Shielding Against Recession

Goals

To understand how to protect oneself if the US economy falls, such as if the dollar is devalued and goes into hyperinflation.

Early Findings

Currency Collapse

  • Some experts have been "predicting" the collapse of the dollar for many years. Some strategies to protect oneself include keeping one's investments diversified and away from the dollar (such as foreign mutual funds).
  • Similarly, it can be beneficial to invest in foreign companies or companies that derive most their revenue outside the US.
  • Advanced investors can also short-sell select companies that a falling dollar would hurt the most.
  • There is some debate about whether owning gold is sufficient protection against a collapsed currency market. It is possible that some countries will turn to precious metals as currency, like Mexico has done with silver.
  • Keeping assets liquid is also important, so investing in things like real estate is not advised.
  • Another advanced technique is investing in the currency that one believes will be the strongest against the dollar.

Hyperinflation

  • Focusing on short-term bonds is one strategy to combat future inflation. Other types of bonds can be useful, too, such as Treasury Inflation Protected Securities (TIPS) and aggressive bonds.
  • Stocks are also a recommended course, which also ties in with the above of investing in foreign companies.
  • Again, investment in precious metals like silver and gold can also help combat inflation. This is because as currency values fall, the values in these tend to rise.

Cryptocurrency

  • There is some speculation that cryptocurrency could follow the same path as gold and silver in the event of currency collapse. However, it is difficult to tell without more time and evidence.
  • Some experts cite Turkey and Venezuela as examples, where cryptocurrency trading volume rose when currency values dropped.
  • Some speculate cryptocurrency might be better than gold, as there is only a fixed amount to be mined, whereas discovery of new gold stores can disrupt the commodities market.

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