems like a good start. From there, yes, count me in. With all this technology and information, there is hope!
Rich, my second country is India. I should have introduced myself when I joined this forum but I did not notice that there was a new member intro section until I was well past 50 posts! Will do a belated one today in a separate post.
BTW, I personally don't feel we need to worry about having to exit the U.S. The economy is bad and should be bad for a little while as the past excesses are worked off but I think people in the U.S. are civilized (in most places) so we need not worry about fighting off our neighbors. That said, I am a little troubled by parts of Sacramento becoming ghetto as the gangbangers from the bad parts are moving into formerly decent neighborhoods.
The economy is bad and should be bad for a little while as the past excesses are worked off but I think people in the U.S. are civilized (in most places) so we need not worry about fighting off our neighbors. That said, I am a little troubled by parts of Sacramento becoming ghetto as the gangbangers from the bad parts are moving into formerly decent neighborhoods.
If you live in a big city, you should be worried about fighting off your neighbors. In any emergency (such as hurricane Katrina), law and order breaks down very quickly. The scum in New Orleans started looting, raping, and murdering almost immediately! The only thing that holds society together is the threat of force by the police. When the police aren't there or are otherwise occupied, then the riff-raff goes wild and you had better be prepared to fight off your neighbors! Could you imagine what would happen if a REAL crisis occurred (nuke going off, serious pandemic, food shortages, hyper-inflation, etc)?
If you live in a small town, rural area, or conservative state, things will be much better during a crisis. Although dismissed by the socialist elitists, people in these areas behave far better during periods of stress. Having said that, I would still be prepared to defend yourself - regardless of where you live.
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Oct 05 '09, 07:38 AM
