A few ways to hedge the dollar, GOLD, YEN, EURO, POUND. I have been converting my "Savings" into Pounds the last year. i have almost doubled my money. I take 50% of my disposable income and Roll it into Foreign Currency. I have most of my money in Pounds a small portion in the Yen which I got in around 116 or so. I have yet to buy gold. I'm looking at the Canadian Dollar and Yen from this point on. I have a heavy % in the Pound and will let it sit for a while. The only draw back on this plan is the conversion cost. So, it isn't wise to move in and out of the actual currency often. You need to buy in and stay in. An its a lot less of a headache then trading Forex but there is no leverage. E
I tried buying foreign sovereign bonds a couple years ago to hide the money from dollar devaluation... I split it between German, NZ, UK and AUS bonds. Net gain was much smaller than expected because even though the dollar dropped as I had expected, the bonds declined because their rates rose. Since then I hide excess cash in GLD almost every night. The only problem with GLD is that I figure after the dollar collapses, the pound will be next, and the UK also has a history of confiscating assets, no different than the US. GLD's gold is stored in the UK. Too bad its not stored in Zurich.
The concept that private currency would be "inflation protected" is pretty naive. There's nothing stopping them from printing more certificates, or lowering their reserve basis. Best of all, the Liberty Dollar folks just need to pack up their bags and move to a country without an extradition treaty. Then you'd see some real inflation. Even sticking your money into silver or gold doesn't necessarily make it stable. Yes, you may not be fighting inflation, but seeing Silver at $4/oz again isn't unreasonable. If you really see inflation as that big of a problem on the horizon, buy some US I Bonds or TIPS--absolutely guaranteed to be inflation proof. Many brokers will allow you to use your bonds as margin.
LOL, you think they are going to pay interest on the real inflation rate? They'd have to admit what it is and need to pay it to everybody if they did. Inflation is running somewhere between 7 and 10% currently. 10% makes sense because they are increasing the money supply by over 10% a year.
I agree with alot of what you say, but since M3 is no longer reported it is hard to track the % of money supply growing per year.
they do pay interest on top of the inflation rate, but it's like .75% or so. So it's hardly anything.
Have you ever taken a macro-economics class? If you recall, in the long run MV=PY holds. GDP growth is about 2.5%, and money supply growth (not even M3, which is not as relevant anymore) is no where near 10% a year. More like 6%, if that. This puts price level growth at 6-2.5 = 3.5%, not too far off adjusted CPI.
http://research.stlouisfed.org/fred2/series/M3/ In 2000, M3 was round 6,000, in 2005 it was 10,000. That's roughly 13% 5 year average growth rate. What is this, voodoo economics?
I ignored M3 as most economists agree that it has become a poor measure of the money supply. My math was fine. http://www.federalreserve.gov/releases/h6/Current/ Seasonally adjusted M2 from jan 2006 to jan 2007 shows 5.5% growth. With GDP growth at 2.5% this puts inflation at 3%.