Cash and where we go from there

[imoldernu]

This may get me drummed out of ER, but I'm looking for a clear unbiased explanation of what's going on in the US Fed, the EU, China, Russia and places like Greece and Italy, and... how the IMF factors in to all of this.

Finance headlines from all directions come up with dire warnings of worldwide money chaos, a change to China as the new"dollar standard" and seemingly valid notices that US banks are trying to eliminate cash as a buying tool and are refusing to allow cash to be placed in safe deposit boxes.

All kinds of sources from The Atlantic, Motley Fool, NYT, Charles Hugh Smith, Zero Hedge, Forbes and the LinkTV, Aljazeera and MSNBC shows. Every one with a different "take" and when you read or watch the piece, all seem sincere and well sourced.

From the national debt, to the unfunded liabilities, to the underfunded pension funds and the overhang in Freddie and Fanny from the last bailout, the entire picture is a worrier's nightmare. The dire predictions about derivatives and hundreds of chartists predicting "whatever"... could drive a naive believer to think 1929 and make bad decisions... moneywise and personal.

All of this information comes in piecemeal... shocking headlines... doomsday... preppers... NRA... political biases, and those "papers"... hundreds of pages of "proof" theories, historical comparisons etc, etc, etc,,,
and those etc's cover a lot of ground.

Like nobody really knows, but secretly they "know".

Current scare headlines seem to center on the FED, and the movement in interest rates. Increasingly a lot more attention to "cash" and its' importance in trade. This, supposedly linked to the fear of "cash" encroaching on banks' liquidity.

I could go on and on... and truthfully, so could you. Who do you listen to? and do they seem to have a handle on the worldwide situation, or just a memory of the worldwide market when it last seemed this unstable?

A gigantic jigsaw puzzle that, for the past 7 years seems to have many solutions that never seem to materialize. Worse still...
Worse still... an 800 lb. gorilla in the room that everyone sees and knows about, but inevitably believes that if we don't disturb him... he'll let us go on going on, for another 7 years.

I don't have a dog in this fight, but the whole subject of money, and cash fascinates me as if I were watching a world-war begin...

I admit to being confused... every assumption has been torn to shreds. Every prediction (by anyone) has been wrong. I confess that those here on ER, who have poo-pooed the apocalyptic predictions have been right. the market continues... the earnings have continued... (even my own pitiful portfolio).

So my thinking has no validity. I confess and bow out.

Never leave an opening post without a question.

Who to listen to?
What's going to happen?

 

[Gumby]

Turn off the TV, kiss your wife, go for a walk and just enjoy being alive.

"Take therefore no thought for the morrow: for the morrow shall take thought for the things of itself. Sufficient unto the day is the evil thereof." Matthew 6:34 (KJV)

 

[dallas27]

When will you write the second chapter?


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[ejman]

I find the collective wisdom of the posters at this forum to have great calming value. It seems that the consensus to most anything is to turn off the news, take it easy, go for a walk, this too shall pass, and son on. And by golly, so it has...

I recall the panic of 2008 when it seemed the world really was heading down the chute rather rapidly. As it turned out a panic response then was absolutely the wrong thing to do. As for now... I dunno all I see is a lot of media froth.

 

[Nemo2]

....all I see is a lot of media froth.

As an old friend of mine, who quit working at 35 and turns 64 in December, calls it..."Babble".

 

[Rothman]

I think 2008 time was a much scarier time, many parts of financial community were vulnerable and industry was way down. I just don't see the parallel today myself, we may have a market downturn from all time highs but the foundation is solid in my view.


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[ERD50]

Turn off the TV, kiss your wife, go for a walk and just enjoy being alive. ...

+1

When will you write the second chapter?

OK, I'll admit to skimming and not reading every word. It comes across as Chicken Little talk, but more seriously, for ER types, 30 some years is a loooong time, and lots can happen. Including the US not being a world leader, and that could have dire consequences for US citizens.

But to address your questions:

Who to listen to? I'm not sure. There must be some very smart people out there with insight, but how to figure out who they are? And are they talking (to the general public)? Not the mass-media news talking heads.


What's going to happen? I dunno. What does Uncle Mick say? Stay the course? Be nimble?

-ERD50

 

[LBrowning]

Don't worry, nothing bad Will happen until I retire next year. Enjoy it while you can!

 

[LOL!]

Finance headlines from all directions come up with dire warnings of worldwide money chaos, a change to China as the new"dollar standard" and seemingly valid notices that US banks are trying to eliminate cash as a buying tool and are refusing to allow cash to be placed in safe deposit boxes.

All kinds of sources from The Atlantic, Motley Fool, NYT, Charles Hugh Smith, Zero Hedge, Forbes and the LinkTV, Aljazeera and MSNBC shows. Every one with a different "take" and when you read or watch the piece, all seem sincere and well sourced.

I like the hyperbole and perhaps you are just pulling our strings. I have not seen any recent articles from reputable sources about "dire warnings of worldwide money chaos". In particular, I have not seen anything from the NYT on this, unless NYT is not "New York Times". I don't normally come across the other places you listed.

I have lived in nice places outside the US. I actually think it would be good for the US not to be thought of as the world leader. Let somebody else do that job for a while. It could be quite beneficial for US citizens.

 

[haha]

This may get me drummed out of ER, but I'm looking for a clear unbiased explanation of what's going on in the US Fed, the EU, China, Russia and places like Greece and Italy, and... how the IMF factors in to all of this.

You have forgotten sunspots and UFOs.

Ha

 

[audreyh1]

Babble is a great description.

You can spend precious hours of your life trying to make sense of it.

Don't forget that the news media is a business, and their job is to keep making you come back for more as often as possible.

We severely limit our exposure. Most of it is crazy making.

 

[Ian S]

You have to understand that spreading fear is lucrative and the financial media with its dire predictions for looming financial catastrophe is simply employing its own version local TV's "if it bleeds, it leads" approach to attracting viewers/subscribers and therefore advertisers.

 

[petershk]

Think of it this way... At any point in history the world was ending. WW1 before great depression, great depression, dust bowl, WW2, cold war, bay of pigs, Cuban missile crisis, civil rights riots, Vietnam, stagflation, oil crisis, Iran contra, tech crash, war on terror, housing bubble, etc etc.

So yeah... Maybe this time it'll really REALLY end... Or not.

If it does... Doesn't really matter where you put your money. If it doesn't... I matters some but not as much as being consistent and not over reacting. Oh yeah... If it does... It'll seem dumb to have wasted the good time left worrying about it .

Now... If you ENJOY trying to figure it out and make macro and micro financial decisions... That's different. In that case there's always lots of fun to be had

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[HawkeyeNFO]

Ric Edelman talked about this a couple weeks ago during his radio show. He offered this advice: Don't wait until next year, go to Europe this summer.

 

[aja8888]

Like nobody really knows, but secretly they "know".


What's going to happen?

Well, right abut now, I predict Golden State in five games. My next prediction is the Astro's end in third place and we fire the current manager.

(If you really want some perspective, read the Drudge Report!)

 

[Car-Guy]

Well, right abut now, I predict Golden State in five games. My next prediction is the Astro's end in third place and we fire the current manager.

(If you really want some perspective, read the Drudge Report!)

Well I don't turn off the news, as some suggest, but I do consider the source, take it with several gains of salt, and make my own judgements (the news has their own agendas - Duh!)

And that's an interesting baseball prediction, since the Astros have been in first place all season. Usually the only time you can say the Astros are in first place is on opening day. However, if they slip out of first place they may drop like a rock.

 

[imoldernu]

As we bury this thread, and declare the winners (and the loser). ... just a single word to be on the stone placed over the grave.

CASH

 

[Totoro]

Just finished reading a book recommended by Charlie Munger:

Future Babble : Why Expert Predictions Fail – and Why We Believe Them Anyway |

Found it really interesting, especially the "Foxes vs. Hedgehogs" types.

In a nutshell it claims (and shows) that most experts are really bad at forecasting, move goal posts, have trouble admitting they are wrong etc ..

In addition, experts with simple stories get more airtime and attention. Those experts are even more wrong.

Things are gray, life is probablities. And we are all human with human flaws.

So: listen more to people who deal in shades and probabilities, with input from several sources. And recognize that most of the future is unpredictable to a very large degree.

Yet we have to decide something, and within those decision lie assumptions about the future. Personally I tend to go with "the future will likely better than the past".

 

[ArkTinkerer]

I think things are screwy in the finance world. Negative interest rates? Really?

That said, the resilience of the human animal is amazing. Governments can do what they want but people find a way to make things work.

Most of the world isn't as bad as Greece right now but, while there is some deprivation there, I'm not hearing about mass starvation. I am no fan of the ACA but after a few years in action we read on forums like this all sorts of mechanisms to make it work to your advantage. People find ways to work the system no matter what happens. An outbreak of war or plague might be an exception but anything less and I think we will adapt just fine.

 

[Jay_Gatsby]

Just finished reading a book recommended by Charlie Munger:

Future Babble : Why Expert Predictions Fail – and Why We Believe Them Anyway |

Found it really interesting, especially the "Foxes vs. Hedgehogs" types.

In a nutshell it claims (and shows) that most experts are really bad at forecasting, move goal posts, have trouble admitting they are wrong etc ..

In addition, experts with simple stories get more airtime and attention. Those experts are even more wrong.

Things are gray, life is probablities. And we are all human with human flaws.

So: listen more to people who deal in shades and probabilities, with input from several sources. And recognize that most of the future is unpredictable to a very large degree.

Yet we have to decide something, and within those decision lie assumptions about the future. Personally I tend to go with "the future will likely better than the past".

I was just thinking of Buffet and Munger - you don't see them panicking. You also don't see many of the very successful long-term investors panicking either. Indeed, they're sitting on plenty of cash, just waiting for an opportunity to put it to work when people sell low (after buying high).

 

[Closet_Gamer]

I find myself balancing a few conflicting thoughts:

1) Markets are at all time highs so everyone is rich, ergo everyone thinks they're a genius at investing and can predict stuff. In this mode, people tend to predict continued genius investing and wealth creation. That is usually the time to buckle up and brace for impact.

2) "This time is different" is a great reminder that its never really different and it all usually comes out in the wash if you just leave it alone. That said, the central banks intervention is unprecedented and SHOULD pave the way for some nasty, equally unprecedented whip-saws in terms of inflation and a hair raising correction in bonds on scales we've never seen in modern, western economies.

3) That hair raising bond correction could come right as boomers retirement hits full force with all of them having been told to "move to bonds for safety" by their FAs or having it done automatically by target date funds. This could put increased political pressure on the already criminally under-funded retirement liability of all sorts...pressuring the govt to just print money to "fund' these unfunded liabilities. Someone has to pay the piper here...boomers with reduced retirement lifestyles, X/Y/Millenials funding their parents directly or through the govt, or inflation producing money printing...there is no free lunch and all options have real impacts.

So to me, the question is: is it really different this time or is just another "this time is different" moment?

That said, to ArtTinkerers' post, I'm a huge believer in the creative power of people. So long as we leave most incentives in places for people to work and better themselves, things will heal over time and we'll move on to worrying about the next crisis-to-end-all-crises.

 

[unno2002]

[FONT=&quot]Follow On Opinion:[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]Re capital gain investments (speculations) where one is seeking a price increase, one is only sustainably rich if one can, when “dollars” are needed, find someone else to buy at an increased price. If/when new money flowing into to such markets slows or stops, let alone people in any significant numbers want “out of the market”, what happens?[/FONT]
[FONT=&quot] [/FONT]
[FONT=&quot]In the market overall, is there any connection between reality of productivity / profitability of stocks, and the price?[/FONT]

In the 1920’s, supposedly a lot of people bought stocks on margin, or with loans against their other property, and lost big time when the market went down.

Further opinion, the IRA / 401k etc. accounts, as set up by the custodians, essentially funneled funds into the stock market, vs main street. With broader vision custodians, the money could have also been invested in local business, rental homes, a broad variety of equity and cash flow assets, BUT the bulk of custodians selected by employers had / have limited opportunities for the cash to go to.

Regarding bonds, or other fixed interest rate vehicles, remember that when the interest rates rise, the sale value of the instrument falls.

There is indeed a significant chance that we have a large mess about to hit the fan. There are a lot of “prepper” discussion boards out there for those who may feel insecure about the stability of their national currency, economy, etc.

Or, keep at “business as usual”.