4 ms·

So, what do you propose he should do with his money? I have a hunch your little smarty-pants speech didn't help him one bit.

by moe 14y ago

khuey 14y ago
Yeah, you're right, the tone is unhelpful. My point is that there's nothing you can do with your money to ensure that it always has value, regardless of the magnitude of the crisis. There's always some risk. You can store your money in insured bank accounts, but we can see how well that's working out in Cyprus. You can store cash under your mattress, but high inflation will destroy its real value. You can buy gold and hoard it in your home, but there's no guarantee gold will be worth much, or that you'll even be allowed to keep it (see Executive Order 6102). You can buy land and if the state fails and thugs with bigger guns decide they want it more you're screwed. There's nothing you can do to eliminate all risk, and we're seeing now that risks we though were minimal (failures of deposit insurance schemes in the western world) aren't so minimal after all.
- seanmcdirmid 14y ago
  Exactly, swapping a fiat paper currency for fiat metal is not useful. If you are a pessimist, buy guns, bullets and non perishable food, or invest in a secret mountain farm/retreat. Or you could just work within the system and try to help keep it from failing by running on the bank.
  - wintersFright 14y ago
    'fiat' metal = metal by government decree?? fiat currency is intrinsically overvalued as it is valued by decree - by the threat of legal violence if you don't use it. There are no fiat metals. Your pessimist view is at the extreme end of the spectrum. Individual fiat currencies have eventually failed ever since they were invented. Each time a currency dies there are winners and there are losers, but it doesn't go all Mad Max - a new transactional currency is used (Zimbabwe) or they lop a few zeros off and keep going.... Well maybe the dog food eating bit of Mad Max is true for the losers whose wealth was stored in the currency that failed.
    - seanmcdirmid 14y ago
      Gold has little intrinsic value (well, you can make pretty things with it), its value is what people assign to it for the purposes of trade. So it most definitely is a fiat metal. If it was something like copper, there would be some intrinsic worth, but it isn't convenient to carry around while there is only so much intrinsic demand for copper! Gold has failed just as often as fiat currencies have. When the Spanish conquered the Americas, the natives were amused that the invaders saw value in such a useless metal, but the amount of new gold that was discovered caused significant inflation back in the old world because Spain was just sitting back, buying everything it needed with its gold, and producing little of value. Similar things happened when Africa came online as a significant source of gold, it got to the point that gold was no longer a stable representative of value, because anybody could just mine more! So you see lots of movement away from gold throughout the 20th century to something...more stable...fiat currency believe it or not. Countries now have control over their monetary policies, for better or worse, and are not beholden to some arbitrary metal. Ok, so its more complicated than that, but reading http://en.wikipedia.org/wiki/Gold_standard http://en.wikipedia.org/wiki/Gold_standard is quite an experience if you are a goldy.
      - wintersFright 14y ago
        ok I get what you're saying but your use of 'fiat' to describe gold is not the right word to use. fiat means by government decree. gold is valued by people as a wealth asset - and I agree it's value only comes from the knowledge that other people will trade something in the future for it - but the mona lisa is just a bit of cloth with some paint. pretty useless yet priceless - because there are many in line would would gladly exchange their vast excess of fiat currency for it. I'm not arguing fiat currency will disappear, it obviously won't. It's just not the correct vehicle for saving. You must not save in the same instrument of the debtors. It leads to you being wiped out when the debtors default as the credit system grows beyond the ability for it to be paid back (eg: see China's trillions of US Treasuries - those are claims that the US economy cannot and will not service). re: Spain: It was silver that was debased not gold I think. re: gold failed: Physical gold didn't fail. Gold backed currency failed. Governments always print more tickets to gold than they own. The last big paper gold failure was Nixon in 1974 after they overspent on the Vietnam war. I wouldn't recommend getting into paper gold to escape a currency collapse. Physical, unambiguously owned metal is the insurance, the vehicle that will transition you through to the otherside.
- tempestn 14y ago
  Diversification and multiple pots seems like the best reasonable option. At the very least, one's investment portfolio should be internationally diversified. If you were really concerned, actually holding a portion of those assets in an offshore account might make sense. Regardless, rather than trying to protect all assets, the goal would be to maximize the chances that you would always be left with at least a sufficient amount.
scotty79 14y ago
Real estate is proven value store and investment. Personally I'd just buy bitcoins.
- wintersFright 14y ago
  when credit collapses (which is what this is) then the price of things bought on credit will collapse. Real estate will not be a good store of value in the short term. Long term it is an excellent asset but don't think it will hold value though this. Bitcoin....you have seen the volatility on it lately? And the other week the miners were all asked to rollback a recent build because the crypto broke? Bitcoin is for speculation, not wealth preservation.
  - scotty79 14y ago
    > when credit collapses (which is what this is) then the price of things bought on credit will collapse. Real estate will not be a good store of value in the short term. I agree. > Long term it is an excellent asset but don't think it will hold value though this. Do you expect people will stop needing roofs over their heads? I agree that real estate seems silly. But I don't mean swapping houses. I mean buying few properties over course of your life, renting them and passing them to your children. That never was a bad strategy and fortunes of few most wealthy families come from that. You don't care how much property costs if you never intend to sell it. You just have to find poor bloke to live there and give you better part of his pay whatever it is. > Bitcoin....you have seen the volatility on it lately? Sure I bought bitcoin near its peak 2 years ago just before it crashed. Guess what. Today, I'm still having a profit on them because I never sold them. > And the other week the miners were all asked to rollback a recent build because the crypto broke? Oh my! That surely must have cause the price to plummet! No? Huh. I guess it's not such a fragile eggshell. > Bitcoin is for speculation, not wealth preservation. Trading bitcoin is for speculation. Buying and holding bitcoin is wealth preservation. Bitcoin is as durable as useful p2p network. Which have pretty decent track record.
    - wintersFright 14y ago
      Given the young age of bitcoin then I would still suggest that buying and holding is still speculation. Good luck to you. Keep in mind though that the scale of your savings compared to others. What if Bill Gates wanted to sink some of his savings into Bitcoin? It would be a market moving event. What happens when he wants to exit? Buying a few properties over your life at this point in time - presumably via credit is a risky proposition. People need roofs over their heads but they need food more. For an interesting perspective on property during a currency event - read Gonzalo Lira's description on Chile http://gonzalolira.blogspot.com.au/2010/08/hyperinflation-part-ii-what-it-will.html http://gonzalolira.blogspot.com.au/2010/08/hyperinflation-pa...

So, what do you propose he should do with his money? I have a hunch your little smarty-pants speech didn't help him one bit.

by moe 14y ago

So, what do you propose he should do with his money? I have a hunch your little smarty-pants speech didn't help him one bit.

khuey 14y ago

Yeah, you're right, the tone is unhelpful. My point is that there's nothing you can do with your money to ensure that it always has value, regardless of the magnitude of the crisis. There's always some risk. You can store your money in insured bank accounts, but we can see how well that's working out in Cyprus. You can store cash under your mattress, but high inflation will destroy its real value. You can buy gold and hoard it in your home, but there's no guarantee gold will be worth much, or that you'll even be allowed to keep it (see Executive Order 6102). You can buy land and if the state fails and thugs with bigger guns decide they want it more you're screwed. There's nothing you can do to eliminate all risk, and we're seeing now that risks we though were minimal (failures of deposit insurance schemes in the western world) aren't so minimal after all.

seanmcdirmid 14y ago
Exactly, swapping a fiat paper currency for fiat metal is not useful. If you are a pessimist, buy guns, bullets and non perishable food, or invest in a secret mountain farm/retreat. Or you could just work within the system and try to help keep it from failing by running on the bank.
- wintersFright 14y ago
  'fiat' metal = metal by government decree?? fiat currency is intrinsically overvalued as it is valued by decree - by the threat of legal violence if you don't use it. There are no fiat metals. Your pessimist view is at the extreme end of the spectrum. Individual fiat currencies have eventually failed ever since they were invented. Each time a currency dies there are winners and there are losers, but it doesn't go all Mad Max - a new transactional currency is used (Zimbabwe) or they lop a few zeros off and keep going.... Well maybe the dog food eating bit of Mad Max is true for the losers whose wealth was stored in the currency that failed.
  - seanmcdirmid 14y ago
    Gold has little intrinsic value (well, you can make pretty things with it), its value is what people assign to it for the purposes of trade. So it most definitely is a fiat metal. If it was something like copper, there would be some intrinsic worth, but it isn't convenient to carry around while there is only so much intrinsic demand for copper! Gold has failed just as often as fiat currencies have. When the Spanish conquered the Americas, the natives were amused that the invaders saw value in such a useless metal, but the amount of new gold that was discovered caused significant inflation back in the old world because Spain was just sitting back, buying everything it needed with its gold, and producing little of value. Similar things happened when Africa came online as a significant source of gold, it got to the point that gold was no longer a stable representative of value, because anybody could just mine more! So you see lots of movement away from gold throughout the 20th century to something...more stable...fiat currency believe it or not. Countries now have control over their monetary policies, for better or worse, and are not beholden to some arbitrary metal. Ok, so its more complicated than that, but reading http://en.wikipedia.org/wiki/Gold_standard http://en.wikipedia.org/wiki/Gold_standard is quite an experience if you are a goldy.
    - wintersFright 14y ago
      ok I get what you're saying but your use of 'fiat' to describe gold is not the right word to use. fiat means by government decree. gold is valued by people as a wealth asset - and I agree it's value only comes from the knowledge that other people will trade something in the future for it - but the mona lisa is just a bit of cloth with some paint. pretty useless yet priceless - because there are many in line would would gladly exchange their vast excess of fiat currency for it. I'm not arguing fiat currency will disappear, it obviously won't. It's just not the correct vehicle for saving. You must not save in the same instrument of the debtors. It leads to you being wiped out when the debtors default as the credit system grows beyond the ability for it to be paid back (eg: see China's trillions of US Treasuries - those are claims that the US economy cannot and will not service). re: Spain: It was silver that was debased not gold I think. re: gold failed: Physical gold didn't fail. Gold backed currency failed. Governments always print more tickets to gold than they own. The last big paper gold failure was Nixon in 1974 after they overspent on the Vietnam war. I wouldn't recommend getting into paper gold to escape a currency collapse. Physical, unambiguously owned metal is the insurance, the vehicle that will transition you through to the otherside.
tempestn 14y ago
Diversification and multiple pots seems like the best reasonable option. At the very least, one's investment portfolio should be internationally diversified. If you were really concerned, actually holding a portion of those assets in an offshore account might make sense. Regardless, rather than trying to protect all assets, the goal would be to maximize the chances that you would always be left with at least a sufficient amount.

scotty79 14y ago

Real estate is proven value store and investment. Personally I'd just buy bitcoins.

wintersFright 14y ago
when credit collapses (which is what this is) then the price of things bought on credit will collapse. Real estate will not be a good store of value in the short term. Long term it is an excellent asset but don't think it will hold value though this. Bitcoin....you have seen the volatility on it lately? And the other week the miners were all asked to rollback a recent build because the crypto broke? Bitcoin is for speculation, not wealth preservation.
- scotty79 14y ago
  > when credit collapses (which is what this is) then the price of things bought on credit will collapse. Real estate will not be a good store of value in the short term. I agree. > Long term it is an excellent asset but don't think it will hold value though this. Do you expect people will stop needing roofs over their heads? I agree that real estate seems silly. But I don't mean swapping houses. I mean buying few properties over course of your life, renting them and passing them to your children. That never was a bad strategy and fortunes of few most wealthy families come from that. You don't care how much property costs if you never intend to sell it. You just have to find poor bloke to live there and give you better part of his pay whatever it is. > Bitcoin....you have seen the volatility on it lately? Sure I bought bitcoin near its peak 2 years ago just before it crashed. Guess what. Today, I'm still having a profit on them because I never sold them. > And the other week the miners were all asked to rollback a recent build because the crypto broke? Oh my! That surely must have cause the price to plummet! No? Huh. I guess it's not such a fragile eggshell. > Bitcoin is for speculation, not wealth preservation. Trading bitcoin is for speculation. Buying and holding bitcoin is wealth preservation. Bitcoin is as durable as useful p2p network. Which have pretty decent track record.
  - wintersFright 14y ago
    Given the young age of bitcoin then I would still suggest that buying and holding is still speculation. Good luck to you. Keep in mind though that the scale of your savings compared to others. What if Bill Gates wanted to sink some of his savings into Bitcoin? It would be a market moving event. What happens when he wants to exit? Buying a few properties over your life at this point in time - presumably via credit is a risky proposition. People need roofs over their heads but they need food more. For an interesting perspective on property during a currency event - read Gonzalo Lira's description on Chile http://gonzalolira.blogspot.com.au/2010/08/hyperinflation-part-ii-what-it-will.html http://gonzalolira.blogspot.com.au/2010/08/hyperinflation-pa...