It is Obvious

Chris Rick has got altogether too much to say

I’ve got loadsa money

Posted by chrisrick13 on February 26, 2015

It is obvious: I’m not a bit interested

Still on the same track.  I have lots of assets in the form of houses and shares.  I would sell the lot at the top of a housing and share bubble today.  But what would I be left with?  It would be bits and bytes at the bank.  Lots of ones and zeroes and likely mostly zeroes.  Think I would rather have my assets.  At least at the end of a reset, which I think will happen and will be short, those assets will have the same relative value.

I have money in an ISA that went to a derisory interest rate after a year on a bonus interest rate.  I stood ready to rip it out and put it into another at year-end.  Trouble was that I could not find an ISA that had a sufficiently higher interest rate than my derisory one to make the change worth the effort.

Along with a reset I have concern about inflation.  Hyperinflation is the fear but even decent inflation at, say, 14% cut your money in half in 5 years.  At the moment though holding money or something that is close to money does not carry that big a penalty.  Risks are small.  If interest rates head off to infinity and beyond then the beauty of cash is that you can move fast to spend it.  Indeed having cash aplenty might mean that you can acquire devalued assets very cheaply.  If you have a Ferrari on your drive and no cash to feed yourself over the next month you might be receptive to some very silly offers.  Profiting from others’ misfortune?  Perhaps saving someone from starving from your forethought.

I am still worried about the bits and bytes that my money consists of.  However getting some part of my money liquid is something that is exercising my mind.  I have spoken about holding some cash (not on my property if you are thinking…).  If money is losing value because of inflation then there is another option: be short on lending and long on borrowing.  Get out there and borrow money where upping the interest rate will never keep pace with the inflation rate.  If the bank goes bust then the bits and bytes might head in the same direction as your savings bits and bytes and never be repaid.

But what is my point?  I think that the old models of thought will not serve you well over coming months and years.  “They’ve stopped making land”.  House prices always go up (sic).  Job for life.  Career.  Final salary pension.  Insurance companies and banks care about their customers.  Have a think about what it will cost you if the unthinkable happens.  Think what you will do if it happens now as you read this.  Think what it might cost you to nod in that direction and make some minimal preparations…and how much better you might sleep.

If you are into serious thinking then have a think about how long the current state of our economy will continue.  What will need to be done to enable the country to survive.  What if interest rates went up to (say) 5%?  On that one I can tell you that the interest payments on our debt are about the same as the NHS.  So at the moment we have one NHS but pay for two.  If interest rates go to 5% then as our debt rolls over, if indeed we can find entities to buy our debt, we will find ourselves paying for 7 of them.  I think I would rather pay for one or put twice as much money into the current one.  How about you?

It is obvious: I’m not a bit interested – sums it up nicely


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