[bsrsharma]

only bullet they had was a rate cut

Price controls http://en.wikipedia.org/wiki/Price_controls have been instituted 3 times in the last 60 years. If sustained inflation crosses 6%, I think it will be back.

[bsrsharma]

HLS: The original poster sounded like he had a ton of cash sitting around and wanted to know if it is a good idea to invest in gold or foreign assets. I think, for his situation, becoming debt free and living a stress free life is preferable to doing something risky (I consider both gold & foreign currency speculation high risk for most piggingtonians. Unless you can lose a million $ and not worry a bit, gold & currency won’t help you). Your suggestion is much better for someone who can manage risk & leverage credit responsibly. Buying a house with mortgage and getting a lower yield on a low risk investment (like a CD) isn’t attractive to me. Renting out a home is also unattractive due to all the hassles of being a retail landlord.

Ideally, I would invest as much as I can in a diversified pool of global funds. Large cap multinationals should be relatively low risk if well diversified.

[bsrsharma]

This may be a “California” property that may not need a mortgage:

http://www.villaslajolla.org/

(Homes from $69,995)

[bsrsharma]

YEARS before the doomsday

Right!

 Parity with CAN $ 2007

 Parity with Mexican Peso 2037

[bsrsharma]

What do you think of this:

If you want to protect your cash holdings, how about moving to a good place that was not inflated by the bubble, pay cash and buy a house you can afford comfortably. That way, a good part of your wealth is converted into tangible assets that can’t be depreciated by fiat money. With the remaining funds as safety net, you can live a happy comfortable debt free life. With the modern miracle of telecommuting, you can even work in far away places remotely.

I am very uncomfortable with holding large amounts in gold or foreign currency. Farmland may be good investment (people are always going to eat, even in recessions!), but I don’t know how to buy and lease/rent it to a farmer. If you think you can do some smart organic farming, that may be a profitable idea! (Even the Amish seem to have good life – at least in movies)

[bsrsharma]

sneak into Mexico

Wrong direction Cat! Try going north. Canadian $ touched parity today. Besides, they almost handout visas like halloween candy for professionals. No need for tunnels. 

[bsrsharma]

Well it happened! Canadian $ touches US $ after 30 years.

http://biz.yahoo.com/ap/070920/dollar.html?.v=19

[bsrsharma]

Don’t know much about China’s policies; but Nixon instituted price & wage controls in 1973-74 to control runaway inflation after Vietnam War. It may happen here (in USA) again. It has been done in many countries. Short term price control is not all that uncommon.

[bsrsharma]

Partypup,

The reason there will be increasing resistance to fast devaluation is exactly because of what you have said. The sweet part of it is over. Every one will hurt more (both exporters and importers) with further drops. That will force them to put up some safety net to slow the fall. Definitely, I think we won’t see real loss of value of 50% in just a couple years (like for e.g. $1600 for gold, $200 for oil, $8 for milk, $6 for gas etc.,) unless we go through a Soviet style revolution – which I am not expecting.

[bsrsharma]

short the US dollar

Dangerous game to play, in my opinion. If the Iranians explode a nuke or throw a missile at Israel, the whole world will jump back on $ and you are toast. Or if Al Queda gets control of nukes in Pakistan (there is only a weak dictator standing between them now), the markets will just discard other currencies in favor of $. Currency speculation is for grown ups. You should understand the global dynamics far too well to play and win.

[bsrsharma]

Though US $ has nowhere to go but down in the long run, this Ambrose Evans-Pritchard guy is a professional alarmist. He wrote a few weeks back about China dumping $ (“nuclear option”). I expect an orderly devaluation of around 5% per year till net capital inflow starts subsiding. That will probably happen in, may be, 10 to 12 years, after $ is down by about 50%. But it is not next weeks problem.

[bsrsharma]

As though on cue, Treasury secretary wants to rise US debt limit to $10 Trillion (from $9 T). That is 1 followed by 13 zeros!

[bsrsharma]

I have 20% international funds

Why limit to 20%? I am 100% Global (Global includes US). With at least a 50% devaluation of US $ in next 10 years, what is the down side risk in going fully global? (Obviously you have to diversify and not fall in love with any country or region, but from any rational analysis, being 80% in US $ based investment is just plain nutso)

[bsrsharma]

Interesting! How much discount do these stores give you for cash purchase? I remember some small computer stores advertising 5% cash discount. And ARCO gas doesn’t take CC. But even if I buy, say, $200 per month at these stores, that would save me $10 for cash discount. Isn’t that rather small for all the haggling you may have to endure?

[bsrsharma]

Can’t you use debit cards for that? My local grocery doesn’t take CC, but they take Debit card. Between CC, Debit Card & ACH (Automatic electronic bill pay), I rarely write checks even, let alone pay cash.

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