28-09-2012, 09:23 PM
With QE3 and the Eurozone bond buying spree....and China easing fiscal policies, it looks like inflation is going to surge and cash is going to dwindle in value. The world will be awash with cash, while paradoxically, there will be major economies going on the verge of bankruptcy? it really is scary contemplating where cash is heading for. We are in uncharted territory. What is fiat currency without any backing at all? (Read Peter Schiff's seminal book on Crash Proof 2.0: How to Profit From the Economic Collapse)
If one looked at the other asset classes that will retain value in these times- property, stocks, gold- which of these could potentially complement or perhaps replace cash as currency in certain situations. Property is illiquid and are huge capital items. Gold is ascribed value according to market forces and is non- productive. One can re-bury gold into the ground, go to sleep, and wake up with the same 100g, no more no less. Of course, it's value may increase or diminish according to the gold market which again is tied to the value of the US dollar, among others.
Stocks on the other hand represent the composite value of a company or group of companies which in turn represents all the myriad elements that makes the company what it is- human capital, human talent, human industriousness, raw material, machinery, property assets, cash, patents, creative license, etc, etc. The company is organic, diverse and diversified. This is where true value resides and will be retained. Parts of this value are represented by the stock of the company ( which previously, just as in cash, were represented by a piece of paper).
I now put forward the case that stocks, which are more liquid and can be represented by smaller denominations, may one day take over some of the role of cash as currency especially in these inflationary times. As it is now companies are paying with their shares- dividends, buyouts, etc. With the proliferation of smart technology, the Internet, and ever more sophisticated telecommunications systems, the use of stocks as a mode of payment, perhaps for big ticket items, may become a reality. I am sure some others have considered this before.
I seek the valued opinions of fellow Buddies.
If one looked at the other asset classes that will retain value in these times- property, stocks, gold- which of these could potentially complement or perhaps replace cash as currency in certain situations. Property is illiquid and are huge capital items. Gold is ascribed value according to market forces and is non- productive. One can re-bury gold into the ground, go to sleep, and wake up with the same 100g, no more no less. Of course, it's value may increase or diminish according to the gold market which again is tied to the value of the US dollar, among others.
Stocks on the other hand represent the composite value of a company or group of companies which in turn represents all the myriad elements that makes the company what it is- human capital, human talent, human industriousness, raw material, machinery, property assets, cash, patents, creative license, etc, etc. The company is organic, diverse and diversified. This is where true value resides and will be retained. Parts of this value are represented by the stock of the company ( which previously, just as in cash, were represented by a piece of paper).
I now put forward the case that stocks, which are more liquid and can be represented by smaller denominations, may one day take over some of the role of cash as currency especially in these inflationary times. As it is now companies are paying with their shares- dividends, buyouts, etc. With the proliferation of smart technology, the Internet, and ever more sophisticated telecommunications systems, the use of stocks as a mode of payment, perhaps for big ticket items, may become a reality. I am sure some others have considered this before.
I seek the valued opinions of fellow Buddies.