

Ask HN: When or if do you think the dollar will collapse? - sown

What are you doing to prepare for it if you think it will happen?
======
lucaf
I'm not sure a catastrophic collapse will happen any time soon (unless as a
byproduct of some non-financial catastrophic event - e.g. a meteor hitting
NYC). Since currency values are only relative to each other, any loss of value
of the USD has to be matched by a strengthening of other currencies. The Euro
is in no fighting shape, and an eccessive strengthening of the Renminbi would
have catastrophic domestic effects in China (hence the Chinese government
would simply not allow that to happen).

But... let's say you live in the US and want to prepare for it anyway? The
major effect would be rampant inflation, especially for goods and services
that are either imported or are highly reliant on imported goods. We import
very little food (although we rely on oil-based fertilizers to make it), so I
do not believe that widespread chaos and street violence ("kill your lunch,
chop your wood, and carry a gun" scenario) are very likely.

To protect yourself from inflation, don't focus so much on your financial
assets as on your personal and professional assets. A financial bet can go
wrong (what if the USD strengthens instead?), while your skills and ability to
generate income will always benefit you. Develop a freelancing business and
related skills - salaries adjust slowly to inflation, so you get squeezed,
while as a freelancer you can adjust your rates more quickly. Also develop a
lifestyle that relies as little as possible on our major imported commodity,
oil - a fuel efficient car, solar panels on the roof, etc.

------
Chronos
This current crisis felt like we came to the brink of hyperinflation, but
managed to scramble through it without quite tipping the balance. Nothing is
fundamentally fixed, though, so I expect the next big crisis 5 or 10 years
down the road to end with the revaluation of the dollar, Zimbabwe style.

Gold is overhyped right now -- anyone buying gold at the moment is a fool --
and, as a rule of thumb, any commodity that people watch like a hawk (gold,
silver, oil) is going to have second-order effects that aren't necessarily
correlated with supply/demand and isn't a very safe bet. That said, a lot of
other less-watched commodities will be the first in line as newly-printed
money trickles out into the economy and fuels an artificial manufacturing
boom: copper, zinc, maybe some of the catalyst metals like palladium (too
volatile for me), iron/steel to a far lesser extent (again, too volatile for
me). If I'd had the money at the time to follow my gut in 2008, I would've
made a killing on copper alone -- and if I'd put some into platinum, one year
ago, pre-auto-bailout, I'd have made a very comfortable one-year return (on
the order of 250%).

------
bgnm2000
I'm making a lot of web sites just in case.

------
yannis
It can have a catastrophic effect on the web. Javascript validation would not
be able to handle all the digits. I wonder how the Zimbabweans handled it?

Seriously don't worry. It will have to adjust sometimes to reflect the real
economy and the deficit. I lived in South Africa for quite a few years. At one
stage the Rand halved its value almost overnight. (Big changes happen
overnight) and lost more gradually over the years. It did not affect the
'buying power' in the country though. So unless you want to get up and go to
Europe keep your money invested in the US. It is a great country and the
economy has a tendency to re-adjust quickly. (By the way in Europe they worry
similarly about the Euro).

If you have a lot of dollars under your pillow change some to Chinese Money.
At worse you can go for a holiday there!

~~~
rphlx
The US is perhaps the most import-dependent nation on Earth. If the dollar
drops in half, prices for many physical goods will basically double soon
after, reducing buying power within the country, unless credit simultaneously
expands 2X (which is what's been happening since ~2001 to maintain our
illusion of wealth).

~~~
yannis
Assuming the rest of the world will not react. The 'exporters' will have a
problem and since now they will import less dollars their own currencies will
re-adjust otherwise the US will start becoming an exporter of physical goods,
industry will be re-vitalized and the cycle will be reversed.

~~~
mpf62
What industry? That sector accounts for less than 20% of US-GDP.

Besides that, if the dollar becomes worthless, how will your "industry" pay
for raw materials that have to be imported?

Of course, you can at least buy oil in dollars ... but what if that changes,
too?

------
nostrademons
I can't predict when. I think it will, at some point, but I can't tell whether
it'll be a gradual slide or a catastrophic panic.

As for what to do about it - own assets that generate continual revenue
streams denominated in foreign currencies. International bonds are the obvious
ones, but stocks of companies that make most of their revenue abroad also work
well. Paradoxically, that means the S&P 500 is a pretty good bet: most of the
top American companies make most of their money outside of the U.S.

------
buugs
I don't think the dollar will collapse, if it does however many people other
than the US need to be very worried.

If I'm wrong: I live in the mountains have plenty of trees an axe, a gun, and
a stove.

------
cmars232
Lots of guns and canned food. Works equally well for zombie outbreaks and
post-nuclear apocalypses too.

------
jacquesm
Please define 'collapse'.

~~~
brianto2010
Galloping/Hyper inflation. Extreme devaluation of the dollar.

~~~
MaysonL
0% probability in the next five years.

------
drhowarddrfine
Your question is like those who boo sports players when they have a bad year.
An economic downturn is not uncommon anywhere and having one now is just
letting the wolves howl at the moon and salivate. The best players bounce back
and so will the economy and the dollar. All this has happened before, many
time. It would be unwise to bet against this track record.

~~~
DenisM
Please don't use sports as analogy to economics, politics or anything else,
unless there is direct connection. Thank you.

------
newacc
i guess gold and silver are the best bet.. though i dont know its a right time
to buy right now as prices has shot in last couple of years... dollar crash
may also result in to stock-crash and someone who can predict this can also
buy 'short' ETFs. Dollar crash will also create demand in Oil which in-turn
will increase the oil price. all these factors can help anyone to shield from
now. Also one can start investing in forex, many smart immigrants have started
investing in their home countries so that there is some risk mitigation.

Interested readers can also read "10 Bubbles in the making" @

[http://www.businessinsider.com/bubbles-in-the-
making-2009-9#...](http://www.businessinsider.com/bubbles-in-the-
making-2009-9#the-china-bubble-1)

