Andy’s Take On How To Weather the Storm
Working with a boss who has more than 25 years experience in the Finance industry has its perks. Mainly, I get challenged on a daily basis with interesting ideas and takes on the world situation and how to cope with it. Instead of keeping it all to my good self, I asked Andy to write a few lines on the present situation and post them on our Lighthouse Blog. He ended up writing three posts, which I find very interesting and thought provoking. Here they are:
You’ll find here under the first post introduction as a teaser. I hope you’ll take time to go read the originals in full, and share your point of view with us !
Central banks are practically giving money away (almost for free), in order to get liquidity into the global economies. See here for current central bank rates. However, once global economies do stabilise, we shift from this illiquid cycle into an inflationary cycle that will give us an altogether different set of challenges – and at the same time we are still reeling from the massive GDP debts we are incurring right now. I say ‘we’ because that debt is yours and mine, no matter our nationality or country of residence. You and I may not have personally signed the release letters for TARP or the HBOS, AIG etc bail-outs, but for sure the ‘interest’ payments will be passed to us by national Governments for you and me to pay in the coming years.
Certainly, this spells difficult times ahead for depositors; with the prospect of inflation rates becoming higher than deposit rates, and the consequent physical loss of purchasing power for our cash. What should you do about it?
In my opinion, you have two choices, and both need urgent action if you are going to pass through the coming storms and reach port: a) safely, and b) in good condition; or c) in a better condition