Let’s imagine that I’m an unrestrictable God-Emperor of the USA with a goal to accomplish three things:
Devalue the currency, to undo decades of trade deficit and bring US wages into parity with Southeast Asia and thereabouts.
Establish tariffs, trade barriers, money exchange quotas, etc. to limit any sort of cross-border economic give or take to a minimum except to sell physical goods.
Establish a universal basic income in replacement of all government welfare programs, paid for through the prior tariffs.
Now, the question is, how do I ensure that I profit through all of that? If I want to bring in compatriots and sell them on the benefit they’ll personally gain by aiding me in this program, what investing tips do I give them?
You left out “and inflate away the monstrous debts my prior life as a failed real estate tycoon have saddled me and my personal company / foundation with.”
But that quibble aside, I agree with the general thrust of your question and I’ll try to address it as asked.
The obvious advice to your cronies is to buy hard assets. The value of a piece of e.g. land isn’t changing. What’s changing is the number of dollars it represents. Companies that have massive debts will be more valuable as their debts evaporate into pennies on the dollar. Companies that have massive cash piles will go the opposite direction.
Since you’re planning on impoverishing most of the nation’s populace, any company that sells to US consumers is in deep kimchee. But doubly so for the “mass affluent”, the folks with nice 401K balances many of whom are retired. The folks who buy mass luxury goods like cruises and lease BMWs and Lexuses.
Investing heavily in overseas assents is another good dodge the cronies would do well by.
That’s, obviously, my current thought. I’m just not satisfied by it since it doesn’t greatly change my fortunes, it just protects them.
As a cronie, I might be promised that some of these initiatives will have carve-outs that protect, very specifically, myself and my business. And maybe that’s the sum total of the idea. But that doesn’t help the emperor, himself, terribly much and it feels like you’re not going to get much buy-in to go through all the political upheaval, minus some big payout at the end.
Well the key would be to have inside knowledge of when & if the devaluation was going to take place.
Then, as @LSLGuy suggests buy large hard assets … like say Greenland.
Then devalue the USD. Then sell it back.
You can imagine the difficulty of doing this on the QT.
Any non-US party who was flush with US denominated funds and got wind of this would similarly, pre-emptively sell US hard assets, wait on the devaluation then buy them back.
Small number of very big winners, otherwise same shit, bigger hole.
Short answer is you buy other currencies and profit as they fluctuate against each other. “Strong dollar, weak Yen” kinda thing.
To make money speculating on currency you have to buy a whole lot since the fluctuations are only pennies or less day to day (usually). You need a lot of pennies to make a lot of money. Think a few million dollars at a time (or more).
Not sure even God-Emperor can do all at the same time. They all get tied up together and with knockdown effects.
Currency devaluation you can do just by printing more money. Huge inflation devalues currency. If other countries do not have similar inflation then they want to take advantage of their currency’s relative strength and buy from you. But for the tariffs they’ve placed in response to yours.
Tariffs first? If no tariffs back that raises the value of the dollar according to experts. If tariffs back possibly neutral.
If I was the crony I’d diversify into some gold and international stocks. Bonds and domestic equity would be risky.
In one quick whack: US domestic hard assets, foreign “paper” AKA financial assets. Denominated in those currency(ies), not USD.
The real challenge is figuring out which of those things will be the bolthole into which umpteen trillion of USD-denominated paper wealth will want to go, then buy lots of that before the landslide is more than a single rolling sand grain. The returns to getting that right will be eye-watering.
I don’t know that I actually believe my next sentence, but it’s something to consider. Will Bitcoin or another fully legit crypto currency (IOW not a scam-coin) prove to be a big part of the boltholes plural that US paper wealth flees to?
I’ve certainly considered Dogecoin. But I’m not convinced that Musk is going to survive the relationship with the President, if he ever starts to upstage him. And minus that influence, it’s hard to be confident about a move to an existing crypto. I’d expect the launch of some new one that, like Ripple, the initiating forces withhold a percentage of prior to launch.
Ignoring Cryptocurrency, though, I’m curious if anyone knows - factually - or can reasonably discuss whether we’d expect significant differences between purchasing US ETFs or ADRs that track foreign stocks, versus trading directly in a foreign exchange?
My thought would be that the currency exchange should (?) relatively automatically affect the price of the stocks, even when they’re traded in the US on an American exchange since the price of a share is dictated by the foreign market. But I’m not entirely confident that, that’s true?