What a Dollar's Worth

[Dan.Linehan]

I just read this article on the value of a dollar.

Why the dollar keeps dropping - MSN Money

What do you guys think? Is a recession inevitable?

[cdn2wheeler]

Of course a recession is inevitable. Financial cycles are just that; cycles. They ebb and flow, that's just the nature of the beast.

[Dwane J.]

Yes some kind of economic slowdown is coming. I wouldn't worry too much about it. Everything goes in cycles. Just payoff any unnecessary debt, live below your means and have 12 months or more of cash reserves ready for any downtime between work assignments.

[Dan.Linehan]

Thanks guys, good way to think of it.

[Lauxa]

Yep, recession is inevitable. The Fed keeps talking about whether we will have a "soft landing" or a "hard landing", but whichever way it goes there will be some readjustment period coming.

There is also a non-zero chance that the dollar will absolutely crater. You can minimize risk by diversifying some of your assets into foreign currencies and metals. Dollars will still be useful for paying off any debt you have that is in dollars, such as a mortgage.

[Parthon]

Well, Western Australia has been in a 15 year boom so far, even during the asia economic crisis and the world wide economic downturn just after the .com bubble burst. I think China is in a similar position, they haven't had a slow down in a majority of years.

I think the recession stems from the rush use of resources that is encouraged in the modern economy. We push our current resources to the limits, and at the sign of any downturn we don't have the reserve capacity to shift our resources into new areas of growth. Production declines, investors panic and stop spending, then you get a recession. Recessions do allow production to be shifted into growth areas however. While economies are run on the growth above all else mentality we will continue to have recessions, and the cycle of ups and downs.

As for surviving recessions, Lauxa is pretty spot on, diversify your money into offshore assets to aleviate the dollar fall. Then if you are capitally sound, the deep of the recession is the best time to invest in light of the impending boom just after, as long as you have the resources to invest.