“US Economy Will Collapse Within 36 Months” Say Hedge Fund Manager and How to Protect You From It

When I meet a hedge fund manager I always try to ask as many questions about their economy as possible. They have the best research team working for them and you always learn something interesting. What a Hong Kong based manager fund of funds manager, a global macro strategy specialist, with millions dollars asset under management, told me was a bit shocking. He predicted a collapse of the American economy within three years! Here are his arguments and the things he’ll do to protect himself from it.

-The American debt is raising every day

America’s national debt is 14 trillion dollars. If you don’t know what a trillion is that’s 14,000,000,000,000 dollars. And the U.S. national debt will grow to over $20.3 trillion by 2019. The current administration doesn’t want to cut the spending because they are counting on that to be popular. When I was discussing with a Honk Kong based hedge fund manger he even told me that it’s unlikely things would radically change if a new conservative candidate is elected in 2012. He said that G.W. Bush spent a lot while in office and governments just don’t know how to get re-elected without spending a lot to please voters. So it’s likely the US government won’t stop spending until the dollar fails.

-The FED has surpassed China as the leading holder of US treasury securities:

What does it mean? It means that America is basically borrowing from itself and is borrowing a lot. Not a really good idea to borrow from yourself when you’re broke.

-Fannie Mae and Freddie Mac still exist

Fannie Mae and Freddie Mac, both government-sponsored enterprises, were major causes in the subprime crisis. Following Washington orders, they spent billions to loan to low-income families. As we all know the results were disastrous. However, believe it or not, politicians did nothing to eliminate them. With Fannie Mae and Freddie Mac still operating another major crisis will occur said the manager.

How to protect yourself from a collapse?

Own other currencies:

The Swedish Krona, the Swiss franc and the Hong Kong dollar are among the best currency to own right now. That’s because these countries are controlling their spending and have a solid economy.

Own Hong Kong or Singapour based companies stock:

Hong Kong and Singapour are two of the wealthiest and economically healthiest places in the world. Invest here is pretty safe and allows you to have a diversified portfolio.

Own gold:

Gold is what you want to have when a crisis occur. Owning gold protects you from a fall of the dollar value because it’s a universal form of payment.

Is there any hope? The manager I met told me that only one candidate could stop the crazy spending: Ron Paul. Results of the recent straw polls are encouraging. Let’s hope American voters will make the right choice in 2012.