financial reserves

[Bircher]

I find it interesting that that in all the church material about finances, saving up for a rainy day, budgeting etc, they seem to say to save in a bank account.

With inflation as out of control as it is, why would they not be recommending some inflation proof plans?

Do they not think that inflation will be that big a problem? do they think explaining it would turn too many people off? Taking the argument of following the living Prophet, it would seem that saving money in Fed notes in a bank is the way the Lords servants are telling us to go.

My instincts tell me that inflation proof savings is a much smarter way to go, but then again my thoughts are not His thoughts.

Any thoughts?

http://providentliving.org/content/disp ... -1,00.html

http://providentliving.org/channel/0,11 ... -1,00.html

[caddis]

Unless I am missing something (which is probably the case) I just see the phrase "build a financial reserve" not save using a bank account.

For the record I think you are right on about inflation protected investments. However, seeing how the savings rate in this country is something like -5%, I think the bretheren are more concerned with members just saving something rather than giving specific investment advice. IMHO

[jbalm]

On the other hand, maybe we're looking at a deflationary situation in the future, as many commentator's suspect. In that case, cash is king, better than gold or silver.

[sunnankar]

On the other hand, maybe we're looking at a deflationary situation in the future, as many commentator's suspect. In that case, cash is king, better than gold or silver.

I don't think you have a proper understanding of what 'cash' is. Money must be a tangible asset. Money substitutes can be bills of credit. Either can function as currency. Fiat Federal Reserve notes are simply 'like-cash' instruments as they are subject to Payment Risk and can become worthless. Gold and silver are cash, the ultimate form of payment and subject only to exchange rate risk; they are 'risk-free' which is the definition of 'cash.' That is a reason why gold and silver increase in purchasing power during times of deflation.

As the credit contraction continues those 'like-cash' instruments will continue evaporating away like auction-rate securities did. Thefirst snowfall of a deflationary winter has happened and hyper-inflation is really just a form of deflation resulting from a credit contraction.

[Bircher]

I understand all that, I just think it is interesting that in all of these financial preparedness pamphlets speak nothing of such and are allowing the masses to continue in their preconceived notions of savings.

I am not saying they are wrong, just curious as to why.

[jbalm]

I don't think you have a proper understanding of what 'cash' is. Money must be a tangible asset.

I understand very well. I just don't use arcane definitions without prior warning. I was using the common definition (hence no prior warning)

cash
–noun
1. money in the form of coins or banknotes, esp. that issued by a government.
2. money or an equivalent, as a check, paid at the time of making a purchase.
–verb (used with object)
3. to give or obtain cash for (a check, money order, etc.).

I was responding to Bircher's comments about protection against inflation, which I assume meant investing in securities, tangible commodities, or some other type of appreciating (normally) investment.

Gold is not cash in the U.S. right now, per the common definition. It is an intrinsically low value commodity that has been historically associated with wealth, probably because it is scarce and pretty.

I don't agree with your apparent notions of inflation and deflation.

[Proud 2b Peculiar]

Maybe it was just me, and I mentioned this on the forum when those came out, but seeing the money in a jar combined with a story of the Prophet Gordon B. Hinckley that I saw on a Living Scriptures DVD where his mother saved money in a jar that made it possible for him to go on a mission when the Great Depression era stole all his savings made me think that cash in a safe location not in a bank was a good idea.

It came as a distinct impression that is what I should do. If the home is the safest place for storage..... anyway.

[lundbaek]

Perhaps the toughtes issue I am dealing with at this time is how to preserve the purchasing power of the wealth (such as it is) for future needs.

[ldsff]

[lundbaek]

Does anyone recall hearing or reading an admonition from the Church leadership to have a safe in the home for keeping cash reserves? A man in our ward told me of such, but I don't recall anything of the sort.

[Proud 2b Peculiar]

Not a safe that I know of, but our preparedness stuff from our ward included a sheet that talked about having cash on hand in case there was no power, but I think that came from members that were in Katrina then the church itself.

[scottja]

We just had a regional preparedness missionary couple present at our ward, and they
strongly mentioned having some cash on hand, at home, in small bills - 1s and 5s.
They referenced a story where during a long power outage a local store would only sell 6 items to a single person, and wouldn't make change.

[Proud 2b Peculiar]

That is the same story we were told, by a sister that lived that during Katrina.