How To Protect Yourself From The Crashing Dollar

Certificates of deposit (CDs) are accounts you can invest in at the bank.

If you agree to lock up your money for a certain number of months, you collect a bit more interest than a savings account.

In the past, they were a way to earn a decent return on your savings. Not amazing, but decent.

In the 1980s, you could collect a 10%-plus yield on CDs. However, over the years, they have become less attractive:

Historical CD Interest Rates

historical cd interest rates

(Source: BankRate.com.)

Today, the highest rate on a one-year CD at BankRate.com is 0.67%.

Yet the consumer price index is 1.4%. That is the rate at which the cost of consumer goods and services is rising.

That means if you lock up your money in the bank for a year at the highest CD rate in the country, you will lose value.

There are better options.

Look To History For Guidance 

If you are reading this essay, there is a solid chance you already own some stocks. That has probably worked out well for you since last March.

But what else could you own to protect yourself?

Low CD rates are a result of the low Fed funds rate. The low rate has also reduced demand for the dollar.

There are a lot of dollars out there. The government continues to print them like drunken sailors.

The government is spending more than it’s bringing in … and debt is rising like crazy.

In a world with a struggling dollar, you need to work harder to maintain your purchasing power. One asset that helps you do this is gold:

gold vs. us debt 1966-2020

(Source: Bloomberg, Federal Reserve Bank of St. Louis.)

Gold is a place to go to protect the value of the dollars in your wallet.

It has served as a protector of value for thousands of years.

I expect it will continue to do so.

The New Gold? 

But what about bitcoin?

It has the nickname, “digital gold.”

How has it fared compared to our ever-growing debt?

It has done well … very well:

bitcoin vs. us debt 2010-2020

(Source: Bloomberg.)

Since Bloomberg began reporting bitcoin prices in July 2010, total debt has more than doubled.

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