The coming monetary crisis Oct 22, 2007 - 08:31 AM
I'm reading this interesting book called "Crash Proof." Now, I don't want to be caught buying 55 gallon blue water containers and water purification tablets (like I did during Y2K), but they warn of possible recall of gold during a crisis (like they did before) so I am rethinking buying all my gold from the US Mint - too trackable. Check out goldmoney.com, which holds physical gold for you and uses the price of gold as its value - not dollars.
I also recommend the everbank.com World CD if you have $10,000 lying around. The Icelandic CD is up 5% after a month, for an annualized return of 60%. You receive 12% on it normally, but it is increasing due to the fall in the dollar.
You can also buy a bag of circulated pre-1968 silver coins. These would be valuable for day to day purchases during a collapse, and valuable nonetheless.
There's a gold ETF (GLD) that trades like a stock. You could think of buying options on that one.
No, I haven't lost my mind - I think our great nation has. This is the same thing that happened to Argentina (and Russia and Weimar Germany and currently Zaire...). They all had unpayable debts, a weakening dollar and as a consequence the foreign investment fled. Read the follow ing story and replace "Zaire" with the US and replace "U.S" with China and you can get a preview of what is possible.
I have friends from China, and they all believe that China will be the next world superpower. They thought this 5 years ago. This is a country that plans ahead 100 years. Don't you think they have a plan for the 1 trillion dollars in US debt they hold? Even if they didn't, what do you think they will do when the interest payments they receive in US dollars falls by 50% due to the value of the falling dollar? Even if they have no ulterior motives they will try to sell the bonds to someone else - another country. What happens when the other countries don't want it? They will try to force the US to pay up and get their money back. Here's the thing: China is essentially a dictatorship. Can you say: "Unions are forbidden by law"? They are halting inflation by fixing prices. The lesson here is China can do pretty much anything it wants in terms of monetary policy to remain competitive, all the way down to price fixing. What can the US do? Raise and lower the Fed rate and print money. China can flog the money dog any way it wants to, and if it wants to sell all trillion dollars of US debt, they can do that too.
What will the US do? Here's what we will do: print dollars to payoff the debt, devaluing the dollar even further. Printing fiat money dilutes the value of the dollar, the same thing which led to the collapse of all the aforementioned countries currencies, leading to stagflation: higher prices from everything from stamps to fuel, while simultaneously dropping house and land values and a fleeing of foreign investment to countries that treat their money better, like Iceland.
It's coming - what are you gonna do 'bout it?
What you can do: Buy gold and silver. Yes, I am talking coins and bars. Some common and some rare. Buy Foreign stocks and bonds Buy a World Currency CD from Everbank.com Buy Gold Stocks and ETFs like GETF
This is a start. Stay informed. Type in "Monetary Crisis" into your google search and start reading. Ignorance is a pale excuse when the stagflation happens. Read Crash Proof and make your own conclusions.
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