Mark Faber talks about the current economy in MarketWatch:

Nowhere was he bleaker than when addressing the beaten-down dollar, another victim of Fed policy which he said has ensured cash returns below the rate of inflation. "In the long term, the dollar is a doomed currency. It will go to zero," he said, which produced some nervous laughter from the audience.

I’m hoping there’s a touch of hyperbole in that statement. Or perhaps long term means really really long. I’m hoping. What to buy?

Chinese yuan. Asian property. Other Asian stuff. Other commodities.

The more I read about the state of the US Economy, the more I picture something like this in my mind:

Also, I get a picture in my mind of that scene in Star Wars Episode III (I think) where they crash land the spaceship and there is a lot of that “gnashing metal” sound.

Where do we hide? They say not US stocks, not US bonds, not cash. Perhaps not even foreign stocks.
Silver and Gold? China banks? Ammo?

The CBS show 60 Minutes did a segment about the penny. You can watch Should We Make Cents?  or read the transcript. Bottom line is this: the gobmint makes $80 million worth of pennies every year. But the problem is that it costs the gobmint $134 million to make them. Not bad if you’re a zinc provider. Bad if you are a taxpayer. Bad for inflation. And guess what, that cost probably ain’t going to go down. Same thing with the nickel. They make $65 million worth of nickels every year. But it costs $124 million to make them.  Stop the insanity! Say goodbye to the penny and nickel. How?

Dear friends, it is time to get rid of a decimal place. I know, I know, you love your precious two decimal places. $14.95. $19.99. Or even $1.00. Well I have a proposal that will save all us taxpayers a lot of money in zinc costs: Get rid of a decimal place! This actually works out in favor of the consumer because now prices would be $14.9 and $19.9 on the same items. No need to round up! Get rid of nickels and pennies. The only use for a nickel would be if you had two of them. Similarly for a penny, you could only buy something if you had ten of them. Eventually the lowest useful coin becomes the dime. And the gobmint could even fashion new dimes with Jefferson and Lincoln on them as an homage to our lost coin friends.

Our pockets would be lighter, our gobmint would save $113 million each and every year by not having to make these coins. That works out to be $1.3 billion after ten years  and probably much more owing to the rising cost of zinc and copper (or said more properly, the lowering value of the dollar). Just think what we could do with $1.3 billion… reduce taxes!

So Jim Cramer is saying he’s been calling for this bear market all along. This is pretty funny. Love it when he calls for DOW 14580. Be careful, Cramer is now saying NOT to buy stocks. Let’s go to the tape…

I can play trader just like all the other guys. For example, here is a chart comparing the Vanguard Total Stock Market ETF (VTI) in green versus the VIX, the volatility index in red (sorry color blind guys… the red is the bold line)

For the past two years, when the VIX spiked, it signaled a bottom for the VTI,  which proceeded to move on upward at least for the short term. Today the VIX spiked up to 37. Did we bottom out this morning with someone selling their VTI shares at $120? (Most VTI shares traded around $129 today).

For a hint at the next Guru Roulette winner, I’m reading Crash Proof. It is a good summary of what I’ve learned (and passed along to you) up to this point. I wish I had read it when it first came out, it would have saved me a lot of time (and possibly a lot of money).

I did show 94 and talked about saving your nickels. Then I read this.

On show 92, I made the prediction that commodities would be in vogue again in 2008. And I said that gold would reach new all time highs (non-inflation adjusted). That was too easy I guess. Let me revise it to say that gold will go above $1000 per ounce. Much more interesting. Nice round numbers. Everybody loves nice round numbers. While I am predicting it, I hope just as passionately that it DOES NOT HAPPEN. So what do you do? Take the Risk Capacity Survey, invest appropriately, and ignore predictions like this one.

Rock Band. Mad Money Machine’s Ten Predictions for 2008. Step 12: Invest and Relax. A spin of the Guru Roulette wheel. If this is your first Mad Money Machine show, please do go and download another one at least. This is a year end shortened show. Next week: how the portfolios did in 2007.

I ENCOURAGE you to Download this show thru iTunes!

But, if you just can’t possibly deal with that then go ahead and
Play the new show right now

Predicting the Future [ 20:00 ] Play Now | Play in Popup | Download

The Mad Money Machine is proud to be sponsored by Index Funds Advisors at ifa.com.

Topics in this week’s show include:

• Ten predictions for 2008. Download and listen to the show for full details of each prediction

1. Cramer will write a new book published on Tuesday 9 December 2008 entitled Jim Cramer’s Mad Rules for Investing and will be about how to select index funds and ETFs, how to avoid actively managed mutual funds, and how to do other things besides watching the stock market. It will go further than his current book “Stay Mad for Life” in recommending passively managed investments, avoiding expenses and fees, and avoiding taxes. In conjunction with the book, he will begin featuring a weekly segment on his show Mad Money each Monday entitled “Index Fund of the Week” where he describes and index fund and why it is a good place to invest.”
2. Apple will release a tablet PC with a touch screen and Wi-Fi for surfing the Internet. It will have a USB port to allow connection of peripherals such as keyboard, external hard drive, camera, even external monitor. A later version will include a Bluetooth phone, connection via 3G, and an even later version will feature an extremely high resolution black and white screen mode for eBook reading giving tough competition to Amazon’s Kindle eBook reader.
3. Stock market will surprise investors. One of the recently strong segments will exhibit significant weakness in 2008. And one of the recent laggards will show significant strength. Either Fear or Greed or both will be rampant.
4. Ron Paul will do better than expected. Not hard to do when they don’t expect much at this point. Whoever bought Ron Paul futures on intrade.com for $8 will be able to sell at a nice profit.
5. Commodities will be in vogue again. You’ll be seeing a lot more of Jim Rogers. Gold will reach non-inflation adjusted record levels.
6. Ben Bernanke will resign as Fed Chairman citing a family matter instead of his actual frustration of being in a hopeless situation and not wanting to have all the blame fall upon himself.
7. Index funds will beat actively managed funds
8. A one-stop-shop ETF portfolio fund will appear that gives complete exposure to risk, reward, and diversification all for a low fee. It will include all of the SMILER components as well as some bonds, commodities, and even private equity and possibly even some selected shorts (A short of a bear fund, perhaps??)
9. MLS Soccer will continue to build. David Beckham will help score the winning goal in the MLS Cup. Other international stars will be brought into the MLS to raise awareness of this internationally popular (sans USA) sport.
10. Google will announce Google WESK: What Everyone Should Know” similar to a wikipedia but instead only includes what the sum total of the public deems to be the most important information that we all need to learn. It will have age–specific areas, topical breakdowns, and be ranked by the users and not a centralized board. You can check off the areas that you have learned and an indicator will show you your completion percentage of what you have mastered. It will be basically an FAQ for everyday life, a supplement to schools at all levels. They will also add real time stock quotes into their online spreadsheet tool.
11. Bonus: MadMoneyMachine.com podcast and blog will continue to innovate, expanding coverage into additional topics and media. Stay tuned.

• Our Guru this week makes bogus claims.
• Mark Hebner explains the 12th step: Invest and Relax
• Next week: The results from 2007

Music from music.podshow.com:
ALTA PLAZA – XRAY DOGS
Sound from the Future – Jesushairdo
This Future – emma cornwell
Future World – Gary Hunter
Maybe Tomorrow – Secondhand
Runaway Train – Under Feather