As the chaos from the COVID-19 coronavirus goes around America and people are out of work, the Wall Street Journal reports that Americans are hoarding cash at record rates.
Americans have been hoarding cash at the fastest pace since the Y2K jitters two decades ago…US business loan balances jumped by the highest percentage on record as companies rushed to tap their credit lines. (source)
I would like to make an observation with this. Outside of necessary expenses, it is probably a very, very bad idea to hoard cash right now.
To the contrary, now is the time to strategically invest cash out of the US dollar or to spend it.
The reasoning for this is simple. As I have been explaining for the past week since the “Trump Stacks”, also known as the coronavirus relief bill signed by President Trump, became popular, while it sounds like a great idea to give people “free money”, the printing of money devalues the currency.
This has been a problem for years, for as the government continues to print money through the private bank that is the Federal Reserve and which has dictated monetary policy for the last century, the value of the money declines to the point where it is worth nothing.
The current bill consumes 40% of GDP in one year. They may do a second package this year as well.
The result of this will be dramatic inflation and the serious devaluing of money- there is no point in saving money that will become seriously devalued because it is better to spend it now on either things that one needs, or to transfer it to a stable asset (traditional examples include gold and silver) that will preserve value in troubled financial times or situations.
It is true that it is almost always better to save money, but since the trend is clearly towards devalutation and will be for the next two years, and likely will not end, the wiser choice is, after covering for major bills, to invest what one has into assets or spend it on something to help one in the future, for summer may be coming, but the economic winter later this year and next year might spell the destruction of many who are caught unprepared.