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Originally Posted by kx250rider
Be careful..... Things aren't always how they appear. And that advice comes not from me, from very seasoned, successful investors on my father-in-law's side of the family. I won't drop a name, but it's one we've all heard. That person sold 80% of his market holdings, and would have sold 100% if not for tax reasons to keep impending losses to come. And those are bio-tech stocks, which will probably "crash less hard" than others. And by the way: I wouldn't keep any sizable assets liquid. The value of the cash will plummet just like stocks. If it goes where it looks like it could, a person who has $250,000 in the bank, might just be able to get a year's worth of groceries. Think Germany; post WW I. The big guns are sticking to real estate, oil, and certain bonds.
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You're hinting at hyperinflation. Certainly that's possible. But we've been at risk of deflation for awhile. I gather a large part of this is the unavailability of credit effectively reducing the monetary supply in the market. "too few dollars chasing too many goods" as posted by classictv80s.
I did some reading awhile back on this and my intuition is that it is not exactly a dead simple thing. But I gather that hyperinflation won't be a problem yet. It isn't quite as simple as "the fed prints money therefore we have hyperinflation" It's dependent on the monetary supply (in part) but that also includes all the credit that isn't available right now. Where we might run into trouble is if those financing our debt (China being a major one) don't anymore and we have no other choice than to print money to do it, as well as if the credit flood gates open at some point and the fed isn't able to reduce the monetary supply in response. Another thing that could be problematic is confidence in the dollar.
Michael