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Are You Prepared if the U.S. Has a Currency Crisis?

Are You Prepared if the U.S. Has a Currency Crisis?

Editor's Note: The following is the third of a series of articles reviewing the possibility of a currency crisis in the U.S. The first article examined the latest currency crisis warnings from Ron Paul and the second article reviewed currency crises that have occurred in other countries.

The U.S. still considers itself a big bad superpower, but self praise is meaningless. What’s the reality? It depends on who you ask. Experts say there are some significant vulnerabilities in the economy that make a currency crisis in this country a real possibility, and some even say sooner rather than later. Yet there are those who continue to wave the flag, click their heels, and say "there’s no place like home," and believe the U.S. is too big to fail.

Truth is, there are no guarantees. The best you can do is prepare for the what ifs in life. Here’s a look at what the experts say about a potential currency crisis and the strategies that can protect you, just in case a crisis occurs.

A currency crisis in the U.S. in the near future is highly unlikely, says Leslie Bocskor, an investment banker and managing partner with Electrum Partners. "We’ve seen the complete credit collapse and asset price meltdown play out and the U.S. economy has in fact remained strong, at least as it relates to the rest of the world. Our economy is likely more elastic than it is brittle and as long as the rest of the world (EU, Russia, China) is having the challenges it’s having, the U.S. by comparison looks pretty good."

His optimism is not shared by all. "The U.S. will experience a currency crisis and we predict it will occur in the next 24 months," says Jim Angleton, president of Aegis FinServ Corporation.

There are many factors at play. Angleton says there is a currency war going on now between Russia, China and Venezuela. "They are running low on real money. Gold is not as bright and pretty as once thought. Silver has seen a decline in value. Bitcoin, digital currencies are not worth talking about. The U.S.’ currency is being challenge by BRIC groups. They want to unseat the dollar as the global monetary peg. U.S. T bills could be challenged by investor nations, corporations, and I doubt the Federal Reserve has the money to pay back everyone," says Angleton.

Joseph Jones, a partner and economist with Economic Hedge, a consulting and forecasting firm says the U.S. dollar will collapse due to the exponential growth of public, private and long-term liabilities due to fiscal mismanagement. "Low interest rates are causing asset prices like real estate and financial markets to rise to pre-bubble prices of 2001 and 2008. In addition, current low GDP growth is fueled by increased levels of debt that will balloon once interest rates increase," he says.

Be ready

The experts can debate until the cow jumps over the moon about what will happen. Listening to the back and forth won’t help you. Instead, come up with an action plan to protect your assets.

"Open a non-dollar denominated bank account of currencies from smaller nations that aren’t heavily traded by institutional investors or heavily in debt. Make sure to comply with FACTA and FBAR reporting requirements," says Jones.

Turn to commodities. Purchase physical gold and silver. "Don’t worry if gold is declining now. Gold is priced in paper gold (ETFs) and the prices of paper and physical gold will decouple because paper gold isn’t backed as fully by physical gold," adds Jones.

Pay attention to asset allocation.

The bullion as a business is built on the anticipation of a currency crisis, says Ross Hansen, CEO of Northwest Territorial Mint. "A dollar today is worth about 125th of what it was when the Fed was established in 1913 – that’s 2310.5% inflation, and that’s based on government figures. When currency is unavailable, hard money is easily recognized and may well become the currency of choice. We advocate owning physical precious metals, silver, gold, platinum, palladium. They serve not only as a hedge against inflation, but a way to preserve wealth," says Hansen.

Pay attention to asset allocation. "You want a balanced portfolio of different instruments like Treasury Inflation Protected Securities, gold, and diversification across the globe of the most stable and reliable economies of countries that have established rule of law," says Bocskor.

Stay on top of the news to understand what the future may hold and when change can be expected. "Proactive is better than reactive, always," says Bocskor.

For most investors and consumers, foreign assets are hard to own and hold directly, says Trevor Ewen, a blogger, for the financial site, pearoftheweek.com. "A much easier strategy is physical assets – like real estate and commodities.

Michelle Johnson, chief marketing officer for Obrella.com says, "While we are not close to disaster, it is highly intuitive to prepare now for a situation that might happen in our lifetime."

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Anonymous   |     |   Comment #1
Dollar About To Soar
Almost more important than the Fed's interest rate is the value of the dollar in comparison to other currencies. The dollar has three key strengths we must not forget. The first is the size and liquidity of its market. The second a lack of good currency options as a place to store value. Finally it is the benchmark by which other currencies are judged. Sound a bit redundant? If so it is because again we come back to the issue of the dollar being the best and safest of dreadful and easy choices we have before us. The status of being deemed the "reserve currency" by which all others are weighed and in someway pegged does not make the dollar infallible or guarantee it will remain strong but the liquidity of such a large market does add a resilience to the American dollar.

Anonymous   |     |   Comment #2
It is shocking to learn Ross Hansen, CEO of Northwest Territorial Mint, is suggesting purchase of precious metal assets.

I mean, who ever would have predicted such a thing!!  ;-)
Anonymous   |     |   Comment #3
More scaremonger nonsense for the uninformed.  This is a CD site and I'm reading about gold and other commodities. Wanna get burned really bad? Trade commodities. Hog futures, my friends, the real alternative to FDIC-insured CD's. Sooie!
Anonymous   |     |   Comment #4
You'll get burned in CDs if you don't understand how and why central banks impacts CDs in the end long run.
paoli2   |     |   Comment #5
So are we going to get our CD interest paid in "gold or silver"?  We already have Lone Wolves killing innocent people for nothing.  Will they soon go after anyone known to have gold hidden at home?  Why doesn't our government get out of the financial mess we are in so the "dollar" won't lose it's value?  They got us in this mess, they should figure out a way out!
Anonymous   |     |   Comment #6
The government flat out wont pay you. They wont be able to afford to do so. Expecting the government to protect you is not a good long-term strategy. IMHO.
Anonymous   |     |   Comment #7
No, our own government won't take care of it's own citizens.  It would rather cater to illegals who jump the boarder and continues to pay foreign countries countless billions we don't have.
paoli2   |     |   Comment #8
This is the reason this next Presidential election can be the most important of our time.  We need a strong, intelligent president who can find the best mines to work with to stop these dangerous actions which are destroying and bankrupting our country!    We all may have to bite the bullet a bit but it will be worth it to protect what is left of our country and have an America to turn over to our children.  
Anonymous   |     |   Comment #9
Gold or silver "mines"?
Anonymous   |     |   Comment #10
You just nailed it.  What we need is a strong, intelligent president.  The problem is there is not one running for president.
gregk   |     |   Comment #11
Who then would you like to draft for the role?
Anonymous   |     |   Comment #12
Someone who would be a strong intelligent president.
Anonymous   |     |   Comment #13
You have a two-term, strong, intelligent president who would be king if only he could make that happen. We need a WISE president, nothing more and nothing less.
Anonymous   |     |   Comment #23
Unfortunately, what this country needs and what we are going to get are two very different things.  I would bet my CDs on that!
RJM   |     |   Comment #14
I have a bag of junk silver US coins that's been gathering dust in my closet for 25 years.

And maybe a few gold coins in my safe deposit box.

Own my house. Of course if all paper assets become worthless, Im a few years away from having to get a job.
paoli2   |     |   Comment #15
RJM:  What makes you think you are safe because you "own my house"?  After you use up your bag of silver coins and gold for food and other bills, what are you going to use to pay your property taxes with and other financial concerns for having a "home"?  Dog food??  Let's face it.  If they let our dollar go belly up, we are all fried.

One thing comes to my attention.  I have been watching constantly for days all programs where they ask the presidential candidates "what would you do about" questions.  I notice if our currency is in such danger, why isn't it one of the main questions they ask the candidates?  Maybe ask Ron Paul for sure!  I would love to hear all of their answers. 
rjm   |     |   Comment #16
I really dont spend any time worrying about such black swan events.
Anonymous   |     |   Comment #17
They don't ask the question about the currency because it isn't a realistic problem. There is no reason to think it will be. 
paoli2   |     |   Comment #18
I did not think it was realistic until I saw it written about in one of Ken's articles by Ms. Nash.  I ignored the others because they all had books to sell or other ways to make money off of our fears.  When I see information written about on DA, I take it more seriously.  Thank you for alleviating my concerns.  I guess I won't have to write that letter to Ron Paul after all.
Anonymous   |     |   Comment #19
What most of you do not understand including Ms Nash, is that all of the currencies today are indexed and connected with each other.
If one of them goes down, all of them go down, which creates the question, why diversify?
Commodities are currencies, just ask IRS, they treat the sale of such instruments as cash transaction. Since those are considered cash, if the dollar goes down, so do they and there is no reprieve there too. It is all in your mind of an imaginary protection that the money consultants want to get to it. Fear is the main driving power, if you fall for it, you will lose big.
Just stay where you are comfortable and do not worry about anything, it is all relative to each other, there is no such thing as protected investments.
Anonymous   |     |   Comment #21
If one currency goes bad, the others will simply depeg themselves from the bad currency.
Anonymous   |     |   Comment #22
I detest articles that throw out fiery technical terms without any sophisticated reasoning at all. The sole purpose is to inflame readers, garner posts and ultimately...eyeballs for advertisements.

There is no currency crisis. You will pay your bills as usual. Gold and silver will not be accepted for payment at Walmart. And, if CD rates popped to 4% you'll send all your cash asap, currency crisis or not. I paid $.89 for a gallon of propane a few weeks ago and it's now down to $.86. When will this calamity end!   
Anonymous   |     |   Comment #24
I reread your article and I'd like to refer everyone to your first paragraph. First, the US is THE superpower because it is the better system. No other country has done more to foster personal and economic freedom across the globe. Socialists have condemned countless millions to death simply because they would not embrace the very ideals our country developed and fostered.

Your remark, "Yet there are those who continue to wave the flag, click their heels, and say "there’s no place like home," and believe the U.S. is too big to fail." Clicking heels was an integral part of Nazi Germany, something I'm sure you are aware of.  It has never been a tradition in our armed forces. Waving the flag is a tradition based on the principles our flag 
represents. The flag represents a set of values much greater than a piece of land, an individual or anything you or I could say. We are not and never have been a perfect nation. But one thing is absolutely certain. In spite of every flaw, every shortcoming, every sin committed in the name of government no other nation has done it better than the United States of America. Trust me, if we go down, they all go down.   
paoli2   |     |   Comment #25
#24  Well said!  It's so good to read that there are still Americans who will  stand up for our country.  Here's hoping we can put in leaders who will really "try" to bring us back the America we love and miss.
Anonymous   |     |   Comment #26
There is NO GOING BACK!  Unfortunately, the U.S.A. as we have known it and dearly miss is gone forever.  Our present generation and all future generations will never miss it because it is something they never experienced. 
Anonymous   |     |   Comment #27
So sad but so true.  I was alive and living in America in the 1940's and 1950's.  Younger Americans today cannot imagine how much freedom and liberty has been lost because, as you so wisely state, they never personally have experienced that high level of freedom and liberty.  I can still close my eyes and taste and visualize what has been lost.  But I know I'll never actually experience it ever again.  And I regret having taken it for granted.  What a fool I was!
paoli2   |     |   Comment #28
No.  We are only fools if we sit back and allow these pathetic politicians in Washington to destroy the America we "should" have.  Nothing can ever be as it was in the 40's and 50's but it certainly doesn't have to have disintegrated into what it is today.  We need a President and leaders in Washington who can stop destroying us financially and militarily and make our government smaller.  People laugh at the idea of Bernie Sanders running for President since he is a Socialist but at least he tells us who he is.  We are being programmed to be a Socialistic nation and that is NOT the America I remember or want for myself  or our children.  This next election and who we put in office will decide if the real America can ever return again. 
Anonymous   |     |   Comment #29
paolie, what you say may be true, however we are vastly outnumbered and will be out voted.  Obama and our current administration has seen to that.  Time to face reality!   The wheels of Socialism have been greased and put into motion.  
paoli2   |     |   Comment #30
#29  I am facing reality and I refuse to accept it for my country.  If we let them destroy our capitalistic government we will no longer be individuals but lambs being led to an eventual financial slaughter.  Unfortunately, too many milleniums have already fallen victim to the Socialistic propaganda and  we may be out numbered but never should we accept defeat.  There are a "few" Republicans who have come to their senses and we have to get them in office!
Anonymous   |     |   Comment #31
The South never accepted defeat either.  Proud and brave people as they are, recognized that life still goes on.  As I have learned to live with things which I cannot control, or forever stew and brood. 
Beao40   |     |   Comment #32
#31  We all have to learn to live with things we cannot control.  However, being a Southern myself, I have always felt we do not stew and brood but take as much action as we can to change the things we can control.  The reason the government is out of our control is because too many voters put the wrong people in office.  This is unacceptable to me and I feel can be changed.
Anonymous   |     |   Comment #33
Our government is a representative democracy. Our economy is based on capitalism. Neither is perfect. Many people believe socialism implies being nice to people (i.e. social) which is as far from the truth as one can be.

I'm a simple guy so I've committed to:
Being as green as Al Gore and not using one more kw/btu/gallon than he does.
When my speaking fee hits 500K and/or my net worth hits 50 million (the Clintons) I'll stop being a greedy capitalist.
When I have a net worth of 10 million and Harvard pays me 350K for one course I'll stop claiming phony minority rights and complaining about the high cost of education (Elizabeth Warren).

What a bunch of power hungry phonies these people truly are.
Anonymous   |     |   Comment #34
They most assuredly are.  But I would remind you that at the present time those "power-hungry phonies" are running, and ruining, The United States of America.  We are being brought down the only way possible, the same way the Roman Empire finally bit the dust, by forces from within!
Anonymous   |     |   Comment #35
Let me see if I got some of this straight:

A Senator from Texas was not born in the US and asserts he can be President...and was also a Canadian when elected to the Senate.

A Gov. from NJ does not know why the Bill of Rights exists, i.e. "buddy, it is not either/or," throw the bad guys in prison but doing it in a constitutional manner.

Another person has his father and brother to thank, but for what?

Another has so much money that he didn't know when he was set up!  Why weren't the ?s asked by other panelists or reframed to not have them pointed to particular people? Then, "he got his wish, he was disinvited to big gathering" yesterday.

On and on
Anonymous   |     |   Comment #36
The senator from Texas was born to an American mother working in Canada with her husband. End of story.
Anonymous   |     |   Comment #37
The father is Cuban...but why the distinction, if any, when the current President was always asked for his B-cert, when he has American mother and Kenga father?
Anonymous   |     |   Comment #38
If a cop stops you and asks for your driver's license and you give him your Canadian license but when I'm asked I repeatedly refuse to produce one who do you think gets the scrutiny? It's really very simple.
Anonymous   |     |   Comment #39
Depends if one is running for president...and the stated criteria of "natural born" citizen...which a Canadian is not