In light of the flawed ratings provided by credit rating services regarding mortgage backed securities, we're not too quick to jump on any bandwagon that these companies parade down the street these days.
However, when Moody's Investor Services put out a warning about a potential for a downgrade of U.S. and UK sovereign paper due to deteriorating public finances, it does force one to sit up and take notice.
Couple that with respected financial experts like Jim Rodgers and James Grant saying that the U.S. dollar has been debased and should be avoided by worldwide investors, and we feel compelled to weigh in on the topic.
Since our long-term goal has always been to help you protect and grow your nest eggs we want to warn you about the coming storm and help you weather it in good fashion.
Now we understand that when you live, work, spend and invest in U.S. dollars the idea of investing and spending in another currency is confusing and off-putting to many of you.
But with the current course of spending and taxing that the government is on, we are forced to start looking at alternatives for you and for ourselves.
Investing Alternatives to the U.S. Dollar
Unfortunately all the plans being discussed such as healthcare reform, extended unemployment benefits, more "cash for crap" programs, and so on come with heavy price tags to be paid for with more dollars created out of thin air by the Fed, backed by NO collateral.
This is a recipe for a complete and utter devaluation of our dollar and a lower standard of living for all except for the narrow interest groups who will profit from all this government intervention.
Here's why. If Moody's concern become reality (which does grow more possible every day) a downgrading of U.S. Treasury bills, notes and bonds will bring with it the absolute need for much higher interest rates just to entice investors to continue to buy U.S. bonds and take on the risk of the U.S.'s deficit and possible default.
Higher interest rates will mean higher costs for all of us when we borrow money and a further decline in the value of the dollars in our pockets. That devaluation will bring on higher prices for food, transportation, utilities and other basics of life.
So, smart savers and investors will now start looking at something that has been distasteful to most U.S. investors in the past...
In fact, up until now the only palatable choice overseas for most investors has always been in the stocks of foreign countries but never in the foreign countries debt. That has got to change if you are looking for dependable income at a reasonable rate.
When venturing overseas, we do not recommend buying individual bonds. That strategy is only for those who have vast knowledge of the governmental workings of foreign countries. Most of us are still trying to figure out what the heck our own government is doing!
The safest wa...