It is Obvious

Chris Rick has got altogether too much to say

I wonder

Posted by chrisrick13 on February 24, 2015

It is obvious: cash is king

Just suppose that a reset happens.  Rubbish you might say but go and talk to the (Greek) Cypriots or the Greeks.  I don’t think it will last long before we come out the other side.  There will be a lot of winners and losers.  Most of us will lose some as the standard of living will drop.  It won’t drop by much though.  Perhaps it will if you need an operation, want to go to school/university, don’t want your house burgled, want to read a book at night and would prefer not to be mugged outside your house (wherever you live).

There might be a month or so where the cash machines don’t work.  Your bank will certainly have gone bust.  This means that you won’t be able to use a plastic card to pay for anything.  You will need notes and coins.  These might lose value quite quickly and be replaced by (say) cigarettes.  For a month though you will not be able to fill your car or buy food unless you can wave ten pound notes in the shopkeeper’s face.

How much cash will be enough to make a difference for the time of the reset?  A thousand?  Two thousand?

What, for savers, of all those bits and bytes, the binary digits that the bank is looking after for you?  How much is a binary digit worth?  You need to protect some of your wealth with a tradeable asset that you can hold that some thief will not easily be able to run off with.  Certainly a house is (should be) worth about 3 times a salary and over the reset it will stay at about that.  You will have to get it in your mind that a couple of zeroes will disappear off the right hand end of that number but it will buy after what it would have bought before in non-bubble periods.

What brought this to mind today?  The Greeks and the re-branded Troika have kicked the can a bit further down the road.  The UK election will be done inside the can-kicking range.  President Putin has said that war is unlikely with Ukraine (what have we got now?).  There is a trigger out there somewhere and lots of candidates keep popping up.

It is obvious: cash is king but cigarettes might be

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