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Thread: dollar drop ... and not the good kind either

  1. #1
    Veteran Member anelia's Avatar
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    Default dollar drop ... and not the good kind either

    so a lot of my friends, especially the ones with stacks of cash either in bank accounts or safes, are starting to worry about their nest egg. some people are still arrogant enough to think that we (the united states) are somehow immune from economic crisis..but the recession has been coming up more and more lately. our country is hopelessly in debt, and we're like the poor girl in rumpelstiltskin, we owe our children to the stock market bookies for the sins of our fathers. as the dollar drops you hear less, "yeah right, that won't ever happen. my moneys is ALWAYS gonna be worth what it's worth today" and more "oh shit, i have tens of thousands of dollars saved and it could all be worth nothing tomorrow. how will i feed my family?"

    they're realizing they could wake up to discover that their precious stash makes great firestarter and not much else, and all they have in the cupboard is herb & butter pasta-roni, a half-empty box of cinnamon toast crunch and two cans of chef boyardee ravioli. all that savings, all that sacrifice, busting your ass all those nights for every single lousy buck, only to see it go up in smoke.

    just wondering what you ladies thought. everybody works hard, but i think we strippers bust our asses in a special way. it's "easy" money but it's also NOT. we put a lot of time and sweat into our work, and take a lot of shit to get what we have...what are we doing to protect it? does anyone here buy gold or silver? i remember when i first started being interested in silver, in 10th grade. i installed a precious metals ticker on my taskbar... silver was less than $5/oz then, and now it's at over $14. tripled in the last 7 years!!! i can't even believe that shit. i'm so kicking myself right now for not buying any.
    "I'm teaching fools some basic rules. / I believe in the Golden Rule. The man with the gold rules. / I made a little money.
    And like the Bible says, I was enjoying the fruits of my labor. This is my comeback. This is me doing what I love to do." -- Mr. T

    "In the street I am my divine self. In the club I am a stripper, portraying a fantasy.
    That's not to say anybody can do or say anything to me but it's acting. Playing a role. That simple." -- Pure


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  2. #2
    Banned Melonie's Avatar
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    Default Re: dollar drop ... and not the good kind either

    IMHO there are three factors that contribute to the US dollar's value ...

    - how fast is the Fed printing new US dollars ?
    - how much faith does the rest of the world have in the US dollar ?
    - how much exchange rate / carry trade bulls#@t is being conducted by hedge funds and speculators i.e. leveraging US dollar investments vs other currencies ?

    the 'tin foil hat' crowd would tell you that all three of these are now working against the dollar.

    the 'smart money' crowd would tell you that the US dollar has been talked down recently, and will soon make at least a small 'pop'.

    both crowds will tell you that there is a lot of 'price inflation' in the pipeline ... i.e. that importers have not been fully passing on their exchange rate losses to American customers, and also that US producers and service providers have not been fully passing on the additional costs they are incurring due to rising 'world market' prices they must pay for 'basics' i.e. oil / gasoline, food ingredients, outsourced component parts etc. This means that while the US dollar has lost 30% of it's purchasing power versus 'world market' commodities over the past 5 years, American consumers haven't really had to deal with the full impact yet ... but soon will.


    As to precious metals, I did buy quite a few 1oz gold bars over the past few years. I also recently sold off some of my 'stash' when the speculators recently pushed the price of gold well over $800. Over the past 7 years, gold has done a bit better than silver ... probably because one of the old 'demands' for silver was photographic film and that 'demand' has been steadily disappearing. However, I have also bought and sold stock in gold / silver mining companies over the years ... which have provided far greater rates of return than the metals themselves (like tripling in the last seven MONTHS ---> ).

    As to personally hedging risk of a US dollar collapse, an easy way to do this is to invest in a CD that is denominated in a different currency ... check out . Of course, if your friends try to buy these CD's or stocks or precious metals in large amounts using dollars out of their safes, they WILL have to answer a few questions as to the origin of their cash !

    Again, the 'smart money' crowd is of the opinion that silver will outperform gold in the near future ... mostly due to the fact that 'Joe Sixpack' will eventually figure out that his US dollars are losing lots more purchasing power than they are earning in interest, and will eventually turn to buying $20 an ounce silver instead of $1000 an ounce gold because he simply can't afford the price of gold ! The crystal ball gazers then claim that silver will quickly pop to $50 an ounce while gold pops to $2500 an ounce once the 'Joe Sixpacks' start buying ... which is good news for people who pick up some silver today at <$15 or pick up some gold today at <$800 .

    ~
    Last edited by Melonie; 11-17-2007 at 02:31 AM.

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    Default Re: dollar drop ... and not the good kind either

    Hi Melonie,

    Another significant factor affecting the value of the US dollar is the United States' trade deficit. The large trade deficit has caused the value of the dollar to drop significantly over the past few years.

    Another way to hedge against a dollar collapse is to buy inflation-adjusted treasury bonds.

  4. #4
    Banned Melonie's Avatar
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    Default Re: dollar drop ... and not the good kind either

    Another way to hedge against a dollar collapse is to buy inflation-adjusted treasury bonds
    Unfortunately, the classic wisdom really doesn't work with TIPS, because A. they are denominated in US dollars, and mostly because B. the interest rate paid is based on the 'official' gov't inflation rate ... which is a work of fiction these days at <3% . According to M3 continuation data the US Fed is printing money at a 14% rate, the costs of energy / food / precious metals is rising at a 15%+ rate, etc.

    The 'tin foil hat' crowd would tell you that the official inflation statistics are deliberately understated for the express purpose of minimizing US gov't expenditures for TIPS interest + Social Security COLA's + military / civil service COLA's plus a host of other programs which are tied to the 'official' CPI number.


    As to the true effect of the trade deficit, what really matters is not whether the US runs a trade deficit, but rather, whether or not the holders of those US trade deficit dollars i.e. the gov'ts of Japan and China and the oil producing countries (mostly) will continue to accept more and more US trade deficit dollars and hold them, versus selling off those US trade deficit dollars in order to buy other currencies (i.e. diversifying their currency reserves). It is a change in THIS policy by the Chinese gov't that precipitated the major US dollar decline over the past 2 years. It is the recent threats by the Saudis, UAE, Indians etc. to soon do the same with the US trade deficit dollars that THEY are holding that is really making the currency markets nervous about the possibility that the US dollar could abruptly 'fall out of bed'.

    The 'tin foil hat' crowd will tell you that this was the underlying purpose behind both the 1991 mideast war, the 2003 invasion of Iraq, as well as current saber rattling towards Iran. If the oil producing countries decide to stop holding trade deficit US dollars and/or decide to stop selling oil in US dollars versus Euros or Yuan or Yen, the US dollar is absolutely 'scroomed'.


    Of course, the US dollar 'falling out of bed' would not be a bad thing for the US gov't nor for the majority of Americans who actually have a negative 'net worth'. Just imagine how easy it would be for the US gov't to pay off a trillion dollars worth of outstanding gov't bonds if the US dollar devalues by a factor of three to one ! Just imagine how easy it would be for a 'poor' American to pay off their $100,000 mortgage if the US dollar winds up being so inflated that the mimimum wage winds up being raised to $20 an hour ! Of course a $10 per gallon gasoline price and a $14 per gallon milk price might counterbalance that ( oops - my mistake, 'poor' Americans would still have a social welfare program to provide milk for free). The 'very rich' would also float above any US dollar valuation problems since it's a simple matter to convert currencies via their offshore bank accounts ! So the people that really will be 'scroomed' by a US dollar devaluation will be the 'middle class', who will see the value of their US dollar denominated retirement funds / houses / savings eroded by inflation.

    There have been some recent discussions cropping up on investment boards as to the merits of taking an early withdrawl on IRA and 401k money, paying the penalties, and moving those dollars into a different currency to avoid being forced to take massive future losses in purchasing power !!! I guess that this is yet another reason to consider all of the risks involved in committing money to a 30 year deal re gov't sanctioned retirement accounts ... i.e. making an assumption that (example) one million US dollars built up in those accounts 30 years from now will actually be able to buy much of anything !

    ~
    Last edited by Melonie; 11-17-2007 at 04:48 AM.

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    Veteran Member anelia's Avatar
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    Default Re: dollar drop ... and not the good kind either

    ^^^ this is exactly what i was hoping to get for a response!!! i def. learned a lot from you! what i really appreciate is that you have followed several sides' opinions on the way money is going...the truth is probably somewhere in between "smart money" and "tinfoil hat." anyway thanks a lot for taking the time. might be picking up some silver now.....even though it makes me cringe to pay over 3x what i would have back then.

    oh btw: what do you mean by having to explain the origin of your cash ...? is it illegal to have unaccounted-for greenbacks in this country? what if you say you found it in a bag on the side of the highway?
    "I'm teaching fools some basic rules. / I believe in the Golden Rule. The man with the gold rules. / I made a little money.
    And like the Bible says, I was enjoying the fruits of my labor. This is my comeback. This is me doing what I love to do." -- Mr. T

    "In the street I am my divine self. In the club I am a stripper, portraying a fantasy.
    That's not to say anybody can do or say anything to me but it's acting. Playing a role. That simple." -- Pure


    [SIGPIC][/SIGPIC]

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    Default Re: dollar drop ... and not the good kind either

    Quote Originally Posted by anelia View Post
    oh btw: what do you mean by having to explain the origin of your cash ...? is it illegal to have unaccounted-for greenbacks in this country? what if you say you found it in a bag on the side of the highway?
    Ummm, yeah, that's a brilliant idea. Why didn't I think of it sooner? Why don't we ALL tell that story to Uncle Sam when we get audited?

    "Have you ever been to American wedding? Where is the vodka, where's marinated herring?" - GB
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    Default Re: dollar drop ... and not the good kind either

    ^^^ seriously ... since the introduction of the Terrorist Anti-Money Laundering Treaty, which was signed by the US and all but nine other countries throughout the world, yes it is potentially illegal to be in possession of large amounts of 'undocumented' money. But the point that Katrine and I are making is that, under current law and IRS rules, anybody who spends $10,000 on anything ( and as low as $3,000 in some states) will cause an automatic 'cash transaction report' to be generated that will wind up being seen by both ICE, the IRS, and state tax agencies. This includes bank deposits and withdrawls, brokerage account transfers, cash purchases at any major retailer etc.

    When the IRS receives such a 'cash transaction report', IRS computers will immediately look up past tax returns from the person with the same Social Security Number listed on the 'cash transaction report'. IRS computers will then attempt to assess whether or not the reported after tax incomes from past tax returns, minus the typical cost of living in the zip code area that the person lives in, plausibly correlates with the amount of cash being spent.

    If there is an obvious disparity i.e. if the person has just spent $10,000 to buy a foreign currency CD or has just deposited $10,000 in order to electronically transfer funds to a broker has only reported $30,000 per year worth of income to the IRS, the IRS computers will then 'flag' this person for further investigation and send a report to a human IRS agent. That human IRS agent will then send out an inquiry on the US financial network, and within 5 minutes they'll be looking at the person's credit report, plus financial details from all of that person's savings / investments / loans / retirement funds / tuition payments. If this additional information correlates the suspicion that the person in question is spending significantly more money than they claimed to have earned in the first place, an IRS audit will soon follow - as will a potential ICE investigation.

    Of particular interest to dancers and other persons whose incomes stem from 'cash' businesses is the fact that the IRS will interpret any major disparities between declared income on tax returns versus actual total dollars deposited in bank accounts / investment accounts / retirement funds, plus actual total dollars spent on college tuition, purchasing a car, purchasing major items at major retailers etc. as wilful intent to defraud. At this point the IRS will probably give zero credibility to any explanation the person in question attempts to make. The IRS will then attempt to 'reconstruct' the actual income of the person in question that would have been necessary to cover the person's actual expenditures, and will then bill the person for back taxes on the IRS's level of 'estimated' income for the last three years, plus penalties and interest.

    A couple of NY dancers triggered such an IRS reaction last year when they decided to purchase new cars ... where the price of the car and the cash down payments they coughed up were totally out of line with the incomes they reported on their tax returns plus the cost of living in New York City. This led to the IRS 'estimating' their actual incomes for the previous three years, and sending each dancer a tax bill that exceeded $100,000. This all started of course with a car dealer filing a 'cash transaction report'. There is EVERY reason to suspect that anybody attempting to transfer $10,000+ in cash ( down to $3000 in some states) into a bank / brokerage account will also trigger the same series of events.

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    Banned Melonie's Avatar
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    Default Re: dollar drop ... and not the good kind either

    speaking to the subject of a potential dollar crash, apparently some microphones were accidentally left on at a recent 'secret' meeting of Saudi Oil Ministers ...



    (snip)"The dollar could collapse if Opec officially admits considering changing the pricing of oil into alternative currencies such as the euro, the Saudi Arabian foreign minister has warned.

    Prince Saud Al-Faisal was overheard ruling out a proposal from Iran and Venezuela to discuss pricing crude in a private meeting at the oil cartel's conference.

    In an embarrassing blunder at the meeting in Riyadh, ministers' microphones were not cut off during a key closed meeting, and Prince Al-Faisal was heard saying: "My feeling is that the mere mention that the Opec countries are studying the issue of the dollar is itself going to have an impact that endangers the interests of the countries. "There will be journalists who will seize on this point and we don't want the dollar to collapse instead of doing something good for Opec."

    After around 40 minutes press officials cut off the feed, which had been accidentally broadcast to the press room."(snip)

  9. #9
    Veteran Member anelia's Avatar
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    Default Re: dollar drop ... and not the good kind either

    melonie - wow - you are a WEALTH of information. thanks for the erudition.
    "I'm teaching fools some basic rules. / I believe in the Golden Rule. The man with the gold rules. / I made a little money.
    And like the Bible says, I was enjoying the fruits of my labor. This is my comeback. This is me doing what I love to do." -- Mr. T

    "In the street I am my divine self. In the club I am a stripper, portraying a fantasy.
    That's not to say anybody can do or say anything to me but it's acting. Playing a role. That simple." -- Pure


    [SIGPIC][/SIGPIC]

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