Thursday, July 24, 2008

[your cash] in a shoebox in your cupboard

From the Asia Times:

Since a major effect of inflation is psychological, the fact that inflationary pressure has decisively moved back into the 1970s range is important.

At 5% per annum, inflation cannot be ignored. Investors cannot buy fixed-income securities without taking account of the fact that the principal of those securities will have devalued by more than half by the time they are repaid (if they are of 15 years or longer maturity.)

The combination of inflation and un-indexed income and capital gains taxes rapidly raises the tax rate on capital returns to an extremely high level, depressing still further the incentive to save.


For the layperson, this last seems the key to me - the disincentive to save. So in the light of this, what to make of Sackerson's post today, suggesting, via Mish:

The entire US banking system is insolvent.
In Russia there is a long tradition of keeping the money in a shoebox in the top cupboard, keeping it in hard currency and never trusting anyone's exhortations to part with it.

8 comments:

Dragonstar said...

This seems increasingly a good idea!

Anonymous said...

I thought about keeping my £12.50p saving in a shoe box under my bed.........but what about if the house goes on fire? I'll be destitute.........

TBRRob said...

Might well be an idea.

mutleythedog said...

I keep all my coins in a jiffy bag and take them to Sainsburys and put them in the Coinstar...

Lord James Bigglesworth said...

Some excellent suggestions here.

Welshcakes Limoncello said...

If the US banking system is insolvent, I shouldn't think Italy and the UK are far behind - or me, for that matter!

Anonymous said...

Your friend may crib from this
BUT
This states the case in a far more powerful manner

jams o donnell said...

Hmm I think the coins in a sock down my y fronts... It enhances what desperately needs enhancement and can be used to incapacitate a potential robber!