Hedging Against Economic Depression
As you all are aware, the U.S. has been experiencing tremendous levels of inflation recently. Much of this is a post-COVID stimulus reaction.
In addition, the world is beginning a slow process of dedollarization, spurred in large part by the freezing of Russian assets in Western banks post-Ukraine war. The majority of Russia and China's foreign trade is now conducted in Chinese yuan (CYN). More widespread dedollarization has the potential to reduce the value of the U.S. dollar.
In any case, more countries (especially China) are no longer buying U.S. debt. The U.S. has very high levels of public debt. Given this debt, it is unlikely that the fed will significantly raise interest rates. It is possible that the U.S. will effectively be attempting to pay off its debt by continuing to inflate its currency over the next decade.
Since the end of the gold standard, the U.S. dollar has been backed by nothing more than the strength of the U.S. military. However, since China joined the World Trade Organization in 2001, it swiftly pulled industry away from the West and into its own borders. China's industrial capacity now likely renders it able to outproduce the U.S. military. China is definitely capable of outproducing the U.S. Navy. If/when China invades Taiwan, it is likely to win. This is likely to have further negative effects on the U.S. financial system and the value of the U.S. dollar.
All that being said, it appears that America's declining standards of living may be far from over. In the worst case, the U.S. is headed for a new economic depression.
How are you hedging against this possibility?
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An enlightened aristocrat must be versatile in both personal endeavors and material wealth to avoid the pitfalls of society's many monetary manipulations.
My strategy encompasses a variety of investments and skills, including:
- Real estate ventures that generate consistent cash flow
- Long-term debt with interest rates significantly lower than inflation
- Gold and precious gemstones
- Maintenance and repair equipment to counteract rising service costs
- Trucks and disposal machinery
- Investments in value securities through rigorous business analysis
- Ownership of private enterprises
- Securing familial titles and accolades
- Exploring new markets with less regulation and greater opportunities for those with less capital
My ambition is to expand dominion into natural food production and to develop a private estate from the ground up for the prosperity of my lineage.
Valete!
An enlightened arist (hidden)
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>>1804Bitcoin, friends, family, skills, land, etc. The only essential thing is food and security. I don't think those are likely to be seriously disrupted, and if they are, other preparations are also in question. Being able to produce essential services and food is a good bet. I'm not particularly worried. We're all in this together and we need a good solid depression to pull us off the teat of bourgeois corruption. The thing to focus on is politics, philosophy, and the production of real wealth (production, not capture).
>>1805Also, none of us are aristocrats, and bourgeois wealth preservation strategies aren't aristocratic.
Bitcoin, friends, fa (hidden)
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I think if one has already acquired a certain amount of wealth, it makes sense to invest time and money into schemes to protect it legally, such as trusts, LLCs, maybe even foreign bank accounts.
I'm curious if anyone here has an opinion about whether it is worth it to invest in obtaining second or third passports as part of this hedge (especially if e.g., social unrest or increasing taxation or wealth seizure becomes a problem), and what would be the most valuable sorts of passports? Or even without such passports, if one wanted to try to ride an economic catastrophe out in another country, what would be the best bet? Or would it be better to stay?
I think if one has a (hidden)
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>>1810I think a European passport is a good idea for extra options within the empire (zero capital gains in Belgium I hear). I'm not convinced by passport options outside the empire, but would like to hear experiences.
I think a European p (hidden)
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>>1804>If/when China invades Taiwan, it is likely to win.The odds do appear significant especially on account of how retarded Taiwanese policy appears to be.
Dmitri Alperovich 3 days ago on C-Span: They've spent ~2B on a homegrown submarine "with the very best of 1960's tech" and plan to build 7 more (Taiwan straight is too shallow for them to operate in). They've also just purchased Abrahms despite minimal utility given the terrain.
>How are you hedging against this possibility?A well-calibrated portfolio of bond proxies and a little bit of gold.
>China is definitely capable of outproducing the U.S. Navy.Defense equities are likely a reasonable bet here. The ballistics stuff are clearly not cheap at this point but there seems to be agreement that they'll matter much more than the ships.
The odds do appear s (hidden)
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>>1807In complete agreement with this post but have questions about Bitcoin. It seems to me like it's been folded into the existing parasitical wealth capture institutions and the main reason to hold is to try and cash out from those bags. Virtual scarcity is much more pliable than real scarcity, and if we wanted utility we would use Monero instead. Am I being too idealistic here? Should I get some fool's gold anyway?
In complete agreemen (hidden)
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>>1816IMO there is a temptation on the part of many Bitcoinists to use fiat debasement as a straw man. Why not contrast Bitcoin instead with various productive assets? Being able to move it around on a USB is understandably desirable. OTOH this encourages the dangerous myth that wealth can be fundamentally separated from politics. The holistic definition of wealth would be something like: "The ability to mobilize resources".
IMO there is a tempt (hidden)
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>>1819At least in theory cryptocurrency should be better able to mobilize resources on the internet, since it is possible to have programmable logic native to the system. For example, one can imagine hurricane based insurance where instead of going through layers upon layers of bureaucracy after a hurricane, a smart contract simply registers that the wind speed at your location was above a certain threshold for a particular amount of time, and that your house is therefore significantly damaged, triggering an automatic payout. Or having your family and friends be able to access your assets if you become incapacitated, without recourse to institutions. I imagine that cryptocurrency would need to become a useful medium of exchange to be able to effectively mobilize resources. Right now the volatility seems to a major obstacle to this, despite the price being highly dependent on energy costs.
At least in theory c (hidden)
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>>1835The price is not affected by energy costs, because of the difficulty adjustment. In any case the block reward is now negligible compared to daily market volume, so changes in flow do not affect price (halvening is a myth now). The price is entirely driven by speculation/monetization.
The price is not aff (hidden)
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Ray Dalio and his ideas aren't the most popular in these parts but I do like his theoretical approach of all weather. The limitation is implements all weather through only liquid, publicly traded futures contracts. I take a more expansive post-apocalyptic view of all weather.
I don't know what the future is going to bring, growth, deflation, depression, hyperbitcoinization, communist revolution, World War III, so my portfolio has a lot of normal assets (stonks, bonds) but also trend following, farmland, bitcoin, physical gold, silver etc.
Personally, I know several people (some here maybe?) who have 'hit it big' being a prognosticator and buying a lot of deep OTM S&P500 put contracts on the cusp of a once in a 50 year event but I'm not that good.
Ray Dalio and his id (hidden)
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Part of what I optimize for in designing a portfolio is my time and effort thinking about the portfolio. I don't want a portfolio that requires the equivalent of a part-time job to be successful. Ideally, it should not require me to trade more than a couple times a year. (Dollar-cost averaging can be easily automated and so is fine. When I say "trade," I mean trades that I have to think about.) That pretty much rules out puts and other options. (They can be automated as well, but not without much more thought.)
Part of what I optim (hidden)
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I agree with that approach. Mine is a bit more complex in that I have four "model portfolios" set up on interactive brokers. Using the model portfolios I can rebalance between what I call 'risk assets' (stonks, MLP, high dividend stonks) and what I call 'diversifiers' (bonds, munis, TIPs, commodities, energy stonks, REITs, MBS). This gives me a few 'levers' to pull. I can efficiently rebalance, adjust risk up and down, make tactical substitutions (i.e. swap an ETF with a similar but much cheaper closed end fund).
Effectively, I am "rolling my own robo" with a few more bells and whistles and at lower cost.
Crypto I treat as a separate "thing" and there I basically just DCA and use it as collateral in an emergency.
The 'riskiest' trade in my account (other than just holding risky assets) is a carry trade where I use below market fixed rate finance on one asset to buy t-bills and high-grade floating rate bonds which nets me a net interest margin of about ~2.25%.
I agree with that ap (hidden)
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>>1835Inb4 muh "oracle problem" -- I actually think it'll be tough for fiat to keep up with this kind of programmability in crypto, but at this rate it might take a generation or two for that shift to happen.
Insurance contracts like the one you mention seem like a good starting point for that kind of thing.
Inb4 muh "oracle pro (hidden)
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> I imagine that cryptocurrency would need to become a useful medium of exchange to be able to effectively mobilize resources. Right now the volatility seems to a major obstacle to this, despite the price being highly dependent on energy costs.
Stablecoins address this problem quite well imo.
Stablecoins address (hidden)
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I have a finance friend who owns a lot of equity in farmland as part of his prepper-oriented portfolio.
I have a finance fri (hidden)
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