There are only two times in your life when you will need money: now and later. Hopefully, you are prepared for both occasions and if not, don't worry - there is plenty to go around! Cash, like all other asset classes, has time-varying preference and utility curves. Cash seems to be in ample supply when it's not needed and scarce when it is in high demand. Does this mean that there is now little demand for cash since cash balances are, by all accounts, at record highs? Or does it mean that there is just not all that much worth buying - so the cash tends to pile up? To turn the page, this analyst believes that today's high cash balances are the result of savvy moves by both companies and individuals that rightly anticipated U.S. dollar appreciation.
Older academics may refer to today's U.S. economy as a having a
Safe havens for investors are downright scary these days.
Since Detroit's record bankruptcy in July, investors have been more skittish than ever about municipal bonds, once a strong strand in the safety net of boring investments for Americans investors.
Debt issued by Puerto Rico is particularly of concern; large investment houses are busy warning their brokerage sales forces to steer clients away from Puerto Rican debt in an effort to avoid potentially disastrous losses.
Meanwhile, the financial services industry is doing its damndest to block new rules that would make investments in money markets funds safer. Indeed, the new rules requiring money market funds to carry more capital are essential to protecting investors and the industry simply doesn't want them.
Let's start with the climate of fear around Puerto Rican muni bonds.
According to the Wall Street Journal last month, the nation's largest brokerage firms, including household brand names like