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Retiring with Bernanke-Are You Prepared?
Old 01-17-2006, 03:01 PM   #1
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Retiring with Bernanke-Are You Prepared?

Great article. Makes you think about where we might be headed to.

http://www.kitcocasey.com/displayArticle.php?id=490
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Re: Retiring with Bernanke-Are You Prepared?
Old 01-17-2006, 03:26 PM   #2
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Re: Retiring with Bernanke-Are You Prepared?

The sky is falling ! You better stock the shed for the apocalypse.

What a coincidence that Mr. Merk, who heads up a currency trading firm, recommends that we should all invest in a basket of foreign currencies.*

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Re: Retiring with Bernanke-Are You Prepared?
Old 01-17-2006, 03:29 PM   #3
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Re: Retiring with Bernanke-Are You Prepared?

Comming from a country that use to have huge public deficits, I know first hand what that kind of policy does with one's national currency. There is indeed a huge ammount of liquidity in the world market, most of it which in US dolars. Take that with a grain of salt if you will, but I will continue to add gold to my portfolio.
I hope you have better arguments than to simply question the interlocutor based ONLY on who he is. Of course that is one factor in which someone should base judgement, but do you find any flaw in his argument at all, or you don't like it just because of his job?
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Re: Retiring with Bernanke-Are You Prepared?
Old 01-17-2006, 03:38 PM   #4
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Re: Retiring with Bernanke-Are You Prepared?

camberiu:

OK, I'll give my response. The problems pointed out by Mr. Merk are real. However those US dollars eventually have to come back to the US and be spent here in the US. They are really not worth anything elsewhere besides the US. Think of the stimulative effects that will occur as the Chinese start to buy things from the US.

So here's my prediction, the US will continue to grow. But the growth rate will be slowed by the factors mentioned in the article.

Now, come on out from that bunker. It's not that bad !
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Re: Retiring with Bernanke-Are You Prepared?
Old 01-17-2006, 03:47 PM   #5
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Re: Retiring with Bernanke-Are You Prepared?

The stuff beating on the USD is real, but it is impossible to predict whether other factors will outweigh the negatives or not. It is also impossible to predict when any chickens might come home to roost. As such, most of the investments that would allow you to make big coin from a USD collapse are likely to be low return because they require you to accurately predict not only the size but also the timing of any collapse.

I choose to take a different tack. I hold some unhedged foreign bonds, some foreign equity, some commodities, and some businesses that should do well regardless of what the dollar does. But I don't go overboard with any of these and I don't spend a lot of time worrying about it. If you insure against everything, you give up a lot of potential return.
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Re: Retiring with Bernanke-Are You Prepared?
Old 01-17-2006, 06:09 PM   #6
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Re: Retiring with Bernanke-Are You Prepared?

Quote:
Originally Posted by camberiu
do you find any flaw in his argument at all?
Hmmm, the site is down. Must be from all the ERs stampeding rushing over there to sign up. I hate it when I miss the express elevator-- it is going up, right?

I've noticed that Buffett has done a lot better since he stopped complaining about trade deficits & budged deficits and started shorting the dollar.

But why would we want to give up our diversified global equity investments, highly liquid that most of them are, for an investment that's based solely on exchange rates or commodities? I'd rather hold value & dividend stocks than currencies.
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Re: Retiring with Bernanke-Are You Prepared?
Old 01-17-2006, 07:02 PM   #7
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Re: Retiring with Bernanke-Are You Prepared?

Quote:
Originally Posted by Nords
But why would we want to give up our diversified global equity investments, highly liquid that most of them are, for an investment that's based solely on exchange rates or commodities? I'd rather hold value & dividend stocks than currencies.
That is not what the author is suggesting at all. But I do believe that there is serious risk to bond holders (private and government) as the dolar continues to devaluate. It went up a little today, but the overall trend has been to lose value. Just look at gold prices (which is based on the dolar)!!!

The US simply cannot keep spending the way it is without consequences. Something gotta give eventually. I come from a country in which the government went on a crazy shopping spree during the 50s, 60s and early 70s. But at one point the party ended and it was time to pay the bills. Talk about reckoning day! To cover the huge deficit, the government started printing money like crazy and taxing the heck out of everybody. The result was 20 years (yes, 20 continous years) of STAGFLATION, until some very painful corrections were put into place and the boat "kinda" stopped making water. It is not smooth sailing right now, but after years of political turmoil and some very hard and painful budget cuts, the government expenses are somewhat under control.

What frustrates me is that I see the exact same thing happening here, and worse, the people think that what happened in my country cannot happen here! The government (and many private citizens) are spending like there is no tomorrow. The people who think like the users of this forum are probably one percent of the whole US population (I am being optimistic). The rest are acting like nuts and certainly do not see any problems with the government acting like they do.

So, what I am doing is:

1) Putting a good chuck of my money on international ETFs and stocks.
2) Investing in Gold.
3) buying stocks of companies that I believe would benefit from a weaker dolar (i.e. Conagra, ADM, General Mills, Alcoa, Boeing, Cartepillar).
4) Staying away from US bonds (for I believe the dolar will get weaker).
5) Staying away from companies that rely too much on the US domestic market (i.e Comcast, Verizon, Netflix, etc...)
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Re: Retiring with Bernanke-Are You Prepared?
Old 01-17-2006, 07:36 PM   #8
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Re: Retiring with Bernanke-Are You Prepared?

Quote:
Originally Posted by camberiu
I come from a* country in which the government went on a crazy shopping spree during the 50s, 60s and early 70s. But at one point the party ended and it was time to pay the bills. Talk about reckoning day! To cover the huge deficit, the government started printing money like crazy and taxing the heck out of everybody. The result was 20 years (yes, 20 continous years) of STAGFLATION, until some very painful corrections were put into place and the boat "kinda" stopped making water. It is not smooth sailing right now, but after years of political turmoil and some very hard and painful budget cuts, the government expenses are somewhat under control.
C'mon, cough it up. We can't draw any conclusions about the validity of your comparison without knowing the name of the country.
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Re: Retiring with Bernanke-Are You Prepared?
Old 01-17-2006, 07:51 PM   #9
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Re: Retiring with Bernanke-Are You Prepared?

It is my understanding that the US net debt level as a percentage of GDP is actually going down (believe it or not). That's cause' the economy is growing so fast.

One could make a case (not me though) that the US economy can withstand all this debt and maybe some more.

camberiu: If I were to guess based on your postings I would guess you were from Argentina or Brazil maybe ??
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Re: Retiring with Bernanke-Are You Prepared?
Old 01-17-2006, 09:09 PM   #10
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Re: Retiring with Bernanke-Are You Prepared?

Quote:
Originally Posted by Nords
C'mon, cough it up. We can't draw any conclusions about the validity of your comparison without knowing the name of the country.
No secret here, all you had to do was to ask. Iam from Brazil.
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