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TOPIC: Cash is King

Cash is King 09 Jun 2014 00:11 #1

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Cash is king – June 5th 2014


It’s been nearly a year since the last View hit the streets during which time your correspondent has gotten himself married which I hasten to add has had nothing to do with the lack of output or indeed its resurrection! Normal service is now resumed and you can expect further diatribes on a monthly basis. First up given that markets everywhere are being manipulated in one way or another and most of them are not cheap where do you put your money. Clue: buy a large mattress.

“Inflation is not measurable, money is poorly understood and the economy is a complex system. From these observations can be derived a straightforward corollary on economic policy makers: trying to control a variable you can’t measure (inflation) with a tool you don’t fully understand (money) in a complex system with hidden, unobservable and non-linear interrelationships (the economy) is a guaranteed way to ensure that most things that happen weren’t supposed to happen.” From the Edelweiss Journal November 2013 www.edelweissjournal.com

Yet we all live in the thrall of central bankers the kings (and queens) of economic policy forecasting. It has ever been thus, but in the relatively modern era, Paul Volcker’s taming of inflation in the 1980s, by levying penal rates of interest, opened the flood gates for all kinds of economic chicanery experiments culminating in ZIRP, QE and the euro. None of these policy initiatives has demonstrably worked in the way intended, but if we persist for long enough, we will get the result we want, seems to be the mantra. Thus giving credence to Einstein’s observation that doing the same thing repeatedly, but expecting a different outcome, is the definition of madness.

Today it is the ECBs turn to throw a spanner into the system. Having said that he would do whatever it took way back in July 2012, Dr Aghi has now actually had to pull his proverbial finger out as the Eurozone drifts inexorably towards deflation in a moribund economic environment. His first move was to reduce the rate at which banks lend to the ECB to minus 0.1%. It will now cost the banks money to park their cash in this particular safe haven. The theory being that they will now just have to lend the stuff out in order to make a turn. Problem is Rodney that no one with a decent credit rating wants to borrow from them.

There will no doubt be lots of loans for car buyers, students and wanna-be home owners, but is this really going to make a lot of difference to the economic recovery. It certainly won’t in the periphery where austerity is still spoken by governments and the IMF and any dissent is being literally beaten out of the system. The EU are debating how “alternative views” can be supressed from the internet and people are being fined for going on anti-Government rallies in Spain; George Orwell was only 30 years early. It would never occur to the ECB that the recent election results giving voice to the anti-Euro brigade might just be the thin end of a very sharp wedge pointing in their direction. The politicians and their banking partners in crime are not going to be put off in their divine right to impose their will by a mere “protest” vote.

The announcement today reiterated the do whatever it takes line and the initial market response was to sell the euro and gold and buy equities. Just as quickly those moves have been reversed and most things apart from gold are close to opening levels; buy on the rumour (July 2012) sell on the news (today) triumphs over conventional analysis (hot air) yet again…

So in this crazy world just what are we to do. That other great “quant physicist” Keynes opined that “markets can stay irrational for longer than one can remain solvent” or “employed” if you are an investment manager with a bearish view on low interest rate / QE fuelled markets. If your investment universe is getting more expensive by the day, which asset class best serves the purpose of preserving your hard earned capital? The conventional risk off asset class used to be sovereign debt, but with yields at historic lows they really aren’t cheap or risk free anymore. In corporate bonds and high yield are you really being paid a big enough risk premium? Hedge fund strategies have had a tough time this year as the markets rotate from risk off to risk on and back again without any clear pattern and the historically successful funds are getting to be heroically large and geared to boot.

It may sound like heresy but the answer to the conundrum is cash; under that mattress and stacked on top of your gold bars.

www.viewfromthebridge.co.uk/
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Cash is King 09 Jun 2014 08:58 #2

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You can still get 4 percent return on your money in OZ , a few banks offer that rate with high interest deposit accounts. (not term deposits, can get more with those)

Not sure the mattress would give returns like that. :wissl:

Though with 11 successive interest cuts in Australia the rates arent what they used to be a short while ago, where they were around 7 percent not so long ago... and who knows where they are headed? :dunno:
1365 = 1

1.1365 = 1,283,305,580,313,352
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Cash is King 09 Jun 2014 11:33 #3

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Do you think a 4% return on investment is anywhere close to the real rate of inflation? To obtain the top rate of return you are required to tie up capital in accordance with the rules applied to those accounts which are totally in favour of the Banksters. Holding any reasonable sum in the Bank incurs a very real and potential risk of confiscation by the State as Savers are now considered to be Creditors of the Bank (bailin policy).

Converting worthless money into tangible assets spread over various items of real value would seem to be a wise approach to take, all be it less convenient. Holding some metals and crypto currencies would seem to be a much more secure and rewarding investment opportunity. Investing in local communities projects would also seem to be an area that people could move their wealth into, which would help dilute the effects of State and Banksters. For example city folk could buy some local agricultural land and create private allotment schemes, or maybe buy up some redundant retail space and create community run stores, which offer service directly beneficial to the community. These stores could buy direct from the agricultural community. A spin off of that maybe a small community transport scheme which could deliver goods to local communities and move produce from the farm gate to the store shelves etc. If the community want organic and raw dairy produce then that's what the store would sell. If the State legislate against Raw dairy for example the community could then stand against the State legislation as a united front. Who the hell has the right to dictate to anyone what natural produce they and their family should or shouldn't consume? FFS! It's pure lunacy to allow morons in some State department to determine how you should live your life!

The State has failed on every level in every community both locally, nationally and internationally to serve the people that it supposedly represents. The only long term solution is for people to take back responsibility for their communities/national interests and reject the States involvement in any aspect of their daily lives. That would also include dependence on a corrupt and failed financial system and the wider economic environment that Banks and State feed off. Cryptocurrencies empower the people and removes any centralised control over the means of exchange while also introducing an open audit trail.

People need to start rebuilding faith in the real people around them instead of clinging to old concepts which require a belief in the fictional entities of the State. The issue is that the real powers behind the illusion of State have managed to fool people into believing that the State is some how beneficial to them - despite all the evidence to the contrary.

There is only one constructive and tangible source that creates and sustains anything, and that is the sweat equity of living breathing people and the communities they build around them.

It's time for us all to break free of the traditional Banking and monetary systems that have been used to enslave us. We have the ability to control our own news and entertainment down to an individual blog or podcast and we now have the power to create our own money and financial systems where individuals become their own bank. What the hell are we all waiting for? It doesn't get any better than that if we can all shake off our old beliefs in systems that we know for a fact don't and can't ever work - especially if we actually want to be free in the true sense of the word.

"Whenever you're in conflict with someone, there is one factor that can make the difference between damaging your relationship and deepening it. That factor is attitude." William James
Last Edit: 09 Jun 2014 11:41 by Frog.
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Cash is King 09 Jun 2014 12:02 #4

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Frog wrote:
Do you think a 4% return on investment is anywhere close to the real rate of inflation? To obtain the top rate of return you are required to tie up capital in accordance with the rules applied to those accounts which are totally in favour of the Banksters. Holding any reasonable sum in the Bank incurs a very real and potential risk of confiscation by the State as Savers are now considered to be Creditors of the Bank (bailin policy).

Yes i understand all about inflation and its affect on true earnings, what your money can buy now vs. past and future etc. My point is its still one better than getting zero percent (stuffed in a matress) :hahano:

Inflation can be measured in many areas as you know of course, but specifically with housing, there are areas where there is no housing inflation, rather the opposite, house prices have dropped sharply in the last few years in parts of capital cities in Australia, and in the USA, those are the two i know of, there may be more... and in parts of rural OZ i predict house prices to drop up to 50 percent from current prices in the next 10-20 years, in some parts they have already dropped 30 percent or more already since 2007-8-ish. Infact i'll go further and say some towns with well built houses will be quite empty as the current generation passes on and their children attempt to sell the estate to pocket the money, but buyers wont exist in many instances.

In OZ there is a govt guarantee that apparently covers depositors for up to 250K per account... it was announced as a 1 million dollar guarantee when the GFC hit because of bank runs, people started pulling their money out... they subsequently lowered it to 250K and thats where it is at present. How safe it really is i dont know.

I could talk alot about food but the fact is most people will herd into the big 2 supermarkets in OZ, no matter how many community stores are set up, and rural areas are dying, even acreages on the outskirts of capital cities are dying in some cities, glasshouses and food producing land on outskirts of cities being abandoned as food production is consolidated into fewer and fewer large operations, whom are the only ones the big supermarkets will deal with.

Out a little further much of the viable land is cropping and grazing, again young people abandoning rural areas in droves, there will be unprecedented rural decay that will only become apparent as the last generation still farming gets too old or passes on, empty houses everywhere in rural areas, its already begun.

I wouldnt recommend people get into food production / agriculture as an investment... for the self yes i would for growing your own food purposes, but to make money, well its being targeted in a massive way and farmers in alot of places are the new Gadaffi if you will, they arent wanted or wanted only as slaves to corporate operations be it slaves to the primary production side or as suppliers to the retail side or any combination of that.

In theory yes doing the opposite of what 'globocorp' globalists want would be a way to oppose them, but with so many people not being aware of what is going on, the majority wont support it, so the reality is it wont work out so well for the few who try oppose it in the area of food production.

Things like bitcoin might be a worthwhile investment as we've discussed before, id be open to giving that a go.
1365 = 1

1.1365 = 1,283,305,580,313,352
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User(s) who Liked this post: Lizzy

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