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Owning American Dollars is Dangerous

Tuesday, January 11th, 2011
Posted in Education by Joel Gross

As the national debt continues to grow at epic rates (our deficit last year was 12% of our total GDP), the question arises: How can I protect myself?

The ideal world solution would be that our politicians would come together in a bipartisan deal to drastically cut spending and increase taxes (including reinstating the estate tax), but unfortunately we live in a world where our politicians aren’t motivated by what’s best for the country.  They instead want what’s best for themselves and protecting big unions by keeping spending and protecting inefficient big businesses with bailouts is what keeps them in office.

So we come back to the question: how can I protect myself and my family in a world where owning American dollars is becoming dangerous? What do I invest my savings into if dollars could become devalued due to inflation? Or what about the scarier possibilities of a true recession/depression due to the government no longer being able to finance it’s debt?

My thoughts on protecting your savings:

  • Diversify your assets between domestic stock/options/ real estate, and foreign stock/real estate.
  • Invest in what you know- put your money into your own businesses (unless you are an employee- then you need to diversify by investing in other businesses in your industry).
  • Buy a nice used car.
  • Invest in commodities

There is also the far less likely possibilities of domestic unrest arising from catastrophic failures, but you should hedge against these also:

  • Buy a house with access to it’s own well and acreage for a garden- they are very common in more rural areas.  Rural homes are extremely cheap and will continue getting cheaper as the housing market continues it’s slow demise.
  • Diversify your skills- learn basic carpentry, farming, defense, etc.
  • Keep extra food/bottled water on hand.  A 50 lb bag of rice costs only $50-60.  Keeping one on hand isn’t much trouble.

I have not done enough to protect myself yet, but I am going to embark on some of these avenues myself now.