Simit Patel

By now the idea that this economic breakdown is not going to be solved in a week or two, and that it represents a restructuring of the global economy, is starting to become more apparent. With that in mind, here's guideline for private companies in the United States looking to safely grow over the next four years:

1. The big picture is the US dollar. As I've stated many times before, the US dollar, its value, and its role as the world reserve currency are at the heart of the current economic crisis. In my opinion, the end result of all these bailouts and collapse of the US financial markets will be currency devaluation, and thus I recommend businesses prepare accordingly.

2. While the US dollar is strong, shop till you drop. The US dollar has been strengthening for much of 2008; while this scenario continues, American private businesses should be looking to acquire. As the currency gets devalued over the next four years, prices will rise and purchasing power will decline. This makes now a great time to go shopping and buy assets that will be needed over the long-term.

3. Consider getting fixed rate credit. Right now, interest rates in the US are very low; they are approaching zero. This, coupled with the expectation of significant currency devaluation going forward, makes borrowing to buy now and pay back later (when the currency is worth less) a compelling strategy. This must be done carefully; only companies that can reasonably manage debt should consider this option. Also, as we have discussed previously, the Federal Reserve may need to raise interest rates to make the debt it continues to issue more attractive.

4. Don't forget to raise prices. Ask anyone who lived through the currency crises in South America: the biggest mistake companies make is failing to raise prices quick enough. Keep an eye on dollar prices and the rate of fluctuation in its value, and move your prices accordingly. Alternatively, if possible, consider pricing in other currencies -- particularly gold or silver. Last but not least, bear in mind that Asian currencies may appreciate while the US dollar declines, particularly if they stop purchasing US Treasuries but direct that wealth instead to domestic production, which China recently took a step towards doing via its stimulus package. As a result, opportunities for American businesses to export to Asia may be a sector to look into.

5. Everyone's a central banker now. Central banks maintain a reserve that is diversified across a number of currencies and precious metals. In a globally volatile economy, businesses must do the same to effectively hedge risk and preserve wealth. Precious metals and foreign currencies are more important than ever.

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My Links: Proud to be a Permabear, Crisis Investing Video Series, Investing in a Centrally Planned Economy, The Investor 2.0 Quest