Debt ceiling strategy

[SecondAttempt]

No, it's not for inflation hedge. I think gold is a terrible inflation hedge. It's more for emergency/sh*t-hits-the-fan/gotta-get-outta-town-in-a-hurry kind of currency.

Wouldn't whiskey and ammo be more useful?

 

[luckydude]

Wouldn't whiskey and ammo be more useful?

Good point. I got guns and ammos also. Back when I was younger and more paranoid than now, I bought a few cartons of cigarettes from Costco and kept them at home. Even though I don't smoke, I figure in a sh*t-hit-the-fan scenario, cigarettes can be useful for bartering and such. Unfortunately, they do go stale over time, so I eventually gave them away. Maybe it's time to stock up again with this debt ceiling nonsense...

 

[SecondAttempt]

I know everyone hates gold because it has historically been a lousy investment. I have a little gold and plan to hang onto it for just such a situation as a default. I think under those circumstances, gold might explode in value - for a short time until inevitably the debt ceiling is raised and we print more money to cover our debt.

Gold can't be created, so has an interesting history vs fiat currencies. When folks trust fiat currency, gold does very little. When there are even doubts about fiat currency, Gold takes off. I won't go out and buy more Gold, but I'm kinda happy I've got a little. I honestly don't think of Gold as "end of the world" investment but more for when major disruptions in world economies and currencies occur. Gold is an insurance policy for want of a better term. YMMV as always.

But we just went through a pretty big disruption both to economies and supplies during the pandemic. Nobody wanted gold. They wanted toilet paper!

 

[SecondAttempt]

Good point. I got guns and ammos also. Back when I was younger and more paranoid than now, I bought a few cartons of cigarettes from Costco and kept them at home. Even though I don't smoke, I figure in a sh*t-hit-the-fan scenario, cigarettes can be useful for bartering and such. Unfortunately, they do go stale over time, so I eventually gave them away. Maybe it's time to stock up again with this debt ceiling nonsense...

I live in Hawaii so some of this is "cultural" but I keep a hurricane "go bag" in my car during hurricane season. Where I live is very unlikely to get hit but it would not take much for roads to be closed for weeks because of tree falls and to not have power for a long period. In December 2021 we lost power for something like 6 days from a minor storm.

Anyway, my kit has several things for trading including whiskey, spam, TP, and beef jerky. Cigarettes sounds like a good idea even though I don't smoke.

 

[Montecfo]

It is disappointing that it has come to this. I wonder how the 14th amendment would come into play?



"The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned. But neither the United States nor any State shall assume or pay any debt or obligation incurred in aid of insurrection or rebellion against the United States, or any claim for the loss or emancipation of any slave; but all such debts, obligations and claims shall be held illegal and void."



I would not be surprised to see the administration sue Congress if there is shortage of money to pay debts. I can't recall any time any administration has sued Congress but there are plenty of times Congress or even a committee has sued an executive agency so I suspect it is possible.



I think the experiences in 2011 and 2013 demonstrated the Congress will get the blame in the end.

"authorized by law" I think being the key term. I doubt an end run around Congress will fly.

 

[arcyallen]

You won't know if it works as emergency currency....until there is a true emergency. No, a hurricane or loss of power doesn't qualify.

I think there has been times in history (outside the US) where alcohol, tobacco, food, and supplies were used more as a currency than gold. I'd be curious to know how often gold has been used historically in these situations - I've heard it's been used very little, but that's mostly anecdotal.

 

[Aerides]

For the umpteenth time - keep to your personal plans. If you find yourself typing "congress" or "policy" or anything near that area, hit the back button.

If you don't, we will do it for you, and we prefer not do do the heavy lifting.

 

[Montecfo]

Wouldn't whiskey and ammo be more useful?

You make a good point. Hard to shave off that gold bar to buy gas. And who knows if it is real?

Less an issue with alcohol and lead.

 

[SecondCor521]

My personal plan not to buy any gold, silver, ammo, tobacco, or anything like that.

I think we underestimate the ease with which ersatz currencies can pop up. Favors, barters, stamps, big round rocks, bitcoin, credit card points, frequent flier miles, swagbucks, and others all function as currencies to some degree. Some foreign countries, especially in the Caribbean, use the US dollar as a currency in addition to their own. Individual US states and even banks had their own currencies before the Federal Reserve.

I think people advocate gold and the other items for reasons other than an actual practical suggestion.

 

[Montecfo]

^^^We know now what you won't do. But knowing what you will do might be interesting.

 

[OldShooter]

In the unlikely-to-happen apocalypse anyone known to have significant quantities of "currency" like gold, ammunition, etc. might as well also paint a target on their backs. Typical houses are basically not defensible from a group of two or more attackers.

 

[SecondCor521]

^^^We know now what you won't do. But knowing what you will do might be interesting.

I will stay the course. I will monitor my financial dashboard to make sure it is all in range or on target, which these days is to ensure I maintain:

1. A safe gross withdrawal rate
2. My Roth pipeline
3. Kids' college plans are funded
4. Kids' college funds are allocated appropriately
5. Asset allocation is where I want it
6. A safe net withdrawal rate

If any of the above become out of range, I will review and implement contingency plans which are already documented. (They're all green at the moment, FWIW.)

 

[Montecfo]

In the unlikely-to-happen apocalypse anyone known to have significant quantities of "currency" like gold, ammunition, etc. might as well also paint a target on their backs. Typical houses are basically not defensible from a group of two or more attackers.

Well, I agree. But also disagree.

Let's hope it never comes to that.

 

[luckydude]

I live in Hawaii so some of this is "cultural" but I keep a hurricane "go bag" in my car during hurricane season. Where I live is very unlikely to get hit but it would not take much for roads to be closed for weeks because of tree falls and to not have power for a long period. In December 2021 we lost power for something like 6 days from a minor storm.

Anyway, my kit has several things for trading including whiskey, spam, TP, and beef jerky. Cigarettes sounds like a good idea even though I don't smoke.

Whisky and hard liquor in general would be good for bartering. I'll add them to my list. I think some cannabis-based products would be good as well. I'm also accumulating some physical cash at home just in case. I don't think default is going to happen, but then I didn't think a global pandemic would happen either and it did. So just need to be ready for anything.

 

[luckydude]

In the unlikely-to-happen apocalypse anyone known to have significant quantities of "currency" like gold, ammunition, etc. might as well also paint a target on their backs. Typical houses are basically not defensible from a group of two or more attackers.

True, but if you don't go around telling people, they won't know what you've got buried underground or hiding in the basement or in the walls. There are much bigger, richer targets for people to go after in a sh*t-hits-the-fan scenario.

 

[MichaelB]

Thanks for the interesting discussion.