Costa Rica to Dollarize ?

Waggoner & Sprite? Surprised you have not thrown in your economic knowledge on why it may be a mistake to run with a losing horse, not to mention the potential psychological outfall with Costa Ricans’ patriotism.

[quote=”grb1063″]Waggoner & Sprite? Surprised you have not thrown in your economic knowledge on why it may be a mistake to run with a losing horse, not to mention the potential psychological outfall with Costa Ricans’ patriotism.[/quote]

As expats we’re hung with the dollar whether we like it or not. We’ve lost about 16% of our purchasing power since the first of the year already.

The dollar is weakening and it wouldn’t be a good idea for Costa Rica. They are better off with the colon

I knew you two would come through.
If your stuck with a fiat currency regardless, would you not stick with the one that holds its value better? You would have made a killing on USD vs. Euro in the last 6-8 months. Your scenario Sprite, which is completely within the realm of reality, will not happen in the 1/2 live’s most of us have left. Physical holdings of precious metals is not an option from a transport perspective, unless you just own paper on it, but it has been a very good bet in the last year. I myself have capitalized on it, but need a safe to store it. Most savier people will make the best of barter; it is how I am getting my house resided, stone installed and painted + equipment. Anything “under the radar” pays big dividends if you are consistent with it.
As of late, maybe it would be more appropriate for CR to switch to the Yuan???

Well said Sprite, but there are too many other countries tied to our debt and hence the dollar. There will be more bailouts to come, but on a more international scale. The Chinese own trillions of our debt and they won’t go down without an ugly fight. Good reason to sell out here, pay for something 100% elsewhere and have $0 debt.

Food & water (self-sustained), guns, bunker of ammo., libations (numerous), computers(music, video and the web via satellite). Scott would not disagree especially if there were cases of single malt.

[quote=”grb1063″]Well said Sprite, but there are too many other countries tied to our debt and hence the dollar. There will be more bailouts to come, but on a more international scale. The Chinese own trillions of our debt and they won’t go down without an ugly fight. Good reason to sell out here, pay for something 100% elsewhere and have $0 debt.[/quote]

I agree entirely. This is what I am working on right now as fast as I can. My guess (just a guess) is that things will be less harsh in the coming period of unraveling world economies for those of us in the country side with farm land, a potable water source and some form of power off the grid. No guarantees, though.

Some people talk about holding precious metal. That might work in the short term but things may happen so fast that there would be no time to convert useless metals into useful survival material so why not just go straight to the ultimate game and set?

An historical chart starting in 2000 shows the Colon steadily gaining against the dollar starting at 232 per dollar and now at about 511. A few years ago it was an even 500 per dollar which made it easy to calculate in one’s head.

While the dollar IS dropping globally there are reasons each currency is exchanged at different rates. The Costa Rican economy relies heavily on the U.S. for commerce including, tourism, realestate and agriculture (you find Costa Rican Pineapples and Bananas in almost EVERY grocery store in the U.S.). If the Costa Rican economy is stronger today than decades ago it is based largely on the flow of U.S. dollars.

As far as investments go there are many places to put your money that is better than cash in the bank or money market funds. Realestate, antiques. . . I have tools and machinery that have gained steadily in value against the dollar. With manufacturing down it HAD been a buyers market but the selloffs are slowing. The problem with all investments of this type is liquidity. Just how fast do you need to be able to convert to cash? Days, weeks, months. You might take a year or more to convert realestate to cash at the highest value.

I have a friend that published a special interest book that is now in its 5th printing of 1000. Its a big book and a printing is over $40,000. He says it earns him just a little more than bank interest so he keeps printing and selling them. Very meager gains and slow to cash out but also low risk.

The problem with “market” investments, including holding any currency or investing in stocks is that it is a power players’ market. Small investors can easily get run over in a big fish’s profit taking. For many it would be better to play the lottery.