Reading room: The little book of The Shrinking dollar
One of my worst dilemmas is when I read a book that is enjoyable or useful, but a terrible idea to talk about. This is what shirking dollar all about. Deep down we all know for a fact that no fiat money stays forever, but how often do we want to face the truth or be reminded of it.
Argentina 1991, Mexico Tequila Crisis 1994, Zimbabwe Crica 2006, no fiat currency in history has ever survived. For a hundred years, USD have fallen in value by inflation. The printing party in 2008/09 just shows how this paper dollar could be easily manipulated. In other words, the days are numbered.
How do you know the dollars has shrunk?
The cut of our living standard comes from three-one punch:
1. Stagnant income
2. Price inflation
3. Falling net worth
Sounds too familiar? Ringgit ~25% devaluation between 2015-2016 is not that bad when you put all these market signs into consideration. Stagnant income, check. Price inflation, check. Falling net worth in USD, check.
I grew up believing that currency is a western policy to benefit their upper class and big corporation. Then, the ringgit was pegged to USD during the Asian crisis, and suddenly USD seems so useful.
How to save guard your asset?
I quite like the "expert solutions" (with a pinch of salt) in every chapter and here are those that make human sense to me.
- Trade in binary option or equity with foreign revenue. The book recommended NADEX. Do beware of the high risk and scams in binary option.
- Keep gold (Now that Bitcoin gains popularity, it may be another option. But I have always thought of Bitcoin as tulip flower, only it doesn't die quickly like the tulip.)
- Keep currency of the following nation: Singapore, Swiss, Australian, Norway & Brazil
- Buy two house in cash. Yes, only two. Please don't purchase multiple houses and beg friends for funds to pay installment. (Obviously, I am referring to someone I know.)
Rick Rule: Chilean Peso
Michael Covel : Ride dollar down, euro down and gold up
Chuck Butler : Renminbi
Jim Rogers: Singapore dollar
If there's one concept I learned: Don't follow one single tulip, have some form of diversified currency reserve.
When this book is published in 2010/11, they forecast that USD dominant would last till somewhere around 2022. That put us in the middle point right now. We seen USD gained against major currencies including SGD and AUS before heading the declining trend since early 2017. Today, the Fed is trying to raise the interest rate and reduce balance sheet like a crazy chicken. Then there's the TRiUMPh card. Do you think they had it under control or it's just the beginning of an inevitable collapse?