What do you think is the very safest place for parking capital?
Gold is a speculative commodity now, but dollar-denominated bank deposits could be hurt by inflation. I suppose that a treasury-bill money-market fund would track inflation, though not after taxes. US savings bonds are pretty illiquid because you lose all the interest since the last 6-month payment period if you cash them in, but the interest is free of state taxes and,temporarily, from federal taxes.
In the early 1930s, the happiest people were those with wads of pure cash in safe deposit boxes, but then there was still a gold standard, at least of sorts. In the early eighteenth century, Alexander Pope's father had a large locked trunk full of gold coins, from which he paid his expenses for the rest of his life.
It might be fun to have an envelope full of large-denomination savings bonds in a safe deposit box.
But don't you think that the more likely situation--which already may be well under way--is simply a willingness, despite what they may say, of the Fed to inflate us out of any depression? And I must admit that it really is better to have 95% of the working public doing something productive, rather than maintaining the value of the currency and having only 75% or less of the people working. Even if the laid-off extra 20% are the least productive, it would still represent a dead loss of a huge value in goods and services.
Milton Friedman, in the WSJ this week, argued that increased money supply that passes into the control of individuals results in productive growth. He seemed to be ignoring the speculation that's going on. I wonder if he knows what Amazon.com is.
Maybe the best thing is to have a wide enough assortment of sources of income and stores of value so that whichever way the wind blows something works out.
Meantime I am unable to refrain from buying LEAPS (puts, that is)on Yahoo, Amazon, and Intel (so far). If those work out, maybe I'll go to the opposite extreme and buy U. S. savings bonds. |
