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That is an opinion and not everyone agrees with it. There are plenty of books that talk about this being the end of the dollar and all paper money.

Generally books with such an extreme position have an axe to grind, and aren't your most reliable source of predictions. Whenever the economy hits a downturn, you get a group of alarmists with a "this is the end" mentality...yet the economy always recovers. If they were predicting a depression-level downturn, while I would be extremely surprised at anything that extreme, it would at least be plausible. End of paper money...not so plausible. Changes in currencies and economic management tend to evolve, not change overnight.

Cycles happen. This one may be worse than usual because it's the result of delaying the down part of the cycle for 7 years. There should have been a longer and slightly deeper recession after the dot-com bust. Since recessions help to correct imbalances in the marketplace (kill off weak companies, maybe make shareholders question the logic of 9 figure compensation for executives who run their companies into the ground, etc.), delaying those corrections usually makes it worse.

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Some think that this might be the beginning of the end of the dollar as the reserve currency of the world. Remember the British pound was once the world's reserve currency. Things change. It is hard to guess now if this will happen or not, but there are those that would like this to happen as the reserve currency is an inviable position.

This one's plausible. We'll see what happens. But again, in the long term losing reserve status isn't the death knell of a currency. Britain continues to boast a solid currency despite its loss of stature.

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When the dollar left the gold standard, the problems really began as there is nothing backing the paper money. I am not a Ron Paul fan at all ( hate some of his positions) , but he is one of the few who is telling the truth about some of our money woes.

Because there weren't any ups and downs during the gold standard years? *cough*cough*great depression*cough*cough*

Really, think about this logically. "there is nothing backing the paper money" The idea that the gold standard is somehow different relies on the idea that gold has inherent value while paper money does not. Some commodities have inherent value...oil, iron...things people use. Like a fiat currency, gold has value primarily because people agree that it has value. Gold does have some practical uses, but very few relative to its supply. If gold was priced based on its value as an industrial commodity, it would be worth a fraction of its current value. Paper, it turns out, also has some practical uses.

Commodity prices, including gold, are volatile. Currency prices are volatile. The difference between the two isn't as much as the gold standard enthusiasts seem to think.

Economies aren't stable because people are greedy. When things are good, they produce too much, buy too much, and end up overvaluing things. Monetary policy can help to moderate things, but it can't get rid of them. I've never read anything that's logically argued why backing money with gold would somehow magically make things better.

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Some think this is a transitional phase from the U.S. losing power and China gaining to eventually become the leading power in the world.

This is plausible, though China's reliance on US consumers to support their economy makes it a little suspect to me. The fact that chinese currency is pegged to the dollar also makes this suspect...if China were to float its currency, there'd be a major correction, since Chinese goods would no longer be nearly as cheap. Either way, like losing reserve status, loss of status doesn't mean that the value will not come back.

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There is a huge financial crisis going on, much worse than most people realize. Some think that all the paper currencies in the world are in trouble. In times of crisis, people tend to gravitate to gold as a hedge and there is a reason why precious metals are doing well as the dollar sinks.

Wouldn't have anything to do with them being measured in dollars, would it? And people tend to gravitate towards winners. Housing prices go up, everyone buys houses they can't afford looking for a quick profit. The same is happenning with precious metals, and while industrial commodities are going up partly because of increased demand from developping economies, a portion of their rise is also a speculative bubble. I just hope it's a ways from bursting because...I kinda own some gold stocks.

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I don't think things are black and white enough these days to predict that the dollar will eventually go up. It could play out many different ways. The world has yet to face the kind of crisis that we are in now, but similar events in history have not been kind. I think we are at the very beginning of this pain cycle.

History shows that there are cycles in economics. There have been credit crunches before. The US dollar has dropped before. Things recover. I don't think we're at the bottom yet, and I'm not sure how much further away it is. But I am confident that there is a bottom, and 10 years from now, this will be just another recession - possibly worse than most - and we'll be all excited about whatever bubble we're busy inflating then.

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I sure would not be getting into dollars today, but each to his own. Even keeping money in treasuries today is losing money if you look at the true inflation rates.

This may be wise, but you have to recognize that there's risk either way, particularly if you're going to return to the states. There's a significant risk to staying in euros, too. Nothing goes straight up, there needs to be a correction at some point.

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Generally books with such an extreme position

Well, not everyone thinks these are such extreme positions. I would have guessed that book was a really extreme position when I first read it in 2003/4, but there was enough wisdom and logic in it to make me look deeper. Now in 2008, when almost everything that they said has proven to be true, it does not look the least bit extreme. Funny, how time changes everything.

When we sold our home ( as it turns out, right at peak for our area) many people thought we were nuts as it was a very special place, all but impossible to find in our area. Now, these same people, think that we were so very smart. LOL. Timing is everything.

Yes, indeed, there are economic cycles and recessions are actually a good and necessary part of the process, but I do think this time is different ( partly because there has been lots of manipulation by the powers that be for much too long). They set up the housing bubble with the record low interest rates and corrupt easy money practices and they want the dollar to be weak because of all the debt.

I don't necessarily think that we are going into a great depression ( hope not) or that it will be the end of the dollar and or paper money. I do think though, that those things are possible in our current crisis and people should stay aware and get educated, not just assuming this is your every day recession.

As you can see, I was not arguing for anything really, just pointing out that there are lots of smart, educated financial people who see things differently than your typical financial media spin.

IMHO saying The Dollar will eventually go up in value in comparison to other currencies can NOT be stated as a fact. Now if the OP had said "might", "should" or "could" instead of an emphatic "will" , I would not have a problem with the statement.

NOBODY can guarantee that statement. Maybe the dollar will and maybe it won't. Certainly if it is not the reserve currency ( which you admit is plausible) the U.S. has a much greater chance of running into the same problem as Argentina or like the one where people needed a wheel barrow of money to buy a loaf of bread.

We are on a dangerous precipice and no one knows exactly how it will unfold. Things are on shakier ground now than I think they ever have been in my lifetime.

People who are traveling for extensive journeys or people saving money for long journeys need to read in depth and pay attention to these issues. It is part of what must be looked at and considered deeply ( lots of different possible scenarios to be prepared for). It helps to read lots of different opinions, even those that seem "extreme" to at least consider the arguments and see what is there of value.

I am not a gold bug, but I am sure glad I bought some when it was cheap. Trust me, I am watching the euro closely and I have already sold some of my euros and pounds ( at a handsome profit I might add).

Of course, our goal is to actually make money while we travel the world on a budget , through our investments. So, perhaps we pay more attention to these things than others, but so far it is working really well for us.

I am not telling anybody what to do, but just giving ideas to open people's minds to the possibilities. They can do their own research and make their own decisions.

What bothers me is when people make bad decisions by just not thinking things through. I know people who made bad choices about their homes around RTW trips. One family made a huge error and sold their home in a booming up moving housing market,so when they came home, they could not buy much of a house. Had they paid just a little more attention, they could have prevented that error by seeing, at that time, for them, it would have been better to rent out the house. MUCH better.


I know several people who should have sold their house and could have when we did. One can not even take their RTW trip now because they missed the boat. Several took huge losses and/or had a hard time selling their homes ( most are stilllll on the market and they came home last summer). In 20/20 hindsight, they see they should have sold BEFORE they left or in order to leave ( and rent if necessary for a short time).

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get a group of alarmists

"Alarmists"? The richest men in the world have been talking about this for a long time and putting their money where there mouths are ( from an old Bloomberg):

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Bill Gates, chairman of Microsoft Corp., left no doubt of that, telling television host Charlie Rose ``I'm short the dollar.'' The world's wealthiest man called the record $7.62 trillion federal debt ``a bit scary'' and lamented that the U.S. is in ``uncharted territory'' fiscally.

And he's right. Just ask Warren Buffett, the world's No. 2 moneyman, who has been buying foreign currencies since 2002, citing concerns about the U.S. deficit. The bet is paying off, too. Buffett's Berkshire Hathaway Inc. reaped a $412 million pretax gain on the trade in the third quarter of 2004.

Gates and Buffett may not be reading from the same playbook as George Soros, though their investments bear some similarities. Financier Soros has long since given up on the world's reserve currency, and U.S. President George W. Bush's competence on economic matters.

2wanders, a nation's currency valuation and economic performance don't follow each other as closely as you imply. Yes, economies cycle. But some currencies loose value and never recover. Even the almighty greenback lost considerable value in the 1970s which was never regained, and yet the US has had several periods of economic growth.

Furthermore, the dollar's weakness is not a recent thing. It peaked in value relative to the €, £ and SFr several years ago.

To second others, namely WT (who's thinking I am fairly aligned with), nobody can predict currency valuations long term consistantly and accurately. If we could, there would not be an actual market. We can only place our bets. I personally have been betting on the dollars's demise for several years now. It has paid off.

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Some think this is a transitional phase from the U.S. losing power and China gaining to eventually become the leading power in the world.

I'm personally a China skeptic, and would suggest that the US is permanently losing a non trivial degree of economic power, and it is being diversified amongst developing nations (China, India, misc.) and energy producing countries (Russia, Iran, SA, Canada.)

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I sure would not be getting into dollars today, but each to his own.

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My concern now is about the euro and pound. I think they have a good chance of going down in the near future as well.

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Trust me, I am watching the euro closely and I have already sold some of my euros and pounds ( at a handsome profit I might add).

So WT what are you buying now then?

I hesitate to give specifics because we ( like most people here) are not financial advisers and we have a unique situation. We do need to keep some money available in dollars, euros and pounds, at least at this given time.

We have lots of different investments because the key is always to diversify. I don't think there are any easy answers to these kinds of questions, especially at this period of time. There are always risks, so people have to do the homework and decide what calculated risks seem best to them. Since many of the markets are quite volatile now, we like things that have quick exits, if need be. We are also long on some things like energy, because peak oil makes sense to us.


We decided at a certain point that we had too much money in euros and pounds.We live on very little and are already planning our African and South American phases. We get to see things first hand, like the Spanish housing market that is in trouble or hear Brits talk about the pound and problems in the UK, besides doing lots of reading. We decided to move some into goldmoney. At this point in time, there are more advantages for us to have this money there and the flexibility works for us.

We are alway reading, thinking about and tweaking these things. That is actually my husband's main job on our trip, but I try to keep informed enough to help in decisions and add input.

Sorry, there really is not a short answer to the question.

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I hesitate to give specifics because we ( like most people here) are not financial advisers .....

Well, first of all, I didn’t ask for financial advice. I asked what YOU were buying.

And, secondly, I think it’s a little too late to say you’re hesitant to offer financial advice. I believe you’ve offered quite a bit of financial advice already.

Anyway, I was hoping you’d give us a glimpse of what you thought the financial future held. After indicating that you correctly timed the housing market and the fall of the dollar, I thought you might give a shot at telling us what’s next.

On a side note, I am always more interested in what people are actually doing than what they are saying. Money does talk after all. So, the real question is what percent of your assets are non-USD based…50%...80%. If you really believe in the death of the dollar, I’d imagine you’d have most of your assets outside the country. If you only have 50% of it outside, then buying and selling Euros really hasn’t made you any money. It’s just hedged your bets and kept you from loosing.

Oddly enough, the least pessimistic person about the dollar here (2wanderers) is probably the one with the smallest percentage of his assets (if any) USD based. Which, if true, would lead me to believe he may actually be the real dollar skeptic in the group.

Then again, Stoo may be the real genius here and have all his assets in Europe and all his debts in the USA. He has been predicting the decline of the dollar for quite a while. I am curious (other than his student loans) how much he has really acted on it. Of course, if he’s had most of his money in the European markets (well most of them) instead of in cash, than he really hasn’t benefited much from the sharp decline of the dollar during the last 6 months either.

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Well, not everyone thinks these are such extreme positions.

Not everyone thinks anything. I've seen you use this a few times.

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BTW, around 2003 or 2004, as I looked around me at the insane real estate in my area that made no sense, I went to libraries and book stores and got books like Rubino's " How to profit from the coming Real Estate Bust".

WT, if you lived in SF proper, you would still be getting top dollar for your house, even today. I also went to look at some places today, that are getting an obscene amount of money and selling pretty quickly. I have many friends in the City who are looking to buy, and there is still low inventory, so it pushes the price. It's an interesting bubble here.

While housing sales have slowed down, almost all the sales I have seen have gone for at or much over asking. This is in SF proper.

Not trying to pick on you, but your posts are so long it seems you want us to take your view on things. Which, as you said yourself, not everyone thinks the same way.

I work at a large financial company. There seems to be a believe amoung them (and my own adviser at a separate firm), that things will change after the election. We'll see. I am not as doomsday as others. Alarmist behavior doesn't really help anything (nor do these stupid rebates...but that's another story).

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I didn’t ask for financial advice. I asked what YOU were buying.

I realize that, but my key word was "specific". I think it is fine to warn people to be careful and share what has worked for us in the past or up until now etc, but it gets trickier ( and much more personal) to give specific private information over the internet on what one is currently investing in.

Yes, we have made some very good calculated choices in the past, but who knows what the future will hold? I did not plan to sell right at peak, nor did I realize when I bought my home that real estate would rise so much. I am hesitant to give specific advice because who knows who will read it and what they will do with the information.

I thought you asked because you wanted help, but now it seems like you just wanted more information to use as ammunition. I don't care whether you or anyone thinks I am right or wrong, my main reason for taking the time to reply is my attempt to help. My main advice is just to be careful and to get informed..... open ones mind to alternative possibilities.

Like Stoo, Gates and Buffet, we were bears on the dollar long before it became popular. I am not sure why everyone else was not seeing the problems in the midst of the boom, but the pattern is that there is always a bust after a boom. This one has been begging for a bust for a looooong time and the longer it is delayed with ponzi scheme bandaids, the bigger the problem with be. The other shoe has not even begun to fall and freddie and fannie are doomed, not to mention more biggies falling like Bear Stearns.

We have very little in dollars and that has worked really well for us, partly because we saw the problem with the dollar before most people were even looking at it, although it has been declining for some time.


Isn't 2wanderers Canadian? Perhaps it is easier to be an optimist about the dollar if you are Canadian. LOL. I find it particularly painful because it affects everyone I love. I am not some wealthy CEO, but just a modest, frugal traveler who likes freedom. I feel like the masses have been robbed by a corrupt government and banking system.... and most will wake up too late.

2wanderers said:

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Whenever the economy hits a downturn, you get a group of alarmists with a "this is the end" mentality

The problem with that is people were not saying this just lately when people are starting to wake up to the problems. Look at Gates, Buffet etc ,they were talking about it in the midst of the great housing BOOM when most people seemed to be under the illusion that it was going to go on forever and that the situation with illegal maids etc buying half million dollar homes with 0 down and mad money loans, was going to last forever without any consequences.

The books I was talking about were written in 2003, loooooong before Time magazine was still raving about people getting rich on their houses in 2005 with a house on the cover. Most people did not want to hear the truth, but like Stoo I was talking about it then.


If you looked at Shiller's classic chart, the story was and is obvious. If you look to how Japan had a bust after their boom and 16 years later, today they still have not recovered in real estate,you know that real estate is sticky going down and it continues for years. Look at Texas in the 90's after the oil bust where people just walked away from their homes for another example. This one was bigger with more funny money loans, so the pain has barely begun. ( Despite a record percentage already underwater in their mortgages).

Read Shiller, RGE Monitor, Jim Sinclair, Peter Schiff, etc to try to understand the fundamentals. There is so much spin out there, but I think one should look deeper and sort out the tricks of the business owned media.

I think things are so crazy right now, that no one knows what is next. They are all guessing,so my guess is not really that valuable. What I try to do is be as prepared as possible for many different possible variations. I think gold will do good this year and I can skim profits with the volatility which is fairly predictable. I don't think it will take a permanent dive, but if it did, I can pull out in seconds. Some say the dollar will go up by the end of the year, some say it will go down...I am prepared for either scenario. The same thing with the euro and pound.

If there is a huge disaster, worst than the Great Depression or WWWIII breaks out, we are all screwed, but I hope my preparations will keep me as safe as one can be in such situations. Mostly, I hope that does not happen or some of the very negative predictions.

I am actually an optimist, so I hope that no matter how things unfold,that it somehow works out to benefit all of mankind.

I am not sure that I believe in the death of the dollar. I think the fundamentals show that there are some major problems with the dollar, but since it is the reserve currency, there are many around the world who will fight hard to help it survive ( to not drown with it). Despite what they say, the fed wants it low and wants inflation because it is good for all U.S. debt. If it is good for student loans, imagine how it helps with a world breaking record deficit.

I think it normally takes time to lose the position of reserve currency, but things are so wacky now, some thing like geo political or some other wild card could be that straw that broke the camels back. Still,the dollar has come back from the brink before, so it might do it again. I am all for a strong dollar, I just don't see the fundamentals backing that up now or in the near or medium distant future. Lowering interest rates makes wall street happy for a day, but increases inflation. The money printing presses have been working over time.

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A dollar in 1950 will buy only 12 cents worth of goods today, 89% less than before! An ice cream cone in 1950 cost 5 cents; today its $2.50 - 4,900% inflation, a postage stamp in the 1950s cost 3 cents; today's cost is 41 cents - 1,266% inflation,a house in 1959 cost $14,100; today's median price is $213,000 - 1,400% inflation;

This does not just affect travel, this affects everything!

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Originally posted by halfnine:
Then again, Stoo may be the real genius here and have all his assets in Europe and all his debts in the USA.

Probably half luck. And I live in Zurich, ffs...many banker friends who influence my opinion. But, thanks for the half complement 9/2.

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I am curious (other than his student loans) how much he has really acted on it. Of course, if he’s had most of his money in the European markets (well most of them) instead of in cash, than he really hasn’t benefited much from the sharp decline of the dollar during the last 6 months either.

I cleared out my US-based stocks and bonds, including the IRA (incuring a penalty), and brought all of my assents to Switzerland between 2005 and 2007. I've less that $100 in the US since last summer. Been ramping up the student loan payments a bit every now and then, too. Also, I've been making an effort to buy 'stuff' either when on a trip in America, or when friends/family come to visit. E.g.: A lasek/shopping trip last November, I am getting a new decked-out MacBook Pro next month from the US(nearly 1k savings), etc. It all adds up nicely

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A lasek/shopping trip last November, I am getting a new decked-out MacBook Pro next month from the US(nearly 1k savings), etc. It all adds up nicely

Yeah, one of the guys I occasionally work with just headed back to visit family and friends in Poland. He brought them 4 laptops. One carried by each member of his family.

As I tend to spend a good chunk of time every year in the USA, we tend to buy our stuff here as well. At least it cheapens the flight somewhat.

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I cleared out my US-based stocks and bonds, including the IRA (incuring a penalty)

I was actually wondering what you did with your retirement plans when I wrote it. Incurring a penalty shows you adamantly believed in the dollars fall and weren't just paying lip service.

I saw a British Airways flight crew show up to the Seattle airport this week with two HUGE suitcases each, in addition to their regular overnight bags. I envision them stuffed with DVD players, iPods, laptops, etc....

I got a kick out of this March 17 article I just read to find out that Fortune seems to agree with me on the state of the economy at the moment:

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If there is any word that captures the mood in the economy right now, it's uncertainty, along with shadings of bafflement and distrust. We have never seen a credit crisis quite like this.

I disagree strongly with some of what Kruger was saying but do think there were two quotes that were useful for this topic:

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I'm now reasonably sure that they will cut again and again and again. A few cuts of 75 basis points and we'll be down to zero. And there's a pretty good chance that we're heading to zero, and that there's going to be a Japan-style ZIRP, zero-interest-rate policy.

Has that happened in the U.S. before?

Not since the 1930s. They didn't have the Fed funds target rate back then, but effectively we had a zero-interest-rate policy for a good part of the '30s. If the Fed responds this time with as much cutting as it did in the last two recessions, we get to zero. And then the problem is, What if that isn't enough? And there's a pretty good chance it won't be.

Many economists ( like this good friend of Ben Bernanke) think they will keep cutting the interest rates. Cutting rates makes the value of the dollar go down and inflation go up. So if this is indeed true, it is easy to see the pattern. The weak dollar will not get any stronger until interest rates rise.


I think this is also significant and one should keep their eyes on this pattern:

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A lot of foreboding economic numbers are floating around right now. What strikes you as the most alarming?

I'm looking at the increase in interest-rate spreads, with the LIBOR (London interbank offered rate) pulling away from U.S. Treasury bills. When the spread gets that big, it suggests that banks are losing trust in each other. Various measures of panic in the markets are looking bad again. I've been thinking to myself, This is now the fourth wave. We had a first wave more than a year ago, when subprime first began to go. And everyone said that was contained. We had a second wave last August, when things started going to hell. We had a third wave late in the fall, and heroic efforts seemed to bring the problems under control. And now here we go again. This is starting to look like a much more comprehensive financial crisis.