US dollar collapse - who profits?
My other question mysteriously did not process... hmmm. ;-)
There is a way to invest where someone can make money when a company loses money. If the US dollar falls, who in the USA would benefit from a fall? Any ideas?
Comments
That should be obvious. The U S government profits. They borrow trillions then make the $ worth nothing so what they pay back that trillions in is rolls of toilet paper.
Hi, Noelle,
In any economic situation, there are always winners and losers.
So you're correct to perceive that in the U.S. there are sectors that benefit from the falling dollar.
As someone else mentioned, companies that export goods and services to Europe and Japan benefit, because US products are now much cheaper than they were.
The US has been running a tremendous trade deficit for many years. That means that more dollars were leaving the US than coming in. We were buying far more goods from other countries than they were buying from us. Something had to give sooner or later.
The falling dollar is to reduce that trade deficit.
Because of it, Americans will buy less foreign goods, but foreigners will buy more American-made goods.
Also, the US tourism industry benefits from the falling dollar.
Partly because US residents will find it much cheaper to travel in the US than go to Europe or Japan.
Partly because more Europeans and Japanese can now afford to visit the US -- if only to shop for bargains!
US manufacturers also benefit, because they're now more price-competitive against foreign-made items.
However, I believe that the Fed's primary motivation for lowering interest rates is not to lower the dollar (although they're not against it, because they want to reduce the trade deficit), but simply to prevent a recession in the US.
So, in a sense, all of us who would be hurt by a recession brought on by the subprime deficit are indirect beneficiaries of the falling dollar.
There are two ways to profit from a company that loses money:
1. Sell its stock short.
2. Buy put options on the company's stock.
Both are quite risky.
best, Rick Stooker
i believe Many people are going to get scare by this.But the right thing to do is not to get panic yet and do diferent what everybody else is doing. yes many people are going to profit from this and many people dont.
This had happen before but i think this time its going to be different. Why? i thought you never were going to ask...Well because we are living in a different time and what work yesterday might not work today. Something different from yesterday today is the internet some people are recomending buy gold or whatever and and investing in other resoursce
but i what i think is going to preveil for those that know how is Internet marketing doing it the right way without spaming ,scaming and without all the hyping outhere of becomeing rich overnight. who is going to benefit ? i believe online bussiness owners and online investors can get ahead on this more than anything offline where many people are going to be sank.
If usa money falls people selling to whole world from they comfort of their house still going to prevail no matter what.
There thousand stuff you can sell online.
A falling dollar benefits several sectors in the US:
First, a falling dollar makes our products cheaper to buy overseas (exports), so companies that sell product to other countries become more competitive.
Second, people who hold precious metals also profit. As the faith in the falling dollar decreases, people tend to invest in precious metals raising the price of these. Check kitco.com for charts on Gold and Silver. I bough 30 1oz coins at $500 in 2005, and now they are $1,000 per coin. On the same note, I bought 450 oz of silver at $9 per ounce in 2005. Now, each ounce is at $20.00
Third, people with debt. A falling dollar will trigger the Fed to cut rates to stimulate consumer spending (biggest contributor to the health of the economy). But cutting the discount rates for banks also brings inflation. While a lot of things are adjusted for inflation, debt is never adjusted for inflation unless rates go up and your debt is in revolving credit (credit cards). As far as you car or house, the debt does not get affected by inflation. So, the buying power for that money only goes down as inflation goes up.
Fourth, people with investment overseas, as people lose faith on the dollar they will convert their dollar-investments into other currencies, boosting stocks overseas. And if your investments are in other currencies and go up, it will be worth more in dollars.
Fifth, people with I-bonds and Inflation-protected investments, these simply mean the higher the inflation the more your dividend payout is. Remember, a falling dollar will trigger the Fed to cut rates, cut rates drive up inflation.
Sixth, people who invest in stocks under their 200 MA (Moving Average). As when the economy corrects, they will make more money.
I hope this helps.
Americans who are holding Euros.
Or companies that do a lot of business overseas, such as T-Mobile or Las Vegas Sands.
well, its already worthless. all the companies would go out of business, except for major corporations and it would probably be for the worst just because there is no more left. it all depends on how the company is doing compared to the public, but im no expert...
A lot of people who were short the dllar made a ton of money.
George Soros - Shorting the dollar.