View Full Version : What to do if you know a depression will hit in a couple years
rusty JEDI
07-26-2005, 04:32 AM
We had a discussion in class today about how Americans are so dependent on credit, and are so overextended that it could throw USA into a depression. The prof explained the reason for the depression in the 20's was because of this.
So lets just say some how you are told a depression will hit in a couple years. It will be just like the 1920's. Assume its absolutely guaranteed, and nobody else or only a very few people know.
How do you prepare for it?
Do you go pick up some sort of skill job that would still be useful?
What do you do with all your current money? Do you try some risky stuff to get a fat stack so you're better prepared?
Will money be useful, or do you just start stashing away stuff that you could use to barter?
Do you move to a climate that isnt so damn cold in the winter when your power is cut off by the electric company?
Would a USA depression like the 1920's effect the rest of the world, so if it didnt you just move now? Would it weaken the US so much that some country would see the advantage and start attacking?
Just some thoughts I had i'm interested in what some of your thoughts are.
rJ
wacki
07-26-2005, 04:38 AM
Buy a gun, buy some land in montana, move to montana, offer Ray Zee a six pack.
daveymck
07-26-2005, 04:39 AM
It would depend if inflation is expected to rocket, if not then I would be looking to have cash reserves to try and buy a load of property and cheap stocks when the property and stock market crashes. Although I am not sure the property market is as hot in the States as here.
The failure of the US market would impact more on the emerging countries like China who export a lot of good tothe states, it would have an effect on europe but not to as large an extent. I think the US economy is weak at the moment and it doesnt seem to be having a huge impact on the UK although our economy is slowing down.
We had many years of boom and bust over the last 20 years but we seem to currently have a great deal of stability although manufacturing has been struggling and the retail sector is now slowing as well.
Jeff W
07-26-2005, 04:40 AM
Convert all my money to a safe, stable currency and bet against the market.
ChipWrecked
07-26-2005, 05:16 AM
Convert cash to gold now, buy property after the crash.
Spaded
07-26-2005, 05:20 AM
Stick it to the man.
jakethebake
07-26-2005, 08:46 AM
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Buy a gun, buy some land in montana, move to montana, offer Ray Zee a six pack.
[/ QUOTE ]
The basic idea is good, but I'm not sure Montana is where I want to be w/o a relaible source of heating oil, etc.
rustyboy
07-26-2005, 08:59 AM
Gold is indeed the correct answer. It will always stabilize a devaluation of currency. I bought as much as I could afford durring the major economic boom in the late 90's. I bought quite low, then sold about 3 months after the correction that resulted from the Sept. 11 tragedy. If you have a huge cash supply, and the market crashes, so does the value of your cash. You will be unable to buy anything, as prices will rise and your money's value will not follow.
The once and future king
07-26-2005, 09:10 AM
Intresting website for those in the UK. Also very relevant for for those in Europe and USA.
Housepricecrash.co.uk (http://www.housepricecrash.co.uk/)
drewjustdrew
07-26-2005, 09:14 AM
What bailed the US out of the last depression? WWII?
I think the draft fires right up in the case of a depression and we go kick some butt in the middle east.
This is really a very easy question. Can you answer the question, "What would you do if you were told that America would have an economic boom in the next couple years?" If you can then you should be able to easily answer this question.
ChipWrecked
07-26-2005, 09:17 AM
I'm in Kah-lee-foan-ya. Thanks for the link.
jakethebake
07-26-2005, 09:21 AM
[ QUOTE ]
Gold is indeed the correct answer. It will always stabilize a devaluation of currency. I bought as much as I could afford durring the major economic boom in the late 90's. I bought quite low, then sold about 3 months after the correction that resulted from the Sept. 11 tragedy. If you have a huge cash supply, and the market crashes, so does the value of your cash. You will be unable to buy anything, as prices will rise and your money's value will not follow.
[/ QUOTE ]
If you actually did this, you actually did horribly. Gold was flat through the early-mid 1990s, then declined during the late 1990s. If you were buying through the late 1990s, then you would have an average price around $300-$350 per oz. Gold didn't get back up to those levels until late 2002. So basically you were dead money during the market boom, and still dead money for two years after the crash.
ChipWrecked
07-26-2005, 09:48 AM
Gold loves flaky times. If you bought gold immediately after 9/11, you killed.
jakethebake
07-26-2005, 09:54 AM
[ QUOTE ]
Gold loves flaky times. If you bought gold immediately after 9/11, you killed.
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This is very true. Flight to safety.
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Convert all my money to a safe, stable currency and bet against the market.
[/ QUOTE ]
Like what, the Euro? Yen? Yuan? Swiss Franc? Although your idea has merit, since the dollar will probably plunge in value in this scenario, the idea that there is a "safe" or "stable" currency is pretty amusing, especially if the U.S. consumer stops buying everything in sight.
If I were going to need to borrow money for anything, I'd do it now, as I'd think inflation or interest rates or both would rise significantly.
spamuell
07-26-2005, 11:07 AM
Why is Andy B a Nazi?
rustyboy
07-26-2005, 11:29 AM
I bought at 258/oz near the end of July '99. I sold in June 2002 at 320/oz. Your questioning me made me look it up. The market in this time lost slightly under 20%. I did alright.
(Although you are correct in that I wish I still had it, as I would have nearly doubled my money today.)
PokerCat69
07-26-2005, 11:30 AM
I put my money in the Euro and Chinese dollar.
colgin
07-26-2005, 11:34 AM
[ QUOTE ]
So lets just say some how you are told a depression will hit in a couple years. It will be just like the 1920's. Assume its absolutely guaranteed, and nobody else or only a very few people know.
How do you prepare for it?
[/ QUOTE ]
I would put a lot of money into precious metals, particulalrly gold and silver. They shoul do alright in a depression.
I would use the rest to short the market, occassionally taking gains as the market tanked and putting that money into metals. Or something like that.
colgin
07-26-2005, 11:37 AM
[ QUOTE ]
Intresting website for those in the UK. Also very relevant for for those in Europe and USA.
Housepricecrash.co.uk (http://www.housepricecrash.co.uk/)
[/ QUOTE ]
For those of you interested in this topic who live in New York City (or the surrounding areas), please see my blog:
http://www.nyhousingbubble.blogspot.com/
jakethebake
07-26-2005, 11:40 AM
[ QUOTE ]
I bought at 258/oz near the end of July '99. I sold in June 2002 at 320/oz. Your questioning me made me look it up. The market in this time lost slightly under 20%. I did alright.
(Although you are correct in that I wish I still had it, as I would have nearly doubled my money today.)
[/ QUOTE ]
Very nice timing!
touchfaith
07-26-2005, 11:51 AM
I'd start growing weed now and invest all my money in tobacco.
Do you see why?
adios
07-26-2005, 11:59 AM
[ QUOTE ]
It would depend if inflation is expected to rocket, if not then I would be looking to have cash reserves to try and buy a load of property and cheap stocks when the property and stock market crashes. Although I am not sure the property market is as hot in the States as here.
[/ QUOTE ]
Yeah that would be a good strategy IMO. The depression was a time of deflation. Real estate is generally speaking doing well in the USA as there is lots of talk about a real estate bubble.
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The failure of the US market would impact more on the emerging countries like China who export a lot of good tothe states, it would have an effect on europe but not to as large an extent.
[/ QUOTE ]
I agree.
[ QUOTE ]
I think the US economy is weak at the moment and it doesnt seem to be having a huge impact on the UK although our economy is slowing down.
[/ QUOTE ]
I disagree about the USA, if anything it's strength as been understated IMO.
[ QUOTE ]
We had many years of boom and bust over the last 20 years but we seem to currently have a great deal of stability although manufacturing has been struggling and the retail sector is now slowing as well.
[/ QUOTE ]
Most likely due to central banking monetary policy.
RacersEdge
07-26-2005, 12:13 PM
Short sell.
jakethebake
07-26-2005, 12:15 PM
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Short sell.
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So many problems with this idea.
RacersEdge
07-26-2005, 12:27 PM
[ QUOTE ]
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Short sell.
[/ QUOTE ]
So many problems with this idea.
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Name one or two.
jakethebake
07-26-2005, 12:33 PM
[ QUOTE ]
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Short sell.
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So many problems with this idea.
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Name one or two.
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One is that it's only half a strategy.
Sponger15SB
07-26-2005, 12:33 PM
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Why is Andy B a Nazi?
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probably because he took away evan's avatar....
thats just a guess though, nothing to base it on.
[ QUOTE ]
We had a discussion in class today about how Americans are so dependent on credit, and are so overextended that it could throw USA into a depression. The prof explained the reason for the depression in the 20's was because of this.
[/ QUOTE ]
There really isn't a strong consensus on what exactly caused the Depression, just as there really isn't a consensus on what causes the business cycle.
[ QUOTE ]
So lets just say some how you are told a depression will hit in a couple years. It will be just like the 1920's. Assume its absolutely guaranteed, and nobody else or only a very few people know.
[/ QUOTE ]
It's important to distinguish between a contracting economy and a deflationary economy.
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