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Wall Street Journal says current higher-than-normal savings may cushion a downturn. Do they know what inflation does to cash?

Posted by John Reed on

This headline in today’s Wall Street Journal jumped out at me. “Americans’ Cash Hoard Could Cushion a Downturn.”
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Their WHAT kind of hoard?
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“Cash.”
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I read the article to see if the author, Justin Lahart, is aware of inflation and what inflation does to cash. Cash, meaning US dollar-denominated bank accounts, bonds, certificates of deposit.
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The article says US households held $17.8 T at the end of the first quarter of 2022.
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The most recent 12-month inflation rate was NOT MENTIONED IN THE ARTICLE: 8.6%.
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You know what 8.6% inflation does to $17.9T in cash? $17.9T x .086 = $1.539T purchasing power “up in smoke” in 12 months.
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Think of $17.9T in Americans’ savings as all being in the form of paper dollars in a single warehouse and currently being on “fire.” From June 1, 2021 to May 31, 2022, $1.539T of the “cushion” “burned and disappeared in smoke.” And the “fire” in the cash warehouse is still “burning.”
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Furthermore, there is every possibility that the “fire” may increase in size. It is quite possible that the inflation could flip over into HYPERINFLATION in which case that entire “warehouse” goes up in a “mushroom cloud of smoke” in a matter of months leaving no “cushion” other than a pile of useless “ash.”
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Yes, he is aware of inflation. His first sentence is “Inflation is high.”
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But the article says nothing about what inflation has done and can do to cash. It destroys its purchasing power.
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Since 2010, out of fear of inflation, I have converted USD assets into non-USD assets, namely our home and our son’s home, “junk silver,” gold eagle coins held outside of the US, US pennies and US nickels which are BOTH USD cash and also base metal that has a melt value worth more than the face value of the coins and which melt value will not be diminished by inflation, a diversified portfolio of six foreign currencies held outside the US, and a stockpile of household necessities like food, fuel, medicine, paper, shampoo, and so on.
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I hope that readers here at least will remove their life savings from the “burning warehouse” that is USD cash. A cushion that is made of “paper” and is currently “on fire” is no cushion.
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