Tuesday, February 01, 2005

Economic Futures

Death Bet Advice
by Ian Welsh
Every time Stirling, Oldman or myself write something related to the Death Bet and the current twilight zone the US economy finds itself in, one of the inevitable questions is "that's nice. What do I do to prepare myself?" This is that article. But let's caveat it. I'm not an investment professional, I don't know you or your specific circumstances, I'm not personally rich, I could be wrong, free advice may well be worth what you're paying for it and if you're reading this in a couple years - it's hopelessly out of date. Use your own common sense.
Death Bet Revisited The death bet scenario is one in which the US dollar melts down. At the current time the US is soaking up about 75% of the interest in the world (maybe more) - including the drug money. Any major power can take the dollar down any time it chooses to do so, and even if none of them choose to a private investor panic or the laws of gravity will probably take it down eventually anyway. When it goes the US economy is going to go with it - interest rates will have to be radically increased, the budget will break, there will have to be a drastic curtailment of imports, the housing bubble will burst, and so on. It'll also, very likely cause a world wide depression.
Leaving One option is to leave the US. Unless you're on the no-fly list you should think carefully before doing so - leaving your support network is often a mistake, Americans are going to be unpopular in many places and really, nowhere's not going to get hit, though some places will get hit less. If you do decide to leave there are basically two options - 1st World and 3rd....