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I think that's more a disadvantage. If the US starts to inflate too much, it may be dumped as the world's reserve currency. A global run on the dollar could con

by wegs 7y ago

I think that's more a disadvantage. If the US starts to inflate too much, it may be dumped as the world's reserve currency. A global run on the dollar could convert modest, manageable inflation into hyperinflation. If dollars are worth 1/2-1/10th of what they are now in three years, that's kind of okay, and in-line with the damage of COVID19. If they are worth 1/1000th, we're looking at a serious, structural collapse.

rapsey 7y ago
> If dollars are worth 1/2-1/10th of what they are now in three years, that's kind of okay That is massive inflation.
- wegs 7y ago
  Yes. It is. It's frighteningly high, but likely necessary: We have a massive crisis. It seems like the least of all evils, unless we somehow are able to act with focused intelligence. On the one hand: Look at unemployment rates, business failure rates, mortgage defaults, people unable to pay for food/medicine/shelter, or any other economic metrics, and plot even conservative predictions even a month or two out. The economy will be dead very quickly if we don't do something drastic. On the other hand: If we let it burn: look at COVID19 mortality rates, and multiply by a significant fraction of the US population. You land on numbers greater than WWI casualties, and likely greater than all previous wars combined. Heck, looking at permanent lung damage alone, we're already tanking our economy. These are exceptional times. They take exceptional measures. The metrics I care about are: (1) Structural damage to the economy (layoffs, defaults, bankruptcies, etc.). (2) The number of people working (likely in pandemic-adapted industries) (3) Deaths. To minimize those, we'll either need to be clever or to inflate. So far, we've been really bad at clever.
lifty 7y ago
I agree, but I think that is more of a long term concern. The USD will be dumped as the worlds reserve currency but I presume this will be a long and volatile process. There are 2 reasons why I think the USD will slowly be dethroned as the reserve currency: 1) the US has made the USD their weapon in punishing opponents and many countries have already started to think about alternatives. 2) the USG has very big long term unfunded liabilities which will need to be inflated away. China and other big holders of US debt know this, hence, they are trying to slowly come up with alternatives. The good part for the USD is that the alternatives, at the moment, are shit.
TacticalTable 7y ago
Assuming this comes to pass, what would the optimal move be to protect savings from inflation? Is this where Gold comes in handy?
- wegs 7y ago
  Hard to say. It's easy to identify safe investments, but if you look at markets, money has flooded there already. People get paid to think about this sort of thing day-in-day-out. People need food, shelter, and medicine, so those are well inflation-protected. But housing prices would collapse if everyone is unemployed for long. Food producers may get sued of COVID19 outbreaks which are happening at plants already (essential workers, no PPE). And hospitals may be overloaded for a long, long time in ways which are quite complex. And you can't eat gold. It's as fiat as anything else. We're looking at a potential major collapse. It's hard to shield yourself from that. Education is always a good investment, I guess. Schools are desperate for students and tuition, and not a bad place to weather a crisis.
  - kyuudou 7y ago
    > And you can't eat gold. It's as fiat as anything else. It's a good way of inter-generational wealth storage still. Also it's useful along with a basket of currencies to diversify with especially in countries with high inflation or value volatility e.g. Venezuela. It's highly regarded in 2 of the most populated countries in the world (India and China) and that is not apt to change any time soon. Sure, in a full grid-down situation it's useless and "junk silver" would be more useful as a temporary currency but that is a slim possibility.

by wegs 7y ago

rapsey 7y ago

> If dollars are worth 1/2-1/10th of what they are now in three years, that's kind of okay That is massive inflation.

wegs 7y ago
Yes. It is. It's frighteningly high, but likely necessary: We have a massive crisis. It seems like the least of all evils, unless we somehow are able to act with focused intelligence. On the one hand: Look at unemployment rates, business failure rates, mortgage defaults, people unable to pay for food/medicine/shelter, or any other economic metrics, and plot even conservative predictions even a month or two out. The economy will be dead very quickly if we don't do something drastic. On the other hand: If we let it burn: look at COVID19 mortality rates, and multiply by a significant fraction of the US population. You land on numbers greater than WWI casualties, and likely greater than all previous wars combined. Heck, looking at permanent lung damage alone, we're already tanking our economy. These are exceptional times. They take exceptional measures. The metrics I care about are: (1) Structural damage to the economy (layoffs, defaults, bankruptcies, etc.). (2) The number of people working (likely in pandemic-adapted industries) (3) Deaths. To minimize those, we'll either need to be clever or to inflate. So far, we've been really bad at clever.

lifty 7y ago

I agree, but I think that is more of a long term concern. The USD will be dumped as the worlds reserve currency but I presume this will be a long and volatile process. There are 2 reasons why I think the USD will slowly be dethroned as the reserve currency: 1) the US has made the USD their weapon in punishing opponents and many countries have already started to think about alternatives. 2) the USG has very big long term unfunded liabilities which will need to be inflated away. China and other big holders of US debt know this, hence, they are trying to slowly come up with alternatives. The good part for the USD is that the alternatives, at the moment, are shit.

TacticalTable 7y ago

Assuming this comes to pass, what would the optimal move be to protect savings from inflation? Is this where Gold comes in handy?

wegs 7y ago
Hard to say. It's easy to identify safe investments, but if you look at markets, money has flooded there already. People get paid to think about this sort of thing day-in-day-out. People need food, shelter, and medicine, so those are well inflation-protected. But housing prices would collapse if everyone is unemployed for long. Food producers may get sued of COVID19 outbreaks which are happening at plants already (essential workers, no PPE). And hospitals may be overloaded for a long, long time in ways which are quite complex. And you can't eat gold. It's as fiat as anything else. We're looking at a potential major collapse. It's hard to shield yourself from that. Education is always a good investment, I guess. Schools are desperate for students and tuition, and not a bad place to weather a crisis.
- kyuudou 7y ago
  > And you can't eat gold. It's as fiat as anything else. It's a good way of inter-generational wealth storage still. Also it's useful along with a basket of currencies to diversify with especially in countries with high inflation or value volatility e.g. Venezuela. It's highly regarded in 2 of the most populated countries in the world (India and China) and that is not apt to change any time soon. Sure, in a full grid-down situation it's useless and "junk silver" would be more useful as a temporary currency but that is a slim possibility.