Do you want to hold CASH?

CASH is KING of the UNIVERSE now! But if you think about what cash means, then you may not be able to sleep tonight. Cash is nothing but paper money printed by the central banks!

If you are holding USD, you can feel good for now. But don't forget that USD is the real paper money backed by trade imbalances and budget deficits, a falling housing and equities market, a helicopter Fed Santa Claus, and dictatorship in Wall Street. The rally is, I believe, purely politics driven! If economic conditions or prospects in other countries require devaluation of their currencies (Euro, GBP, A$, NZD, CAD, etc.), then the conditions in the US require a double devaluation. The question which currency will win the race by running the fastest devaluation.

The process of this competition by currency devaluation actually began many months ago when Canada started to cut interest rate after the Loonie rose above the US dollar. Now, the US was lagging behind the race but I believe they will still win at the end. Why? They can print unlimited paper money without real sanction or fetter. So long as USD remains as the reserve currency, you are free to print more everyday. China and Japan are bound to take up the papers!

I am no contrarian but if you are holding sufficient cash including USD, you should consider whether it's time to buy low. Yes, Euro, RMB, and commodities backed currencies. Once the evil carry trades have finished settling their holes, life should be back to normal.

Just look at the data released about Australia's employment. It shows a rapid rise and no real sign of slowdown! As for NZ, let me know the bad news about their economy. Is their export sinking? Is their housing market doing any worse than the US housing market? Is their unemployment rising rapidly? You have the answers! As for the Eurozone, no one doubts that the financial turmoils in US are causing greater damages than expected there. But the tumbling Euro is actually a result of over-speculation. The Euro has jumped from $1.2 to $1.6 within a short time and the fall is naturally driven by gravity. When the Euro was launched in 1999, the rate was USD1.1 as far as I can remember.

The pity is that many of us may not have sufficient cash now or may be most reluctant to buy anything after seeing huge losses in our portfolios. That is why I have been telling you to store up your cash as ammunition from Day One! But if you can save 5% of your income every month for investments, then you should still have the chance to join the party again. Reservation period can't be closed until Wall Street has sold everything to fill the black-holes in the markets. That still needs a considerable amount of time, my friends. Why? The more you sell, the smaller the amount of cash will be available in the markets! You must try to sell in parts day by day.

Yes, I want to hold cash but only for the purpose of escaping from the economic collapse being generated by paper money. A vicious cycle but one that none of us can avoid.