We have read in the last few days, that the world’s billionaires are buying up a lot of gold bars and now, that they are hoarding cash. We add to that: “He wo has eyes to see, let him see.”
In 1933, President Roosevelt closed the failing banks for a “bank holiday” that left a lot of people scrambling. In 2008 President Bush covered the failing banks with Fed cash via the “TARP” program; he didn’t therefore have to close them. But next time, since we’ve already overused that gambit, it won’t be available. So the availability of banking shouldn’t be taken for granted these days as the billionaires are, by example, advertising.
It is beginning to seem wise to have some cash on hand, a couple of weeks’ worth at tleast. Unadvertised, of course in these days of home invasions. Given that we can’t expect to earn any useful amount of interest (Gracias, Federal Reserve) we might as welll store it in a mattress anyway.
Re the gold bars: President Roosevelt confiscate all the gold (except coins) at his artificially set, inflated price. Billionaires may store such things in Switzerland or under convenient alias; most of us will be subject to any confiscation that comes along. But most of us can’t afford too many gold bars anyway. Anything that may retain value as the dollar inflates should do.
See, we’ve been watching the stock market in New York. Stocks are supposed to represent the market value of businesses, right? But we note that businesses have been taking on debt, laying off people and leaving for China; we don’t see how their value can have been skyrocketing upward unless they are Apple. But they have, skyrocketed upward, that is. The New York S&P stock index is in the stratosphere.
When the market value of business stocks shoots up while the business itself isn’t setting the world on fire, that’s telling us something: the puffed-up values contain a lot of hot air. At some point, that air will cool and leak out, leaving only the value of plant, inventory, workforce etc. behind. When it happens to a bunch of businesses at once, it’s called a stock market collapse. We famously saw that in 1929 and more recently, in 2008. We didn’t much care for it either time.
Stock markets setting new records for high stock prices when the real businesses haven’t been doing so wonderfully are prime candidates for such collapses. The trick is dating the event. Our theory today is that watching the world’s billionaires taking in their sails and preparing for a blow suggests that the date isn’t too far off. Of course, we don’t know what we’re talking about. Maybe we should put on our tinfoil hat? Or maybe we should stuff a few big bills under the mattress. We dunno …