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To: WallStreetCapitalist
With respect to your point 4), Denninger is saying the dollar would APPRECIATE rapidly in value if this credit “dislocation” was to occur.
32 posted on 10/23/2009 2:39:35 PM PDT by swamp40
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To: swamp40

Thanks for catching that!

I personally think that five to ten years from now, cash is trash. The combination of $9,000,000,000,000 in projected deficits combined with the fact that the United States cannot maintain its reserve currency status with China and the European Union offering more attractive terms for many nations as we ruin our balance sheet is an assault the USD simply cannot take.

This isn’t a tragedy for individual investors. There are dozens of ways you can make obscene amounts of money off a declining dollar - from foreign real estate investments to holding stocks in other countries in the native currency with no hedging to issuing 30-year fixed-rate bonds (if you own a business that is large enough, which isn’t feasible for most people), to buying equity to multi-nationals such as KO, GE, JNJ, etc., which I mentioned earlier, a falling dollar can make you very, very rich if you are positioned to take advantage of it.

My philosophy is, and has been, there are always intelligent things to do. Whether you believe the dollar will increase, the dollar will decrease, or we’ll trade in the greenback for seashells, it doesn’t matter. You can structure your life and finances in a way that you are flexible, with resources to take advantage of whatever comes our way. It’s why capitalism works and why I love it.

If I were retired, I’d buy a Best Western or some other real estate holding in Canada, keep the money invested in Canadian currency in their banks (their debt as a percentage of GDP has drastically declined over the past 10 years), and then if and when the dollar fell, ship the money back to the states to live on as needed, enjoying extreme gains in real purchasing power. If the dollar appreciated, I could take more of my dollars and pour them into additional real estate holdings in Canada, using the power of the dollar as a “discount” on my acquisition price. Either way, I’d be protected.

Note: I’m not actually advocating someone do this, I’m merely pointing out that it is a practical application of my philosophy.


34 posted on 10/23/2009 2:56:14 PM PDT by WallStreetCapitalist
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