Post: #26

No one can really answer this.

Take any point in US history, let's say: The Civil War, the Great Depression, 1939, 1970, 2007.... What do you think people would have guessed? Do the same exercise for Germany, for China, for Japan, an so on...

I am likely not going to be alive then, so I'm more concerned about that than what my paper will be worth.

Post: #27

Possibly the 998th economic doomsday thread

Post: #28

I wish there was a reddit enhancement suite type addon for this forum so I could mark and remember which members are negative doomsday nutcases.

Post: #29

(12-24-2014 01:13 PM)Ricky Rose Wrote:  Given trends in western economies (cutting pensions, massive debts, inflation, static wages, etc.) plus the looming crippling energy crises in the coming decades, all coupled with climate change, what will our money (which is fiat currency based on hallucinated wealth) be worth?

Money is an I.O.U.

If you lend me an orange expecting me to give you back that same orange in 20 years, you obviously dont understand money.

In other words, money is a note for an exchange of value. Save the value, not the note.

Post: #30

(12-25-2014 02:44 PM)Nostromo Wrote:  I wish there was a reddit enhancement suite type addon for this forum so I could mark and remember which members are negative doomsday nutcases.

7 day ban

Post: #31

(12-24-2014 10:05 PM)rudebwoy Wrote:  Latin America will be a great place to buy land. The Bush family bought a huge ranch in Paraguay a few years back, that tells you everything you need to know.

That they thought Paraguay was a nice place for a ranch?

Post: #32

(12-25-2014 04:26 PM)Enigma Wrote:  

(12-24-2014 10:05 PM)rudebwoy Wrote:  Latin America will be a great place to buy land. The Bush family bought a huge ranch in Paraguay a few years back, that tells you everything you need to know.

That they thought Paraguay was a nice place for a ranch?

I'm not sure if that thing about the ranch is internet b.s. but I've also read that the biggest freshwater aquifer in Southern Hemis. (or one of them), may be underneath.

Post: #33

(12-24-2014 11:03 PM)Sonsowey Wrote:  

(12-24-2014 09:59 PM)LouEvilSlugger Wrote:  If I had any money to invest I'd probably invest in arable land in Latin America

Land in Latin America has a history of changing hands due to violence or government dictate.

So maybe not the safest of all investments.

That is my major concern about ever relocating to South America, including Chile. Chile seems to be pretty peaceful and well-organised at the moment, but it wasn't that long ago that it wasn't. There's also a fair degree of support for socialism there. Latin America still seems to me like a place that could turn on a dime and go full retard, to mix my metaphors. Even aside from that, being an obvious outsider would be like painting a big target on one's chest.

My concern about economic chaos goes beyond that, however.

I really worry that we're going to see the rise of fascism again. Before continuing, it's worth reminding people that fascism had many left wing elements. Nazism was national socialism. It's also worth noting that fascism did not support the status quo. It was revolutionary. It sought to change dysfunctional societies with populist, Utopian solutions that overturned the existing order. Thus, I don't think it's unreasonable at all to think that a lot of SJWs would readily embrace a new form of fascism. Of course, it wouldn't be called that, but it would still be fascist.

Now, here's why there's reason to fear that economically.

I think one way or another, even without the rise of fascism, we're looking at bail-ins, confiscation and capital controls. It would be even worse under fascism, however, since it would be populist and need to placate the masses. There's so much debt right now that it's unsustainable. We are going to see a massive transfer of wealth in the next decade, possibly the next few years. One way or another, there is going to be a crushing of the middle class (which has already begun). Obviously, when that happens, a lot of people are going to be pretty pissed off and grasping at straws (cue Utopian solutions). If you have any money, they're going to want some of it.

The trouble for people who have seen that coming, however, is where to have your wealth.

I think the best solution is probably to have it spread around geographically so that no one government can play games with it. There are, however, some hurdles to this. The most obvious two are residency and the large sums often required to be invested in different locations.

Obviously, anything you can't physically touch is a real danger for confiscation. Yet what about hard assets? Land is highly illiquid and easy to confiscate or heavily tax. Even precious metals are no guarantee. Here's why.

Firstly, let me say that if you're buying gold or silver, you'd better be buying the physical stuff. The paper market is going to get crushed. Furthermore, you'd better be storing it yourself. If you think any sort of depository, even with allocated precious metals, is not going to have multiple claims on its unallocated PMs (and thus, dip into the allocated stuff), or surrender it to the government, you have a lot more trust than I do. If you think you're going to store it there until things heat up, and then take direct possession, you're essentially claiming that you're going to beat everyone else to the head of the line in what will basically be a bank run. It doesn't work that way in this day and age anyway. One day, the depository is open for business, the next day the government has declared some sort of state of emergency and everything is closed indefinitely. See Cyprus for an example of this.

That aside though, the problem is that in the kind of situation where the economy is in absolute tatters, you wouldn't necessarily be able to do anything with precious metals anyway. If the government were to collapse beyond the point where it could put massive controls on the trading of precious metals, you'd have some much bigger issues to worry about (namely widespread violence). If the government weren't to collapse into complete anarchy (without another government of some form replacing it), however, how would you spend your precious metals? The government would implement very strict controls. As such, you wouldn't be able to just buy a house with precious metals because you'd still need to go through the government during the buying/registering process. Likewise, you'd have to be damn careful about going out and trying to spend your PMs on everyday items. The majority of people -- who weren't prudent -- would be only too glad to rat you out to the government.

Of course, there's a point where things might not get that bad and PMs might be worth a whole lot. That's not a sure thing though, so don't bet on it. There is no silver bullet to solve every problem.

The other issue with all of this is that quote by Keynes about the markets remaining irrational longer than you can stay solvent. I think that the markets can't go on for too much longer, but I could be wrong. Plenty of bubbles have defied expectations before and persisted (and grown) well beyond anyone's wildest dreams. Perhaps they might limp along for another decade or longer. In the meantime, big holdings of PMs might have flat or even negative returns in that time. It's all very well to say that PMs will eventually increase in value dramatically -- which I think they will -- but we're all going to be dead one day. You could miss out on a decade or more of a decent standard of living by not acquiring productive assets in the meantime simply because PMs don't produce anything that you can consume or trade. They are purely a store of value.

I am stacking PMs, but I am doing other things also. I'm under no illusions that PMs are going to necessarily be any kind of solution. I cringe a little when I watch certain Youtube videos and guys there freely admit that they don't earn much and don't have much other wealth, but pour all of their monthly disposable income into one ounce silver bars. That's a pretty big all-in bet with a pay-off under a very strict set of conditions. In my opinion, a lot of stackers have simply traded one irrational and absolute belief system for another and could be in for a rude awakening when things don't go according to their script.

Post: #34

(12-24-2014 09:35 PM)rudebwoy Wrote:  Within 3 years your money will be worthless, that is putting it mildly.

The geo-political issues going on now are going to lead to something ugly.

Since your money will be worthless in three years, do you want to bet your net worth against my net worth three years from now?

If in three years, a $50K annual income can still buy a comfortable life with a small apartment and a cheap but reliable car and occasional dinners out, you'll give me every dollar you have.

If in three years, some major catastrophe has occurred and civilization is reduced to a point where money is effectively worthless, I'll give you every dollar that I have.

I'm serious.

Post: #35

USA is broke, no way it's surviving in it's current state. The amount of social security promises completely exceeds what can be paid back, the plan is to inflate the dollar into shit and pay back nothing on SS.

They've kept interest rates at zero percent for 6 years and counting. If you guys seriously think this is sustainable, then you are completely naive, foolish, and mistaken. I'm not even sure how things have lasted as long as they already have, it truly is a giant con game. At some point the music stops and there will not be enough chairs.

We all know it ends in USA bankruptcy but everyone wants to know when? Could be tomorrow, could be 50 years from now. There are too many unknowns and events that could help or hurt the USA to make any concrete claim.

That's why the only thing a rational person can do is make a small hedge with some gold/silver/guns, but otherwise live life as normal. These are the good times so enjoy them while you can, don't worry about the future which we have nearly no control over anyways.

Post: #36

Now, lets say that he accepts, money does loses its value, and he wins the bet.

What would you expect him to buy with every dollar you have?

Post: #37

Suits I am saying the dollar will be devalued or crash within the next year or two.

I am serious as well. I will buy you dinner next time you are in Toronto, if I lose the bet.

Like Samseau said the con game can't go on forever. In fact when you look at zero percent interest rate it actually works out to negative interest rate when you look at service charges you have to pay.

I also believe the chess game going on with Russia and America could lead into something bigger.

Post: #38

(12-27-2014 11:43 PM)rudebwoy Wrote:  Suits I am saying the dollar will be devalued or crash within the next year or two.

I am serious as well. I will buy you dinner next time you are in Toronto, if I lose the bet.

Like Samseau said the con game can't go on forever. In fact when you look at zero percent interest rate it actually works out to negative interest rate when you look at service charges you have to pay.

I also believe the chess game going on with Russia and America could lead into something bigger.

I agree with most of your points, yet do not arrive at the same conclusion - that the dollar's death is imminent. Currency is a medium of exchange. For a particular currency to serve its purpose, people who use it must agree that it has a certain value. In other words, they believe it has value. People believe USD has value because it is backed by the US government. Dollars are labeled with "In God We Trust", but really it should say "In the US Government We Trust".

What you're predicting is a full loss of faith in the American government. I just don't see that happening, NIRP and QE con game notwithstanding. The natural consequence is the end of modern civilization as we know it. And the populace has a vested interest in not seeing that happen, even if the alternative is to get robbed blind. We can always blame it on the Russians or ISIS.

Even if it does happen, gold and silver won't save you.

By the way, I'd love to make this bet with you. Name your terms.

Post: #39

In short, not much. I was watching Goldfinger yesterday, and was shocked to hear one character say that the gold bar that 007 was to use as bait to pique the interest of the villian Auric Goldfinger was only worth 5,000 pounds sterling.

The movie was made in 1964, and at that time the Bretton Woods gold-standard system was still in place, with the price of gold fixed at US$35/troy ounce. So that gold bar was 400 ounces.

Today's gold spot price is $1195. Therefore, gold is worth 34.1 times what it was worth in 1964 in US dollars. At that time, the UK pound was fixed at US$2.80, so gold in 1964 was 12.5 pounds per troy ounce, making the gold bar that 007 plopped onto the green to entice Goldfinger worth only $14,000 back in 1964. That very same hunk of metal today would be worth US$478,000.

You need to invest in things that are a good hedge against inflation. Whatever you do, don't save too much in currency (i.e., money market or savings accounts), because inflation will vaporize its value.

Post: #40

(12-28-2014 02:09 AM)Mr. Wolf Wrote:  In short, not much. I was watching Goldfinger yesterday, and was shocked to hear one character say that the gold bar that 007 was to use as bait to pique the interest of the villian Auric Goldfinger was only worth 5,000 pounds sterling.

The movie was made in 1964, and at that time the Bretton Woods gold-standard system was still in place, with the price of gold fixed at US$35/troy ounce. So that gold bar was 400 ounces.

Today's gold spot price is $1195. Therefore, gold is worth 34.1 times what it was worth in 1964 in US dollars. At that time, the UK pound was fixed at US$2.80, so gold in 1964 was 12.5 pounds per troy ounce, making the gold bar that 007 plopped onto the green to entice Goldfinger worth only $14,000 back in 1964. That very same hunk of metal today would be worth US$478,000.

You need to invest in things that are a good hedge against inflation. I've done well in real estate, but poorly when trying to pick stocks. Whatever you do, don't save too much in currency (i.e., money market or savings accounts), because inflation will vaporize its value.

I think we need to qualify the term "too much" though. I understand what you're getting at in terms of how inflation absolutely crushes the value of money, but there are two things (perhaps flip sides of the same coin) to bear in mind.

The first is that being fully invested at all times actually means a person can't necessarily take advantage of opportunities that come along.

The second reason is more important and is of a defensive nature. I think people should have at least three months' living expenses on hand, but probably more like six. Some of that they can store in other ways (e.g. having food stored at home), but a certain amount of that they need to have in cash because they can't store living expenses any other way. Now that does mean that people in that situation are going to get burnt by inflation, but I think that's better than the alternative.

The alternative is this. We all know that one of the most pernicious aspect of the cash printing and ZIRP is that it's forcing everyone to reach for yield by going way out on the risk curve. What's the end game of that? The end game is this. In the next financial crisis, there are going to be a bunch of guys who can't cover the gap when they're out of a job for three months, have to cover a margin call or any other such crisis. Then, they're going to be forced to start selling whatever they have -- whether stocks, gold or anything else -- at the least opportune times and prices. So, they'll pick up maybe 5% p.a. for three years, but then take a 30% loss. This happens to the middle class every single time -- really, every single time there is a recession because in a financial sense, they're carrying absolutely zero fat. Meanwhile, there are a bunch of people -- predominantly already very wealthy, but sometimes some others -- who are willing to burn a few percent for a couple of years just sitting on cash because they know they're going to be picking up absolute bargains a couple of years later. That's how and when the real transfer of wealth occurs.

Now it depends upon how much we want to get into conspiracy theorising as to whether, and to what extent, the next financial crisis will be engineered. Some people would say that is precisely the point of monetary policy right now.

Post: #41

Quote:You need to invest in things that are a good hedge against inflation. I've done well in real estate, but poorly when trying to pick stocks. Whatever you do, don't save too much in currency (i.e., money market or savings accounts), because inflation will vaporize its value.

I have done fine in currency accounts like CD'S. Cd's historically beat inflation. It is just now with them artificially keeping rates low that is changing this rule. Even so I am still beating the CPI..no rates under 3%.

Owning a broad based index fund that tracks the SP 500 will in the long term kill inflation. Sure the market goes down but in the long haul it gains back. Companies after all have to set prices that give profit.

RE is hit in miss. Depends on the market. Plenty of places in America where values don't increase more than CPI and in fact less. The rust belt for example.

Post: #42

That's how and when the real transfer of wealth occurs.

Bingo, this is the what I am talking about. This is the endgame and has always been the game. Stealing wealth and limiting wealth of the people.

If the Dollar falls then they will invent another currency to take its place, the pound was the reserve currency before.

Post: #43

(12-28-2014 12:34 PM)jimukr104 Wrote:  

Quote:You need to invest in things that are a good hedge against inflation. I've done well in real estate, but poorly when trying to pick stocks. Whatever you do, don't save too much in currency (i.e., money market or savings accounts), because inflation will vaporize its value.

I have done fine in currency accounts like CD'S. Cd's historically beat inflation. It is just now with them artificially keeping rates low that is changing this rule. Even so I am still beating the CPI..no rates under 3%.

Owning a broad based index fund that tracks the SP 500 will in the long term kill inflation. Sure the market goes down but in the long haul it gains back. Companies after all have to set prices that give profit.

RE is hit in miss. Depends on the market. Plenty of places in America where values don't increase more than CPI and in fact less. The rust belt for example.

Any examples of good CDs available to the general public? I mean I know there are good rates for Army/Navy vets etc.

Post: #44

(12-28-2014 01:03 PM)Brodiaga Wrote:  Any examples of good CDs available to the general public? I mean I know there are good rates for Army/Navy vets etc.

In the US, your best bet is to join a couple decent credit unions. I think you can join PenFed with a $20 donation and it is not too hard to join others based on geo or family member eligibility. For instance, I think I can join Navy Federal even though my direct family isn't military.

You can also buy good brokered CDs through Vanguard or other brokers.

You can find a current list of CD yields here: https://www.depositaccounts.com/blog/cd-rates-survey/ I've heard decent things about GE Capital, Ally and Everbank can give you exposure to international currencies CDs as well.

Post: #45

In 1964 I could buy a Coke, a cake thing like Twinkies, a bag of potato chips, and a pack of 5 baseball cards (with stick of bubble gum) for a quarter dollar.

Post: #46

(12-24-2014 01:13 PM)Ricky Rose Wrote:  Given trends in western economies (cutting pensions, massive debts, inflation, static wages, etc.) plus the looming crippling energy crises in the coming decades, all coupled with climate change, what will our money (which is fiat currency based on hallucinated wealth) be worth?

The money printing and debts could end up with a weak USD and the possibility of a debt crisis in our lifetime if things don't change, but don't expect it any time soon.

Right now you are seeing a rally in the USD compared to other currencies. I think there's potentially a more immediate financial crisis going to occur with Japan's debt and currency, which is the largest debt in the world as a % of GDP. They also have an aging population and a culture which seems to not be adapting to their economic reality. When world crises do happen, the USD is still seen as a safe haven and generally goes up in value.

The Roubinis and Schliffs of the world have been preaching doom and gloom since 08 and their followers have been buying gold and silver and missed the biggest 5 year increase in stocks in a very long time.

Eventually they will be right, recessions do happen, crashes happen, but even a stopped clock is right twice a day. It is very hard to predict anything, especially the timing of it.

My question is why should you care exactly how much the currency is worth? Wages typically rise with inflation, assets rise with inflation. If you concentrate on your earning potential and diversify your assets and wealth (including international and not having a huge home-country bias), history says you'll weather just about any storm.

Post: #47

(12-28-2014 01:03 PM)Brodiaga Wrote:  

(12-28-2014 12:34 PM)jimukr104 Wrote:  

Quote:You need to invest in things that are a good hedge against inflation. I've done well in real estate, but poorly when trying to pick stocks. Whatever you do, don't save too much in currency (i.e., money market or savings accounts), because inflation will vaporize its value.

I have done fine in currency accounts like CD'S. Cd's historically beat inflation. It is just now with them artificially keeping rates low that is changing this rule. Even so I am still beating the CPI..no rates under 3%.

Owning a broad based index fund that tracks the SP 500 will in the long term kill inflation. Sure the market goes down but in the long haul it gains back. Companies after all have to set prices that give profit.

RE is hit in miss. Depends on the market. Plenty of places in America where values don't increase more than CPI and in fact less. The rust belt for example.

Any examples of good CDs available to the general public? I mean I know there are good rates for Army/Navy vets etc.

Penfed yearly has a good special. Last year it was over 3%. In NYC there are a bunch of credit unions that have decent rates. If you are Ukrainian ancestry you can join Self Reliance. They have had 3%+ for the last few years.

often when a new bank opens or a new branch they have as promotion.

Quote:l
My question is why should you care exactly how much the currency is worth? Wages typically rise with inflation, assets rise with inflation. If you concentrate on your earning potential and diversify your assets and wealth (including international and not having a huge home-country bias), history says you'll weather just about any storm.

My point exactly. Only worry if you are keeping the dollars under your pillow.

Post: #48

(12-24-2014 09:35 PM)rudebwoy Wrote:  Within 3 years your money will be worthless, that is putting it mildly.

The geo-political issues going on now are going to lead to something ugly.

Absolute predictions such as these are dangerous and erroneous, as the following demonstrates:

Doomsday Prediction: "By the year 2000 the United Kingdom will be simply a small group of impoverished islands, inhabited by some 70 million hungry people … If I were a gambler, I would take even money that England will not exist in the year 2000.” See Paul Ehrlich, Speech at British Institute For Biology, September 1971.

Fact: England still exits.

Doomsday Prediction: "If present trends continue, the world will be ... eleven degrees colder by the year 2000. This is about twice what it would take to put us in an ice age." See Kenneth E.F. Watt, in Earth Day, 1970.

Fact: We are not in an ice age.

Doomsday Prediction: "David Parker, at the Hadley Centre for Climate Prediction and Research in Berkshire, says ultimately, British children could have only virtual experience of snow." See Snowfalls are now just a thing of the past." The Independent. March 20, 2000.

Fact: "Coldest December Since records began as temperatures plummet to minus 10 C bringing travel chaos across Britain." See Mailonline. Dec. 18, 2010.

Quote:My point exactly. Only worry if you are keeping the dollars under your pillow.

Correct. As discussed here (and will be further explored in a more-detailed data sheet), to generate wealth and hedge against inflation, invest in low-cost index funds. Trying to "time the market" or "day trade" is dangerous. "The stock market is never obvious. It is designed to fool most of the people, most of the time." -Jesse Livermore.

Post: #49

The doomsday scenarios are generally wrong, but then so are the rosy "everything is great" scenarios pushed by the CNBC crowd.

The reality is somewhere in the middle. The best way to hedge for a crisis is to be prepared for all outcomes.

Now I don't know if in the end inflation or deflation will win, but I do know there are easy ways to prepare for both outcomes.

One is to hold physical gold, which is a good hedge against inflation and/or a currency crisis. The other is to hold physical dollars, which is a good hedge against deflation and/or a debt bubble popping. The key here is holding physical forms of both. In an inflationary crisis, it is going to be hard to buy gold with cash since cash will be losing value very quickly. Conversely, in a deflationary crisis, banks might be closed and deposits seized to help recapitalize banks, so having cash outside the system in a safe or even under you mattress will be a godsend.

I personally hold about 20% of my portfolio in gold and 20% in cold-hard cash, and the remaining 60% in stocks, bonds, real estate, etc. The gold and cash act as insurance policy if shit hits the fan.

The only remaining problem is if the government starts seizing assets, which is hard to prepare for...but even in that scenario I could always just smuggle my gold and cash to Mexico and from there head to South America, so even that scenario doesn't bother me much.

In the end, you can prepare for any outcome and sleep much better knowing no matter what happens, you will be fine.

Post: #50

I am not a doomsday believer, life will go on as always.

If you seriously think the dollar will be around in 40 years then I got a bridge to sell you.