Meraglim Blog

Hoarding Cash Helped Cause the Great Depression. It’s Happening Again.

Share on facebook
Facebook
Share on twitter
Twitter
Share on linkedin
LinkedIn

The word “hoarding” may conjure up images of pack rats piling old newspapers and magazines up to the ceiling. But it’s actually an economic term with a technical meaning.

Hoarding in economics refers to the acquisition of an asset which is held, and not spent, transferred or used in transactions. Gold hoarding means the acquisition of a stash of physical gold with no intention to sell it.

Cash hoarding is the same thing. When consumers hoard cash, they pile it up in checking accounts or pull physical bills out of the bank and stick it in a safe place.

The noun form of hoard refers to a gold hoard or cash hoard held and not spent. Hoarding can be prudent in times of extreme uncertainty or financial distress. It’s like saving for a rainy day. Then when the rainy day comes, you keep saving. But, hoarding is the opposite of spending and if everyone hoards and no one spends, then the economy grinds to a halt.

This is what happened in the Great Depression. Another name for hoarding cash is a “liquidity trap.” If no one spends money, then prices drop, which makes people want to spend even less because they’re waiting for prices to drop even more. It feeds on itself.

This article details how Americans are now hoarding cash in checking accounts at the highest levels since the 1991 recession. This could be a leading indicator of another recession. The drop in consumption reported on April 27 in the first quarter GDP estimate seems to confirm this.

It’s too soon to call a recession, but cash hoarding, Fed tightening, declining consumption and a near-inverted yield curve make a powerful case that a recession may be coming soon. In that case, stocks could drop 30% or more in a matter of weeks.

 

Accredited investors interested in learning more about Jim Rickard’s private placement in the world’s first predictive data analytics startup that combines human and artificial intelligence with complexity science should check out his offering at Meraglim HoldingsClick the link to learn more.

IF THE SCIENCE IS NOT ON YOUR SIDE, JUST TRY THREATS

It’s clear that good science does not support the extreme claims of the climate alarmists. Yes, there is such a thing as climate change, but it’s slow, difficult to predict and almost impossible to model because of the complexity of the process. The climate alarmists have grabbed most of the headlines for the past ten

Read More »

WHY TRUMP WILL WIN REELECTION: NOT POLLS OR PUNDITS; JUST COMMON SENSE

Political analysts use polls, betting odds, historic trends and other inputs to make their (usually wrong) political predictions. We all remember that “experts” said Hillary Clinton would win the presidency in 2016 (they gave her a 92% chance on the morning of the election), and that the UK would vote to “remain” in the EU

Read More »

HERE’S ANOTHER ELITE WITH ANOTHER PLAN TO TAX AWAY YOUR WEALTH

The elites never rest when it comes to devising new ways to take your money through taxes, inflation or outright confiscation. The latest Trojan horse the elites are riding to take your money is climate change. The climate does change over long periods of time for reasons that are not well understood except that they

Read More »

KRUGMAN SHOWS HE KNOWS LITTLE ABOUT ECONOMICS AND LESS ABOUT FINANCE

We already knew that Nobel Prize winner Paul Krugman knows almost nothing about economics. Now, we see from this article that he knows nothing about banking either. Krugman claims that the repeal of Glass-Steagall and the actions of banks in general were not the cause of the 2008 financial crisis. The conventional wisdom is that Lehman Brothers,

Read More »
Scroll to Top