Ecuador & the US Dollar

Don't worry about doomsday.  In this global economy if the dollar crashes there's no safety anywhere.

Good one Edd,



Now, trying to be serious, the ecuadorian government is working with another kind of currency for his commercial trade with Venezuela and Bolivia. Some people think some day this three countries will change their currencies for this one if they get other south american countries in the system.

Will see.

Vinny

I'm with Edd on this.  There are some things, like the Mayan calender and 2012, a global meltdown or thermonuclear war that are just out of our hands.  Pick a place that makes you happy and live there.

Mike

I think Portmac has a justifiable concern. I've read many blogs stating that being tied to the dollar is almost a plus. Wrong. Tea, you can be happy anywhere but that doesn't change the facts. If (when) the dollar falls your dollars won't buy squat. Rather than joining ties with bolivia or ? equador should back a currency with gold or silver like mexico (and others) are moving to. In the mean time it would be wise to convert as many paper dollars as you feel comfortable into gold and silver coins. After you've done that THEN you can talk about how it doesn't matter. Until then you are kidding yourself. Good question Portmac.....

wrote:

In the mean time it would be wise to convert as many paper dollars as you feel comfortable into gold and silver coins.

Owning physical gold and silver usually results in the loss of money unless you are a jeweler or trader.  It costs money to buy precious metals and it costs money to store it, either in a safety deposit box or by having to purchase a safe.  It can also put you and your family at risk, should the wrong people find out you have large sums of money in your house.  Most personal financial advisers advise against owning significant amounts physical gold and silver for the average person. 

Should the dollar collapse, then other currencies will also loose value, and thus gold and silver will not maintain its current value.

If doomsday-coming-soon is the mindset, it would be more wise to invest in stock piles of food, water, and protection.  At least these still have value when currency is removed.

' Most personal financial advisers advise against owning significant amounts physical gold and silver for the average person."  And they have been wrong, yes ?

"Should the dollar collapse, then other currencies will also loose value, and thus gold and silver will not maintain its current value." Sorry, history shows just the opposite. Every single time. What are you reading ?

There is no history of the dollar (U.S economy) completely collapsing.  The Great Depression is the closest it got, and the rest of the industrialized world was affected negatively by it.

First of all the dollar is now only worth .04 since 1920. Second, have you ever heard the phase "not worth a continental" ? That was during the civil war when they printed money until it was worthless.....You can go back beyond the Roman empire to find that every great civilization ultimately collapsed because of currency devaluation. They basically kept using less and less gold in their coins till no one wanted them. China, Russia, the UK. Do I need to mention Germany or Zimbabwee. Most recently Argentina. All in all over 100 countries in the not so distant past. Do you remember the photo/caption of the argentinian crying..."I should have bought gold" ? Are we here to share and learn or are you going to argue just to argue. If you listen to the press or most liberal professors you will not find the truth.....I would hope that beyond a tranquil loving equadorian lifestyle equadorians would cherish the truth. Gaining knowledge is as important a lifestyle as is the outdoor hiking and meditation some of you seek.

PortMac:
I would be less concerned about the value of the USD than the impact the USD is having on life in Ecuador. Ecuador is running out of USD as there are more USD's leaving the country than entering. This is due to declining business investment, reduced remittances from Ecuadorians living in USA and Spain, relatively low price of oil, reduced exports (banana and flowers) and Ecuadorians moving USD out of the country. This problem is compounded by an inability to borrow more USD due to the prior default. As a result of this problem:
-the government now imposes a 5% tax on sending USD out of the country and recently imposed requirements to register funds with the central bank.
-import tax rates continue to increase. The cost of cars and higher quality imported products will continue to escalate.
-money laundering and drug trafficking is flourishing. While the government might not condone, it reluctantly accepts as it brings USD into the country. 
-the government can't sign a TLC as it would result in a net drain of USD out of the country.

How will this effect those living in Ecuador in the next five to ten years?
-drug violence and related crime will escalate.
-import taxes will continue to increase limiting purchasing options and increasing inflation.
-economy will stagnate due to limited investment, businesses moving to Colombia and Peru, and lack of trade agreements with North America and Europe.
-quality of locally produced products will deteriorate due to diminishing of import competition.
-unless the world wide price of oil increases dramatically, Ecuador will eventually be forced to exit the USD and implement a local currency.

How can expats protect themselves?

-rent don't buy. Bringing money into Ecuador to buy a residence will cost 5% to send it back out when you sell.

-limit deposits in local Ecuador banks.

-maximize flexibility to leave if economic or security situation dictates. Rent housing and limit local investments.

And like I said, buy silver and gold. The ONLY proven protection thruout the history of man....This is why I brought the subject up in the first place. Any country tied to the dollar will be hurt.....BTW...silver is up 20% in the last week. Silver is money. Paper dollars are backed by nothing but debt and will be perceived as near worthless in the future.

jlconst wrote:

Do you remember the photo/caption of the argentinian crying..."I should have bought gold" ?

afair that was Brazilian...

jlconst wrote:

And like I said, buy silver and gold. The ONLY proven protection thruout the history of man....This is why I brought the subject up in the first place. Any country tied to the dollar will be hurt.....BTW...silver is up 20% in the last week. Silver is money. Paper dollars are backed by nothing but debt and will be perceived as near worthless in the future.

I am unsure how you reach that conclusion from my posting. I trust you are a commodities dealer. Historically, commodities including gold and silver, are poor investments vs other options.

Buying commodities will not protect expats from political, economic or security risks in Ecuador. Also, any reasonable investment adviser will warn if you insist on investing in commodities to limit to no more then 2-3% of net worth. I would not recommend them to the typical expat residing in Ecuador.

Gold and silver are NOT commodities. They are money. And if you believe anything "financial advisers" tell you then you deserve what you get..... Like invest for the long run....it's a buyers market....yada, yada, yada....They're salesman who haven't a clue about the real markets......factoring in inflation if you invested 25 yrs ago you're still even..... Ten yr bull market in gold and they're still telling you to stay away....while all the central banks and the world richest are buying. Who's the fool and who will be left empty handed when the banks implode.....[ http://stockcharts.com/h-sc/ui?s=$HUI&p … listNum=-2 ]

There's a graph no financial advisor will show you because THEY are clueless about it. I can show you one for gold if you wish. One that shows all these pullbacks are mere bumps in the road. One your stock broker has never seen.

talking of armageddon, the only practical advice is to dig deep bunker of concrete and fill up with a food, preserves and touchonka. Get the machine gun and pray that u have enough bullets. mwahaha


PS: having question of what is tuchonka: http://joyoffieldrations.blogspot.com/2 … -1941.html

jlconst wrote:

Gold and silver are NOT commodities. They are money. And if you believe anything "financial advisers" tell you then you deserve what you get..... Like invest for the long run....it's a buyers market....yada, yada, yada....They're salesman who haven't a clue about the real markets......factoring in inflation if you invested 25 yrs ago you're still even..... Ten yr bull market in gold and they're still telling you to stay away....while all the central banks and the world richest are buying. Who's the fool and who will be left empty handed when the banks implode.....[ http://stockcharts.com/h-sc/ui?s=$HUI&p … listNum=-2 ]

Again, I do not understand why this conversation continues to revert to the relative value of investing in gold and silver. My posting related to the impact on Ecuador having its currency denominated in USD.

I have no problem investing in gold, silver or commodities or real estate or bonds or pork bellies or art or anything else that might increase in value. When asked by family members for investment advice I consistently recommend 1. subscribe to Money magazine to educate yourself to make intelligent financial decisions and 2. diversify your investments.

From my perspective, gold and silver can be a modest part of a diversified portfolio. If a significant part of a portfolio, your time horizon has to be sufficiently long enough to recoup periodic downturns and be prepared to have sleepless nights.

The fact that you rely on Money Magazine pretty much tell it all about not knowing what you are talking about. The whole world is in printing press overdrive, all currencies are going down, and the whole world is in a debt spiral down. If holding 1-3% in a "hard" currency makes you sleep better that's good.Sounds to me you hold NO gold, which is almost always the case when I argue with you guys. My post started with just wanting to encourage others to protect themselves financially....Make sure you re-post off and on during the next few months and yrs. I'll look forward to your next post that has no relevance to facts or history.

Gold or not gold...that is the question. 

In case on global armagedon just get some canned food, medicines, bateries and a water purifier. Ans some ones extra for trade.

Vinny

Vinny  You are absolutely correct. Besides, everything you buy now will be a good investment because everything will cost more later. A win-win. Buying silver/gold is only a secondary option to consider vs dollars sitting in the bank.....I think this converstion has spent itself.....Thanks for the spirited discussion..... over and out/adios

jlconst wrote:

The fact that you rely on Money Magazine pretty much tell it all about not knowing what you are talking about. The whole world is in printing press overdrive, all currencies are going down, and the whole world is in a debt spiral down. If holding 1-3% in a "hard" currency makes you sleep better that's good.Sounds to me you hold NO gold, which is almost always the case when I argue with you guys. My post started with just wanting to encourage others to protect themselves financially....Make sure you re-post off and on during the next few months and yrs. I'll look forward to your next post that has no relevance to facts or history.

JLCONST, lets end this with agreeing we disagree without being disagreeable.   

I wish you luck with your investment decisions.

fdmcg   You're a first class guy....Deemetrio, regarding brazil and argentina....check out these graphs....be safe..[http://www.gold-eagle.com/gold_digest_08/vronsky021610.html]

Hi all - I'd like to revisit and expand this question.  My husband refuses to consider Ecuador on our list because he doesnt like their government. My question to you (please, only those folks who have or are living there) is: As an expat, have you found government policies to be a problem for you? Some issues: property ownership, taxes, law, etc. I don't want to start political arguments...just want to explore the real-life day-to-day problems (or not) for expats (particularly American expats) with the Ecuadorean government.

Thanks much!
Tes

Hello Tes, why don't you start a new thread on the Cuenca forum with your questions? This will allow better interaction.

Thank you,
Aurélie

The great news about Ecuador's history of political instability is that citizens aren't dependent on the government like in the US. I've lived here 2 1/2 years and , beyond getting my visa, government policy has not effected my daily life in the slightest.

Pica1 wrote:

Hi all - I'd like to revisit and expand this question.  My husband refuses to consider Ecuador on our list because he doesnt like their government. My question to you (please, only those folks who have or are living there) is: As an expat, have you found government policies to be a problem for you? Some issues: property ownership, taxes, law, etc. I don't want to start political arguments...just want to explore the real-life day-to-day problems (or not) for expats (particularly American expats) with the Ecuadorean government.

Thanks much!
Tes

Tes, as an American married to an Ecuadorian and residing in Quito since 2005, I strongly suggest your husband reconsider Ecuador. While residents love to complain about politics, in reality their efforts have little if any impact on local quality of life issues such as cost of living, security and acceptance of expats.

Thanks.  Not much interested in dependancy, which is really a political term and can be in the eye of the beholder. (i.e. is gov't dependancy good roads, public education, welfare or???).  But am interested in things like any specific gov't policies restricting expats money, property rights, etc.  So far, that doesn't seem to be the case.  We visited Belize several times.  Even though it's gorgeous, is quite U.S. friendly, English speaking and works on British Common Law, the reality for me was that it just didn't have enough cultural things to offer.  Immigrating is so personal; there's just no one easy thing that leads us on our travels!  Anyway, good luck.  Still interested in more comments. Thanks to all!

Thanks fdmcg.  I suspect as much.  The blogosphere is so full of everybody's angry comments, often from people who haven't even been to the place they're criticising.  That's why Expat.coms like this are so important. That, and, of course, visiting first if you can.

There is a contingency plan already to counter the dollar collapse. Ecuador is already trading in other currencies different than US$. I dont see any Gov policies affecting expats who have purchased their assets legally. The fight for corruption is pretty effective, if you are doing everything legal there are no problems here. Be aware of english written articles about how "Bad Ecuador, Bad Gov, Bad president, etc" lots of "Bad people" have time to make up even more enemies around the world. Please keep bringing questions and concerns to forums, we are ordinary people having a great time in a friendly, loving country. We know better! Take care.

What an interesting exchange this has been.

Capitalism, money, excess, fear, stress, unavoidable cultural realities of first-world societies. They suck the joy out of life.
It is possible to refuse to participate. One must live for today and let mañana take care of itself. Ecuador allows and facilitates this mindset. It is not a Chicken Little society.

Hi all,
Thanks for all your participation.  Just letting you know that since the only place I am even considering in Ecuador is in or around Cuenca, I will be doing as Aurelie suggests and continuing on the Cuenca Forum.  This will allow this string to remain focused on its current title.  I also have some concern that there appear to be many postings about Ecuador from people who do not appear to be living here.  I have some concerns about this as it may cause this forum to revert to the same general angst as online news sites.  I alo pledge to ask, if appropriate, for input just from those who live or have lived there.  OK?  Thanks again....and all the best.

(Moderated: No free ads pls)

and what will life be like in Japan if the yen crashes?
or in any other country if their currency crashes!

And if anyone has a crystal ball that can predict such crashes, they are sitting on a gold mine.

Most of us who follow currency evolutions short- or medium-term keep our feet firmly on the ground, and prefer not to make rash predictions such as the one you heard!!!

In the meantime the dollar is a currency of reference, and yes it fluctuates somewhat.........but it usually is considered one of the strong attractions for moving to live in Ecuador!

Stay positive........

The best solution is to buy a piece of property. That has housing, water on it or can be stored, ood soil to grow crops and raise animals. This is truly the best option.  A couple of Hectors or more , this way you can barter and raise what you need to substain your self and family. Sure it wouldn`t hurt to have some silver coins .. stash away. A bank account in another counrty in a different currencey is also advisable.

So true Jkjv...

I just wanna see how fast you can run to the store with your pockets full of coins! LMAO!!!!

Kurt......

I would not loose any sleep over it.

Just drink more beer and be happy eh.


                         Saludos Brian

You'll be buying the booze from me.. They say to hort  booze to barter with .. No a bad ideal after all.