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What would happen to our funds and ETFs if the country were to go bankrupt?

DAK
edited June 2011 in Off-Topic
Articles such as this make lots of questions in my head...If the dollar collapses, does that mean everyone starts over with zero??? What happens if the credit rating of US goes below AAA? Can someone explain to me?
http://www.naturalnews.com/022528_housing_bubble_real_estate.html

Comments

  • edited June 2011
    In terms of this kind of issue, you can look at Weimar Germany and Zimbabwe, where the stock markets soared/practically went vertical, but the currency went to zero, so you had significant nominal gains, but in real terms...well... Zimbabwe was the best performing market in the world NOMINALLY for the last decade or so, but those who cashed out their gains could probably only get a few eggs. There's the video "Bread for Gold", which one can find on Youtube, where the people of Zimbabwe are shown spending their days shoveling through rivers panning for gold because local shops for their necessities are not accepting the local currency. If the dollar were to collapse, which I doubt - although I would not be shocked by a significantly lower dollar months and years from now - then it becomes you can have invested assets that may do really, really, really well nominally, but what are you trading them in for? Less and less (and in some cases historically, not much at all.) I started reading "When Money Dies" recently, and that is something I'd really recommend to get a historical look at an example of hyperinflation (a lengthy exploration of Weimar.)

    The link below is actually a timeline for Weimar Germany, and you can see that the interest rate was 5% in 1919-1921, then by November 14th, 1923, the interest rate was 900%. German stock market at 97 in January 1919, 166 in January 1920, 278 in January 1921 and 731 in December 1921. From 1914-1922, the stock market rose about 89x (from about 100 to 8900), the dollar rose 1525x and coal rose 1250x. In 1923, German stock market at 21,400 in January and rose to 26,890,000 in November at the peak. Cost of living at one point was increasing at 50% per month.

    http://nowandfutures.com/us_weimar.html
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