ygsmilo: I have been busy with the crazy cattle and soybean markets (cattle have been higher for 11 days in a row) have you looked at the European bond markets - what have they been doing? I am sorry, ygsmilo. There is nothing I can advise you short term. The economic theory I subscribe to firmly states that no process involving human action can have constant numerical properties or be a subject to quantitative prediction. You can easily use simple math (well, relatively simple) to find the current trend which will work while the prevailing human preferences persist, but by definition you will not be able to predict by looking at the trend whether, let alone when those preferences will change.
The theory will at least predict how they will change but not exact scenarios or dates/magnitudes.
Which theory can ever predict when the fed lowers the rates one time too many?
What is "Austrian Economics"? Dollar must fall or default or the US economy must if it follows the trends and the causal mechanisms are all working to worsen the trends, not reverse them. But when it will happen and how exactly? Who knows. Austrian Carl Menger, the originator of the Austrian School of Economics predicted great conflict and devastation of WWI and preserved his wealth (in gold and scandinavian bonds) when all austrians lost their shirts in 1920s - he died in 1924. But he made his prediction in 1880 and allegedely it was the pessimism and feeling of inevitable disaster that caused him not to produce any great works after his 1971 "Principles of Economics".
Mises described the details of the downfall of Soviet Socialism in 1920 - when everyone believed they were the superior system. He was correct - for 70 years. He was a pessimist but kept producing one great work after another - 5 total of classical status and a whole slew of minor works. He said in 1960s that his hedge against incoming great inflation was his advanced age - he died in 1973 aged 92.
Only austrian economists were saying the gold was indervalued and will jump in price while everybody else expected it to drop to $7/ounce when Nixon unpegged it at $35.
Long term - it's better to be in marketable commodities (gold?, land, alcohol, cigarettes, fishing hooks, ammunition) and currencies backed by real stuff. Also, remember that in times of crises the governments often confiscated people's holdings of marketable commodities/securites - like US confiscation of gold in 1932, Russian and South Amarian confiscation of dollar accounts, etc.
Dollar can jump up 25% tomorrow bacause chinese may as well devalue as appreciate their currency and europeans as well. In the long term the US elderly will have to reire and in 2013 the SSA trust will be empty and money have to come from somewhere.
fd ski question to you Miko2d
I have some savings in dollars. I'm thinking about converting them to euro ( i have accounts in europe ) simply because expected drop in value of dollar vs euro. You can open a foreign currency account (FDIC insured) in an american bank. Check the
Everbank World Markets - a division of the First Alliance Bank. Forbes wrote highly about them. They charge 0.5-0.7% for currency conversion, no other fees. You even get interest of the country on the deposits above certain sum. Aussies and Kwis pay around 4% and S. Africans >8% compared to our <1%. You can also invest into a composite "index" of currencies and even Chinese currency, if you want to bet they will unpeg from the dollar as Bush demands. Especially since in this rare case Bush inadvertenly is in greement with common sense...
Of course if SHTF, the US government may get to those money easier than to your european accounts. How would I open one, btw? What bank would you recommend? What are the tax implications.
When do you think the drop in exchange rate will occur? As I said before to ygsmilo, the theory I use states that such kind of predictions cannot possibly be made. So the answer is anytime. I do not believe the dollar will survive the real hard-limit crunch of mid of the next decade but its downfall can be triggered by some event any moment even before that.
I am not trying to get rich here - I believe wealth makes it ahrd to raise good children. I just intend them to survive the downfall like my ancestors survived 1917-1920s in Russia when everythingw as sold by a million and lot of people died of hunger.
3. How will the drop of dollar affect euro? They will try to match our devaluation printing money for a while but when the strain on their economy becomes unbearable (the peg-induced expansion is putting quite a strain on the Chinese economy already) they will cut the ropes and let us drown. Hopefully they will do it quickly enough to avaid a major collapce of their economies and will be able to send us shipments of food...
US was trying to match the british pound devaluation in late 1920s and that greatly contributed to the great depression. At the same time the collapse of german curency in early 1920s did not cause great problems elsewhere.
miko
