Options Trading Tutorial

economics, where is the best place to put your money(I have one answer)?

this is one question that people ask all the time and ponder about even more. The interest rate has been going down in the US. Usually, this leads to a depreciation of the currency; as the interest rate decreases, there is less incentive to buy dollars in order to buy bonds, or any interest-yielding device. The less demand for the dollar means that the dollar depreciates. However, something curious has happened, given that the world, when push comes to shuve (big surprise), prefers the US dollar over any other currency in times of crisis, the US dollar initially appreciated with the bad economic news (spawned by the lower interest rate, which should normally spawn a depreciation). In South America, what has historically happened is when the goverment spends a lot and gets in trouble, it increase the interest rate, in turn, they generate an enormous debt, and then inflate the currency to pay back the debt in a devalued currency. What the US could end up doing is paying back its debt by devalueing its currency. It could do this by decreasing the interest rate to zero (which has happened), in order to depreciate the dollar and pay back the debt in depreciated dollars, and in turn, cause inflation, which in turn, will favour those that take out loans. What has happened? banks do not want to lend because of the possibility they will be paid in devalued dollars due to inflation. And the other reasons cited which we all well know. The stock market has always been a source of tremendous speculation since the early 90's. It could very well go down some more. Commodities have gone down due to decreased demand worldwide. Oil spiked to 140 and then went back down to 50. why? speculation. I am conservative with these things, I don't like to invest in things that are pure speculation. Right now, people are afraid and uncertain of what the future brings. A lot of wealth that was once created through speculation, has now been lost. The fragility of this financial system is the following: everything is projected, planned, capitulated, and expected.....based on what is expected. The moment reality diverges from what is expected, things go hay-wire. Take a simple loan, for instance, the cornerstone of the entire financial system. If you take a loan as a company, the bank or provider gives you the loan based on your company projections...and those projectiosn predict that you will be able to pay that loan. But that in turn, is dependent on other industries that support your projections....if any of these industries goes under, your company fails its projections, and fails to pay the loan as expected, which causes turmoil. the housing market is the best example. People EXPECTED the price of homes to go up, so the price went up and up and up. They took out a loan on the house, then sold the house, paid the loan and kept the difference. But then the prices went down, so they got the loan, let the bank acquire the house, and let the bank deal with the losses.. because of failed expectations, the actions of an entire system faltered. Because of speculation, an entire system completely went down. So, now there is negative speculation, and that drives the prices down, so banks are in turn, not lending. However, where to put your money? euros? But the european economy is much more fragile than the US economy, 12 countries with no central bank. When the Europeans start feeling it, their currency will also crash. Why? because no matter how high their interest rates, if the economies of Europe are doing badly, no one will want euros, and in turn the currency will depreciate vs the dollar. One strategy were to be temporarily in euros, wait till the dollar hits rock bottom, and then shift to dollars before the dollar goes back up, but thats too outlandish for me. The second would be yuan, but China has a strong control on their currency, having it pegged to the dollar. Any increase will be very slight. And who knows it might go down. Especially with the crazy stock market and possible inflation (they havn't spent their money in any where near the US rate). so where do you put your money? well, there are a variety of options, you could go completely into the stock market, or to be conservative, you could go into treasury bills and some in the stock market. the logic is that the US would have to ceaze existing as a goverment for them not to pay back their debt. Most people still perceive the US to be able to pay back its debt, so they give them money even with no interest rate, as has recently happened. Given that inflation will probably come in effect, I would recommend the TIPS....which is a treasury bill with inflation adjusted for. This means you get your principle, no matter what inflation or deflation happens. This is if you are very conservative. The other logic, is to be more liberal, and know that the surest bet, even if there is a depression and every thing goes goes downhill, even if everybody in the world defaults on their debt, the surest place to put your money, is in productive companies...because productivity transcends a bad economy. and that today is called the stock market. So you could try investing in companies with good P/E ratios and with productive potential. I would say stick to very conservative picks, such as caterpillar, etc. Nothing flamboyant. Personally, I have trouble thinking of the ideal place to put y our money, so if you have any suggestions, please, elaborate....these are the ones I thought about. well, if your going with chinese currency, your really going with the US currnecy......yes, the only way it can go is up since its under-appreciated. Yetthe yuan is very tihtly controlled, soyou can only get it through very tight channels, thats another problem. chinese currency---the logic would be that the US dollar is depreciating, so eventually the yuan is going to appreciate, even if its pegged. I bought yuan in january of 2008 and made about 4%. I put in a good portion of my investments in that. The thing is its complicated to get chinese currency. Furthermore the bank screws you by only letting you to earn some of the earnings but if yo uhave a loss, you take the hit all by yourself.at least thats how I read it in the contract. chinese currency---the logic would be that the US dollar is depreciating, so eventually the yuan is going to appreciate, even if its pegged. I bought yuan in january of 2008 and made about 4%. I put in a good portion of my investments in that. The thing is its complicated to get chinese currency. Furthermore the bank screws you by only letting you to earn some of the earnings but if yo uhave a loss, you take the hit all by yourself.at least thats how I read it in the contract. under your mattress. the problem with that is stealing and inflation, which are one and the same. gold is kind of speculative dont you think? if your going to do that, why not oil?

Public Comments

1. My gas price goes up due to Israelis Gaza War, That No.1 economic issue for me
2. wow, you really put a lot of thought into it I'd say that the best place to put money into now would be buying Chinese currency
3. I will go along with Chinese currency..
4. Right now the safest place for your money is under your mattress. Have a look around again in a year.
5. buy gold bars , when the USA dollar is worth nothing you can sell your gold to another country for currency that is actually worth something , maybe go live there too *oil is another good idea , it is cheap now and will go up high again like it was a few months ago