I agree but… – Holding cash is a sign of fear, and fear is the worst investment of all by Ted Rechtshaffen – My Review – July 3, 2020,
I’ve personally watched and read at least 9 months’ worth of information that is derived from Financial Post contributors, the mainstream media isn’t all bad. However, one of the reasons there are so many regulations on everything financial in Canada, is because as rich dad poor dad author Robert Kiyosaki has pointed out, the rich don’t work for money and financial education, the real financial education that people like Ted Rechtshaffen comprehend isn’t understood by most people.
Now, with all of the money printing happening in the world, all the free cash giveaways that all of society ha to pay back in some way shape or form, the assumption by most financially uneducated people is that this free money is going to stop flowing and therefore they should hoard the cash they got.
I often write AGAINST a Gold Stanard currency, because I personally believe a Gold Standard currency is too advanced for the average person who can’t comprehend what a storer of value is. A storer of value is not necessary the gold or the money, the storer of value is what the individual can do with the Gold or the fiat money.
Often when governments send out free money, their intention is to stimulate the economy, get people spending money recklessly, so they can expand the credit markets. Deflation is the government’s biggest fear primarily because the government pays most of its bills primarily via the silent tax.
Now if a person goes shopping at the store in January and let’s say a bag of 255gram potato chips is $1 Canadian, dollar, the individual purchases the chips for $1 and hoards these potatoes chips. But let’s say it’s now July and instead of a 255g bag of potato chips being $1 Canadian, a 150gram bag of potato chips is now $1, what actually happened is the consumer lost their purchasing power by hoarding Canadian dollars.
It’s hard for most people to comprehend that their money is losing purchasing power, but that’s what happens if the Canadian dollar doesn’t lower it’s purchasing power, we can’t pay for our bloated government. God forbid we have to dissolve into austerity measures?
Canadians love their big government, I’m not one of those Canadians who love a big ole government, but we live in a democracy and if people want to protect crown corporations and pay the salaries of public sector workers, the inflation tax is the name of the game.
Pay for government by devaluing the Canadian dollar, irrespective of the Canadian dollar to other currency, the domestic Canadian dollar will have to be devalued, and again, the only tax I like the Tariff tax is going to be used against Canadians in a deflationary economic period, because the tariff tax needs to be paid and prices for imports will have to go up!
I agree with Ted Rechtshaffen for the most part, but there’s a problem that’s brewing in Canada and it’s why I’m personally against things like rental controls, minimum wages, Crown Corporations and other wage and price control government measures, Canada is going to eventually have a massive CASH FLOW problem
As an example, if I’m a minimum wage worker and the government is giving away money via CERB to infinity, there comes a time in which working a 9-5 job is pointless. I personally would continue working for my own sanity, but I wouldn’t fault someone if they decided not to work and instead take a government check for being ‘sick’ or ‘unable to work’.
The Canadian economy was headed down the wrong economic path before COVID-19, now, there is clearly going to be a cash flow problem and worst of all people are hoarding cash. The whole purpose of the fiat monetary system was to incentivize humans not to hoard cash and to spend freely.
In this environment where run-away inflation is a possibility, can you imagine if central banks were forced to raise interest rates? Try not to imagine it, because it would be catastrophic and the hoarders of money still wouldn’t win, because again the problem approaching Canada and other countries is a cash flow problem, the government is too big almost everywhere on the planet and government people don’t work for free, so as the private sector contracts and the government still consumes the same money it did before, do you not see the cash flow crisis approaching us?
Holding cash is a sign of fear, and fear is the worst investment of all | financialpost.com
Interesting times ahead!