It is Obvious

Chris Rick has got altogether too much to say

A fistful of paper

Posted by chrisrick13 on March 31, 2013

It is obvious: in all, timing is everything

You put your money in a bank.  Why?  A large part of the reason for doing that  is because you can easily pay bills.  Your salary comes into it (if only).  It will make money available to you all over the country or even the world.  You do it because the ‘retail’ banking works very well.

As a business there is not much danger in this.  Money comes in and mostly only goes out if there is arrived-money to match it.  Money is not hugely efficient in its passage through bank accounts so there is opportunity to use the money and…gamble with it…until the person wants it back.  Of course the banks can charge for their services but they don’t.  Except they do in a fairly underhand set of service charges and outrageous fees for foreign exchange and other less heavily used functions.

If you want to leave money in a bank to earn some interest you can.  What you won’t do is to keep up the value of your money against the forces of inflation and taxation.  As Lenin said: “The way to crush the bourgeoisie is to grind them between the millstones of taxation and inflation”.  It’s good to experience a right-wing government doing that to us.

So if you want to keep your money away from a bank then buying yourself a decent safe and bolting it to the floor is not too bad an option for at least some of your money.  It will lose value but not much beyond keeping it in a bank.  If you were in Cyprus it turns out it was a lot safer than keeping that money in the bank.  The problem comes when inflation takes off at a decent pace.  Then you need to empty your safe and buy stuff.  Go reasonably illiquid with things that you can use to survive with or trade.  However those pound notes in your hands are very liquid and turn into stuff at speed when needed.

The FIAT money that we all use is vulnerable.  However if that money goes then things will have reached a poor state.  We will be into buying shotguns not least to shoot and eat the squirrels and cats that come into the garden.  I don’t believe we will go that far and I can’t think of any useful preparation.  Perhaps it is just a being chased by the bears syndrome: you don’t have to run faster than them, just don’t be slowest in your party, and that is easy to do.

Running is something that is happening a lot.  You sit there with a warm glow that you have spread your money around a number of banks.  Nowhere is it more than £85,000 in an account so it is all safe.  Then you look at Cyprus and realise that it is not.  You also notice that the money over £85,000 is as far from safe as it possible to get.  Why is there not a differential rate for all the money over £85,000 as it is at more risk?  Simply because banks can set a lower interest rate and nobody says anything.

So having money under your carpet is not a very smart thing to do.  Neither is having it invested because any investment involves a bank somewhere along the line.  Banks are not safe.  They never have been.  The difference is that now we have seen it in action.

It is obvious: in all, timing is everything but in waiting for a bigger fool you might discover there isn’t one.

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