When “Cash Becomes King” . . . .

[Guest]

and where would you store it ?
what do you think would happen to the stock market the day a bail in happened?

[ajl]

On a related matter Errol, when or do you see negative rates becoming reality in canuckistan? Have been giving a lot of though to how to restructure the portfolio if that becomes reality as I was thinking 3 years but now am not so sure.

[macdon02]

Lol this repo mess has about 12 different tentacles and can be played multiple ways, unfortunately being dependent on the short term bond market isn't one of them. Deutsch bank is sitting on roughly 54 trillion of derivatives in currency and rates. Go watch the Big Short for definition of derivative. Here's the problem, GS, Citibank, Bank of America, everyone but Wells Fargo and JPM are counter party risk on that 54 trillion, and I mean everyone across the world. The Fed is losing control on short term rates, hence the spike to 10% in Sept. Canadian pension funds at Bank of Montreal, TD and Scotia are also involved indirectly but could become collateral damage. Govt regulated a 40% requirement back in 08 that pensions had to hold bonds. Merkel and the ECB is on record there will be no bailout of Deutsch or any other European bank. So if this thing lets loose, the account holders are on the hook. QE4 doesn't fix this as it's more of a structural issue then banks in US and Canada no meeting reserve requirements, they have enough deposits versus loans. So when liquidity crisis gets mentioned, it isn't North America directly thats at risk. This isn't at a retail level either, it's all institutional and out of our hands. Im skeptical that this will hit because it's been talked about so much, usually when this happens, the expected result is the opposite. Every dollar of credit we rely on resides in the bond market, along with insurance company holding. Anyone remember MF Global? The judge in New York took the account holders cash to bail in MF. So the precedent is already set we can lose cash in the deal. JPMorgan is unraveling their counterparty risk through tbills, why i mentioned they are not at risk, institutions have to pay tax on earnings starting on the 16th, usually everyone takes profit on yr end and the books get squared up on yr end but then where does the $ go? I can't explain this in less then a couple hour presentation as it reaches so far. Negative yielding bonds, there's 17 trillion of them and im guessing Deutsch is involved there as well, if the short term rates come unglued, and 20% wouldn't be out of the question but likely 8~% more likely, the 17 trillion in negative yielding bonds would revalue at 64% of initial value. If short term rates go, so will longs, then currency. Incredibly deflationary because you also have to remember every govt in the world is reliant on the bond market to function because they can't run a surplus. I truly can't get my head around it completely. The Fed is stepping in because JPMorgan is rebalancing, its almost dollar for dollar. There's rating involved as to cost for JPMorgan to borrow and that's likely somewhat a factor but my guess is they know Deutsch is going down, Merkel said no bailout, and their offices have been raided twice for documents. Again it's so much in the news i doubt it'll happen, but the safe haven might be a forward price contract spring delivery, and grain in the bin, assuming ABCD are not exposed in this mess, end of Q1 we could see pressure build again. It has the potential to be epic, sort of 10x of '08. Can you put a crop in the ground without credit through CCGA or input finance companies? Cash would be king in the above scenario

[SASKFARMER]

In my safe at 9999.00 every trip. Just kidding.

I still believe in having cash around in a safe for you just never know kind of day.

I do believe the USA dollar will come out as king and the Canadian will be like Mexico or Greece. Junk.

[macdon02]

In my safe at 9999.00 every trip. Just kidding.

I still believe in having cash around in a safe for you just never know kind of day.

I do believe the USA dollar will come out as king and the Canadian will be like Mexico or Greece. Junk.

Unless like Poloz and Lagarde have mentioned, they outlaw paper currency to prevent hoarding and a bank run. We can still see 83cad ~. Transporting more then 10k through an airport will get it seized. The risk they run by banning cash, is a barter system getting established. "Cash is for criminals" was IMF talk I believe. They are trying to close the loops

[jazz]

rumour has it Goldman Sachs is bailing out Duetchabank in the overnight lending window.

If that's true they are trying to avert a 2008 style meltdown.

Two corrupt institutions, one bailing out the other. Even the fed won't lend to whoever that is at the repo window every night for 3 months. Think about that for a second. How insolvent do you have to be when the institution that can print money from thin air won't touch you.

[macdon02]

rumour has it Goldman Sachs is bailing out Duetchabank in the overnight lending window.

If that's true they are trying to avert a 2008 style meltdown.

Two corrupt institutions, one bailing out the other. Even the fed won't lend to whoever that is at the repo window every night for 3 months. Think about that for a second. How insolvent do you have to be when the institution that can print money from thin air won't touch you.

The leverage of the deritives makes this unfixable even for a CB. Take a look at GS shares, there's weakness JPMORGAN isn't showing at present. GS is also tied up in Malaysia through selling them a deal govt is revolting on and it's in the courts, there isn't much that sticks to GS but they might get scorched, they did the same to Greece 3 times through bailouts before IMF or ECB stepped in(can't remember which). If the short term rates explode, govt budgets get blown out of the water as they are all in, just rotating it, ECB is buying 90% of all new issued govt debt in Europe and then there's Japan. At least the fed is letting bonds expire causing a slight shrink, ECB and JCB are rolling all govt debt into long and short term snowball effect.

[FarmJunkie]

Keep posting Errol. U are more realistic than most on here. The shit is gonna hit the fan just when who knows. I say not this winter but after the US election in 2021. They will do their best to keep the balls in the air until they just say phuck it. Can only kick the can down the road so long.

[flea beetle]

Eight years of predicating doom and gloom! Who are you and what credentials do you have to make these economic assertions. Are you a professional financial adviser? Have you personally had any success timing the markets while taking your own advice?

If you have been taking your own advice, what has that CASH you have held on hand earned you since 2012?

You mention Buffet for the first time in your economic synopsis that he is now holding a large amount of cash, what was he doing the last eight years, hoarding cash waiting for the big crash? No the majority of the time he as buying Blue Chips!

Yes there may be some sort of a correction to come, but for coming Agriville with your monthly predication of a cash is coming is like crying wolf over and over again!

I would say Errol has the credentials to back up what he preaches. If you don't know who he is, you should look him up. He is well respected in the ag community.

A little taste of who Errol is:

Experienced President (Pro market communications) with a demonstrated history of working in the market research industry. Skilled in Commodity Risk Management, Public Speaking, Commodity Pools, Market Research, and Project Management. Strong business development professional with a BSc Ag Economics focused in Commodity Markets from University of Alberta.

At least he has the cahonees to put his thoughts and opinions out there for people to learn from.

I have said it once, and will say it again. I believe Errol is 100% correct in his depiction of what is to come. It is just hard to time with the government fighting tooth and nail to prolong it from happening as long as they can.

[biglentil]

Enjoy the good ole days while they last. Ignorance is bliss. The can will get kicked again and again. Cash is king and at least it will be better than no toilet paper at all. Try that with a gold coin.