IF you use a computer application like Word or Excel, you know that there are certain “default settings” like the font size and what “hot keys” do. The universe also has default settings that we broadly call the “Laws of Physics.”
Money—or interchangeably “cash”—must be able to function as a medium of exchange, a unit of account, and a store of value with the following characteristics: portability, divisibility, and acceptability. While often cited, “limited supply” is not a significant factor as it is only a function of “acceptability.”
Despite the high interest rate currently being paid for holding cash and lending it to governments, cash is not king in 2023. No better example is the 25 percent increase in the price of Bitcoin since 2023 began. Further, the Dow Jones index—and the Philippine stock market—is up 20 percent since the start of October 2022, followed by gold up 18 percent.
Cash is not always king when you are afraid, confused, and thinking short term. That is why the lady on the Titanic grabbed the oranges and not the diamonds before getting onto the lifeboat. If you are anticipating a more favorable future, you get out of cash and go with an investment that will increase wealth longer term even if it carries a risk.
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