Hard cash is illusory not a true asset!
I have to disagree here. in any 'market', whether it be property, equities etc, it is all 'funny money'. If BHP has 1 billion shares on issue, and the last trade was $40, then BHP is now 'worth' $40bn. If tomorrow, it only sold for $30 per share, it is only 'worth' $30bn. But nothing has changed. A BHP share is still a BHP share, but each shareholder has just 'lost' 25% of their 'value'. So value has been lost. I could transfer one BHP share for $30 and wipe off $10bn of stock market value by myself. Where'd the $10bn go? It never existed...
This just demonstrates that wealth is an illusory concept. The only thing that is 'worth' anything stable is cold, hard cash. Even precious metals like gold or even jewels like diamonds have their 'value' fluctuate in absolute terms each and every day. So don't put too much reliance on what your assets are 'worth' because it's all based on the last sale price.
Yes, all assets flactuate as I pointed out, become undervalued or overvalued but the most easily manipulated, in my opinion, is 'hard cash' as you call it.
I have to disagree, what happened to hard cash in Iceland or Leman brothers, or Zimbabwe, or Belarus recently when their currency was devalued by 30%? I lived in Eastern Europe as a child and saw how inflation changed daily. Imagine your hard cash just loosing 30%, how would you feel?
Why are our banks only guaranteeing $250K in the bank (down from $1m) as of 1/1/12? Look what they did to, was it Swiss frank, when people started to invest into it in Europe?
History shows many such accounts (eg. Weimar Germany as pointed out above, the wheelbarrow was more precious than currency). My point is that there is a difference between currency and money (value of money).
When you truely grasp the difference between both than you'll understand. If I say a cup of coffee costs $100.00 today, then you may say that's expensive, but if I told you that your average earnings are $1billion, then you may think it's not so expansive (it's all relative). It's what that currency represents as a value as the purchasing power to acquire things such as assets. Think about it, is $100 paper note worth $100, the actual paper, well not. It's what it represents, it's the medium of exchange that you can use to purchase something that has value, what we would call an asset.
Two main things that can confiscate our wealth are taxes and inflation (silent tax as I like to call it). Say property rose in value by 5% and you think great, you have gained wealth, but what if inflation rose by 10% at that time (you would be actually worse of by 5%). You see governments, central banks, wall street (the most powerful cartels) use tools that everyday people like us are unaware off. We cannot change the rules but we can outsmart them...
Say your current wages are increasing by 5% but inflation (true inflation since government likes to adjust that index) is 8%, then you're are getting poorer..... There are ways to make people poorer thinking they are getting wealthier....
So all assets (property, shares, commodities, land, oil, etc....) have a mean value and in time they either become overvalued or undervalued or revert back to their mean. When you know how to compare that asset class to its past and you know whether it's undervalued then you can make fortunes as I said before. That's all I meant, it's more to do with economy but well, we can all learn something, I hope...
Look at Elizabeth Taylor's auction of her jewels and clothes I think it was predicted to be worth $50m.....(well, you see gold can be sold for 'hard cash' or 'currency' as I like to call it). When the US dollar was backed by gold then it was worth something, it was real money then, but since 1971 when it's no longer backed by gold or silver it's just paper that its worth can be manipulated with....
I doubt most wealthy keep 'hard cash' in the banks, I would think they hold, stocks, businesses, lands, buildings, paintings, jewellery, diamonds, gold/silver, mines, just to mention few, so let's learn from them a little and apply the same to our lives, what do you think?
