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matt

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on feeding the bears [Nov. 21st, 2007|03:02 pm]
matt
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http://www.economist.com/opinion/displaystory.cfm?story_id=10134118

There's a certain greedy notion that drives people to hoard latinum as a physical preserve of wealth, particularly as more sensible people see the storm coming. It's emotionally hard to "have it" and "lose it". I think one of the most interesting things about the next couple of years promises to be watching the various ways people will go about the hoarding.

This is not a jeremiad, mind you. I don't lament the morals of the time. I don't believe in just judgement.

It's eminently sensible at all times to be a little defensive. We're drilled, I think, not to become the Aesopian Grasshopper. However, I think the tendency to put faith in gold, or guns, to defend what is "yours", is to take away the wrong lesson.

Winter's coming. Hopefully, that damn grasshopper will stop the awful racket now.
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Comments:
[User Picture]From: twoeleven
2007-11-22 12:07 am (UTC)
gold is funny asset to horde; it's a pure shorting of the local currency. foreign-denominated investments are probably more clever. not only do they short the local currency, but may generate income or increase in foreign-denominated money as well.

We're drilled, I think, not to become the Aesopian Grasshopper.
o, were it only so! most people in the us (even wealthy ones) have very low net worth compared to their expenses. if the (nominal) value of their houses are excluded, they're practically broke.
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[User Picture]From: hbergeronx
2007-11-22 02:53 am (UTC)
In part, I think you missed my point.

While I agree with you, generally speaking, the phrase "low net worth compared to expenses" is not terribly meaningful, IMO. I don't think there's a value that you can give that's appropriate for everyone equally.

Furthermore, foreign denominated assets are clever if they do better, adjusted for inflation, relative to domestic ones, which is not self-evident or universally true even right now. For example, I doubt that would have been the right strategy eg. 1927-1937, even though US assets took it on the chin during that period, IIRC, or 1967-1977, ditto. It also depends what you mean by "foreign".

Edited at 2007-11-22 02:54 am (UTC)
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