Major recession and fallout of the dollar

[zooracer]

I'm certainly not an alarmist and dont mean to freak anyone out on here. I have just been doing lots of reading and seeing lots of, supposedly very informed and intelligent people/organizations calling for a possible major recession and a possible complete devaluation of the U.S. dollar.

Does anyone else worry about this? Just read an article on Barrons online saying it is inevitable the dollar will fail.
Obviously there are many countries/economies who do not want this...most of Asia and europe, as it will really hurt them also.
But, these "experts" are saying that it is really out of everyones hands. The cake is baked and we are going to have to eat it.

There is talk of the U.S. working towards a North American unification (Canada and Mexico) to create the "Amero"? To replace the dollar ?

Am I the only one here who is seriously freaked out by all this?

On the Barrons article they speak of moving your U.S. dollars into overseas accounts with foreign currency. I've also read Gold is a good idea now.

Do you think this is possible? Am I unnecessarily worried?
Or, should I be taking some extreme measures and cashing out my IRA's...taking the big tax hit...and buying gold or some such?

Thanks,
ben

[jIM_Ohio]

I am worried but not paranoid.

I have an investment in PRPFX, so I own some gold and silver.

I think history will show a few things-

the weak dollar helps Bush and his supporters two fold.

1) weak dollar helps companies which export, I believe, or get significant business from overseas.

2) weak dollar might also be a way to fight war on terror. We know that terrorists were populating the US with counterfeit currency before 9/11. Now that same tactic means little because the dollar is worth so much less.

3) this might also be a subtle way of sticking it to the Saudi's, who the real war on terror needs to fight.

[banditfist]

All fiat currencies in the history of mankind have failed eventually. The dollar will be no different. Take the $140 billion stimulus package. How can the government afford to do this? Either the Fed expands the money supply via inflation or we borrow it from the Chinese (which we then go to Walmart and buy cheap Chinese imports). The dollar is backed by nothing more than the good faith of the US government. Nothing more.

I would not recommend gold at this point. I bought some back in late summer at around $683. I sold it at $938. Gold does not have much of an industrial use like silver.

Gold is considered an inflation hedge. However, you really need to determine if we are in an inflationary environment or deflationary.

[zooracer]

Originally Posted by jIM_Ohio

I am worried but not paranoid.

I have an investment in PRPFX, so I own some gold and silver.

I think history will show a few things-

the weak dollar helps Bush and his supporters two fold.

1) weak dollar helps companies which export, I believe, or get significant business from overseas.

2) weak dollar might also be a way to fight war on terror. We know that terrorists were populating the US with counterfeit currency before 9/11. Now that same tactic means little because the dollar is worth so much less.

3) this might also be a subtle way of sticking it to the Saudi's, who the real war on terror needs to fight.

I'm going to look into the PRPFX...as I think owning some silver and gold is a good thing right now.

I do try to be a cup half full kind of guy and see that this could be a good thing for the country. Perhaps our new currency will have some kind of backing, as opposed to the current fiat system we have (well, all of the world has I guess)

I know the rest of the world doesnt want this to happen since their currency is pyramided off of the dollar. They will not let it go down the proverbial toilet until the very last moment when they have no choice before it pulls them down too.

On one hand I hate how much we spend on the military and this war (I'm a libertarian), but I understand the model of trying to get a democracy going in the middle east that is an ally with the U.S..

I hope we start drilling more here in the U.S.. I understand with the current technology our oil companies use, they can have very little environmental impact.

sorry for the ramble

Just nervous.

[zooracer]

Originally Posted by banditfist

All fiat currencies in the history of mankind have failed eventually. The dollar will be no different. Take the $140 billion stimulus package. How can the government afford to do this? Either the Fed expands the money supply via inflation or we borrow it from the Chinese (which we then go to Walmart and buy cheap Chinese imports). The dollar is backed by nothing more than the good faith of the US government. Nothing more.

I would not recommend gold at this point. I bought some back in late summer at around $683. I sold it at $938. Gold does not have much of an industrial use like silver.

Gold is considered an inflation hedge. However, you really need to determine if we are in an inflationary environment or deflationary.

yes, I really think your right and I do think it will happen within 3-5 years.
Of course, I hope I'm wrong, but no one really knows when it will happen.

I have to wonder if we will end up in a hyperinflation like Germany and the mark back in the day.
The stimulus package is a joke and will only hurt us.
I read some history on the Great Depression and many think it would not have been as bad had the govt. not been so involved.
The govt. is trying to prevent a recession right now, which is a natural thing that our economy needs to go through. In the process, the govt. is simply postponing the inevitable, and also making it worse in the end than it may have been.

I will also look into more silver and other precious metals (there is also palladium and platinum)...rather then just gold.

Do we foresee a complete breakdown in infrastructure when the dollar collapses? Meaning no electricity or running water?
God, I cant imagine if this were to happen. Complete lawlessness throughout the land...

If I'm going off the deep end feel free to administer an internet slap across the face to bring me back to reality

[myrdale]

My personal conspircy theory is as follows:

Step #1 Borrow billions of dollars from China to fund the war. The simulus package is just icing on the cake.

Step #2 Federal Reserve pumps billions and billions of dollars into the market bailing out big businesses.

Step #3 Stand back as the value of the dollar drops like a hot rock.

Step #4 Default on loans to China, all you have is dollars and they ain't worth ****.

Step #5 USA's debts have disappeared over night, China is in the hole.

Step #6 Switch to the Euro!!! MWHAHAHAHA!!

Ehhh I know it's nutty, but that is my theory.

[sweeps]

Fear is the path to the dark side. Fear leads to anger. Anger leads to hate. Hate leads to suffering.

[GrimJack]

There are a couple things to think about:
1) The world still operates on the dollar standard - this probably won't change in the near future (unless something drastic happens like China suddenly dumping all their dollars for euros).
2) If you invest in gold and do not actually have it in your hot little hands, it is out of your hands - ie, you are dependent on a corporation that could go down like Enron and Bear Stearns.
3)If you have gold in one hand - it would be prudent to have a .357 mag in the other.
4)diversify

[zooracer]

All really good advice and info...

I like the idea of switching to euros...
But, I imagine it wont be a seamless switch either
Perhaps a few years of serious depression while we adjust?

Sweeps, I know what you mean. But, I dont hate. I dont blame anyone for this. I'm actually a very compassionate, nice guy.
I'm simply trying to take steps to be, at least somewhat prepared....in some way.

Grimjack...great advice..thanks
I agree that I HOPE it will not happen very soon. I like the idea of having a few years or so for getting myself and my family prepared, because this will take time. I'm looking into changing the funds/stocks that my IRA invests in. Researching a safe place to keep my money will take time.

I plan to invest into solar power (florida) to get completely off the grid (this will cost something north of 20K) (I have always wanted to do this anyways). I hang dry most clothes/towels, phased out paper towel use, conserve as much as possible, and I drive less by using my bike for some trips to post office/grocery store, etc...
I hear you about having nothing but a note of ownership. If the brokerage or company goes under, you have a nice shiny note

I actually was a cop in the past, have a couple of firearms, and my wife is also proficient...so I do plan to have SOME silver and gold coins in my possession.
NO, you cannot have my address

And diversify is always good advice. It is just going to take me some time to figure out exactly WHAT to diversify into.

I joke with my wife that if this does happen we will be forced onto a diet and probably have to bike more...so we will lose the weight we've been struggling with for years So, it will result in better health....thats a good thing!

[zooracer]

sorry, I know I'm posting a lot on here....

But a thought occurred to me.

If Americans start pulling their investment monies out of American investments and putting it into overseas stuff in foreign currency...may this actually accelerate the problem? Make matters even worse?

[maat55]

It may be time to invest heavily in canned beans in the garage. I think I will start hedging this way.

[brig2221]

Originally Posted by zooracer

yes, I really think your right and I do think it will happen within 3-5 years.
Of course, I hope I'm wrong, but no one really knows when it will happen.

I have to wonder if we will end up in a hyperinflation like Germany and the mark back in the day.
The stimulus package is a joke and will only hurt us.
I read some history on the Great Depression and many think it would not have been as bad had the govt. not been so involved.
The govt. is trying to prevent a recession right now, which is a natural thing that our economy needs to go through. In the process, the govt. is simply postponing the inevitable, and also making it worse in the end than it may have been.

I will also look into more silver and other precious metals (there is also palladium and platinum)...rather then just gold.

Do we foresee a complete breakdown in infrastructure when the dollar collapses? Meaning no electricity or running water?
God, I cant imagine if this were to happen. Complete lawlessness throughout the land...

If I'm going off the deep end feel free to administer an internet slap across the face to bring me back to reality

Have you been reading Hypertiger's Blog by any chance?

[Broken Arrow]

Originally Posted by sweeps

Fear is the path to the dark side. Fear leads to anger. Anger leads to hate. Hate leads to suffering.

*snort*

zooracer, sweeps is apparently a Star Wars geek. Pay him no mind. He probably dresses up as Darth Maul on Halloween just to scare all the little kids.

But I think he's also trying to point out that there is no need to fear. Which in my opinion is exactly what we should do. Not fear the market.

We've gone through quite a few recessions by now, believe it or not. And we more or less came out of it just fine.... In fact, for those who have invested into the down market have been paid handsomely in those delicate days of rally, right before it rebounded into a bull market! (Those rally days, by the way, is also when investors make most of their money, not necessarily the bull market itself!)

I've said this on plenty of occasions, and I guess I'll say it one more time because you're new here. Welcome by the way.

Don't run from the market.

Or do... or do not. But there is no try.

My $0.02

[noppenbd]

Economists have been predicting the end of capitalism for quite a long time now. It seems every time the economy hits a hiccup Chicken Little gets his 15 minutes of fame. Relax, stick to your long-term goals and don't have more than 5% of your portfolio in gold or silver. As Warren Buffett said, "Be fearful when others are greedy and greedy when others are fearful."

[sweeps]

You called me out, BA.

Actually I lick my chops when people start going crazy with fear like this. That means I'm on the right track dumping massive amounts of money into my stock funds.

I've said it before, I'll say it again, if you're selling everything and going all in on gold and silver and cans of beans, you're going to be very very sorry.

Now back to your regularly scheduled panicking....

[JimInOK]

Moderation is the key to all things.

Dump everything for gold and euro's? Go right ahead. But you've already taken a large market hit on your investments, you'll be buying gold high. When the turnaround comes, you'll miss the stock rebound and catch the gold hit. You've just compounded your initial losses. That's why most people lose in the market and why they tell you to assess your tolerance for risk before entering the market.

Back to moderation, selective investments in foreign stocks and a minor (possibly 10-15%) position in commodities-producing companies is a good hedge in any market. Just don't take it to the extreme, and continue to ride it no matter which direction the market is moving in a particular week.

But if you don't have the stomach for the market's downturns, don't be in the market at all. You won't beat inflation-risk outside of the market, but you'll do better than you would if you were in the market and selling out every time the bears come out.

[zooracer]

Originally Posted by JimInOK

Moderation is the key to all things.

Dump everything for gold and euro's? Go right ahead. But you've already taken a large market hit on your investments, you'll be buying gold high. When the turnaround comes, you'll miss the stock rebound and catch the gold hit. You've just compounded your initial losses. That's why most people lose in the market and why they tell you to assess your tolerance for risk before entering the market.

Back to moderation, selective investments in foreign stocks and a minor (possibly 10-15%) position in commodities-producing companies is a good hedge in any market. Just don't take it to the extreme, and continue to ride it no matter which direction the market is moving in a particular week.

But if you don't have the stomach for the market's downturns, don't be in the market at all. You won't beat inflation-risk outside of the market, but you'll do better than you would if you were in the market and selling out every time the bears come out.

I definitely do not plan to dump everything and buy only gold/silver.
I'm looking at investments that are not merely a hedge against a bad economy. I'm looking at investments that are a hedge against a failed dollar.
I am now researching currency on FOREX, as I really think asian currency is the future. So I may have some of my money there.

I simply plan to have some of my money in foreign currency and global investments. Also plan to have some gold and silver on hand for emergencies.

Market downturns are natural and should be allowed to happen. When the govt. gets involved you get something much worse. I simply do not trust our govt. or the feds to do the correct thing.

I have plenty of money in the market, and have left it there. I'm not a buy and sell kind of guy. I know that, over time, the market ALWAYS goes up. Never sell during a hiccup out of panic.
And, I'm not IN a panic here. I do recognize the signs I'm seeing and I would like to have a certain level of preparation.

I really do appreciate all the info guys. Just dont want to be misunderstood.

The reading I've done on here HAS helped put my nerves to rest a little.

I do think we will see a decent increase in unemployment pretty soon.

[JimInOK]

Originally Posted by zooracer

I definitely do not plan to dump everything and buy only gold/silver.
I'm looking at investments that are not merely a hedge against a bad economy. I'm looking at investments that are a hedge against a failed dollar.
I am now researching currency on FOREX, as I really think asian currency is the future. So I may have some of my money there.

I simply plan to have some of my money in foreign currency and global investments. Also plan to have some gold and silver on hand for emergencies.

Market downturns are natural and should be allowed to happen. When the govt. gets involved you get something much worse. I simply do not trust our govt. or the feds to do the correct thing.

I have plenty of money in the market, and have left it there. I'm not a buy and sell kind of guy. I know that, over time, the market ALWAYS goes up. Never sell during a hiccup out of panic.
And, I'm not IN a panic here. I do recognize the signs I'm seeing and I would like to have a certain level of preparation.

I really do appreciate all the info guys. Just dont want to be misunderstood.

The reading I've done on here HAS helped put my nerves to rest a little.

I do think we will see a decent increase in unemployment pretty soon.

Sorry if I misunderstood your original post. You did mention such things as "extreme measures", "cashing out my IRAs...taking the tax hit", and being "seriously freaked out." I read that as panic. Again, sorry if I misunderstood. Just trying to point out that extreme measures almost always lose you money in the marketplace. You're better off with a solid diversified plan and sticking to it in any market.

[zooracer]

Originally Posted by JimInOK

Sorry if I misunderstood your original post. You did mention such things as "extreme measures", "cashing out my IRAs...taking the tax hit", and being "seriously freaked out." I read that as panic. Again, sorry if I misunderstood. Just trying to point out that extreme measures almost always lose you money in the marketplace. You're better off with a solid diversified plan and sticking to it in any market.

You know, you may be right I do think the reading I've been doing has calmed me down a little.

I do plan to see if I can diversify into a little more of a global market to protect myself.

Have a lot of reading to do. Thanks for the responses and info.

[LuxLiving]

I think zooracer was trying to reassure himself that he's doing all he can to think thru the situation. It can be frightening. As well prepared and as diversified and as frugal as we are, there are days when the thoughts of what all could go wrong send me back to the drawing board to be sure we've covered all our bases.

Now's probably a good time to re-read that story "Sleep When The Wind Blows". You can probably google and find it on the internet. Yeah, well, maybe two years ago was the right time to read it, but we're where we are at NOW, so go read it now.

Check your plans and consider why you made them. Shore up any weak points. I think this is one reason why keeping some kind of investing journal comes in handy. Five years out you might scratch your head and wonder 'and what was I thinking when I bought XXXX company's stock or this mutual fund or this commodity???'. A quick look back through your investing journal or blog will help you understand it in the scheme of your entire portfolio and life plans. And in light of any looming or 'media-driven' crisis.

Fear can get ugly and feeding it may be fruitful for the writers and people pushing it, but, use it to help you reaffirm your preparations and deploy your assets in a way that will be most useful for your family.

All of the things mentioned sound about right to me. Ya'll forgot a few on my list:

Faith in God to supply NEEDS? Check.
Good Neighbors? Check.
Lotsa Beans? Check.
Physical Gold/Silver? Check.
Defensive Position, Armory & the Food (bullets) that feeds them? Check.
Skillset 4 Survival? (barter, hunt, garden, bake, firstaid, satisfaction & contentment, sew, make-do) Check.
Globally Diversified Portfolio? Check.

I do sleep well at night. BUT, zooracer, I'm with you, I do re-check the latches on the gates and whether it's a good idea to keep something or give it the old heave-ho, whenever the doomsdayers get to trash-talking!!

Make a plan, and work your plan.