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Financial Times/Brendan Greeley/7-15-2020
“'[Cash is] the one asset that people are pretty confident isn’t going to lose value,’ said Eric Rosengren, president of the Boston Fed, in March. “And so people are deciding they’d much rather hold more of their assets in cash.”
USAGOLD note: Mr. Rosengreen, it would seem, does not fully understand the concept of price inflation, or perhaps he just overlooked it in making this statement. A ten dollar bill stuck under the mattress in 1971 would have the purchasing power of roughly $1.60 today. The equivalent of $10 in gold (.286 troy ounces) put under the mattress in 1971 would have the purchasing power of almost $519 today (at $1815 per ounce). Over the long term, cash is cold comfort to the saver …… if its comfort at all. That is why Ray Dalio, manager of the largest hedge fund in the world, recently said ‘cash is trash’ and recommended a long term holding in the yellow metal instead. It is not difficult to understand, at the same time, why someone might want to keep a fairly substantial emergency stash of the green stuff nearby under current circumstances.
Sources: ICE Benchmark Administration, Bureau of Labor Statistics, St. Louis Federal Reserve [FRED]