The Many Uses of Paper Money

[Narcotized]

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Don't let hysterical people like myself scare you into thinking paper money will become worthless at the hands of brilliant men like Obama and Bernanke. That just simply is not true. It will still retain value for it's many uses.

Experimenters rely on paper money for its reliability:

http://static.soxfirst.com/soxfirst.com/...

Kids will still play with them:

http://www.istockphoto.com/file_thumbvie...

They make excellent scratchpads:

http://www.curiobot.net/images/resized/0...

With a little creativity you will discover all sorts of valuable uses for your money:

http://www.freakingnews.com/pictures/205...

And don't forget the historical last resort use of paper currency:

http://p21chong.files.wordpress.com/2009...

As hard as they try, Obama and Bernanke can never destroy the value of true paper money!!

 

[deleted126335]

Don't let hysterical people like myself scare you into thinking paper money will become worthless at the hands of brilliant men like Obama and Bernanke. That just simply is not true. It will still retain value for it's many uses.

Experimenters rely on paper money for its reliability:

http://static.soxfirst.com/soxfirst.com/...

Kids will still play with them:

http://www.istockphoto.com/file_thumbvie...

They make excellent scratchpads:

http://www.curiobot.net/images/resized/0...

With a little creativity you will discover all sorts of valuable uses for your money:

http://www.freakingnews.com/pictures/205...

And don't forget the historical last resort use of paper currency:

http://p21chong.files.wordpress.com/2009...

As hard as they try, Obama and Bernanke can never destroy the value of true paper money!!

So how have you positioned your portfolio to deal with your confidence in the Dollar?

 

[Narcotized]

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[cfdavid]

So how have you positioned your portfolio to deal with your confidence in the Dollar?

A decent approach, given the "new" problems within the EU, and hence the Euro, would to simply hold an equal percentage of dollar denominated assets (could just be dollar futures) as to Euro denominated assets.

The entire world is inflating, though, and this still makes a decent case for precious metals though one needs to be patient.

Personally, I'm not sure this is the time to try to "make money", so much as preserve it. Unless you're a professional trader, with a very abreviated time horizon..... Just so much volatility these days.

Thoughts?

cf

 

[Narcotized]

The entire world is inflating, though, and this still makes a decent case for precious metals though one needs to be patient.

Personally, I'm not sure this is the time to try to "make money", so much as preserve it.

cf

Print, print, print, worldwide. Has never worked. Has no mathematical basis to ever work. I agree, cf, that preservation of wealth is most important. I don't think anyone knows for sure. I have my own ideas, and I'm comfortable thinking it out and being wrong, but not so comfortable where to tell others to put their money and being wrong.

If we are truly heading for a severe currency crisis (hard for me to see how not eventually) any desired fixed asset would retain value over paper money. If you had the storage you could choose from gold, whiskey, cigarettes, food, guns, you name it. They all should retain (ie preserve) a fairly fixed amount of value.

Cigarettes might work best for Dream in the, um, finer clubs. The other items seem a little heavy to slip under your entertainer's clothing.

 

[pgg]

If you had the storage you could choose from gold, whiskey, cigarettes, food, guns, you name it. They all should retain (ie preserve) a fairly fixed amount of value.

What do you mean by "fairly fixed" value?

Bubbles come to all markets. Guns & ammo prices are declining from their peaks after the election. The $1200 gun I bought in Oct 2008 was selling for $1800 six months ago, and is $1100 new today; ammunition isn't flying off shelves any more and prices are down. We're on the downslope of the gun bubble. Is $1100 gold a bubble? Sure looks like it; goldbug arguments sound an awful lot like realtor propaganda ca 2005. Maybe gold has room to go up, maybe it'll be $600 next year.

Cigarettes? What are you going to do, buy cigarette company stock? Or cases and cases of the stuff (which is perishable and takes up lots of space)? Same for alcohol. You going to barter it for turnips at the market next to Thunderdome?


Clearly, the solution is to put all your paper in a box and FedEx it to me. 🙂


I don't disagree with you entirely - fiat currency has always ended badly. But at least for the near term, as in the next few years, it may well be that we'll see deflation and not inflation. In that scenario ... a person sitting on a pile of good ol' greenbacks could snap up an awful lot of, well, whatever he wants.

 

[countingdays]

A decent approach, given the "new" problems within the EU, and hence the Euro, would to simply hold an equal percentage of dollar denominated assets (could just be dollar futures) as to Euro denominated assets.

The entire world is inflating, though, and this still makes a decent case for precious metals though one needs to be patient.

Personally, I'm not sure this is the time to try to "make money", so much as preserve it. Unless you're a professional trader, with a very abreviated time horizon..... Just so much volatility these days.

Thoughts?

cf

Volatility is great for the options game. I have some relatives who clean up while risking fairly small amounts of money. You have to be really selective and disciplined when buying options though, probably even more selective than when buying common stock shares.

 

[Narcotized]

Bubbles come to all markets. Guns & ammo prices are declining from their peaks after the election. The $1200 gun I bought in Oct 2008 was selling for $1800 six months ago, and is $1100 new today; ammunition isn't flying off shelves any more and prices are down. We're on the downslope of the gun bubble. Is $1100 gold a bubble? Sure looks like it; goldbug arguments sound an awful lot like realtor propaganda ca 2005. Maybe gold has room to go up, maybe it'll be $600 next year.

Cigarettes? What are you going to do, buy cigarette company stock? Or cases and cases of the stuff (which is perishable and takes up lots of space)? Same for alcohol.

I'm not saying you have to stock up on ciggy's today. Just saying when the time comes that the dollar drops like a rock (I mean really drops with full on crisis) things like cigarettes and booze, etc frequently pop up as barter items that retain, again, "fairly fixed value." I agree there are always fluctuations, but all those items will retain relative value strongly than crashing paper.

I do not feel gold is a bubble. We haven't even begun to print money the way it will be eventually printed. I'm glad to hear gun prices have dropped. I wasn't following that, but increasing my personal firepower is on my to do list.

 

[dhb]

I agree with Narco things are going to end badly but it's impossible to determine when. Deflation could well benefit those who are long cash and inflation those long hard assets. So the best is to have a balance so that you can retain value in any scenario.

 

[cfdavid]

Volatility is great for the options game. I have some relatives who clean up while risking fairly small amounts of money. You have to be really selective and disciplined when buying options though, probably even more selective than when buying common stock shares.

Options have been intriguing me. I'm just not sure I'll have the time (with residency coming up) to first educate myself appropriately, and second, actually get into it........ Currently, I'm only aware of the basics and their use as a hedge.

cf

 

[deleted126335]

I agree with Narco things are going to end badly but it's impossible to determine when. Deflation could well benefit those who are long cash and inflation those long hard assets. So the best is to have a balance so that you can retain value in any scenario.

👍



OR HOW. The dollar may for a time be the least unattractive horse parked outside the glue factory. Possibly for a long time.

 

[cfdavid]

Interestingly, I've come down from my Uber-doomer philosophy. To be very sure, I'm pessimistic about the sustainability of Western-style finance, including fiat currency (which the entire world is using as well, ofcourse).

HOWEVER, I personally feel that the problems are SO severe that there will be massive international "cooperation" in order to prop up the system (already going on), and THEN fix the problem (which could very well include massive "information campaigns" that prop up the full faith and credit of certain nations). How this pans out is anyone's guess.

But, the Western nations, along with a good number of their Asian counterparts (and major trading partners) still wield the "power" in the world at this time. Let's not forget our Middle East partners either. Whether this be Israel or Saudi Arabia. There's going to be cooperation to circumvent a doomsday scenario.

I believe they will collude in order to prevent Thunderdome, as that doesn't benefit anyone (or at least the vast majority of people, including the world's "priviledged class").

Also, as PITIFUL as the U.S. financial system is, many other "traditional" powers in the world aren't in too much better shape. Japan, too, has an aging population and will have major "liabilities" such as healthcare and retirement benefits (not sure if their numbers are per capita as severe as Medicare and SS are in the USA)......

Interesting times....

cf

 

[Narcotized]

I believe they will collude in order to prevent Thunderdome
cf

Thunderdome could be a bit extreme, but I think a severe currency crisis is down the road leading to lots of pain such as civil unrest, etc.

 

[cfdavid]

👍



OR HOW. The dollar may for a time be the least unattractive horse parked outside the glue factory. Possibly for a long time.

I'm starting to agree with this more and more. That the "game" can go on for a longer time than seems logical. But, who the hell knows.....

 

[Narcotized]

I'm starting to agree with this more and more. That the "game" can go on for a longer time than seems logical. But, who the hell knows.....

Our horse is pretty friggin ugly and as deserving of the glue factory as any other. When you add in all the debt (Federal, SS, State, and everything else guaranteed such as mortgages, deposits, etc) that the US government will take on combined with a GDP that is 70% fluff consumption, you get a financial statement as bad as any on the planet.

I'll let the man better explain it:

http://www.youtube.com/watch?v=nwcv70wW_FI

 

[Narcotized]

And Foreclosures show no sign of slowing down affecting everyone from every walk of life.

http://www.youtube.com/watch?v=O_vehva2HLc

 

[cfdavid]

Our horse is pretty friggin ugly and as deserving of the glue factory as any other. When you add in all the debt (Federal, SS, State, and everything else guaranteed such as mortgages, deposits, etc) that the US government will take on combined with a GDP that is 70% fluff consumption crap, you get a financial statement as bad as any on the planet.

I'll let the man better explain it:

http://www.youtube.com/watch?v=nwcv70wW_FI

Yep. We're up sh.ts creek alright.

However, I'm begining to think that we're SO FAR down the rabbit hole (for the reasons Schiff explains) that the existing power structure, that got us here, will pull out all stops and this may include war.

This could change the outcome, and yes, I do believe that the world's elite (the West, certain Middle Eastern allies, and certain Asian allies (mainly Japan)) would resort to this if the status quo were imminently in danger.

And when I say "the world's elite", I mean a very small percentage of those respective populations that really control the game.

I have no idea how this will play out, but I just think it could get messy if the U.S. were no longer able to float debt via Treasury auctions, which as we both know is only a Band-Aid anyway.

For the record, I'm clearly not advocating resorting to craziness in order to prop up a failing system, but rather just hypothesizing that this is NOT out of the realm of possibilities.

cf

 

[Narcotized]

I just think it could get messy if the U.S. were no longer able to float debt via Treasury auctions
cf

Schiff had always said Bernie Madoff has the qualifications to be Secretary of the Treasury since our whole system of floating new debt to pay old debt is nothing more than a massive ponzi scheme.