Q for others on the economiy forum: Are you still holding dollars?

[girl gone mad]

I have to say, that $23.7 Trillion figure is causing me a bit of concern.

[billyoc]

1. Yep, I got six of 'em, right here in my pocket.

:hi:

[GoesTo11]

2. In deflationary times, $ are not so bad.

I wouldn't want to lock into them for the next 15 years, but right now they're not going anywhere. It's not that easy or that much safer to just go into euros or whatever.

The $23.7 is mostly guarantees plus loans. If it comes in under $2 trillion in the end, it will mean higher taxes but by no means a collapse of the dollar, and you're stuck holding that bill anyway unless you leave the US.

Finally, there's a big difference between a decline and an absolute collapse. Over spending, tight capital markets, etc. could push the dollar down by 10, 20 or even 30%. But that is not what causes a currency to drop to essentially nothing through hyperinflation - that is more of an act of either negligence or theft by a government. Different issue. Different risk. Not one I'm worried about.

That said, you can hedge the $ risk you do have by, for example, owning real estate, owing $ on a mortgage, owning foreign stocks, etc. Some hedging is just stuff you would probably do anyway.

Lotsa luck.

[dixiegrrrrl]

6. " You can hedge...on owing a mortgage"

Eureka...
I'm rich !!!
Nicely Hedged.
Oh boy...no worries now. Old ex-Countrywide is going to get less dollar value on every payment.
by the time this sucker is paid off, they will be lucky to have made 10 cents on the dollar in interest.
What could go wrong?

[enid602]

3. investments

I´m 70% in non-dollar, hard currency bond and stock mutual funds.

[Art_from_Ark]

4. Investing in any currency is risky

since they are all prone to ups and downs. Aussie, New Zealand and Canadian dollars are all strongly affected by commodities markets.
The euro is still in its infancy and can easily go one way or the other. The British pound gets knocked down, it gets back up again, and gets knocked down again. The yen, which is currently my main currency, has been subjected to roller coaster rides in the past and may be overvalued right now. I wouldn't even touch currencies like the Argentine Peso, the Mexican Peso, and the Brazilian whatever-the-name-is-this week, because they have all had serious bouts with hyperinflation and will likely have hyperinflation again at some point in the future.

As we have seen with real estate, it can collapse in a big hurry, especially in urban areas such as Detroit, where the value of some real estate has gone to practically zero, if it's in the wrong area. Of course, the stock market is a giant crap shoot where the house always wins and a few outsiders are allowed to make a few bucks to bring in new suckers, er, investors.

Gold, the oldest form of money, is considered to he a hedge against inflation, but you need to do a lot of homework before committing any money to it. Silver is considered gold's poor cousin, and while it may be attractive because you can buy roughly 70 ounces for the price of one ounce of gold, its production as a by-product of lead/zinc/copper mining and declining use in the photography industry will ensure a steady supply and keep prices down in the foreseeable future, barring another Hunt Brothers-type episode of trying to corner the silver market.

[On the Road]

5. Don't Worry About the $23Trillion

it is a hypothetical scare number. Will never happen even under the most dire scenarios.

I generally don't bet on currencies. But many countries have had bailouts and most are hurting, often more than the US.

[girl gone mad]

8. It has genuine psychological and political import.

Plus I'm not convinced that the Fed will be able to mop up the excess as quickly as Bernanke thinks they can. At some point these amounts start to put real pressure on our currency - against commodities, against equities and against certain foreign currencies. Many countries are presently engaged in beggar thy neighbor policies, but in the long term they can't all be successful. Something's got to give.

[On the Road]

9. The $23 Trillion

is the amount guaranteed or covered plus some other stuff. It similar to saying that if every insurance company had to pay off every fire claim simulatneously, it would bankrupt the nation. Whether that would happen is immaterial because every house is not going to burn down simulaneously.

I agree it has a resonance in people's minds. But even if all your concerns are justified and we experience the worst case scenario, it will barely amount to a fraction of that number.

[tomreedtoon]

7. Invest in canned food, guns and ammo. LOTS of ammo.

It's the only way you'll be able to defend those dollars when the screaming insane hordes of the unemployed finally man up and start killing.