Saturday, January 2, 2010

Currency Crisis for 2010?

As we begin the new year, we need to look back at where we have left off in 2009 so as to make wise investment decisions for 2010.

For me, I am almost certain that a currency crisis of the US dollar is way overdue. Well..you do not have to take my word for it but at least you can trust investor Jim Rogers and websites like the Motley Fool.


The financial crisis which was caused by too much debt is being solved by increasing debt(ironic isn't it??). That is perhaps the most tell-tale sign that the Federal Reserve is way over enthusiastic about actively stirring the country away from depression. The amount they are spending is way over board and it seems that they are keen on totally destroying the US dollar.

Gold and Silver are hitting new highs because the US dollar is being devalued.


In fact, the BRIC countries are proposing that trade move away from the US dollar and be based on a basket of currencies instead.

Two quick questions to all people out there.

1. How can one really PROFIT if the US dollar is to become devalued in the future?

2. Which is the safest currency to place your money in should a US dollar currency crisis take place?

6 comments:

  1. I am not living in the USA or HK, making US$ or HK$. I am living in Singapore and making S$ which will appreciate against US$ and HK$ in time.

    Currencies which will do badly are those from countries with too much foreign debt (example: US$). Currencies which will do well are those from countries with no debt or little debt (example, the Chinese RMB).

    However, if you are really worried about inflation, buying some real assets such as gold would provide protection.

    I blogged about hedging against inflation as well as a new world order. Feel free to visit. :)

    http://singaporeanstocksinvestor.blogspot.com/2009/12/new-global-economic-leadership.html

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  2. Hi FF,

    just wondering, why are u worried about a declining USD?

    I love a declining USD then I can go USA on the cheap! =p

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  3. I am not worried of a declining USD.

    I am worried about a USD that becomes devalued to the point that it forms a currency crisis which screws up the entire trade Singapore has with USA. It will also affect the world economy to some extent.

    Imagine oil today is bought using USD. What if USD becomes not devalued but worthless....

    I know the scenario is far fetched but with so much US debt...their money might become paper money in the end...like banana notes during the Jap occupation or the collapse of Iceland's currency in 2008 which forced Mcdonald's out of Iceland...

    I know Singapore dollar is strong but I am worried about the implications of a great US currency crisis on us. How will it affect our SGD and how will it affect our economy if USD declines to say today's 1.39 to 0.7 or 0.8....

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  4. Yep Gohsip,

    We can start planning a US trip in the next few years =)

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  5. A weaker US$ will have great implications for our exporters. It will also have serious implications for people and countries with savings and assets denominated in the US$. So, you would worry if you were in their shoes. Other than that, join Gohsip and start going to the USA for regular holidays! ;-p

    As for US$ losing its status as an international currency, it is already happening. Quite a few central banks are upping their reserves in gold and the Euro and reducing their reserves in US$. We will have to wait and see if world trade will gradually be carried out using the Euro instead of US$ in future.

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  6. AK71,

    A weaker US dollar will hurt our economy no doubt. I am not worried so much about a weaker US dollar but more of a totally worthless US dollar.

    The probability of that happening is of course low but with their mounting debt, nothing is impossible.

    A lot of countries have been asking for a global currency based on a basket of currencies instead of solely relying on the US dollar. Perhaps they do know something we don't =)

    ReplyDelete

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