The late-night New York City talk show host pulled out a huge wad of cash from his pants pocket. In turn, he peeled off one bill after another and put them in the open palm of his "gofer." Apparently it was the gofer's payday.
This I saw in an old office that overlooked Times Square. The talk show host was known as the "King of Memory Lane" -- his office was stacked with so much memorabilia that one could barely walk around. He had invited me over to see his office, because for several months I'd given him a copy of the television station's overnight ratings (he wasn't on the list to receive them, but my boss said it was okay). In return his gofer would hand me an inter-office envelope with meal tickets to Manhattan restaurants. I was in my early twenties, and glad indeed to eat free meals at pretty nice places.
But I'll never forget that handful of cash. Fast forward (too) many years to today, and what brings this story to mind is how many people show a growing fondness for hard, cold cash:
"We were struck by something that makes this holiday different; more Americans using cash -- not plastic."
Diane Sawyer, World News Tonight (12/17)
"...global demand for U.S. currency, in its elemental form of cash, has been growing at a strong rate. According to data from Wrightson ICAP, the most recent four-week moving average for currency in circulation grew at a robust 10.3% annualized pace.
"That figure was no doubt boosted by holiday shoppers withdrawing money from cash machines, but it’s still well above the 2% growth rate posted in the same period a year ago. And average monthly currency growth year-to-date stands at around 5%, according to data from the Federal Reserve, well above the 0.1% pace that persisted before the financial crisis.
"The world-wide interest in holding cold, hard dollars is driven substantially by fear."
Wall Street Journal, (12/8)
EWI's Robert Prechter referenced this article in his December Elliott Wave Theorist, and said:
"When people finally realize that banks are going bust, they will rush to withdraw their deposits in cash, but banks will shut their doors, and it will be too late. If you are still underinvested in cash, get it now, before it’s too late."
The question becomes: As the credit contraction gets tighter, how many more banks will fail? Deflationary trends are rare, but the evidence strongly suggests we are experiencing such a trend now. One asset can help you conquer the deflationary depression:
"Cash is the only asset that assuredly rises in value during deflation."
Conquer the Crash, 2nd edition, p. 164