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mark cuban is a smart guy & also a billionaire so i tend to listen to his advice. the part i don't get is why we should be putting our money in the bank. our

mark cuban is a smart guy & also a billionaire so i tend to listen to his advice. the part i don't get is why we should be putting our money in the bank. our government is printing money at a record pace and our money is being devalued by the minute. as much as i hate having my money in the stock market, at least it has some protection against inflation.

mikebo 16y ago
Despite quantitative easing, we haven't experienced any significant inflation. In fact, we are getting very close to a deflation. If you have a very pessimistic view of the stock market's future, reducing risk by being in cash make a lot of sense.
- joshfraser 16y ago
  that's partly because the fed plays all sorts of tricks to hide the real amount of inflation they are causing. regardless of whether that inflation is visible now, it's inevitably coming. it's the only option we have to deal with that 13.3 trillion debt that we can't afford to pay.
  - mikebo 16y ago
    Inflation will be an issue at some point in the future, but with high unemployment I don't think it's likely for several years. If you're risk averse, broader market decline is a bigger worry than inflation IMO.
  - kargdt 16y ago
    I heard somewhere that Deflation right now is a fact, inflation a belief. One would've lost a lot of money being short long-dated treasuries this year with that belief. If inflation is the answer to this (most likely the case), would you say that it could be hyperinflation versus the milder demand-driven inflation that America is used to?- Specifically, if the Fed devalues the dollar.
- riffer 16y ago
  Sort of. There's a real tendency to look at these CPI prints and say that inflation is low, but that is only one aspect of inflation. Aggregate price inflation has been low over the past several years. A big part of that is that energy prices are much lower than they were three years ago (remember $4+ gas?). That is only a very temporary phenomenon (long term supply is constrained, demand is exploding as Asia develops), and in any case energy is only one part of the economy. But asset inflation is a real problem. That is why the price of gold has tripled in the last half dozen years. If you put money into either stocks or cash 5, 10, 15 years ago, you're way behind where you would be having put the money into a store of wealth that is portable and not subject to inflation.
  - cynicalkane 16y ago
    Gold doesn't do anything, except in some specialized applications. Suppose you had some completely arbitrary asset. Kneezles. Over the last few years, the price of kneezles have tripled. The kneezle-bugs come out of the woodwork and say, "Look, if you had invested in a store of wealth that is not subject to inflation, you'd be doing better. Your kneezle-denominated wealth has fallen greatly." Well, what are kneezles anyway? They're lumps of metal that don't do anything. Hey, sounds familiar...
    - lionhearted 16y ago
      > Gold doesn't do anything, except in some specialized applications. Neither do paper dollars - it's an abstraction that has been historically coveted and accepted as money, and that's why it's valuable. I'd take gold alternative to paper money if someone wanted to pay me in it and had proof of its purity.
    - riffer 16y ago
      Gold doesn't do anything Gold is a store of value. Stores of value provide a useful function in society. Very few things actually qualify as stores of value, and gold is the most known of them so I used that, but you could replace the string 'gold' with 'store of value' in my argument without changing the substance of my argument.
- math 16y ago
  The inflation/deflation debate is fascinating to follow, and in my eyes currently the most important topic to make a correct call on financially. I'd recommend searching for "Mish" to learn more about the arguments on the deflation side, and "Marc Faber" on the inflation side. Both offer compelling arguments and both are entertaining to read.. My best guess is QE will eventually catch up with the US but it could be a while coming.
jseliger 16y ago
* our government is printing money at a record pace and our money is being devalued by the minute. as much as i hate having my money in the stock market, at least it has some protection against inflation.* The problem is that no one actually knows if we're heading towards inflation, as you think, deflation, as some economists fear, or something in the middle. Economists, naturally, are split: http://www.nytimes.com/2010/08/06/business/economy/06deflation.html?ref=deflation_economics http://www.nytimes.com/2010/08/06/business/economy/06deflati... . Regarding deflation or not, part of the story happens in the labor market, about which see this: http://www.marginalrevolution.com/marginalrevolution/2010/08/whats-the-actual-problem-in-the-labor-market.html http://www.marginalrevolution.com/marginalrevolution/2010/08... . Anyhow, there's a real danger that you're worried about inflation and might get hit with its opposite. Or not.
illumin8 16y ago
Trust me, we're nowhere near inflation risk. The US is still in the middle of deleveraging $trillions in bad housing debt. The deflationary pressures will stick with us for years, if not decades, depending on how much money the government continues to waste trying to prop up a falling housing market. While I think cash is definitely safer than stocks, you could make pretty good money investing in US treasury bonds or other "safe" investments, if you're worried about getting a better return than 1% or whatever the banks are paying for CDs right now.

mikebo 16y ago

Despite quantitative easing, we haven't experienced any significant inflation. In fact, we are getting very close to a deflation. If you have a very pessimistic view of the stock market's future, reducing risk by being in cash make a lot of sense.

joshfraser 16y ago
that's partly because the fed plays all sorts of tricks to hide the real amount of inflation they are causing. regardless of whether that inflation is visible now, it's inevitably coming. it's the only option we have to deal with that 13.3 trillion debt that we can't afford to pay.
- mikebo 16y ago
  Inflation will be an issue at some point in the future, but with high unemployment I don't think it's likely for several years. If you're risk averse, broader market decline is a bigger worry than inflation IMO.
- kargdt 16y ago
  I heard somewhere that Deflation right now is a fact, inflation a belief. One would've lost a lot of money being short long-dated treasuries this year with that belief. If inflation is the answer to this (most likely the case), would you say that it could be hyperinflation versus the milder demand-driven inflation that America is used to?- Specifically, if the Fed devalues the dollar.
riffer 16y ago
Sort of. There's a real tendency to look at these CPI prints and say that inflation is low, but that is only one aspect of inflation. Aggregate price inflation has been low over the past several years. A big part of that is that energy prices are much lower than they were three years ago (remember $4+ gas?). That is only a very temporary phenomenon (long term supply is constrained, demand is exploding as Asia develops), and in any case energy is only one part of the economy. But asset inflation is a real problem. That is why the price of gold has tripled in the last half dozen years. If you put money into either stocks or cash 5, 10, 15 years ago, you're way behind where you would be having put the money into a store of wealth that is portable and not subject to inflation.
- cynicalkane 16y ago
  Gold doesn't do anything, except in some specialized applications. Suppose you had some completely arbitrary asset. Kneezles. Over the last few years, the price of kneezles have tripled. The kneezle-bugs come out of the woodwork and say, "Look, if you had invested in a store of wealth that is not subject to inflation, you'd be doing better. Your kneezle-denominated wealth has fallen greatly." Well, what are kneezles anyway? They're lumps of metal that don't do anything. Hey, sounds familiar...
  - lionhearted 16y ago
    > Gold doesn't do anything, except in some specialized applications. Neither do paper dollars - it's an abstraction that has been historically coveted and accepted as money, and that's why it's valuable. I'd take gold alternative to paper money if someone wanted to pay me in it and had proof of its purity.
  - riffer 16y ago
    Gold doesn't do anything Gold is a store of value. Stores of value provide a useful function in society. Very few things actually qualify as stores of value, and gold is the most known of them so I used that, but you could replace the string 'gold' with 'store of value' in my argument without changing the substance of my argument.
math 16y ago
The inflation/deflation debate is fascinating to follow, and in my eyes currently the most important topic to make a correct call on financially. I'd recommend searching for "Mish" to learn more about the arguments on the deflation side, and "Marc Faber" on the inflation side. Both offer compelling arguments and both are entertaining to read.. My best guess is QE will eventually catch up with the US but it could be a while coming.

jseliger 16y ago

* our government is printing money at a record pace and our money is being devalued by the minute. as much as i hate having my money in the stock market, at least it has some protection against inflation.* The problem is that no one actually knows if we're heading towards inflation, as you think, deflation, as some economists fear, or something in the middle. Economists, naturally, are split: http://www.nytimes.com/2010/08/06/business/economy/06deflation.html?ref=deflation_economics http://www.nytimes.com/2010/08/06/business/economy/06deflati... . Regarding deflation or not, part of the story happens in the labor market, about which see this: http://www.marginalrevolution.com/marginalrevolution/2010/08/whats-the-actual-problem-in-the-labor-market.html http://www.marginalrevolution.com/marginalrevolution/2010/08... . Anyhow, there's a real danger that you're worried about inflation and might get hit with its opposite. Or not.

illumin8 16y ago

Trust me, we're nowhere near inflation risk. The US is still in the middle of deleveraging $trillions in bad housing debt. The deflationary pressures will stick with us for years, if not decades, depending on how much money the government continues to waste trying to prop up a falling housing market. While I think cash is definitely safer than stocks, you could make pretty good money investing in US treasury bonds or other "safe" investments, if you're worried about getting a better return than 1% or whatever the banks are paying for CDs right now.