There was/is a coin dealer in Berkeley I bought gold from. He wrote a book about paper money ( called "fiat"), really well researched, he went all the way back to the first silver coins used in China.
Here's an interview with him:
http://www.youtube.com/watch?v=LKUpcCQ4Nwo
Apparently, all paper money not backed by gold/silver/SOMETHING, all through history has become valueless. The temptation to debase currency is essentially irresistible, because for a while you can buy the same stuff before people catch on. What governments want to usually do is finance wars. (Wild guess-- Iraq cost us at least ~2 trillion, about 1/6 of national debt. Straight to military contractors and insiders)
But it can take a LONG time, the Roman silver coins went from something like 90% silver to 5% but it took several hundred years.
He told me one story of a Russian family that buried gold coins under their outhouse during the Russian Revolution in 1917, then seventy years later dug up the coins to finance a child's move to the USA in the 1980's. Of course, all Russian paper money had been devalued probably several times over during that time span.
I do know: Malls are packed, restaurants are packed, there's a lot of overbuilt real estate however.
And that gold dealer? Well, he's selling coins for--dollars.
CATEGORIES OF DOOM:
If you're going to worry, define it:
1) Total collapse, food supply and utility breakdown. Coping: Hideout with guns, food, medical, fuel.
10 year probability .2-2.0% (WAG) I think this is the only scenario where stock exchanges stop working, you can't get your "money" out, if it even is still considered real money. That might include
CEF ( Central Fund of Canada who hold real gold supposedly). That's why people who are trying to allow for this want "physical" ( easy to get to: for you and thieves however)
2) Severe dollar fall (>40%)Probability 3-7%; I've been told about 60% of all the money in the world is in dollars, people are going to ditch dollar eventually, but it will take a while. Gold may explode, but there's too little to start basing all world trade on it. There's no substitute I know of that can rapidly be brought on line. Much lower living standard, contagion screws a lot of economies up, local wars. maybe some nasty race riots as red herring of race is used to distract the masses from incredible concentration of wealth at top. Coping: Invest in Materials people can't do without even temporarily-- FOOD, WATER and FUEL, MEDICAL SUPPLIES, GOLD, Super stable stocks like Proctor and Gamble, Johnson and Johnson. Google "dividend aristocrats"; some companies have paid increasing dividends for over forty years, through Vietnam, Watergate....
3) Moderate dollar fall (5%-20%) (20-85% likelihood) less luxury for most, ugly politics here as rich redirect anger towards racial minorities and "excess" government workers. Coping Methods: Gold, high dividend stocks as mentioned above. Coca Cola has increased its dividend 10% per years for the last 10 years. Stock dropped a lot in crisis; but if you've bought it for the income, who cares if the dividend keeps going up.
I tend to paranoia, but one side of that is I think people who are really rich generally aren't stupid.
They own and run everything ( The wealthiest 400 families in the USA own assets equal to the assets of the bottom 40%, about a hundred million. )
They've got sailboats at Newport RI, kids in Harvard, private jets at Kennedy airport.
A REAL collapse ( basically if electricity stops significantly, food stops getting to the grocery store, and telvision stations stop broadcasting so people don't know what they should think about) would GREATLY interfere with the lifestyles of those who control everything.
They don't want to hole up in some silo in Montana. Who is there to show off for?
I'm old enough to remember the cold war and heard a lot of the same doom-saying. Scared the hell out of me until I thought about it this way:
If the rich people don't want it to happen, it doesn't happen, except in the case of the French Revolution and the Bolshevik Revolution, and USA is NOWHERE NEAR that level of anger. Hell, people are more angry at Civil Servants because they're going to get pensions than they are at the rich!!
So I wouldn't worry about doomsday unless you've got that extra money to build a hideout and stock it.
Also, prices have already tripled since the 70's. It's not something people can't cope with.
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