Have we already reached a tipping point for the USD as a reserve currency?
If not will this make that happen?
Because the real “shit hits the fan” moment will be when the rest of the World dumping USD assets (most notably, Treasuries) starts snowballing as those still holding assets valued in USD start getting hit by dollar devaluation due to others having dump USD assets, pushing them to sell dollars and dollar-denominated assets to avoid further losses.
Given just how large of a fraction of their currency is held by foreigners, a snowballing aversion to holding dollars is the kind of thing that can result in hyperinflation in the US.
That’s a surprisingly more complex question that it seems.
Which money? Dollars, Euros, Yen, something else?
Unless you’re a professional investor, it really depends on which currency you spend for your day to day or big ticket items.
So first I’ll answer a slightly different but related question: “How do I protect myself from this if I’m American?”
Move your savings/investments to assets which are not denominated in USD (for example, stocks in a non-US stock exchange), open a bank account which is not in USD (I believe that’s possible in some banks in the US) and convert your savings to that currency and deposit them there, buy Gold (thus in practice converting you savings to a ancient currency not controlled by any state). That is, if you have savings. If you don’t, well, you’ll mostly have to weather it: concrete non-perishable stuff has the same utility value no matter what the dollar value is, so your home is your home (if you’re lucky enough to own it) thus its worth to you is the same whatever it’s supposed dollar value is, and as others said “canned goods and cigarettes” too keep their value no matter what the USD value says.
As for how to make money from it, as somebody else said, “forex gambling”, more specifically derivatives on cross-currency pairs such as Futures on USDEUR. However that stuff is risk: Will USD hyperinflation really happen or will it be something milder? When will it happen, precisely? Derivatives move like crazy and things like Futures can result in margin calls (basically you have to give them more money) if they move against the direction you’re betting,
Back when I lived in Britain I avoided the 20% crash of the British Pound from the Leave Referendum results by having most of my savings in Gold and Euros, so in pounds it could be said I made a 20% profit in a couple of days (basically the week when the results came out), though now I’m in the Eurozone and, not even being a Briton have no relation to that country and don’t actually care about about the value of my savings in British Pounds, so that week I didn’t really made any profit in Euros. That said, over the years (the money is still there) that investment in Gold has gone up in value quite a lot even in Euros.
That said most of it was the product of me simply distrusting Britain and the British Pound as a safe store of value hence already keeping a big chunk of my savings outside it, though I did move some more just before the Leave Referendum results came out just in case.
So in summary: just getting your savings out of the USD merely to another currency will protect them, whilst Gold over the long term will probably make you a bit of profit (certainly in USD due the mismanagement of the US Economy). Big profits can only come from forex gambling, but so do big losses as derivatives are much more risky that just holding the underlying assets (in this case, some foreign currency you bought with dollars).
Somehow, even while blaming tRump for their plight, Republican voters will continue to support tRump, even as they lose everything they and their family have. It’s so fucked up!
Have we already reached a tipping point for the USD as a reserve currency?
If not will this make that happen?
Because the real “shit hits the fan” moment will be when the rest of the World dumping USD assets (most notably, Treasuries) starts snowballing as those still holding assets valued in USD start getting hit by dollar devaluation due to others having dump USD assets, pushing them to sell dollars and dollar-denominated assets to avoid further losses.
Given just how large of a fraction of their currency is held by foreigners, a snowballing aversion to holding dollars is the kind of thing that can result in hyperinflation in the US.
How do I make money from this?
That’s a surprisingly more complex question that it seems.
Which money? Dollars, Euros, Yen, something else?
Unless you’re a professional investor, it really depends on which currency you spend for your day to day or big ticket items.
So first I’ll answer a slightly different but related question: “How do I protect myself from this if I’m American?”
As for how to make money from it, as somebody else said, “forex gambling”, more specifically derivatives on cross-currency pairs such as Futures on USDEUR. However that stuff is risk: Will USD hyperinflation really happen or will it be something milder? When will it happen, precisely? Derivatives move like crazy and things like Futures can result in margin calls (basically you have to give them more money) if they move against the direction you’re betting,
Back when I lived in Britain I avoided the 20% crash of the British Pound from the Leave Referendum results by having most of my savings in Gold and Euros, so in pounds it could be said I made a 20% profit in a couple of days (basically the week when the results came out), though now I’m in the Eurozone and, not even being a Briton have no relation to that country and don’t actually care about about the value of my savings in British Pounds, so that week I didn’t really made any profit in Euros. That said, over the years (the money is still there) that investment in Gold has gone up in value quite a lot even in Euros.
That said most of it was the product of me simply distrusting Britain and the British Pound as a safe store of value hence already keeping a big chunk of my savings outside it, though I did move some more just before the Leave Referendum results came out just in case.
So in summary: just getting your savings out of the USD merely to another currency will protect them, whilst Gold over the long term will probably make you a bit of profit (certainly in USD due the mismanagement of the US Economy). Big profits can only come from forex gambling, but so do big losses as derivatives are much more risky that just holding the underlying assets (in this case, some foreign currency you bought with dollars).
Don’t. Remember the classic
Somehow, even while blaming tRump for their plight, Republican voters will continue to support tRump, even as they lose everything they and their family have. It’s so fucked up!
Why are we typing Trump as tRump though?