Cash: “Trash” or “King”?
Much thanks to Chris and his team for making all of this information available. After watching the crash course, I have since been reading as many books and blogs on the economy as I have time for. All indications are that we are in for major adjustments going forward resulting from the US being the greatest consumer based debtor nation in history. However, there seem to be to viewpoints:
"Cash is Trash" and "Cash is King" —> "Cash" being the US dollar
Arguments for both are compelling. I would like to start a discussion to see which you believe will be the reality going forward in say 1,5,10? years….
I will start with my opinion based on my interpretation of what I have read thus far:
Cash will be "King" for the next 1-5 years. This will be due to the unwinding of the credit markets. Available credit will disappear faster than the Fed can pump more money into the system. Thus assets typically acquired with credit (housing, cars, big ticket items) will see prices continue to fall significantly. Prices for basic goods and services will likely continue to go up however, especially as less is imported.
Cash will then be "Trash" as all the money pumped into the system by the Fed to combat asset deflation will be let loose. This could show up and impact goods and services well before assets. But after the 1-5 year period, then one will want to own assets, gold & silver and not cash.
What do you think?
"Cash is/will continue to be King", I think. Whether I like this idea or not is not what you asked.
I’m surprised the dollar value has not gone up steadily. I suspect it will pretty soon here. I just don’t think we’ll see that "inflation" everyone is talking about. I see it going the other way and I think that it’s another reason why we are pumping liquid dollars into the markets–because of the lack of it.
Both: currently I use it as a scoreboard.
Cash is King UNTIL cash is Trash. A fortune teller would know when to switch out of cash to hard assets in order to get the most hard assets for the cash. (GREED) Then if the cash is devalued you are covered. You can’t time it unless you are an insider so that leaves the gut-meter (FEAR). The most troubling part for me is the phrase "Federal Reserve Note" on the Dollar bills. "Note" means debt, and the FED’s debt is growing but we can’t see their balance sheet. If they belly up their ‘Dollar clone’ is worthless leaving only the Precious metals in your hand to cover you – as you pitch the wallet with the paper money in it into the trash can.
Supply and demand will take effect.
In long run, cash is trash. What is the long run? Wish I knew. This depends on when the governments either stop meddling or there meddling looses it’s power.
Kman, you are on the money! short/med-term = cash is king. long-term (once the US empire collapses) = cash is trash.
the only thing I’d add for more specificity…the cash that is king is USD and Yen. other currencies are closer to trash simply due to the pecking order of the global system that has been built via the Fed, US Treas, and BOJ.