Re:Ask HN: what to do if you have only cash?
by Tichy on Friday December 26, 2008 @03:06AM
(#410050)
Germany, but we don't have a German currency anymore. It is all Euro, and while I don't know enough details, I have heard that the way the Euro is constructed is not exactly bulletproof.
Inflation seems pretty likely to me, giving governments across the world are busy dishing out sweet deals to struggling industries. And governments get their money by printing it (if all else fails). Also Iceland comes to mind.
Of course I hope that nothing really bad will happen, but the truth is, I have no idea how severe the current crisis is. A lot of people are worried about hyperinflation, for example, but what are the odds? 1%? 0,001%, 10%?
Also, even without the crisis I think it has always been a good idea to diversify one's assets.
In the U.S, I think cash is about the safest thing you can hold, in an FDIC insured account under the insured limit (currently $250k). Don't believe any of the stuff you read on Reddit about hyperinflation; Redditors are largely idiots and don't know a damn about economics.
If hyperinflation does hit, you will have bigger problems than the security of your savings, notably how to get food and how to avoid being killed in a riot. Your best bet here is the same as if there is no crisis: friends, skills, and a reputation for being a decent human being.
The depression-era advice of "neither a borrower nor lender to be" is also appropriate. In a crisis, the fewer financial ties you have to other organizations, the fewer potential credit risks. Pay off your credit cards, pay off your car loans, pay off your mortgage if you can, and avoid holding bonds or other debt on risky organizations.