That’s a surprisingly more complex question that it seems.
Which money? Dollars, Euros, Yen, something else?
Unless you’re a professional investor, it really depends on which currency you spend for your day to day or big ticket items.
So first I’ll answer a slightly different but related question: “How do I protect myself from this if I’m American?”
Move your savings/investments to assets which are not denominated in USD (for example, stocks in a non-US stock exchange), open a bank account which is not in USD (I believe that’s possible in some banks in the US) and convert your savings to that currency and deposit them there, buy Gold (thus in practice converting you savings to a ancient currency not controlled by any state). That is, if you have savings. If you don’t, well, you’ll mostly have to weather it: concrete non-perishable stuff has the same utility value no matter what the dollar value is, so your home is your home (if you’re lucky enough to own it) thus its worth to you is the same whatever it’s supposed dollar value is, and as others said “canned goods and cigarettes” too keep their value no matter what the USD value says.
As for how to make money from it, as somebody else said, “forex gambling”, more specifically derivatives on cross-currency pairs such as Futures on USDEUR. However that stuff is risk: Will USD hyperinflation really happen or will it be something milder? When will it happen, precisely? Derivatives move like crazy and things like Futures can result in margin calls (basically you have to give them more money) if they move against the direction you’re betting,
Back when I lived in Britain I avoided the 20% crash of the British Pound from the Leave Referendum results by having most of my savings in Gold and Euros, so in pounds it could be said I made a 20% profit in a couple of days (basically the week when the results came out), though now I’m in the Eurozone and, not even being a Briton have no relation to that country and don’t actually care about about the value of my savings in British Pounds, so that week I didn’t really made any profit in Euros. That said, over the years (the money is still there) that investment in Gold has gone up in value quite a lot even in Euros.
That said most of it was the product of me simply distrusting Britain and the British Pound as a safe store of value hence already keeping a big chunk of my savings outside it, though I did move some more just before the Leave Referendum results came out just in case.
So in summary: just getting your savings out of the USD merely to another currency will protect them, whilst Gold over the long term will probably make you a bit of profit (certainly in USD due the mismanagement of the US Economy). Big profits can only come from forex gambling, but so do big losses as derivatives are much more risky that just holding the underlying assets (in this case, some foreign currency you bought with dollars).
Nice write-up, but I’m not American, never been there, have no wealth in USD. How do I make money then? Derivative-shorting the USD somehow? But as others have mentioned, the descent is unpredictable.
In that situation I can only think of derivative shorting of the US as a way to directly make money from it.
Indirectly, maybe bet in gold to reap gains from the global environment of uncertainty in the safety of modern currencies that will surely come with a USD crash (that’s basically how I’ve positioned myself since a few years after the 2008 Crash - having concluded that the whole “saving of the Economy” after it wasn’t fixing any of the problems, just delaying the consequences - and that has yielded in EUR a return of about 400% in a bit over a decade, especially in the last 5 years).
One might also bet in currencies most likely to gain from the end of the US and USD dominance, the greatest of which IMHO is the Chinese Yuan, but how you would go about doing it, I don’t know.
When the USD stops being the world’s reserve currency, it will never recover its previous value because it will never again have such a status and the worldwide demand for a currency that comes it it, so in broad terms it won’t be a “dip”.
Sure, it will overshot its final value (big market movements always do) so there will be a local dip at the bottom, but even if one can actually time it right (good luck with that) whether one can profit from it or not also depends on whether it actually caused hyperinflation and how the authorities deal with it - those things tend to be confusing and involve things like emission of a new currency or other non-orthodox measures as seen in Germany’s, Zimbabwe’s and several Latin American country’s historical situations of hyperinflation.
More in general and if you look at other markets, a run on an asset (say, a stock whose price is crashing) usually breaks the market for it (for example, in the 2008 Crash Bear Stern’s stock value collapsed and the whole company ended up being bought by another bank for $1), so I wouldn’t bet on the usual market rules applying to a USD during a period of hyperinflation.
I suppose if you’re just using something that mirrors the asset rather than being the asset, such as a derivative, you might be able to take advantage of the local dip at the bottom.
That’s a surprisingly more complex question that it seems.
Which money? Dollars, Euros, Yen, something else?
Unless you’re a professional investor, it really depends on which currency you spend for your day to day or big ticket items.
So first I’ll answer a slightly different but related question: “How do I protect myself from this if I’m American?”
As for how to make money from it, as somebody else said, “forex gambling”, more specifically derivatives on cross-currency pairs such as Futures on USDEUR. However that stuff is risk: Will USD hyperinflation really happen or will it be something milder? When will it happen, precisely? Derivatives move like crazy and things like Futures can result in margin calls (basically you have to give them more money) if they move against the direction you’re betting,
Back when I lived in Britain I avoided the 20% crash of the British Pound from the Leave Referendum results by having most of my savings in Gold and Euros, so in pounds it could be said I made a 20% profit in a couple of days (basically the week when the results came out), though now I’m in the Eurozone and, not even being a Briton have no relation to that country and don’t actually care about about the value of my savings in British Pounds, so that week I didn’t really made any profit in Euros. That said, over the years (the money is still there) that investment in Gold has gone up in value quite a lot even in Euros.
That said most of it was the product of me simply distrusting Britain and the British Pound as a safe store of value hence already keeping a big chunk of my savings outside it, though I did move some more just before the Leave Referendum results came out just in case.
So in summary: just getting your savings out of the USD merely to another currency will protect them, whilst Gold over the long term will probably make you a bit of profit (certainly in USD due the mismanagement of the US Economy). Big profits can only come from forex gambling, but so do big losses as derivatives are much more risky that just holding the underlying assets (in this case, some foreign currency you bought with dollars).
Nice write-up, but I’m not American, never been there, have no wealth in USD. How do I make money then? Derivative-shorting the USD somehow? But as others have mentioned, the descent is unpredictable.
In that situation I can only think of derivative shorting of the US as a way to directly make money from it.
Indirectly, maybe bet in gold to reap gains from the global environment of uncertainty in the safety of modern currencies that will surely come with a USD crash (that’s basically how I’ve positioned myself since a few years after the 2008 Crash - having concluded that the whole “saving of the Economy” after it wasn’t fixing any of the problems, just delaying the consequences - and that has yielded in EUR a return of about 400% in a bit over a decade, especially in the last 5 years).
One might also bet in currencies most likely to gain from the end of the US and USD dominance, the greatest of which IMHO is the Chinese Yuan, but how you would go about doing it, I don’t know.
Maybe I can just buy the dip later? Or will the USD go the way of the mark?
When the USD stops being the world’s reserve currency, it will never recover its previous value because it will never again have such a status and the worldwide demand for a currency that comes it it, so in broad terms it won’t be a “dip”.
Sure, it will overshot its final value (big market movements always do) so there will be a local dip at the bottom, but even if one can actually time it right (good luck with that) whether one can profit from it or not also depends on whether it actually caused hyperinflation and how the authorities deal with it - those things tend to be confusing and involve things like emission of a new currency or other non-orthodox measures as seen in Germany’s, Zimbabwe’s and several Latin American country’s historical situations of hyperinflation.
More in general and if you look at other markets, a run on an asset (say, a stock whose price is crashing) usually breaks the market for it (for example, in the 2008 Crash Bear Stern’s stock value collapsed and the whole company ended up being bought by another bank for $1), so I wouldn’t bet on the usual market rules applying to a USD during a period of hyperinflation.
I suppose if you’re just using something that mirrors the asset rather than being the asset, such as a derivative, you might be able to take advantage of the local dip at the bottom.