November 26, 2004
This is a ten-billion-dinar note. This is what happens when your regime has a bunch of unnecessary wars and loses them, as the administration’s cronies loot the treasury, in an orgy of self-righteous media propaganda.[03:42 PM]
Glad that could never happen in a place like this.
That's right. We will never have to worry about the U.S. government printing 10 billion dinar notes. On the other hand, we really should have a denomination with Tesla on it.
It's always a bad sign when someone emits a sentence ending with the phrase, "..., it's the only language Those People understand." It bespeaks intellectual laziness and an over-willing quickness to deny Those People the imputation of enough humanity to allow them to understand more subtle methods of communication, e.g. common speech, hand gestures, formal appeals to reason, a crow-bar, &c..
Be that as it may, I feel the need to say, "Vote with your money, it's the only sort of vote which They feel a moral obligation to count, and (modulo becoming a violent jerk) it's really The Only Language They Understand."
Now: euros, pounds, swiss francs...?
It's not places like this that I'm worried about. It's this place.
Poor, alcoholic, eclipsed, Phil Ochs sang in "Another Age":
And they'll coach you in the classroom that it cannot happen here
But it has happened here
(He also went on to sing:
---and now it's gone that way again, though perhaps we can't have really died twice if there hasn't been an interposed resurrection.
We were born in a revolution and we died in a wasted war
It's gone that way before
)
Not to be the little red hen or anything, I have been wondering recently on the best way to move funds into a different, more stable, currency. Euros seem the most likely, but the mechanics are still fuzzy. Suggestions?
What mayakda asked; I have a fair wad of cash I'd like to invest in overseas furriner money.
When frigging WAL-MART finds its sales growth slipping, something is up.
As far as domestic stocks go: I think that stock in companies that fulfill basic needs will probably do OK. Medical stuff, personal care items, that sort of thing.
Ya gotta luv Chairman Bruce's dry wit. Even when he's talking about a case of gross economic mismanagement that's already cost you 20% of your income. (Yes, I'm talking about me again. Paid in dollars, pay mortgage and groceries in pounds sterling -- the dollar's back to 1.90 again and on the way down!)
I wish Tom Lehrer was still writing songs; this'd be classic fodder for his particular talent.
Mayakda, try non-dollar denominated bond funds. Blackrock (unhedged), and Pimco (hedged), among others, offer them. Stefan, for general investing, you might add non-dollar stock ("equity") funds; try Fidelity. Stay away from investment in the third world, especially Russia. Keep in mind that if things get sufficiently bad the US government may restrict your access to your money.
I think pure currency speculation is unwise for most private investors--that's a game for experts with nerves of steel who are handling Other People's Money. That said, if the dollar slides as far as seems likely, hedged funds will lose money, and unhedged gain. I have, ah, hedged my own bets, but suspect that unhedged is currently the way to go, despite currency risks.
I highly recommend a visit to the local library and use of the print version of the Morningstar fund reports in conjunction with their non-pay on-line service; use the on-line service for finding funds and the print for detailed reports. I can see little reason for a private investor to subscribe to Morningstar's pay on-line service.
I am not an investment advisor, nor do I play one on television.
I recently purchasefd some goods from a company in Utah, taking advantage of sale prices and the slide in the dollar. By my calculation I should still have exceeded the duty-free limit on personal imports.
I didn't even have to ask them to lie on the customs declaration.
Of course, not all residents of Utah are LDS.
Jordin called our broker last week but he was on vacation. I expect we'll be talking to him this week and I'll try to report back on what he says. But, yeah, Euros looking good right now. Our trip to London next month may have very little shopping involved.
MKK
Euros are not a good long term plan; the Euro is backed by the European economy, which prospers by doing high-margin, high-value add manufacturing. The rise of the Euro is murdering that margin, which will in turn murder the Euro right around the time the dollar crisis peaks.
Hedge funds probably not a good idea either; most of them are inadequately backed, and I think Brad De Long's point about a twenty year selection process for irrational optimists in financial institutions is well taken.
Dubya, like any true aristocrat, wants an economy where the only things of reliable value are gold, land, and cattle, and he's probably going to get it, world-wide.
If I had to come up with something to invest in, I'd try tool steel additives -- vanadium and molybdenum, say -- which are tolerably rare and very hard to do without unless we're postulating that the lights are going to go out, rather than everyone becoming much poorer.
There is no escape. For the past 60 years or so the US has had the capacity to take everyone else along for the ride on the way down.
Have a nice day.
If you are considering investments that are (relatively) safe against declines in the value of the dollar, don't neglect TIPS (Treasury Inflation Protected Securities) and I-bonds.
These are investments which are adjusted directly for inflation, which is, of course, what we're really worried about when we worry about the decline of the dollar against foreign currencies.
TIPS are just like regular US Gov't bonds, except that their principal is adjusted for inflation, and their interest is paid based on the inflation-adjusted principal. TIPS are traded just like other bonds, so they are completely liquid. There are a number of mutual funds that invest primarily in TIPS or similar securities.
I-bonds are inflation-protected US Savings Bonds. Instead of adjusting the principal, they carry an interest rate which consists of a fixed rate added to the inflation rate. The interest is compounded, and is payable on redemption of the bond. They can't be transferred or traded, but they can be redeemed for their full value after 5 years, or with a 3-month interest penalty after just 1 year. You must be a US citizen or resident or a US gov't employee to own them.
For a risk-averse investor, I would think that inflation protected investments are safer than foreign currency denominated investments. Barring complete collapse of the US government, they are probably also safer than precious metals and the like. All IMHO, of course... (I am not any kind of financial professional.)
I don't have any direct experience (yet), but the Wall Street Journal pointed out EverBank as a bank offering foreign-currency accounts and CDs for Americans.
This should really be in an open thread, but the most recent one was a while ago, and this is kind of about the future too --
Today is the twentieth anniversary of the Bhopal disaster.
Read about it here and read Union Carbide's statement here and more here.
I keep wanting to compare Bhopal to Chernobyl and 9/11, but disasters are not comparable. If they were, Bhopal would be an order of magnitude worse than either.
General advice: Stay away from gold. The price of gold always rises during a crisis and collapses afterwards, so it is a surefire way to loose money at the present juncture.
Keep your debts in fixed-interest, dollar-denominated long-term bonds, and your assets in eastern europe - the vagarities of the dollar and the shifting currents of international trade are not going to stop places like Estonia and Poland from growing darn quickly.
Hard-Hitting Moderator: Teresa Nielsen Hayden.
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