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<p>[QUOTE=&quot;GeorgeM, post: 1250663, member: 28550&quot;]Don&#039;t worry - plenty of the participants in this thread are <i>writing</i> with confused fascination. And, it&#039;s common for people to have brilliant lines of reasoning that arrive at totally different destinations. That likely just means we&#039;re all wrong to varying degrees. </p><p><br /></p><p>I agree with your summary though - having a $100 bill sit under your mattress (or otherwise out of circulation / not invested in anything) is generally a bad idea in an inflationary situation. In a deflationary situation, it can be wonderful though. </p><p><br /></p><p>Having cash in hand can be useful even in an inflationary situation if no one else has any. It allows you to make fire-sale purchases (ie; when a company goes out of business and you can buy their assets cheaply, or when a storage unit is auctioned off due to the renters failure to pay). </p><p><br /></p><p>One way of looking at interest rates is that interest is the value of money. When more people have money that they want to invest than there are people who want to borrow money, interest rates fall. When there&#039;s a shortage of lenders, interest rates climb. </p><p><br /></p><p>Currently, we are in a strange situation because the US government is trying to depress interest rates to stimulate economic growth (this is being done through several different mechanisms, from the Federal Funds Rate set by the Federal Reserve to TARP and various other Federal Loan Programs). The impact on interest rates has been pretty severe, but we haven&#039;t seen the results in the form of economic growth yet. When that does come, you can expect a pretty big slinky effect.[/QUOTE]</p><p><br /></p>

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