Cash Saving To Be Wiped Out!

[pkrv]

The last time I was aware of a western country printing money and lowering interest rates was Germany between WW1 and WW2. All savings were deliberately annihilated (with huge social consequences) to effectively end German debts from WW1.

Will the same happen again in terms of wiping out cash savings – my thoughts are yes it will, but what to do about it?

[lannarebirth]

The last time I was aware of a western country printing money and lowering interest rates was Germany between WW1 and WW2. All savings were deliberately annihilated (with huge social consequences) to effectively end German debts from WW1.

Will the same happen again in terms of wiping out cash savings – my thoughts are yes it will, but what to do about it?

If one believed that were to occur, it seems to me they would be wise to spend the money on something holding tangible, lasting value, while the currency they hold is still considered fungible for such things. That's just a response to the question you pose and it is not a recommendation by me.

[Naam]

The last time I was aware of a western country printing money and lowering interest rates was Germany between WW1 and WW2. All savings were deliberately annihilated (with huge social consequences) to effectively end German debts from WW1.

Will the same happen again in terms of wiping out cash savings – my thoughts are yes it will, but what to do about it?

let your wife talk to my wife. years ago i thought her purchase of 116 acres agricultural land with riverfront was utmost foolish. nowadays i try to change subject when she mentions it

[whatsoever]

The last time I was aware of a western country printing money and lowering interest rates was Germany between WW1 and WW2. All savings were deliberately annihilated (with huge social consequences) to effectively end German debts from WW1.

Will the same happen again in terms of wiping out cash savings – my thoughts are yes it will, but what to do about it?

let your wife talk to my wife. years ago i thought her purchase of 116 acres agricultural land with riverfront was utmost foolish. nowadays i try to change subject when she mentions it

<deleted> has your 116 acres got to do with the post subject

[lannarebirth]

Of course land titles are only "paper" also. Sometimes I wonder why I ever stopped drinking.

[Old Man River]

The last time I was aware of a western country printing money and lowering interest rates was Germany between WW1 and WW2. All savings were deliberately annihilated (with huge social consequences) to effectively end German debts from WW1.

Will the same happen again in terms of wiping out cash savings – my thoughts are yes it will, but what to do about it?

let your wife talk to my wife. years ago i thought her purchase of 116 acres agricultural land with riverfront was utmost foolish. nowadays i try to change subject when she mentions it

<deleted> has your 116 acres got to do with the post subject

If I may jump in here, at the risk of offending Naam while he is having his nap, his message is quite clear. If a government is printing money (increasing the inflation rate) and lowering interest rates at the same time, it is best to buy something tangible instead of keeping your money in savings while it decreases in value.

[whatsoever]

The last time I was aware of a western country printing money and lowering interest rates was Germany between WW1 and WW2. All savings were deliberately annihilated (with huge social consequences) to effectively end German debts from WW1.

Will the same happen again in terms of wiping out cash savings – my thoughts are yes it will, but what to do about it?

let your wife talk to my wife. years ago i thought her purchase of 116 acres agricultural land with riverfront was utmost foolish. nowadays i try to change subject when she mentions it

<deleted> has your 116 acres got to do with the post subject

If I may jump in here, at the risk of offending Naam while he is having his nap, his message is quite clear. If a government is printing money (increasing the inflation rate) and lowering interest rates at the same time, it is best to buy something tangible instead of keeping your money in savings while it decreases in value.

Sorry I missed the point

[lannarebirth]

Ironically, if the mainstream population (say in America) were to believe their currency could be debased to near nothingness, people would be out buying those "distressed" properties immediately, and would put a floor under the housing sector, which was the source of the panic. That wouldn't quell the derivatives monster however.

Edited October 13, 2008 by lannarebirth

[shochu]

as the op stated - there really is no way out of this mess - except to digitally print money and they are.

i would not want to be in western currencies right now BUT three in particular- pound, dollar , euro.

Edited October 13, 2008 by shochu

[lannarebirth]

The last time I was aware of a western country printing money and lowering interest rates was Germany between WW1 and WW2. All savings were deliberately annihilated (with huge social consequences) to effectively end German debts from WW1.

Will the same happen again in terms of wiping out cash savings – my thoughts are yes it will, but what to do about it?

let your wife talk to my wife. years ago i thought her purchase of 116 acres agricultural land with riverfront was utmost foolish. nowadays i try to change subject when she mentions it

My wife same same. I can't really picture her down on the farm though.

[Naam]

The last time I was aware of a western country printing money and lowering interest rates was Germany between WW1 and WW2. All savings were deliberately annihilated (with huge social consequences) to effectively end German debts from WW1.

Will the same happen again in terms of wiping out cash savings – my thoughts are yes it will, but what to do about it?

let your wife talk to my wife. years ago i thought her purchase of 116 acres agricultural land with riverfront was utmost foolish. nowadays i try to change subject when she mentions it

My wife same same. I can't really picture her down on the farm though.

mine makes nice photos whenever she visits. land is leased out for a pittance in cash and hopefully we will never have to use the option "25% of the proceeds".

[Heng]

Land AND cash savings is the way to go. What's with this either/or talk?

[pkrv]

The last time I was aware of a western country printing money and lowering interest rates was Germany between WW1 and WW2. All savings were deliberately annihilated (with huge social consequences) to effectively end German debts from WW1.

Will the same happen again in terms of wiping out cash savings – my thoughts are yes it will, but what to do about it?

let your wife talk to my wife. years ago i thought her purchase of 116 acres agricultural land with riverfront was utmost foolish. nowadays i try to change subject when she mentions it

<deleted> has your 116 acres got to do with the post subject

If I may jump in here, at the risk of offending Naam while he is having his nap, his message is quite clear. If a government is printing money (increasing the inflation rate) and lowering interest rates at the same time, it is best to buy something tangible instead of keeping your money in savings while it decreases in value.

Sorry I missed the point

Hmmm... There are a set of thoughts here that are looking for the best option. None of us truly knows the objectives of the other but I suspect we know a thing or two. If this continues cash savings will be wiped out due to simple mechanics. If I could suggest something I am from the UK our taxes have not increased, we are in recession where does the money come from?

Pressure is being placed on moving money back to the markets - so consider shares, well they are going down, bonds pay a fixed rate so if they pay say 5% and things are going up 10% you are losing money. Things are desparate.

So when people talk about Thai agriculture they are probably correct. I don't have a Thai partner and worst still have resources in a UK pension scheme (SIPP) that allows me to buy any of the above.... whhhhooooooooo (sarcasm)

Thank god I bought this in 2005

http://www.theparkresidence.co.th/exterior.htm

With this relativly small investment at an average of (ish 70 GBPTHB=) I may soon be able to buy Buckingham Palace for 1 THB, and I am not kidding.

in the interim.... I am thinking

[pkrv]

I don't have a Thai partner and worst still have resources in a UK pension scheme (SIPP) that allows me to buy any of the above.... whhhhooooooooo (sarcasm)

Bugger (techical term) I should have said I don't have a Thai partner, and a such can't do this. Followed by.... and worst still have resources in a UK pension scheme (SIPP) that allows me to buy any of the above (UK cash, UK shares, UK bonds). OK I can't do this properly but what I said could have (easily) been misinterpreted - PKRV

Edited October 13, 2008 by pkrv

[pkrv]

UK Inflation is now 5.2% and interest rates 4.5%

http://news.bbc.co.uk/1/hi/business/7668608.stm

Somthing to keep an eye on I believe. IMO a good article.

[beginner]

It is possible to buy Index Linked Savings Bonds from www.nsandi.com ie UK treasury.

They are linked to the RPI (not CPI) and guarantee to keep up with inflation as measured by the RPI.

They are sold in 3 and 5 year issues and also have interest added after 12 months.

The drawback is that you are limited to 15k UK pounds each issue, so you can only buy 30k right now. When the next issue is launched, you can buy another 30k.

NS and I are very user friendly as you can cash in at any time by post and receive index linking up to that day. They are therefore guaranteed by the UK Government to at least keep up with the RPI.

The BBC item speculates that the RPI has peaked and will now decline. If that is correct then a one year tax free return of 6.65% from Nationwide International may be a better bet. HSBC Offshore is offering Premier customers (total savings 60k plus) 6% for new cash in a fixed term 6 month account.

Its all a question of what your judgement is regarding future UK inflation rates. If bank rates are reduced to counter recession then these rates may disappear from the market soon.

The other less predictable factors are the future exchange rate of pound versus baht and relative inflation here and in UK.

Crystal ball anyone?

[OriginalPoster]

It is possible to buy Index Linked Savings Bonds from www.nsandi.com ie UK treasury.

They are linked to the RPI (not CPI) and guarantee to keep up with inflation as measured by the RPI.

They are sold in 3 and 5 year issues and also have interest added after 12 months.

The drawback is that you are limited to 15k UK pounds each issue, so you can only buy 30k right now. When the next issue is launched, you can buy another 30k.

NS and I are very user friendly as you can cash in at any time by post and receive index linking up to that day. They are therefore guaranteed by the UK Government to at least keep up with the RPI.

The BBC item speculates that the RPI has peaked and will now decline. If that is correct then a one year tax free return of 6.65% from Nationwide International may be a better bet. HSBC Offshore is offering Premier customers (total savings 60k plus) 6% for new cash in a fixed term 6 month account.

Its all a question of what your judgement is regarding future UK inflation rates. If bank rates are reduced to counter recession then these rates may disappear from the market soon.

The other less predictable factors are the future exchange rate of pound versus baht and relative inflation here and in UK.

Crystal ball anyone?

Can a person who is neither a UK citizen nor a UK resident purchase Index Linked Savings bonds through www.nsandi.com?

[glyph]

"The last time I was aware of a western country printing money and lowering interest rates..."

I'm going to make the rather bold assumption that you are inferring that the US is going to print a substantial amount of money, and going to lower interest rates. I'm sure you can steer us to the sources of those tidbits.

[pkrv]

"The last time I was aware of a western country printing money and lowering interest rates..."

I'm going to make the rather bold assumption that you are inferring that the US is going to print a substantial amount of money, and going to lower interest rates. I'm sure you can steer us to the sources of those tidbits.

Not quite - I am UK based so I really only monitor the UK. Situation so far we have

1) Inflation at 5.2% The BoE was (and I stress was) meant to keep this at around 2% to meet Gordon Browns golden rule.

2) Unemployment is rising at an alarming level

3) Interest rates are being dropped, this time by 0.5% to 4.5% - in the past rate changes have been in 0.25% increments in order to not alarm the public, the government did not wish to be perceived as panicking

4) Huge amounts of money are being injected into the UK banking system - I take it that this does not grow on trees (though it soon may do so ).

Above link to the BBC covers most of this stuff.

As to the US - Don't know. Any of this stuff familiar for you guys?

beginner - thanks very much for the advice/thoughts - I will research, but I am slightly constrained because the cash I am now trying to protect is in a SIPP (A UK Self Invested Personal Pension). IMO a good and well thought through reply - thanks PKRV

IMO we are heading into a recession and the worst is yet to come. So for me it is now wealth protection that is it.

Edited October 16, 2008 by pkrv

[Hairy]

"The last time I was aware of a western country printing money and lowering interest rates..."

I'm going to make the rather bold assumption that you are inferring that the US is going to print a substantial amount of money, and going to lower interest rates. I'm sure you can steer us to the sources of those tidbits.

"Our source was the New York Times."

Seriously, if you haven't seen the comments from financial analysts suggesting that the U.S. Federal Reserve will likely lower rates further by the end of this year, possibly going as low as 0.5% by October 2009, then you've been spending too much time on the beach.

As far as printing money, exactly how did you think Bernanke got the nickname "Helicopter Ben"? He's stated outright that if the U.S. were headed into a deflationary depression, he would print.

[TaiKai]

In case you are afraid of the inflation which might arise, the wisest thing to do would be to buy tangible goods and finance with low priced mortgages, e.g. buy land and get a 5,0 % mortgage on 80 % of the mortgage price.

Nevertheless, the recession will put counter-pressure on all prices as we can see right now with the oil-prices.

What is the conclusion? Well, there is none and times of widespread disorientation are on the rise. This will definitely cure unnecessary speculation.

[pkrv]

In case you are afraid of the inflation which might arise, the wisest thing to do would be to buy tangible goods and finance with low priced mortgages, e.g. buy land and get a 5,0 % mortgage on 80 % of the mortgage price.

Nevertheless, the recession will put counter-pressure on all prices as we can see right now with the oil-prices.

What is the conclusion? Well, there is none and times of widespread disorientation are on the rise. This will definitely cure unnecessary speculation.

Don't get me wrong - I agree wholeheartedly with the sentiment of buy tangible assets - I used much of my savings to buy into an incredible condominium and we have just had our first AGM, so we are done and dusted. But I do have cash to consider as well, and am at a point in life where I will not take on further debt (approaching 50) as I consider this foolish. I have taken my risks and won in the past, but now need to consolidate.

None the less cash/wealth does now need to be protected. It just depends on the point you are in life. If young use the opportunity if older IMO batten down the hatches.

[cocopops]

The last time I was aware of a western country printing money and lowering interest rates was Germany between WW1 and WW2. All savings were deliberately annihilated (with huge social consequences) to effectively end German debts from WW1. Will the same happen again in terms of wiping out cash savings – my thoughts are yes it will, but what to do about it?

Since the website you read this stuff on was owned by a chap running a gold-centric investment firm, why not buy gold?

[pkrv]

The last time I was aware of a western country printing money and lowering interest rates was Germany between WW1 and WW2. All savings were deliberately annihilated (with huge social consequences) to effectively end German debts from WW1. Will the same happen again in terms of wiping out cash savings – my thoughts are yes it will, but what to do about it?

Since the website you read this stuff on was owned by a chap running a gold-centric investment firm, why not buy gold?

OK I am actually interested - what web site are you referring to? Please post the link (you’re not talking about the BBC link posted are you?) - I am just going by historical data on what happened.

As to gold - not really my thing, a rather tasteless metal. Good for the electronics industry though (does not corrode and is a good conductor) and I believe is going down in value, which would be correct if we are moving into recession – people will be buying less electronic goods and this industry is the world’s biggest consumer of gold.

[pkrv]

It is possible to buy Index Linked Savings Bonds from www.nsandi.com ie UK treasury.

I think you are refering to Index-linked Savings Certificates IMO A good idea for these times and I agree - unfortunately I cannot protect the cash in my SIPP using this approach. I will have to bear the pain on that front and do what I can later.

[thaihome]

The last time I was aware of a western country printing money and lowering interest rates was Germany between WW1 and WW2. All savings were deliberately annihilated (with huge social consequences) to effectively end German debts from WW1.

Will the same happen again in terms of wiping out cash savings – my thoughts are yes it will, but what to do about it?

Personally I think you have misstated what happened in Germany during the early 1920’s and completely overlooked the fact that the situations are nothing alike.

TH

[colibra]

Its seems that the powers that be (people with lots of money) need someplace to put all their wealth that is safe. Gold would work but there's not enough of it. Property, not very liquid. So some sort of paper currency will probably be their choice. So what currency with they pick. My bet is still the USD. I would however watch for large moves out of the USD as a possible sign of a change.

Edited October 16, 2008 by colibra

[dotcom]

Thaksin ran a policy of interest rates below the rate of inflation for what seemed like decades.

LIke his hero Greenspan Toxic believed in full throttle stimulus ALL THE TIME

Remember saving account rates of 1% for years?

What did you think was gonna happen with inflation (in LoS) at 10% ?

What happened was that the price of everything skyrocketed.

P.S. My comments concern Thailand only. Not the world's engine of growth U.S.A.

[pkrv]

The last time I was aware of a western country printing money and lowering interest rates was Germany between WW1 and WW2. All savings were deliberately annihilated (with huge social consequences) to effectively end German debts from WW1.

Will the same happen again in terms of wiping out cash savings – my thoughts are yes it will, but what to do about it?

Personally I think you have misstated what happened in Germany during the early 1920's and completely overlooked the fact that the situations are nothing alike.

TH

Hi TH - you are correct the situations are nothing alike - except in that central banks are also now taking extraordinary measures, I think you would agree with this? - this is not how they are meant to operate at all, but are a tool of last resort.

Thanks for the link it really helps provide background information and guess what! The suggestions on this thread mirror what happened in the past almost exactly "consumer flight from cash to hard assets, and the rapid expansion of industries that produced those assets"

It is the parallels that I am after and I can see they exist. All I know is my UK cash reserves in my UK SIPP are being erroded at an ever increasing rate.

[pkrv]

Its seems that the powers that be (people with lots of money) need someplace to put all their wealth that is safe. Gold would work but there's not enough of it. Property, not very liquid. So some sort of paper currency will probably be their choice. So what currency with they pick. My bet is still the USD. I would however watch for large moves out of the USD as a possible sign of a change.

Personal thoughts are gold is out - Unlike in the only other 'similar situation' I can come up with in the past, we are no longer on the gold standard. If we enter a recession the electronics industry will suffer - This is the worlds largest consumer of gold.