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Das Capital: Trust In Banks Wanes As Savers Find Other Ways To Protect Their Money

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http://www.independent.co.uk/news/business/comment/das-capital-trust-in-banks-wanes-as-savers-find-other-ways-to-protect-their-money-9105576.html

The ultra-rich are switching to real assets – gold, commodities, farm land

All systems – social, cultural, spiritual, economic and financial – rely on trust. Policy makers are now systematically undermining trust in institutions, turning to financial repression in attempting to deal with the economic crisis.

Current government policies focus on low interest rates, with returns artificially set below the true inflation rate. Where interest rates are near zero, governments print money, manipulating the amount rather than the price of money.

These measures reduce borrowing costs allowing borrowers to maintain high levels of debt. Rates below that of inflation help reduce the value of the debt, effectively decreasing the amount that must be paid back in economic terms. The policy subsidises borrowers at the expense of savers.

These policies debase currencies, undermining money’s function as a mechanism of exchange and a store of value. Once an unquestioned store of wealth, investors in government bonds are now threatened by the risk of sovereign defaults or destruction of purchasing power.

He seems to have forgotten to mention London property. You can't go wrong with that.

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When articles like that get into the mainstream press, I wonder how much time the current system has. It's all based on trust, easy to lose and once it's gone, it's gone. I don't think our leaders realise what a dangerous game they are playing. If they do, I guess they are just running on hope. Hope that the next guy has to deal with the consequences.

Personally, I have lost faith in currency, my savings (~£100K) has now been spend on real stuff. I keep a cash float for emergencies.

My pension is unfortunately mostly in £ and index-linked treasuries while I work out what do to with it. Stocks are too risky so it looks like commodities are one of the few ways to get something real.

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Personally, I have lost faith in currency, my savings (~£100K) has now been spend on real stuff. I keep a cash float for emergencies.

My pension is unfortunately mostly in £ and index-linked treasuries while I work out what do to with it. Stocks are too risky so it looks like commodities are one of the few ways to get something real.

Money is circulating, but buying and chasing things at very high prices. There is also a lot of debt exposure out there, at the margin, on over-valued 'real' assets.

Scrooge McDuck was right in 1967 for decades and decades, but he's wrong now. Best to sit on savings, whilst others over-extend themselves, and until the debts start to be called in, or incomes come under strain. Unless the Gov do then feast on the humble savers.

Power has always sought the readiest road to wealth... by attacking those in possession of it.

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That Scrooge McDuck is fascinating. Can't imagine anything like that being made today.

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If someone buys some land with cash, there is no less money in the system.

If someone buys some land with credit, there is even more money in the system

The idea that 'money' can hide by buying assets is a fallacy.

unless the land is mortgaged.

your argument is not correct.

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Since when have the ultra-rich ever held their wealth as money on deposit in a bank ??? It's always been the case that the majority will be parked in a variety of assets (property, equities, valuable items etc), augmented by a slush fund in a bank account to provide some instant liquidity and of course some 'petty cash' in physical form secured somewhere safe for emergencies .. the sort of expensive emergencies that rich and well-connected people seem to have.

The real story will be when enough members of the general public start to abandon the concept of parking their money in banks.

Our so called 'capitalist' system relies on capital formation .. something which the politicians seem to forget in their frenzy to get the public to take on more and more debt.

Edited by Sour Mash

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