The stock markets everywhere had a ~20% drop this past week. Now please correct me if I’m wrong: this means that 20% of the stock market value became cash, right? Since gold dropped as well, and commodities as well, and housing price isn’t about to rise any time soon, what will be bought with all that cash? Or is cash considered the best refuge now, even though there’s a risk of even more inflation?
Can the price of everything drop at the same time? That happens if the overall demand for cash increases I guess. Is it the case now? It seems a bit strange.
That’s correct. There is a so-called “flight to liquidity”, meaning cash demand is going up. (Just look at the monetary base reserves graphs to see how much demand for cash there is.)
Bush is right. Until the bailout plan becomes effective, the dollar is not going to be inflated to nothing, so it’s a good time to be in dollars.
Is there any way you could elaborate on what you mean by the effectiveness of the bailout plan. I don’t quite understand why you think “the dollar is not going to be inflated to nothing”, despite their latest printing spree.
Also, do you have any good links where I could look up the “monetary base reserve graphs” for different countries?