I often write on Quora.com, where I am the most viewed writer on financial matters, with over 610.5 million views in recent years.
In the answers below I focused on the following topics and issues:
- Is the US dollar going to collapse in 2023?
- Are there undeclared billionaires much richer than the ones listed on Forbes?
- What is the “value creation” in business exactly?
- How can I protect my assets and plan for the long-term future of my finances?
- Will Bitcoin be taken down by world governments?
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Is the US dollar going to collapse in 2023?
If you have been alive for any length of time, you will notice that some stories are recurrent.
Those stories tend to be:
- Will the stock market crash in _ year due to _ . In fact, this story usually happens numerous times a year. So, now the conversation is the debt ceiling/debt default, which has happened many times before.
- Will inflation get out of control. This tends to happen periodically.
- And yes, will the dollar collapse! I remember in 2010–2011, after a decade of underperformance for the Dollar, many people were predicting the USD would reach parity with the Brazilian Real. Here is somebody saying the the Dollar will collapse in 2011 – spoken by some gold bug (sound familiar?)
Here is the reality.
The USD is much stronger than it was ten or fifteen years ago, against most major currencies.
Here is the index which tracks it, coming from the St Louis Fed.
In the last ten years, the US has increase by about:
- 16% against the Euro
- 11% against the Chinese RMB
- 23% against the British Pound
- 25% against the Canadian Dollar
- Over 50% against the Australian Dollar
- 160% against the Russian Rubble
- Incidentally, the price of gold and silver in USD terms is now lower than in 2011 and in the 1980s.
In fact, the USD became so strong last year, that people were fear mongering about the opposite.
Some people on LinkedIn and beyond were predicting a financial crisis last year, due to the USD hitting the highest level since after 9/11.
The Dollar tends to increase when people are feeling less pessimistic. When people are feeling more afraid, like after the Ukraine war, the Dollar goes up.
Therefore, I would expect the Dollar to fall a bit because it is so high, and the world is looking a bit more optimistic than before, but that doesn’t mean a collapse.
That last point about an increase in optimism leads me to another point. We were told just a year ago that most countries would be in recession by now and inflation wouldn’t fall.
We now have 4.9% inflation in the US, 3% in Spain and falls in most other developed markets.
The UK Bank of England was predicting a two-year long recession, and is now predicting no recession whatsoever (just very slow growth).
The point is, don’t pay attention to forecasters. There are too many unknown variables to accurately forecast.
What we do know, however, is that currencies aren’t investments. They also fall over time due to inflation.
Having money in the bank is seldom less risky than investing long-term, and isn’t usually as profitable.
Therefore, somebody who is 100-years-old now who had money under their bed for eighty years would have seen a slow collapse – in any currency.
So, it is best to own assets rather than currencies, but don’t believe all the talk about the BRICS and a USD imminent collapse.
Are there undeclared billionaires much richer than the ones listed on Forbes?
Let’s take the question in two.
- Are there undeclared billionaires?
- Are those undeclared billionaires richer than the top people on the Forbes list such as Elon Musk?
Firstly, there are undeclared billionaires.
Forbes themselves admit that the list is only for those who are declared billionaires, and have co-operated with them.
This video explains it well:
If you run a publicly listed company on the stock market, you can’t avoid being on the list, because your wealth is known.
Amazon told the world how many shares Jeff Bezos owned, because it was a legal requirement when they decided to list on the stock market.
If you run a private company that gets huge, then it is more likely people will know about you.
In comparison, there are many private firms that are only big in their niche, which few people outside that bubble know about.
That is when you get some half billionaires or billionaires who are only known by a certain percentage of people.
There are one or two people in the industry I am in which are widely known to be super wealthy, but only within the bubble of overseas financial services.
Most super wealthy people don’t want the whole world to know exactly how much they have, for obvious security reasons.
In terms of your second question, there could be people who are worth more than the top people on the Forbes list, but it is less likely.
If they exist, it is more likely to be indirect. You can never prove that somebody like Putin has hundreds of billions, because if he does, he likely has money in other people’s names.
What is more, if the people doesn’t actually directly belong to you under your name, then legally it doesn’t belong to you.
What is the “value creation” in business exactly?
It is the idea that if you solve more problems, you will be rewarded with higher profits.
For instance, curing cancer is a pretty big deal, and whoever will solve this problem might become a trillioniare.
Or the company that solves it could have the biggest market capitalization on the stock market.
So, yes, sometimes solving big problems will ensure businesses and individuals make more money.
Quite often it doesn’t work like this.
Perceived value is more important.
What creates more value?
Flying people thousands of miles away, with a great safety record, which easily beats comparative safety on cars?
Or having a brand like Rolex or HSBC, which have barley innovated for decades, and has shoddy customer service ratings on some consumer websites?
Most people would say the airlines are producing more value.
After all, there are some very convincing Rolex alternatives which cost hundreds of USD.
Yet the margin for retailers on a Rolex is about 40%.
Airlines make 5% at best.
Ditto the big banks. Compared to newbies on the block, they create little value in many cases, but they continue to exist.
Robert Kiyosaki produced the best selling financial book ever, yet the information in it wasn’t earth shattering.
He just was good at marketing, and created a huge personal brand.
Supply and demand + perceived value is key.
How can I protect my assets and plan for the long-term future of my finances?
A few weeks ago, I heard about a man I know and met over a decade ago.
I will keep this vague, as the person who told me the information might be reading this answer!
So, I won’t say if he is a friend, a friend of a friend or a business associate, or where he lives exactly.
Anyway, when I met him he was riding high.
As he was living in a fast-growing developing country, he didn’t see the need to diversify his assets.
Even getting 10% per year in USD terms didn’t seem attractive to him, because he was getting far more.
As this over performance had been going on for about two decades, and he was complacent about the local risks due to familiarity with the area, he assumed the situation would go on forever.
A few years later, there was a military coup in the country in question. He also had a health issue.
One thing lead to another and he became bankrupt.
I heard similar stories in Thailand after the 2014 military coup, and many more from those who fled Venezuela.
More recently, I have seen people from Russia, Ukraine, China and beyond who have similar complaints.
The reality is this
- We all suffer with familiarity bias. That is why nationalism and localism exists. Therefore, we always underestimate local risks. This quote says it all
- Likewise, we all suffer with recency bias. If our country or city has been stable for the last few decades, we assume that will always be the case
Therefore, diversification isn’t just about what assets we hold.
It is also about having assets in different countries and regions.
Beyond that, you can focus on insurance, trusts and other wealth preservation strategies.
Will Bitcoin be taken down by world governments?
I doubt it.
Some authoritarian governments have already banned it.
That doesn’t mean people aren’t using it in these countries.
What is more common is people asking “will private currencies destroy governments”.
Here is Peter Thiel in 1999, predicting the rise of private currencies:
What is interesting is his assumption that private currencies would weaken the power of the state.
Only states that ban private cellphones could stop it. At least that was his theory.
Many people had similar theories about the internet.
In both cases, governments have often gained power from the new technologies.
So, right now, central banks are interested in bringing in central bank digital currencies (CBDCs), which could increase the power of the state dramatically.
Likewise, with the internet, the state gained a new way to spy on people.
So, a lot of advocates of Bitcoin were making silly arguments, especially a few years ago, about how it would harm the power of the state.
If Bitcoin was really going to weaken the state, there would be a danger of a worldwide ban, but it isn’t going to do that – almost for sure.
¿Le duele la indecisión financiera?
Adam es un autor reconocido internacionalmente en temas financieros, con más de 830 millones de respuestas en Quora, un libro muy vendido en Amazon y colaborador de Forbes.
