A great way for the average person to hedge off inflation
What does it mean to have an economic crisis?An economic crisis is a period in which the economy of one or more countries is severely damaged. During an economic crisis, people face problems such as unemployment, declining incomes, currency depreciation, etc., so they need to take steps to protect their property.
The economic crisis is also divided into several levels: one is a simple financial crisis, such as the collapse of Japanese housing prices in 1991, when Japan's **, the property market fell quite miserably, but in fact, the impact on the macro economy is not great, Japan's unemployment rate at that time is basically stable, indicating that their asset bubble burst at that time, only affected the financial level, and did not seriously impact the real economy. At this time, it is indeed a good opportunity for value investors to enter the market with cash in hand.
Second, if the financial crisis deepens, it will turn into an economic crisis. The most typical example is the Great Depression that began in 1929, when the U.S. stock market crashed, and the financial crisis became a full-scale economic crisis, when the unemployment rate in the United States soared to 25%, and in the case of a comprehensive economic contraction, all assets may collapse, and even the best real enterprises will face collapse due to the sharp decline in demand, including banks. At this time, we ordinary people should deeply understand the meaning of cash is king, and the meaning of cash is to convert your assets into high-quality assets that are easy to cash. If you simply keep cash in the bank, then it is really depreciating all the time, your assets are shrinking all the time, we ordinary people only need to keep a small amount of cash for living expenses, and the rest of the money should be exchanged for high-net-worth assets. For example, **, land, and real estate in the core area of first-tier cities are all high-quality assets at this stage.
Third, the most dangerous thing is that the further deepening of the economic crisis will turn into a social crisis, such as Germany after World War I, when Germany was facing an economic crisis, it directly started the money printing machine, hoping to save the economy with a large amount of money, but in exchange for only hyperinflation. In just four years, prices have skyrocketed by nearly hundreds of billions of times, and at the height of inflation, it costs 80 million marks to buy an egg and 1 to a beerWith 500 million marks, the people at the bottom of Germany fell into an abyss from which they could never recover. At this time, it is risky to keep money in the bank and keep cash, and if you want to maintain its value, you can only exchange the money for materials in advance, such as food, **, etc.
When the economic crisis comes, is it better to keep our money in the bank or in cash?
Many people may be trumpeting you in your ear, saying that if you have deposits in the bank, the deposit interest rate has been lowered, and the currency has depreciated, the deposit interest cannot beat inflation, if you just keep cash in the bank, it is just working for the bank, because the interest rate of the bank is far lower than the rate of currency depreciation, you have to replace the cash for a house, hurry up and buy some insurance, and so on. And what I want to say is that the reduction of the deposit rate just proves that you have saved the right deposit. The reduction in the deposit interest rate is actually a nominal interest rate, which actually proves that the real interest rate is in **!So how do you understand real interest rates?
For example, if you deposit 1 million yuan to buy a house, but you don't buy it when you deposit, this year, the house price is 10%, the interest on your deposit is 2%, and the real interest rate you actually benefit 12%. But if you make the opposite decision, go to buy a house at the beginning of the year, spend the money and carry a 4% interest rate debt, and then take out a loan with four points of interest, this house price **10%, in fact, your real loan interest is 14%;One is a positive 12% benefit, and the other is a negative 14% return, which is a big difference. So don't ignore the real interest rate. Now the overall economy is improving, although it is not as good as expected, but it will not break out of the crisis, so only deposits can cross the cycle, only deposits can survive this cold winter, and wait for the real recovery and prosperity of the economy.