What to do when the USD is worth nothing?

[ModestGamer]

Some feel that hyperinflation is on the horizon with all our spending.
At that point, our money will be worthless.

What's the best hedge against this? Other currencies?

Prepare by having lots of food/water and barterable skills to trade for.

 

[Bitek]

http://www.youtube.com/watch?v=9GcR3-Lm3r0&feature=related
and guess who has been right in the past.

Who's that again? Peter "Decoupling Fail" Schiff?

How's all those European and Japanese investments going these days?

 

[LegendKiller]

Who's that again? Peter "Decoupling Fail" Schiff?

How's all those European and Japanese investments going these days?

LOL, I forgot about decoupling (well, I guess I didn't considering my other stuff).

Schiff is such a joke.

 

[Turin39789]

You're all right.

There are very large forces at work, of both inflationary and deflationary types.

Inflationary:
Massive government deficit spending
Low fed funds rate
Increase in monetary supply (M3)

Deflationary:
Low rate of loans being made
Unemployment
Savings-oriented public (low overall demand)

The feds are walking on a katana edge here.
Or, think of it this way - for what the fed's doing, we should have huge, Carter-esq inflation.

We don't.

That alone should scare the hell out of you. Just think about the economic force required to counteract $1 trillion of government waste deficit spending on top of a 0% funds rate.

THIS was your first post?

 

[totalnoob]

Buy silver. Inflation or deflation.. There's none left..and China needs a ton of it.

 

[Munky]

First you'd have to determine how the USD is "worth" something in the first place.

 

[soccerballtux]

when the fed realizes they are inflating another bubble by keeping interest rates low, they will have to hike rates.

the economy is not going to recover by then so rising interest rates + poor economy + high unemployment are conditions that would bring about inflation.

Let's hope and pray they do a better job than last time. :\

but that's not what's happening, the bubble isn't being inflated away

 

[soccerballtux]

Have you been to the store to buy food? Deflation does not come to mind.

About once a week I make a trip. I haven't noticed a trend (deflation or inflation) one way or the other.

not sure what you're buying but the stuff I eat is very cheap
lots of veggies, fruit, and protein. Nothing else.

 

[PingSpike]

I'd pay off my mortgage with a loaf of bread?

 

[IceBergSLiM]

I'd pay off my mortgage with a loaf of bread?

man that would be awesome. i'm going to start stock piling bread now.

 

[dullard]

Some feel that hyperinflation is on the horizon with all our spending.

I'll ask again. When? Is that horizon in 1 month, 1 year, 1 decade, or 1 century? When? If it happens long after we are all dead, should we care?

You can't plan for hyperinflation unless you have a target time frame for the plan. You may be off a bit on your estimate, but you still need an estimate to be prepared for hyperinflation.

For example, if you plan is to get $1M worth of gold, you probably can't do that by tomorrow. But many of us could conceiveably do it within a decade or two.

So, I ask again. When is your best estimate of the time frame that we have until hyperinflation comes?

 

[nick1985]

I'm ready

 

[BlahBlahYouToo]

I'll ask again. When? Is that horizon in 1 month, 1 year, 1 decade, or 1 century? When? If it happens long after we are all dead, should we care?

You can't plan for hyperinflation unless you have a target time frame for the plan. You may be off a bit on your estimate, but you still need an estimate to be prepared for hyperinflation.

For example, if you plan is to get $1M worth of gold, you probably can't do that by tomorrow. But many of us could conceiveably do it within a decade or two.

So, I ask again. When is your best estimate of the time frame that we have until hyperinflation comes?

i really don't know, but here is my uneducated guess. within 10-15 years.

 

[Vic]

when the fed realizes they are inflating another bubble by keeping interest rates low, they will have to hike rates.

the economy is not going to recover by then so rising interest rates + poor economy + high unemployment are conditions that would bring about inflation.

Let me see if I understand you correctly... you're saying that in conditions where people can't buy, aren't buying, and can't borrow to buy... that will bring about inflation? How's that work again?

 

[dullard]

i really don't know, but here is my uneducated guess. within 10-15 years.

Ok then. If the USD is worthless, so likely will be virtually all of the world's currencies. They are now tied together more than most people want to admit.

In that case, money (in any format, currency, or possibly even gold itself) won't do you any good. The best hedge for that complete disaster would be physical items. Things that you can use and/or trade.

If hyperinflation were to happen in 10-15 years, the proper plan would be to collect as many items as possible within that time frame. Of course, keep the items to things that would have value in that disaster. A stockpile of dried food goods would be better than a stockpile of Jonas Brothers CDs. A stockpile of clean unused shirts would be better than a stockpile of company stocks/bonds/etc.

 

[BlahBlahYouToo]

Let me see if I understand you correctly... you're saying that in conditions where people can't buy, aren't buying, and can't borrow to buy... that will bring about inflation? How's that work again?

Feds printing trillions of dollars = devaluing the USD = inflation, no?
Is that not just what happened?

 

[IceBergSLiM]

Feds printing trillions of dollars = devaluing the USD = inflation, no?
Is that not just what happened?

they didn't "print" trillions did they? I don't think their are literally 1 trillion extra notes in circulation.

 

[Vic]

Feds printing trillions of dollars = devaluing the USD = inflation, no?
Is that not just what happened?

No, because there has been no inflation. The Fed printed trillions of dollars and yet the dollar did not devalue and the economy is still more deflationary than inflationary.
How do you explain that?

Oh wait, LegendKiller already did explain that and you ignored it.

How about 10 trillion in assets being blasted into thin air and the leverage from those assets being written down to match them.

 

[dullard]

Feds printing trillions of dollars = devaluing the USD = inflation, no?
Is that not just what happened?

I think you have it backwards. The banks have been making fewer loans. Fewer loans = less "printing of dollars".

Look at the dips in the first few graphs (the last couple of years).

I could go on and on with links. Look at the monetary supply shrinking in recent years. The banks have been "destroying" trillions of dollars, not printing it. LegendKiller and Vic have it right.

They were printing like mad in the mid 2000s, but recently the trend has reversed.

 

[heyheybooboo]

You're all right.

There are very large forces at work, of both inflationary and deflationary types.

Inflationary:
Massive government deficit spending
Low fed funds rate
Increase in monetary supply (M3)

Deflationary:
Low rate of loans being made
Unemployment
Savings-oriented public (low overall demand)

The feds are walking on a katana edge here.
Or, think of it this way - for what the fed's doing, we should have huge, Carter-esq inflation.

We don't.

That alone should scare the hell out of you. Just think about the economic force required to counteract $1 trillion of government waste deficit spending on top of a 0% funds rate.

Congratulations.

This could well be the Worst First Post Ever.


The primary emphasis of the FR has been and will continue to be winding down the special programs created to capitalize our insolvent financial institutions.

So. (1) You Fail at monetary supply.

And, (2) You Fail at Federal Budget, Debt & Deficit.
(sure sign you are a Wing Nut)


Finally, (3) You Fail at Revisionist History.

Or, think of it this way - for what the fed's doing, we should have huge, Carter-esq inflation.

This is either ignorance or trolling (I'm betting the latter, and that you were born in the mid 1980s as your Papa was prematurely ejactulating over Ronnie Raygun).

Because you clearly know nothing about the 1970s.




--

 

[BlahBlahYouToo]

I think you have it backwards. The banks have been making fewer loans. Fewer loans = less "printing of dollars".

Look at the dips in the first few graphs (the last couple of years).

I could go on and on with links. Look at the monetary supply shrinking in recent years. The banks have been "destroying" trillions of dollars, not printing it. LegendKiller and Vic have it right.

They were printing like mad in the mid 2000s, but recently the trend has reversed.

welp, my bad then. ignore this whole thread!

 

[hal2kilo]

Since it means that the whole world economy has colapsed, I would start planting a garden if possible. And if you haven't already armed yourself against the well armed paranoid masses in this country, consider yourself fucked!

 

[BoberFett]

Some of you are being too simplistic when you say that inflation won't happen because indicators are pointing to deflation. The question should be:

"What kind of assets should I invest in to protect against the massive inflationary policies that the government will enact to attempt to counteract the coming deflation."

The fact is that our economy has been riding high for far too long now, based on demand built with imaginary value. It has to unwind at some point. The government has been using bailouts and car and home buying credits to try to keep things inflated but that can't last forever. Demand will slow, there's no doubt about it. When it does, what will Washington's reaction be? And what assets can hedge against that action?

 

[Balt]

Since it means that the whole world economy has colapsed, I would start planting a garden if possible. And if you haven't already armed yourself against the well armed paranoid masses in this country, consider yourself fucked!

Make sure you use only non-hybrid seeds. They'll be worth more than gold.

 

[dullard]

Some of you are being too simplistic when you say that inflation won't happen because indicators are pointing to deflation. The question should be:

"What kind of assets should I invest in to protect against the massive inflationary policies that the government will enact to attempt to counteract the coming deflation."

That can be a valid question. Although, you wrote it in a highly biased fashion, so it is hard to outright declare it a worthwhile question. I'll ignore the opinion part, "massive inflationary", and the rest is a worthwhile question.

What are likely government actions? Low interest rates are one likely action (already being done). The best investments in that case are to start your own business or to invest in stable, dividend paying companies. Another likely action is deficit spending. Invest in companies that will benefit from this government spending (often construction companies, but it varies with the political winds).

Less likely government actions, but still highly possible actions include massive spending cuts (ie if conservatives have a big win in November). We've tried that in the 1930s and Britan is doing it now. Honestly, I never tried thinking of what would have been a good investment in 1938. But try looking there.

An even less likely result (given the deflationary scenario) would be actual massive inflation. When that happens the best bet could be in TIPS, Treasury Inflation Protected Securities (they pay out whatever the inflation rate is plus a premium, so you always win with inflation).

The fact is that our economy has been riding high for far too long now, based on demand built with imaginary value. It has to unwind at some point.

I think that point was in 2007/2008.