I don’t know what the future I don’t know what the future holds for the Euro…but it hasn’t been pretty for the USD.
Just a data point…
When I traveled to Australia last spring (2008) the exchange rate was on the order of $1.50AUS->$1.00US. I remember when I first arrived and converted $500 USD and got about $750 AUS in return. Things are relatively expensive over there (they seem to have a higher standard of living relative to the US) but the conversion rate softened the blow quite a bit.
Just over a year later the exchange rate is about $1.11AUS->$1.00US and has been below $1.05AUS->$1.00US in the last year. This isn’t because the AUS is string…it’s because the USD is weak and continues to be.
Note that the USD is basically at parity now with the Canadian dollar.
davelj
May 12, 2010 @
9:27 AM
What will be the strongest What will be the strongest currency over the next decade? My vote would be the Norwegian Kroner. They have everything you want in a currency. Huge surpluses, fiscal discipline, all of that North Sea crude… and just 4.5 million people. They wisely opted out of the EU as they correctly thought, “Why would we join a group of financial barbarians when we have all of this oil and just 4.5 million people?”
Coronita
May 12, 2010 @
9:30 AM
davelj wrote:What will be the [quote=davelj]What will be the strongest currency over the next decade? My vote would be the Norwegian Kroner. They have everything you want in a currency. Huge surpluses, fiscal discipline, all of that North Sea crude… and just 4.5 million people. They wisely opted out of the EU as they correctly thought, “Why would we join a group of financial barbarians when we have all of this oil and just 4.5 million people?”[/quote]
Davelj, What are your views of the top 5 currencies moving forward. Just curious. Always respected your opinions.
Zeitgeist
May 12, 2010 @
10:00 AM
Norway is in good shape if Norway is in good shape if they take care of their immigration issues and protect their culture. As for currency- the best currency is the oldest, gold.
davelj
May 12, 2010 @
10:14 AM
Zeitgeist wrote:Norway is in [quote=Zeitgeist]Norway is in good shape if they take care of their immigration issues and protect their culture. As for currency- the best currency is the oldest, gold.[/quote]
What about oil? My problem with gold has always been that the fundamental value is so opaque. Sure, it has unique properties and industrial uses, but the value is based more on speculation than anything else.
Assuming that even in a market meltdown, we continue to have exchanges that trade things (stocks, bonds, commodities, etc.), I’ve always thought oil was the safer bet because it has a clear use and is a fundamental part of the economy. And, as Arraya likes to point out, the supply is limited (and declining?) while demand continues to increase.
Sure, if the Grid blows up and we start living hand-to-mouth, you can’t carry oil around with you, so gold is better. But assuming that modern civilization marches on, I’ve always been more attracted to oil than gold. And done nothing about it, to be clear. When it gets to $150 I’ll be sold on my own idea and buy some so that I can ride it down to $75 again.
sdduuuude
May 12, 2010 @
12:37 PM
One thing that makes gold One thing that makes gold nice is its compactness. I could easily store and protect (i.e. hide) $1,000,000 worth of gold on my property. Would be difficult with $1M in oil. I’m not a gold bug. Just pointing out that using oil as currency requires different storage requirements than gold.
I also agree with Dollar/Euro/Yuan in decreasing order of stability. To show how little I know about currency, I’m still trying to figure out if davelj was kidding about the Norwegian Kroner.
XBoxBoy
May 12, 2010 @
1:06 PM
davelj wrote:My problem with [quote=davelj]My problem with gold has always been that the fundamental value is so opaque. Sure, it has unique properties and industrial uses, but the value is based more on speculation than anything else.[/quote]
All currency is only valuable because people believe it’s valuable. Gold is no different. If paper money is a fiat currency, then gold is a fiat metal.
With that thought in mind, I think it’s safe to say, nothing is a 100% guaranteed store of value. In which case, the better question is what thing (currency or otherwise) are people in the future going to be more willing to honor in exchange for goods and services.
For portability and trade Norwegian Kroners seems pretty reasonable, and gold certainly has it’s fan club. If you don’t want to trade it actively and can store it, as Dave suggests, oil seems like a sensible solution. But for long term store of value, real estate has always been the favorite here in America. (Mind you that last choice is probably blasphemy on this site.)
XBoxBoy
briansd1
May 12, 2010 @
1:34 PM
XBoxBoy wrote:But for long [quote=XBoxBoy]But for long term store of value, real estate has always been the favorite here in America. (Mind you that last choice is probably blasphemy on this site.)
XBoxBoy[/quote]
Not blasphemy to me.
Real estate is a good store of value for sure.
I have questions about surburban American real estate where taxes and maintenance costs are high and potential uses are limited.
But I’ve watched real estate in the city centers of crowded emerging market countries. Real estate in capital cities is always a good store of value.
Look at real estate in cities such as Guatemala City, Beirut, Ho Chi Minh City, Bagdad, Havana – countries we had written off before. Their RE prices are higher than San Diego, and on paper, the owners of those city center real estate are richer than most American families.
One of my Chinese friend’s parents sold their ancestral house in a second tier city in China to developers. In exchange they will get 4 brand new condos, free and clear, in the various new developments. If we assume $120k value for each condo, that’s a $500,000 networth, right there.
partypup
May 13, 2010 @
11:22 PM
There’s only one currency There’s only one currency that matters now, and it will soon be the world’s new reserve currency:
Balestra Capital: “We View Gold As Potentially The Best Currency”
“While deflation is the current problem, these policies increase the risk of a sudden turn to inflation. Without the return of significant global growth it is possible that we get the worst outcome in the form of stagflation. For example, oil and other commodity producers may start to demand higher prices in debasing currencies even though unemployment remains high and wages are stagnant or falling.”
davelj
May 12, 2010 @
10:07 AM
flu wrote:davelj wrote:What [quote=flu][quote=davelj]What will be the strongest currency over the next decade? My vote would be the Norwegian Kroner. They have everything you want in a currency. Huge surpluses, fiscal discipline, all of that North Sea crude… and just 4.5 million people. They wisely opted out of the EU as they correctly thought, “Why would we join a group of financial barbarians when we have all of this oil and just 4.5 million people?”[/quote]
Davelj, What are your views of the top 5 currencies moving forward. Just curious. Always respected your opinions.[/quote]
I really don’t have any idea. They all have their flaws. It’s very hard to tell which have the greater flaws and what’s already priced in.
Of the major currencies, my GUESS would be that over the LONG term the Yen would be the strongest. My GUESS would be that the Yuan and Euro would be the weakest and the $US somewhere in between. Our currency sucks, but I think it sucks less than the Euro and the Yuan long term.
Those views are worth exactly what you paid for them – I could be completely wrong. I ain’t no currency expert.
briansd1
May 12, 2010 @
12:44 PM
davelj wrote:What will be the [quote=davelj]What will be the strongest currency over the next decade? My vote would be the Norwegian Kroner. They have everything you want in a currency. Huge surpluses, fiscal discipline, all of that North Sea crude… and just 4.5 million people. They wisely opted out of the EU as they correctly thought, “Why would we join a group of financial barbarians when we have all of this oil and just 4.5 million people?”[/quote]
I absolutely agree about Norway.
It’s a socialist country that is well managed. They are saving their oil wealth in the second largest sovereign wealth fund.
They decided against the easy money that fuels crazy growth. So they don’t have skyscrapers or outward signs of wealth. But they are rich and enjoy a great standard of living. They also have a single payer universal health care system. 😉
May 12, 2010 @ 6:36 AM
I don’t know what the future
I don’t know what the future holds for the Euro…but it hasn’t been pretty for the USD.
Just a data point…
When I traveled to Australia last spring (2008) the exchange rate was on the order of $1.50AUS->$1.00US. I remember when I first arrived and converted $500 USD and got about $750 AUS in return. Things are relatively expensive over there (they seem to have a higher standard of living relative to the US) but the conversion rate softened the blow quite a bit.
Just over a year later the exchange rate is about $1.11AUS->$1.00US and has been below $1.05AUS->$1.00US in the last year. This isn’t because the AUS is string…it’s because the USD is weak and continues to be.
Note that the USD is basically at parity now with the Canadian dollar.
May 12, 2010 @ 9:27 AM
What will be the strongest
What will be the strongest currency over the next decade? My vote would be the Norwegian Kroner. They have everything you want in a currency. Huge surpluses, fiscal discipline, all of that North Sea crude… and just 4.5 million people. They wisely opted out of the EU as they correctly thought, “Why would we join a group of financial barbarians when we have all of this oil and just 4.5 million people?”
May 12, 2010 @ 9:30 AM
davelj wrote:What will be the
[quote=davelj]What will be the strongest currency over the next decade? My vote would be the Norwegian Kroner. They have everything you want in a currency. Huge surpluses, fiscal discipline, all of that North Sea crude… and just 4.5 million people. They wisely opted out of the EU as they correctly thought, “Why would we join a group of financial barbarians when we have all of this oil and just 4.5 million people?”[/quote]
Davelj, What are your views of the top 5 currencies moving forward. Just curious. Always respected your opinions.
May 12, 2010 @ 10:00 AM
Norway is in good shape if
Norway is in good shape if they take care of their immigration issues and protect their culture. As for currency- the best currency is the oldest, gold.
May 12, 2010 @ 10:14 AM
Zeitgeist wrote:Norway is in
[quote=Zeitgeist]Norway is in good shape if they take care of their immigration issues and protect their culture. As for currency- the best currency is the oldest, gold.[/quote]
What about oil? My problem with gold has always been that the fundamental value is so opaque. Sure, it has unique properties and industrial uses, but the value is based more on speculation than anything else.
Assuming that even in a market meltdown, we continue to have exchanges that trade things (stocks, bonds, commodities, etc.), I’ve always thought oil was the safer bet because it has a clear use and is a fundamental part of the economy. And, as Arraya likes to point out, the supply is limited (and declining?) while demand continues to increase.
Sure, if the Grid blows up and we start living hand-to-mouth, you can’t carry oil around with you, so gold is better. But assuming that modern civilization marches on, I’ve always been more attracted to oil than gold. And done nothing about it, to be clear. When it gets to $150 I’ll be sold on my own idea and buy some so that I can ride it down to $75 again.
May 12, 2010 @ 12:37 PM
One thing that makes gold
One thing that makes gold nice is its compactness. I could easily store and protect (i.e. hide) $1,000,000 worth of gold on my property. Would be difficult with $1M in oil. I’m not a gold bug. Just pointing out that using oil as currency requires different storage requirements than gold.
I also agree with Dollar/Euro/Yuan in decreasing order of stability. To show how little I know about currency, I’m still trying to figure out if davelj was kidding about the Norwegian Kroner.
May 12, 2010 @ 1:06 PM
davelj wrote:My problem with
[quote=davelj]My problem with gold has always been that the fundamental value is so opaque. Sure, it has unique properties and industrial uses, but the value is based more on speculation than anything else.[/quote]
All currency is only valuable because people believe it’s valuable. Gold is no different. If paper money is a fiat currency, then gold is a fiat metal.
With that thought in mind, I think it’s safe to say, nothing is a 100% guaranteed store of value. In which case, the better question is what thing (currency or otherwise) are people in the future going to be more willing to honor in exchange for goods and services.
For portability and trade Norwegian Kroners seems pretty reasonable, and gold certainly has it’s fan club. If you don’t want to trade it actively and can store it, as Dave suggests, oil seems like a sensible solution. But for long term store of value, real estate has always been the favorite here in America. (Mind you that last choice is probably blasphemy on this site.)
XBoxBoy
May 12, 2010 @ 1:34 PM
XBoxBoy wrote:But for long
[quote=XBoxBoy]But for long term store of value, real estate has always been the favorite here in America. (Mind you that last choice is probably blasphemy on this site.)
XBoxBoy[/quote]
Not blasphemy to me.
Real estate is a good store of value for sure.
I have questions about surburban American real estate where taxes and maintenance costs are high and potential uses are limited.
But I’ve watched real estate in the city centers of crowded emerging market countries. Real estate in capital cities is always a good store of value.
Look at real estate in cities such as Guatemala City, Beirut, Ho Chi Minh City, Bagdad, Havana – countries we had written off before. Their RE prices are higher than San Diego, and on paper, the owners of those city center real estate are richer than most American families.
One of my Chinese friend’s parents sold their ancestral house in a second tier city in China to developers. In exchange they will get 4 brand new condos, free and clear, in the various new developments. If we assume $120k value for each condo, that’s a $500,000 networth, right there.
May 13, 2010 @ 11:22 PM
There’s only one currency
There’s only one currency that matters now, and it will soon be the world’s new reserve currency:
Balestra Capital: “We View Gold As Potentially The Best Currency”
“While deflation is the current problem, these policies increase the risk of a sudden turn to inflation. Without the return of significant global growth it is possible that we get the worst outcome in the form of stagflation. For example, oil and other commodity producers may start to demand higher prices in debasing currencies even though unemployment remains high and wages are stagnant or falling.”
May 12, 2010 @ 10:07 AM
flu wrote:davelj wrote:What
[quote=flu][quote=davelj]What will be the strongest currency over the next decade? My vote would be the Norwegian Kroner. They have everything you want in a currency. Huge surpluses, fiscal discipline, all of that North Sea crude… and just 4.5 million people. They wisely opted out of the EU as they correctly thought, “Why would we join a group of financial barbarians when we have all of this oil and just 4.5 million people?”[/quote]
Davelj, What are your views of the top 5 currencies moving forward. Just curious. Always respected your opinions.[/quote]
I really don’t have any idea. They all have their flaws. It’s very hard to tell which have the greater flaws and what’s already priced in.
Of the major currencies, my GUESS would be that over the LONG term the Yen would be the strongest. My GUESS would be that the Yuan and Euro would be the weakest and the $US somewhere in between. Our currency sucks, but I think it sucks less than the Euro and the Yuan long term.
Those views are worth exactly what you paid for them – I could be completely wrong. I ain’t no currency expert.
May 12, 2010 @ 12:44 PM
davelj wrote:What will be the
[quote=davelj]What will be the strongest currency over the next decade? My vote would be the Norwegian Kroner. They have everything you want in a currency. Huge surpluses, fiscal discipline, all of that North Sea crude… and just 4.5 million people. They wisely opted out of the EU as they correctly thought, “Why would we join a group of financial barbarians when we have all of this oil and just 4.5 million people?”[/quote]
I absolutely agree about Norway.
It’s a socialist country that is well managed. They are saving their oil wealth in the second largest sovereign wealth fund.
They decided against the easy money that fuels crazy growth. So they don’t have skyscrapers or outward signs of wealth. But they are rich and enjoy a great standard of living. They also have a single payer universal health care system. 😉
BTW, in Norway taxes are 45% of GDP.