Re:Entire German bond yield curve back in sub-zero territory
by WanderPanda on Tuesday August 03, 2021 @12:04PM
(#28050863)
Where did we end up if shorting your currency is the only way to go? I could not sleep well with the potentially unbounded loss
Re:Entire German bond yield curve back in sub-zero territory
by imtringued on Tuesday August 03, 2021 @01:02PM
(#28051544)
You short the USD by borrowing in USD, spending USD while it is still valuable and then wait for it to devalue. Deflation is a bad thing so the Fed won't let it happen.
Of course the flaw with this is that I get 4% interest on personal loans so I actually can't make money off of this strategy.
Re:Entire German bond yield curve back in sub-zero territory
by AnimalMuppet on Tuesday August 03, 2021 @01:15PM
(#28051697)
Gold. Gold essentially functions as a short on paper currency. If you're wrong, you'll lose money, but it won't be an unbounded loss.
Re:Entire German bond yield curve back in sub-zero territory
by throw0101a on Tuesday August 03, 2021 @03:59PM
(#28053423)
Gold isn't as much of a hedge as most people think. Two papers by Erb & Harvey cited in the podcast:
* https://www.nber.org/papers/w18706
* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2639284
The Rational Reminder podcast looking into this and basically concluded that there is no hedge:
* https://rationalreminder.ca/podcast/150
* https://www.youtube.com/watch?v=_f0dns9fHFs
The best you can probably do is have some debt which will worth less and less over time as its nominal value stays the same whereas you get cost of living (CoL) increases with your salary so have more money in really terms to pay it off.
Other than that equities have (generally, but not always) had good enough nominal returns so that you get a real return increase in your investments.