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Lately I have noticed a lot of questions asking about financial doom, especially in the US. While this is all well and good, but these questions are hard to answer because they're about an uncertain future that none of us know about. Also it sets up two premises under which all questions must be evaluated: continuation of the two century trend in the US, and unforeseen doom.

Should we discourage these questions?

Disclaimer: I personally believe that financial collapse is a real possibility, I'm just not sure there is much to say about it besides be prepared.

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    They definitely are a downer and a bit paranoid, but they are legitimate questions. – JohnFx Aug 20 '10 at 17:52
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I can see it being a bit of an issue if we get a flood of such questions. However, I do think it is very valid type of question for this site.

The basic answer being be prepared. That said, there are at least two levels to this and so depends on the question itself.

One way to prepare is with financial instruments, i.e. savings account, cold hard cash, foreign currencies.

Another way, is the full-on crap hitting the fan situation. I.e. my plan includes stockpiling some food, boning up on my "survival" skills, boning up on my other skills, e.g. home repair, sewing, skills useful in a serious doom scenario.

Update:

I'm torn. I don't want to see a bunch of doom-and-gloom, buy-guns-and-ammo type questions. That said, I feel that the possible collapse of the financial system, however remote, is an appropriate topic for a finance site. Let's not forget that financial panics were a regular thing before the establishment of the Federal Reserve.

Disclaimer: I personally believe that financial collapse is a real possibility, I'm just not sure there is much to say about it besides be prepared.

With this in mind, I have been thinking that one question could serve as the canonical Q&A for this topic. As C. Ross puts it, there isn't much to be said other than "be prepared."

Of course, there are several key financial ideas that go into being prepared:

  1. Inflation may render cash/money next to worthless.
  2. Even that gold held for you in a vault somewhere may be next to worthless if you cannot actually get access to it. Not to mention that in a worst case scenario, who will really care about shiny baubles (at least in the immediate term)?
  3. Bartering (of goods and services) will likely be king for the immediate term, in a worst case scenario. Even in a less than doom-and-gloom scenario, bartering may become important.

Let's not forget that preparing for "Oh, crap!" scenarios is a part of financial planning. Like it or not, finance is a key part of life. In the absence of good financial systems, human productivity, innovation and general quality of life can seriously suffer.

(Ultimately, that is why I like finance. In reality, it is not just about numbers in a spreadsheet. It truly is a multidisciplinary, human-centric pursuit.)

  • It's the second part that makes me wonder whether they're right for a personal finance site. – C. Ross Aug 20 '10 at 19:21
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    @c.ross A fair point, but the possibility of it all going tits up is there. As is being realistic about one's expectations. – George Marian Aug 20 '10 at 19:37
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    I am with @C. Ross. While they are legit questions, they aren't legit for here. – MrChrister Aug 20 '10 at 22:30
  • Your "update" veers off topic a bit. Asking "should I prepare for doom-and-gloom in [such-and-such a way]" is a legitimate financial-planning question (assuming such-and-such is a financial matter). Asking if the economy going to collapse (i.e. buy-guns-and-ammo type questions) is better suited to an economics site or a survivalist site: in either case, they're off topic here. But the examples cited fall more along the lines of "what should I do" financial questions. – Robert Cartaino Dec 7 '10 at 4:09
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I'm going to reference the FAQ and say that without more specifics, they should be closed.

On the list of questions not to ask is: we are being asked an open-ended, hypothetical question: “What if ____ happened?”

How are questions of the form "What if the apocalypse happened?" and "What if inflation goes up 300%?" are open-ended and hypothetical.

Some of those questions can be rewritten to be in scope like "What was valuable after a natural disaster like the Katrina Hurricane?" which is no longer hypothetical.

Some of the questions may not be able to be rewritten in an acceptable way.

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I've asked one of these questions, deliberately focusing on the financial aspects: What should I invest in to hedge against a serious crash or calamity?

So obviously I think they are reasonable :-) In my opinion the main value of such questions is not to encourage people to run for the hills, but to at least advance the possibility that things don't always continue as they have before, which seems to be quite a common assumption in answers.

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    So long as they stick to finance. – MrChrister Aug 20 '10 at 22:30
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My concern about these questions is, that, from my experience from other sites, they have a strong tendency to degrade into political or ideological squabbles of exactly the kind to be avoided in other Stack Exchange site. Instead of there being an objective answer, it is a speculation on what may happen. In some cases, a speculation of a very unlikely scenario. But in some online posting , on other sites, regardless of what evidence was cited to suggest the unlikeliness of a given doom scenario, the original poster steadfastly refused to consider anything other than his original viewpoint.

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There is room for valid "doom" questions, but they need to be scoped in a way that will result in productive, useful answers.

A question that asks, generically, "what do I do to prepare for apocalyptic disasters?" in my mind is automatically qualified as a question that is going to attract ambiguous answers based on the subjective determination of what the questioner is asking about. (ie. It's a poor question that doesn't belong here.)

IMO, an in-scope "doom" question is one that is clearly talking about a specific scenario. The scenario needs to include details of both the disaster and the personal situation. To be a "doom" question that also yields good answers, it should also be associated with an illustrative, real-life scenario.

Examples:

  • How do I protect my wealth against a natural disaster that threatens to destroy my home? (Cite example of tornado strike that devastates a community)
  • I'm self-employed and run a small business/farm that caters to a local clientele. How can I prepare financially for a disaster that destroys my business and my customer's home/businesses? (Cite example of Mississippi floods, or Arizona/Texas wildfire)
  • I'm 53, partially disabled and have $650,000 in 401k accounts. In the event of a crash similar to what happened after Lehman Brothers collapsed, how can I protect my retirement savings while still earning a reasonable yield?
  • I live in the Generician Republic. How do I preserve my wealth if my country is invaded or the government is overthrown? (Cite Egypt, the invasion of Georgia by Russia.)

If the answers contain references to zombie attack or Mad Max, it's an out of scope question.

  • Excellent answer! – C. Ross Jun 14 '11 at 18:53
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Leaving aside whether or not this scenario is even possible (collapse of US -> collapse of world economy as we know it), the very fact that lots of people want answers to this type of question is interesting in of itself. It points to certain market sentiments that typically are more common during recession/depression. Even if it is not a sign of things to come, it expands the site in the area of investing for wealth preservation/low risk investments.

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I'm just not sure there is much to say about it besides be prepared.

Financial planning is more than saying "be prepared." It's that how that these questions are asking about.

Nobody is asking you to predict the future (or at least they shouldn't be). But mitigating risk against possible down-turns is very much a part of "personal finance & money." I don't think you can reasonably deter questions which ask you to speculate about potential outcomes, good or bad (emphasis on the word potential). That speculation forms the the very basis of investing and financial planning.

You may think that "stockpiling nickels" is silly — asking for assurances that it is going to pay off is certainly speculation and off-topic — but asking if it is a valid financial activity is certainly very much on topic for this site… even more so in an economic downturn when so many people are concerned about which activities are likely to afford some protection.

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