Originally Posted by wind_magic
So the question is - what would make you sell cash ? What would make you lose confidence in the $us to the point that you would refuse to hold it, because the answer for you individually is the answer for all of us as a whole. Right now, you (and everyone) sitting there in front of your keyboards reading this - you know on some fundamental level that the $us isn't completely as safe as a silver dollar, you may not know consciously why you believe that, but on some basic level you do - everyone knows that silver and gold is mined in limited quantities, that is has never been worthless, and that paper grows on trees. We all play the game with $us, we all hold it, it is very convenient, and right now it is appreciating in value. Everyone wishes they had wads of the stuff to pay their mortgage with, so you're probably happy to be holding it now and you probably wish you'd sold stocks a year or two ago and bought more of it. So what would make you want to sell it ? What would make you lose faith in its value, what would make Camaraderie afraid to hold his savings in $us ?
If you can answer that question for yourself, you can answer it for all of us.
What would convince everyone, at once, to sell $us ?
The answer to the question is the same as what would make everyone sell houses like they are doing right now when they were excited to be buying them not 5 years ago. It's the same as the answer to the question of what would make people sell stocks right now when they were excited to be buying them 3 years ago.
What would make everyone sell $us is that everyone else is selling it - and what makes people start selling it is that at some point its value becomes unsustainable and people stop believing in the fairy tale, just like they've stopped believing in real estate and stocks.
What would cause you and everyone else to stop believing the fairy tale ?
The most recent hyper-inflation has happened in Iceland. Iceland is a small island country of 300k people, yet it had a massive banking system and issued piles of currency, the currency was sought after all over Europe. At some point during this financial crisis people stopped believing, they started to sell Iceland's currency, and by the time it got going the currency had collapsed and even the locals were scrambling to buy canned goods, guns, gasoline, and whatever else they could get their hands on to try to get rid of the currency they had, because virtually over night it became worthless. Why them, why now, what made it happen now ? The currencies fundamentals didn't change, it is the same currency it was two years ago, same people involved, same banks, same investors, so why now ?
What made people stop believing in the Icelandic Krona ?
|