Now that Gary Vaynerchuk is talking about the imminent economic collapse, maybe people will finally listen.
He’s urging people to “maximize on cash”, which is a sensible thing to do.
He’s talking solely from a business- and investor point of view, though, so he’s not specifying the term “cash”. He seems to just mean “liquid” money - which includes savings in the bank - as long as it’s not stuck in any longterm assets/investments.
His thinking is, ‘Everything will be on discount’ (properties, shares, entire businesses) so you want to have enough liquid money to take advantage of that and “buy cheap”.
From an actual money point of view, savings in the bank are not cash, of course. Only cash is cash - physical fiat cash and digital crypto cash. Cash is the only money, that you have complete ownership and control over. You can access and spend it whenever you like.
Why is it important to make this distinction?
Because you do NOT have ownership and control over your money in the bank: When the crisis hits and ATM’s are empty, and you’ve been queuing for hours at your local bank branch, the bank teller might still close their window right in front of you and say, “Sorry, we’re all out of cash.” Or they will decide to give you a tiny amount as an allowance, so that there’s enough for everyone.
You do not have ownership over your money in the bank. It is NOT the same as cash.
“Well, then I’ll just pay with my credit card, so what?”
What Gary also doesn’t mention is hyperinflation of our currencies. The Dollar, the Euro, etc. An economic downturn is a “devaluation” - that includes our money. So, no matter how much money you have in the bank - it will lose its value and not be worth much anymore.
I remember my grandma showing me a “1 Trillion Reichsmark” note when I was a kid. All you could get for it in the 1920’s was a loaf of bread.
Of course physical cash won’t make any difference if that happens. One Dollar in your pocket or one Dollar in the bank will be equally worthless in that case.
What will very likely rise in value during this time is digital cash: cryptocurrencies.
Cryptocurrencies are not part of the system that will be in a crisis. They exist outside of it and they have been created to replace it.
The moment our fiat currencies will show signs of devaluation, people will want to bring their money to “safety”. Fast. Just like in Venezuela and other countries, where this is already happening, they will flee into cryptocurrencies. And Gold, but mostly cryptocurrencies, because Gold doesn’t really lend itself as cash, to by food or other necessities.
But both of these forms of money - crypto and Gold - will rise in value very quickly when that happens, due to the sudden increase in demand, and a limited supply.
What seemed a “risky investment” til then, will suddenly turn out to be a “safe haven”. Something that longterm crypto investors have known all along - they are protecting themselves from “losing everything” during the next economic downturn.
So. Listen to Gary Vee.
Maximize on cash!
Cryptocurrencies in your wallet are cash - but only if you own the private keys, remember. If you leave your crypto lying around at an exchange, it’s not cash. It’s just like money in the bank.
Also, we are in a crypto downturn right now, and everything is at about an 80% discount. Just saying...
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About the author:
Anja Schuetz is a cryptocurrency mentor for absolute beginners, with specific focus on women and non-digital natives. She also consults as a Customer Communication & Operations Manager for blockchain start-ups. Sign up for her Free Bitcoin Beginner's Course and her Conscious Crypto Museletter here: http://anjaschuetz.net