recessions, depressions, and investing

Analysts are predicting a depression. Democratic hopefuls are predicting change, and everyone else is just trying to survive. One of the questions that rarely surfaces when we find ourselves on the alleged cusp of collapse is how our current investment strategies may be affected.

For example, the typical American worker feeds a 401k with x amount of dollars per year, and hopes to supplement it with his/her pension and social security benefits. The assume that they will have to work 65 years (more like 75) before they can retire. Hopefully, by that time, they will have paid off their mortgage and credit card debt, and can spend what is left of their lives trying to rest and relax. But what happens when the market collapses? What happens when their 401k disappears, and the government finally admits to running out of social security?

Everyone is reliant on their current "sound investments" because they have worked well in the past for the majority of the population. But what kind of changes do we need to make when faced with a potential depression? Who has the experience to guide Americans through these decisions? What kind of planning existed for those who were hit so hard by the depression of the late 20s and 30s? Can we rely on the advice of our futures broker and investment advisers to steer us clear of an impending wave of bankruptcy and foreclosures?

Some would say this is unfounded paranoia. Some would say not to worry about it, or to trust that our government would prevent a depression from happening again. Others say to take all that paper money and buy gold. Personally, I've sunk much of my future into land. It may not be a very accessible source of funds in an emergency, but at least I know that I have somewhere to live (rent and mortgage free) in a bind.

the safest investment?

With the U.S. economy in the toilet, I had been watching my 401k slip in value, so I finally decided to switch my funds to a basic interest-bearing account. I know that the "experts" say to leave it in place for the long haul, but after seeing many coworkers lose their life savings, I am actually thinking about taking the tax hit and cashing it out. It seems like the right thing to do, as the paranoid conspiracy theorist in me worries about some sort of mass revolt occurring in the near future, at which time any funds in my 401k will probably disappear. Sure, it's sad to even think of these types of things, but I believe that Americans are upset with the state of the nation, and when the next president is in place and he/she fails to fix these problems, I wonder what will happen. And before you go spouting off that so-and-so is the perfect candidate and that he/she will make things better, let me just say that you're all dreaming. The current system of government that we have right now will never let itself be fixed.

Our government runs on the money of big business. The only way to fix it, in my opinion, is to remove money from the equation. Take away the campaign funding, the lobbyists, and everything else that causes elected representatives to value the requests of corporations over individuals and we may be off to a good start. I also believe that we need to re-evaluate all of the individual rights that have been taken away from us over the years, and make the government answerable to the people, instead of the other way around.

So until all of this happens, what do we do? If I am right..if a revolution may occur in the near future, what should we do to prepare? Do we start learning basic survival techniques? Do we search for abandoned missile silos and bunkers built by ex millennium bug refugees, or is it a better idea to dump our money into gold and silver? I even thought about looking for land for sale in the middle of nowhere...some place remote...some place where one could be left alone and totally self-sustained. But with the latest eminent domain laws that have been established, even real property can be snatched away from us.

So I guess we just go on living our lives the way that *they* want us to, until somebody can come up with a better idea.

smart investors dig modern booty

We've all heard of Fort Knox gold scandal, and the reported finagling of our gold prices that our government was attempting during the sixties. Gold has played a part in the direction of the world's most powerful governments, and it has caused them to make some interesting decisions. It is what brought the Spanish to the "New World", and has been the trigger for battles and wars in countless eras. Recent Hollywood films such as Disney's Pirates of the Caribbean remind us that when the dollar fails, tangible assets like coins made of precious metals will remain prized possessions, regardless of origin or language. The Y2K scare resulted in many fearful consumers picking up some "booty" of their own, in case the dollar would crumble.

Seven years later, we see that the Y2k scare yielded little calamity, and our dollar is still around (albeit with a new off-center face and some not-so-green accents). Gold is still around, and savvy investors don't require an impending doom to respect its value. The value of a dollar has continually dropped over the last few decades, yet according to Monex, gold bars have consistently held their value. In fact, they state that the value of silver today would buy you the same amount of gas as it had bought based on its value back in the seventies. Imagine getting your gas at an equivalent of 25 cents a gallon again!

As with any retirement or investment strategy, it is best not to have "all of one's eggs in one basket." Whereas many investors may think that they are diversifying their investments simply by spreading them across multiple stock plans and money market funds, I believe companies like Monex are providing sound advice when they recommend including some precious metals in that diversification equation. Some people advocate real estate, but you can't put a house in your pocket like you can a gold coin.