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Thread: Time to pay serious attention...

  1. #1

    Time to pay serious attention...

    I just want everyone to be aware of the importance of having a couple of months of cash should this economic advisor to the IMF be correct.

    Andrew Macpherson

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  2. #2
    Team Z8 tomfakes's Avatar
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    Are you talking about cash in hand rather than cash in the bank here? Probably small bills too - 100s are too big for day-to-day use in a failed banking system

  3. #3
    Z8 Ate My Homework! Norcal's Avatar
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    And even if we wanted to pull out some cash, good luck getting a few hundred thousand in small bills. How would you swing that?

  4. #4
    Team Z8 tomfakes's Avatar
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    Golly! How much cash do you spend in 3 months?

  5. #5
    Z8 Ate My Homework! Norcal's Avatar
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    My concern is how much I am willing to risk by leaving it in a bank. If things get really bad, it would seem that my cash might be safer under my mattress. It's not like I'll miss the 0.001% interest! Why not pull it all out? And, if the @#$% never hits the fan, what have you lost? You can always redeposit it later. I'm not joking, I've thought about doing this... and it would be quite a bulky package to transport and stow. As for government insured accounts, I have little faith they would be able to cover it, and there is no specific timeframe in which they need to get you the money back.... it takes time to print new money!

  6. #6
    Z8 Millennial Monster hayvenhurstkid's Avatar
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    If it comes down to what you are talking about, I don't think you would want to live in the kind of world that would exist. I always keep cash on hand in case there is a disruption and I need money to get me through a few days or weeks. If the whole system collapses and FDIC accounts are wiped out, we are finished. I don't think that is going to happen. I personally would never put my money "under my mattress." What if your house burns down? I think rough waters are ahead, I just don't think we are headed for armageddon.

    P.S. I am with US Bank and my research shows they are a very stable and well capitalized bank. My retirement money is spread out among many laddered FDIC insured accounts at various banks. I do all of this through my account at Schwab. What are you going to do with your retirement money? Cash it out and pay taxes and a big penalty? I'll sit tight.
    Marty

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  7. #7
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    I am of the belief that cash in the bank is guaranteeing a negative return if you see the inflation occuring around you. I believe 10% of your assets held personally in precious metals is the prudent thing to do. Virtually all international financeers believe we are headed towards a different reserve currency model and that gold will be part of the picture. I have been with Andrew for the last 18 months on this. I would urge all here to extricate a portion of their assets from their dependency on present day fiat currencies.

  8. #8
    I do think this collapse, if it happens, will be pretty bad, and gold/silver will be effective wealth bridgers to whatever comes next. I have no idea what will come next, but I read a lot of comments and thoughts by a lot of people much smarter than I, and none of them are seeing the next either.

    It seems everyones focus is keeping this system going at all and any costs, and as such there is just not much thinking about what to do should the unthinkable happen. All I can do is pass along the most important info as I find it in hope that it will help protect our small brotherhood in some relevant way.

    Without sounding too absurdly English I'm hoping that this warning will be just like the weather forecast that makes you take your umbrella, but the very fact of taking it will ensure that it doesn't rain!
    Andrew Macpherson

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  9. #9
    Freedom Ouray's Avatar
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    The issue in 2008 was a global issue but the European banks and regulators have refused by and far to address it. The interviewer is correct in that Scandanavian banks are in good shape, British banks are in better shape then they were three years ago, but the rest of the European banking system is like an Ostrich with their heads in the sand. Just two months ago Dexia passed the 2nd round of bank stress test, and then this past weekend then needed a rescue. The EU is a flawed concept as monetary union with out fiscal union and centralized government does not and cannot work. That is the root cause of the failure to come together and address the issues today, there are just too many cooks (countries) in the kitchen. My personal view is that the sense of urgency in Europe is picking up, but it may be too late. Having said that the US banking system appears to be sound at this point. The markets tried to test some of the US financial firms this week and were repulsed by the end of the week. In 2008 I had many sleepless nights, this year I just have a few bad dreams, but feel much better about the US financial system then I did in 08. Diversification of assets, and financial institutions is always a good idea even in healthy times.

  10. #10
    Z8 Millennial Monster hayvenhurstkid's Avatar
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    Can't tell you why, but gold and silver scare me. They have no intrinsic value, just what people think they are worth, and panic seems to make their prices go up. I guess that can be said about a lot of commodities though. I refuse to panic and will continue with my philosophy of being more concerned with return of investment rather than return on investment. Maybe I am getting very little interest in the bank but that is better than a 30% loss in the market. My plan has been retire all debt, including my mortgage, which I have done, live within my means, and save as much as I can. Someday interest rates, just like home prices, will once again go up. In the meantime I try and enjoy each day as best as I can, control the things I have control over, and don't obsess over those things over which I have no control. That and enjoy driving my Z8!
    Marty

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  11. #11
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    Well said Marty!

  12. #12
    Ouray, as always I'm very happy to hear your perspective, and would be most grateful if you'd keep us updated on anything you think would help us remain safe and sound through this.
    Andrew Macpherson

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  13. #13
    Sport Button On - DSC Off Lisa's Avatar
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    yeah maybe someone can explain the gold thing to me - it seems to me that gold is worth only what people will pay for it - and if no one has cash to buy it how will gold be a safer bet? If things get really bad i probably won't be able to roll into the safeway and buy a loaf of bread with gold. Might be better to invest in a warehouse full of canned goods (tongue in cheek).

  14. #14
    Z8 Millennial Monster hayvenhurstkid's Avatar
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    Lisa, you hit the nail right on the head. If gold goes up in value and you want to sell and make a profit, someone has to give you cash, unless you have a farm and could use a few extra goats. :-). Seriously, if our fiat currency system collapses you will have gold but how do you spend it?
    Marty

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  15. #15
    Sport Button On - DSC Off Lisa's Avatar
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    or buy a bunch of this http://wisefoodstorage.com/

  16. #16
    Z8Mania
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    Remember what JP Morgan said about the shoe shine boy. Now Ive seen gold vending machines at airports. Does this tell you something? Yes. Its probably overvalued- by quite a lot. Maybe it will take a very long time to expose that but it probably is (it being gold). Im with Marty- I keep some cash on hand in case of a disruption but Im not sticking my money in the mattress. If you are really worried about Armageddon / what I call "Defcon 0" / then Id say get a SUV with mud/ off road tires/ spare wheels and tires/ and several guns and a lot of food supplies. JMHO YMMV PQD ETC

  17. #17
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    Lisa, I'll try to explain the gold thing. First, hedge against inflation. Gold goes up in direct proportion to inflating fiat currencies. The more money printed, the higher gold goes in value. Gold is being treated as currency in a growing number of international transactions. Gold will almost certainly be part of a developing global currency standard. Gold is being accumulated by sovereign nations as we speak. China is set to open The Shanghigh Gold Exchange that will offer investors the opportunity to purchase actual gold rather than future contracts that are leveraged 50:1 and can be easily manipulated. Once these things behind to happen, you will simply turn your gold into the bank for cash in return. There is a real global crisis that's been created through currency printing since we came off the gold standard and the rest of the world is fed up. China, Brazil, India, Russia, Venezuala, and South Africa are all accumulating gold. I'm not a gold nut but consider it asset insurance.

  18. #18
    Freedom Ouray's Avatar
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    Gold is like anything else in this world, it is only worth what the next person is willing to pay for it. It does not matter what the seller thinks it is worth if the next bid is less then the offer. Supply and demand is an efficient mechanism is all markets.

  19. #19
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    Ouray,
    You are taking the position that gold is and will remain solely a commodity. My points above largely focus on the growing belief that gold is currency, a view shared by many including Alan Greenspan.

  20. #20
    Z8Mania
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    I think your argument would have more force if you didn't cite Alan Greenspan. Ill take cash or bullets.

  21. #21
    I want some of all, because I like to cover my bases.
    Andrew Macpherson

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  22. #22
    Z8Mania
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    Theres nothing wrong with that. But if the world ends, you're not going to be going shopping with bars of gold.

  23. #23
    I dunno, I think that the 1/10 ounce baby gold coins and 1oz silver rounds are very farmers market friendly.

    If there is a systemic collapse I can't see the 'time out' being that long as the need to create a new system will produce one in very short order. While I may not have a whole ton of confidence in the current system I have supreme confidence in humanity reacting to such an emergency with both speed and total effectiveness. I am sure that there must be a lot of folks at the Brookings Institute, the Rand Corp and other big think tanks who have already run this through their minds.
    Andrew Macpherson

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  24. #24
    Freedom Ouray's Avatar
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    Even currencies float unless you have a fixed exchange rate. They float according to supply and demand. Why has the dollar underperformed the Euro over the last decade, because there are too many dollars in print. There is no such thing as intrinsic value, only what the next person is willing to pay or exchange for the item in question. Gold, diamonds, bottles of water, when you want it you will pay more, when you do not you will pay less or not have a bid. Supply and demand is at play in all things economic.

  25. #25
    Z8Mania
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    Andrew, I hope you're right. Remember the dark ages? Humanity can languish for centuries. Just a happy thought of the day!

  26. #26
    I would fear a Dark Ages should we be invaded, but America is easily defendable from invasion, and anyone who wants to invade us in force has a long way to come across a lot of open ocean.

    Before Hannibal invaded Rome, and set off the Dark Ages, Rome was crumbling under its own economic collapse. It achived a level of culture and knowledge beyond Egypt and Greece, but this was the fruit of an effective economy that lasted five hundred years. However when Rome lost its power it was an oasis of reason in a wild world, and that wildness was what flooded the empire bringing on the Dark Ages.

    Should there be a total financial collapse today I think it would be much closer to what happened in Germany in 1923 and for the same reason, an unsustainable wall of debt. As happened in Germany the greatest danger of any collapse here would be the rise of some sort of extreme Nationalist Party.

    We are already at a 100% debt to GDP ratio which historically has been the event horizon of every economic collapse. Will it be different this time? I spend hours every day reading, learning and trying to understand what is happening around us, and with each days learning I realise how little I understood yesterday, so the truth is I have no idea whether this is the beginning of the end or just a cyclical down turn that will be forgotten in a few years.
    Andrew Macpherson

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  27. #27
    Freedom Ouray's Avatar
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    What is different is that our debt is denominated in the currency that our Treasury owns the printing press for so it can be paid back with inflation. Not pretty, but not a default end of the world scenario. No doubt change is in the air, but I for one do not believe that the apocalypse is upon us, yet..... Still like our card hand vs. Europe's or China's.

  28. #28
    What is different is that our debt is denominated in the currency that our Treasury owns the printing press for so it can be paid back with inflation.
    But so was Germany in 1923, and that's where my concern lies.
    Andrew Macpherson

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  29. #29
    Freedom Ouray's Avatar
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    True, but the invasion and taking over of the Ruhr River valley and its coal/steel plants by French and Belgian troops in order to collect on the war repartriations is not likely to be something that could happen in the U.S. There are economic issues that could pressure the US but an invasion is highly unlikely.

  30. #30

    and so it goes on....

    Andrew Macpherson

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  31. #31
    Freedom Ouray's Avatar
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    I am not certain, but looking at the rolling headlines at the bottom it appears this is a fairly old broadcast. Does not change what he says, just that it is old news.

  32. #32
    July 31st of this year.
    Andrew Macpherson

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  33. #33
    Andrew Macpherson

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  34. #34
    Z8Mania
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    More bad news is despite over 2 years in office, Obama is not a leader even though he said he was. Whats worse is that he said he wouldn't run for reelection if the country was in bad shape and guess what- we're in bad shape and guess whose coming to dinner!

  35. #35
    :-) That made me laugh, you hit the nail on the head!!

    I have to be honest, when I voted for him I really believed the hype, bit I wasn't as deeply engrossed in studying the revolving door between the privately owned Federal Reserve, Goldman Sachs, the SEC and Washington. Now I realize how naive my vote was, and can see that the oligarchs who own the Fed, and thus the country, the big banking families with the Rockerfeller's at their head, still own the country.

    Our choice is Dem Inc and Rep Inc, but they run the same business model, divide and conquer, and their business model only works by setting us against the other.

    Roughly half the population and right brained, and half left brained, across both sexes. Roughly half the nation are conservative, and half are progressive. By setting the two halves against each other the banksters are able to continue this terrifying silent coup they have running since the formation of the Fed in 1913.

    We need real change, all money out of politics, and banking should be turned into a tightly controlled utility. Most importantly our currency can and should be issued free of debt by congress as the founding fathers intended. This debt based system is a house of cards that can only collapse. When it does we need those who can see and think beyond this paradigm to be able to help define and create what comes next.

    Voting for either of the current parties is futile, it just continues the very system that has to be swept aside. We need to evolve to something better. I do not believe in revolution, but evolution, and I hope it is something we as a nation can all do together.
    Andrew Macpherson

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  36. #36
    Z8Mania
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    Great post Andrew, I will reply more later when I have more time.

  37. #37
    Sport Button On - DSC Off jim's Avatar
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    The difference between revolution and evolution is the velocity of change. MacFly, you said a mouth full (I concur) but patience Grasshopper....The "inflection point" is the Euro and how the ECB handles the member states austerity option. Where the banks (Euro and US) stand with regard to solvency is anyone?s guess as well. For now, Capital regs for US banks seem satisfactory BUT they have alot out to the EU so we see......
    In other words, it?s all moving further away from any sense of resolution, with uncertainty about as high now as it?s ever been, as is the potential for a catastrophic financial event. Don't forget, ECONOMICS IS THE OPPOSITE OF RELIGION. WITH ECONOMICS IT?S BETTER TO RECEIVE THAN TO GIVE. REAL TERMS OF TRADE AND STANDARDS OF LIVING ARE OPTIMIZED BY IMPORTING AS MUCH AS POSSIBLE IN EXCHANGE FOR AS FEW EXPORTS AS POSSIBLE.
    Deflation (the big wild card) has capped gold/cmdty's for now, but hold on to it. As Greenspan said, (sorry Zmania), although I agree AlanG is a horses ass of epic proportion.
    "Some decades are better than others".
    js
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  38. #38
    Z8Mania
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    Hard to argue though I don't know if its really as much of a conspiracy as Andrew says- Im not arguing the counterpoint, Im saying I don't know and when you're discussing something as dynamic and complex as our nation and its economy then I am skeptical of simple diagnosises of our problems.

    The way I see it, somewhere along the line everyone stopped moderating and went full out for themselves- and thus we have the polarization in- just about everything.

    I don't think we have to eliminate the national debt but it needs to be gotten under control. I think if we do it right it can be a powerful tool to aid the nation but if abused, we get, well what we are looking at.

    As far as the last election, I never believed in Obama and his message. I am very scared of those who promise rainbows and candy canes because they can never deliver and I was shocked at the free pass the press gave him. If George Bush sat in a church where the pastor over decades uttered those abusive lectures against the US, he'd never have made it anywhere. I know people who had Obama as a professor and they said he was frightening in his world view- that he is to the left of a communist. Thats what they said- they really interacted with him. And this was a guy who began running for President before he ever really started working as a senator. Sorry, never bought it and still don't. McCain was far from perfect, he really made a hail marry pass with Palin, which was sad, and this was a very long time ago, but to me he showed his true colors when he was in captivity. Id like our President to at least wake up knowing who he (or she) is. I feel with Obama he's too much of a college professor and too busy seeing both sides to ever figure out his side. Hopefully next November we will chose a different person; but I can just see the press getting ready to give the same free pass to Obama this time around. He does seem like a charming guy.

  39. #39
    Z8 Millennial Monster hayvenhurstkid's Avatar
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    Obama made another promise; if things were not substantially better after his first three years in office he would not run for reelection. Guess what? Things are probably worse and he is out campaigning instead of trying to fix our massive problems. Also, his campaign bus was built in Canada! Someone told me Obama stands for One Big .... Mistake America!
    Marty

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  40. #40
    Z8Mania
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    Quote Originally Posted by Z8Mania View Post
    More bad news is despite over 2 years in office, Obama is not a leader even though he said he was. Whats worse is that he said he wouldn't run for reelection if the country was in bad shape and guess what- we're in bad shape and guess whose coming to dinner!
    I agree.

  41. #41
    Z8Mania
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    PS- wheres the media to replay that promise? Right. They are out campaigning for him.

  42. #42

    Dept - GDP to = 100% by Nov 1st!`

    According to ZeroHedge we are almost there - http://www.zerohedge.com/news/ironic...-gdp-helloween

    The very sage Niall Ferguson has at several times said that this is the tipping point from which no fiat based economy has ever recovered.
    Andrew Macpherson

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  43. #43
    Z8Mania
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    Everyone's got an opinion.... hopefully we won't go down the giant black hole.