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Stock Market Post US Dollar


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2009 Nov 27, 4:47am   9,527 views  21 comments

by knewbetter   ➕follow (0)   💰tip   ignore  

Once the dollar is officially dead and there's a field day on American companies world-wide, what's going to happen to the stocks of those companies?

Does anyone else believe this is why we've been persuaded to dump our wealth into this market? A collapse of the US dollar as a world currency is inevitable, nothing lasts forever. Wasn't the constant devaluation of the dollar the whole point of Bretton Woods II? What's the price of a gallon of milk when Disney is bought by Dubai and Coors is bought by Columbia? Once my neighborhood vinyard realizes I can no longer buy my favorite Chilean pinot the son of a bitch is going to jack his price. Then, when he finds out all the really good stuff from California is going to Chindia (who suddenly get the wine bug) because they pay with real money, my humble local grower is going to grow a pair of balls and stick it to me.

I'm starting to get the feeling my money is safer in the stock market than it is in the bank. What's more is I'm getting the creepy feeling this is always it was going to be, as we march unknowingly towards one company in which we all have a share.

Somebody recommend a book for me.

#investing

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1   knewbetter   2009 Nov 27, 6:33am  

I'm not looking for answer to the apocalypse. If I only survive the Jones by an hour I'll feel good about myself.

2   The Original Bankster   2009 Nov 27, 5:08pm  

between this and all the conspiracies being uncovered lately, I tend to think were in completely uncharted waters at this point. God save us all.

3   The Original Bankster   2009 Nov 27, 7:48pm  

"Somebody recommend a book for me."

Book of Revelations by John

4   Honest Abe   2009 Nov 28, 2:31am  

A book? Anything by Ron Paul. Or maybe Atlas Shrugged. The Bible, or for 'light reading' how about the Constitution? Common Sense, by Glen Beck. The Web of Debt is another good one. Happy reading!

5   nope   2009 Nov 28, 2:32am  

Why do you believe that the collapse of the dollar is "inevitable"? What makes the dollar special compared to, say, any other major world currency?

If the dollar's value drops quickly enough, the result will be that it loses its status as a global reserve currency, which will end the devaluation since inflation will no longer be an easy way for the fed to erase the treasuries debt.

Why do you think other countries economies are in such good shape (Dubai, really?) that they could just start buying up american assets?

What is this "real money" that you speak of, anyway? Unless other countries suddenly move back to the gold standard (and that isn't going to happen), your doomsday isn't going to happen.

Lastly, your whole premise is absurd. You think that any stock market is going to be safe if the dollar just collapses? The fallout from that clusterfuck would make the current recession and the great depression combined look pleasant. That's the sort of event that would send the whole world back a century or more. Stock market? You'd better invest in ammo if you honestly think that's going to happen.

6   knewbetter   2009 Nov 28, 4:11am  

I want to thank the duck for arguing much more effectively than I can, but that's not really what I'm trying to ask. I'm not looking for investing advice. I'm looking for the trail of breadcrumbs. I always thought the stock market bubble was an effect of peoples changing habits of savings, but I'm starting to think social engineers knew it was coming. Really, what have we been through so far? The collapse of Wall Street and the banks last year had the net effect of lowering the cost of servicing the national debt by close to 50%. Not too shabby, and in the end bigger banks with more money will be stronger.

The removal of the US dollar as the defacto world currency will/was always going to happen. That it what I feel is inevitable. I don't feel that it will become worthless per say (we won't be moving to cubits or tally sticks), but that that it will cease to be the "only" answer for commodities. This single fact will devalue the dollar more than all the printing and all the fractional reserves put together. I think this is a controlled event and the powers that be know it.

Someone who invests in a pension or social security or fixed income retirement gets wiped out when the dollar falls.
What happens to stocks when our companies get cheaper? Somebody buys it and stocks even the score. What's the fastest/easiest way for someone to get their wealth out of America? Buy stock in an emerging market.

7   The Original Bankster   2009 Nov 28, 9:36am  

all I can say is CA is VERY out of touch with the rest of the nation.

8   knewbetter   2009 Nov 29, 1:33am  

Except that debt isn’t held by any single entity. The debt is only held in dollars because it’s the reserve currency, and in the event of a collapse it would be repaid in something else. The actual debt is essentially “credits”, because there simply aren’t enough actual “dollars” to repay the debt.

This is kinda what I'm talking about. The debt is in US dollars, and when we repay its US dollars, so get your people to mortgage themselves to the hilt just before the intentional collapse of the currency and they'll be saved, because their real "wealth" will be in items that float with the rate of inflation (housing and stock market). Hyper-inflation is a CHOICE.

Do you honestly think China, Japan, or India would let that happen? Their economies would collapse overnight if they lost the US export market, and China would probably respond by going to war with someone to distract the people. Not going to happen.

This is the arguement I understand the least. The same side of the coin burping the mantra that rich people provide consumption, so that poor people have something to do all day. There are over 1 billion people in OPEC member countries who would be more than happy to take Chinese goods in exchange for oil. We would be the ones going to war. Oh, wait, we're there already.

9   pkennedy   2009 Nov 30, 6:25am  

As someone pointed out, there are hundreds of trillions in debt in the US. That is reason enough that it won't collapse. No one will allow that deb to just disappear.

The US currency is the USD.
The EU currency is the EUR.
The Chinese currency is the Yuan.
The ...

The world currency is the USD.

No one is going to let the currency they use collapse. Their currency being the USD, not matter who they are. They might have their own, but the sheer amount of money coming into/leaving the US, the sheer amount of US held debts in the US and everywhere else, will prevent the USD from failing.

Even if the USD was to fall, there are NO currencies that would be able to create a stable world currency replacement.
When the USD starts falling, it hurts everyone. There isn't a country in the world that isn't impacted by a falling USD. That is the difference between the examples given about previous failing countries. The USD is essentially gold to the world.

10   doubleup   2009 Nov 30, 8:13am  

Can someone provide a source that outlines how the US has several hundred trillion in debt outstanding?

11   thomas.wong87   2009 Nov 30, 2:59pm  

Can someone provide a source that outlines how the US has several hundred trillion in debt outstanding?

here is the cut... "The first is that most of our government's debt is held domestically, as this chart shows"

http://voices.washingtonpost.com/ezra-klein/2009/06/should_we_worry_about_the_chin.html

12   tatupu70   2009 Nov 30, 9:17pm  

@thomas

Am I misreading the wiki chart? It shows $10 Trillion debt. Far from several hundred trillion...

13   pkennedy   2009 Dec 1, 3:29am  

If the dollar falls to zero, china will lose all the money it's holding. If they suspected they were going to lose out now, then they would be buying up US assets at a mad rate. They wouldn't buy one treasury bond, but masses of real estate.

If the dollar falls to zero, we go to a massive trade surplus, as we won't be able to afford anything from china and unless china has created an internal market for themselves,they won't be able to unload anything themselves.

Our current trade deficit with Saudi Arabia is currently 24B a year. I dont know why you think they "own" so much. We sell all kinds of things to them, probably through a semi forced agreement, but we do. It isn't chump change, but not something all that massive either.

I saw somewhere that fixing social security, in 50 years when it goes fully belly up, would require increasing tax rates by 2%. That is 2% more in taxes, but again that is 2% to save something that everyone cries about all the time. That isn't really that painful in the end.

If push comes to shove, and the US has two options, 1) spiraling death 2) reducing military spending, I'm betting someone will make the correct decision.

If we reduced energy consumption by something ridiculous, 10%? 15%? Our trade deficit would turn positive. I can get 20-25% better mileage on just my car by driving a little easier on the gas. Drop your heating/cooling temperatures by a few degrees and that will save some massive amount of fuel over all. Simply increasing taxing oil to $150/barrel, and increasing other taxes on gas products will cause people to reduce their usage.

These are minor things that would need to be done, not major. People just resist change, but given a choice, once we hit rock bottom, people will do what it takes. They'll do it faster if there is a little government incentive as well.

14   pkennedy   2009 Dec 1, 5:51am  

There is currently about 5T in gold EVER mined, at about $1000 per ounce.

http://en.wikipedia.org/wiki/Gold_reserve

That is shared amoung ALL countries, and all individuals. There is no way China or any other country could corner that market and stay afloat. Other minerals are likewise limited. The economy is simply too large for gold to be of any use.

I didn't bother to "add up" all of the gold in that chart but the US currently holds the most by a far margin. Only Germany, Italy, and France hold sizeable amounts. The rest I assume is in the general population. That would mean if anyone wanted to buy up gold, they wouldn't be able to, unless those countries sold it, or individuals cashed out their gold.

It doesn't matter WHEN medicare gets dealt with, the fact is, it will. And like most other industrialize countries the cost will go down. You can argue that the service will degrade or whatever you want. The fact is, the cost will go down when they need it to go down. It will happen.

No one is going to accept 100% and think, oh wow this is going to be completely doable. Lets keep it up. No, it will change. Maybe no one can agree on when that will happen, but I really doubt anyone will agree with you that the US will drive itself into the ground with making any changes. We're already making changes, this massive real estate bust hasn't taken down the country. People did ANYTHING to stop it. They will continue to do anything, and it won't be the havok people think it will be.

Your idea of the 1 well and 10 dippers is interesting. There are 100 dippers now, but there are far more wells as well. Many more countries are become power houses, and their citizens are become consumers that everyone can sell to. China can sell goods internally now. Before they couldn't. There are buyers for cars in china now. Middle class is buying them. China is becoming more of a consumer society. A new well is being drilled right now over there. It will take another 10-15 years to become a huge well, but it will happen.

Every country is now connected. If we go down, every other country goes down harder than us. If our dollar dropped 80% tomorrow, every country on the planet would start grinding to a halt. If the US implodes, then everyone implodes. If everyone implodes then everything gets "reset". If our dollar slips 80%, there aren't going to be buyers in china to buy things up, they'll be hemorrhaging at the seams. Their USD savings are now worthless, they can't get anyone to take their products, so they don't have anyone to sell to, now they can't get "new" currency to buy up US real estate or hard goods with. They go down with the ship too.

15   pkennedy   2009 Dec 1, 6:13am  

My point is,no government could back it's currency solely on gold. Not anymore. It would require gold at $50,000 per ounce. We need a slight surplus to have a strong dollar based on gold, and there is no way the government could get enough gold stock piled to base the dollar on it.

When the Yuan starts buying up more goods made both in china and outside china, then that is a new well for us to use as well to balance out the budget over here. There will be more opportunities to sell into. Considering most of the US goods are higher end goods being exported, the better off those economies are, the better it is for the US. The USD is like english. English isn't the majority language used around the world but in business it is.

16   pkennedy   2009 Dec 1, 6:41am  

It is backed by the people who want it. It is backed by the people who need it. It is backed by US citizens. It is backed by businesses all over the world. It represents work performed and work owed. It has a value. If the government prints more money, it devalues everyone's efforts -- everyone is then in essence tossing a little into the pot to help. That includes other governments, businesses in other countries and what not. However it's a price of doing business in the US. If they didn't want to do business here, the could just avoid the US. However they aren't. They aren't leaving the USD. The currency took off during the last melt down because people understand this IS the gold of the world.

Only one party can print additional money, and that is the government. If the government prints out a few trillion dollars, that is nothing compared with the hundreds of trillions in debt you are talking about. The government is barely diluting anything! Even the 10T in US government debt is little compared with the total global commerce that is done in USD.

17   thomas.wong87   2009 Dec 1, 3:57pm  

Sorry Tatu, here is the narratives

http://en.wikipedia.org/wiki/Us_debt

18   tatupu70   2009 Dec 1, 8:26pm  

thomas.wong87 says

Sorry Tatu, here is the narratives
http://en.wikipedia.org/wiki/Us_debt

Thanks--but how about you just post the part where it mentions anything close to hundreds of trillions of dollars of debt. Still haven't seen that one.

19   thomas.wong87   2009 Dec 2, 2:11am  

tatupu70 says

Thanks–but how about you just post the part where it mentions anything close to hundreds of trillions of dollars of debt. Still haven’t seen that one.

The graphs were posted to show "who owned" our debt. China is a minority. I dont know of any $100T DEBT.
Those comments are from others.

20   tatupu70   2009 Dec 2, 2:43am  

@thomas

OK. sorry--I was going off this post of yours from earlier.

thomas.wong87 says

Can someone provide a source that outlines how the US has several hundred trillion in debt outstanding?
here is the cut… “The first is that most of our government’s debt is held domestically, as this chart shows”
http://voices.washingtonpost.com/ezra-klein/2009/06/should_we_worry_about_the_chin.html

21   knewbetter   2009 Dec 3, 12:11pm  

Kevin wrote:

50% devaluation (or 100% inflation if you prefer) would be a great boon to everyone right now:

1. We have no savings anyway, so nothing to lose there
2. Federal debt goes bye-bye
3. Trade deficit goes bye-bye
4. Underwater mortgages go bye-bye

YES!! Almost amazing how this helps everybody isn't it? We all put our "money" into stock markets and housing/land and wiped out our cash savings. Now its time for a ride. No matter who owns the debt, its the value of a barrel of oil that dictates the value of a dollar. If Oil exporting countries decided to take Chinese container ships full of beanie babies and knock-off blue-jeans, instead of "investing" in the US treasury we would be done writing checks in a week.

What's left? Well, we have a service based economy that can swap widgets so they'll get along fine in the meantime. We sold all of our 50 year old manufacturing base, but let's face it that stuff was old and we know how to make it cheaper/better/faster now anyway so let them have it. Now that no one will take our dollars for their stuff, I guess we can build a couple hundred nuke plants and dabble with the wind and solar, put the whole country in electric cars and grow a boat-load of food. We have metals, fuel, and the best farm land on the planet. We've got everything to build it all over again in about 20 years. What are we gonna do with all this food?

That's right China, you can't feed yourself! I guess we're you're new best friend. Oh Snap!

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