At the end of the article on September 26, a reader left the following comment:
I am the first type of person in this article, and I still have some spare cash and do not plan to enter the A-shares market. My question is: after the massive liquidity injection, cash will certainly depreciate, and I don't dare to invest in real estate either, and the crypto market is also in a slump. As a small investor, what strategy can I adopt? How should I preserve the value of the little cash I have painstakingly saved?
"After the massive liquidity injection, cash will certainly depreciate" - this statement needs to be viewed from different perspectives.
First of all, I believe that the central government will definitely take various measures to stabilize various risks and provide a safety net. Of course, whether these measures can be effective is another matter. Let's consider what might happen if these measures can indeed provide a safety net.
It is obvious that after these measures are taken, money will definitely overflow into certain areas.
At this point, several scenarios may occur:
The first is that the money will directly overflow into daily necessities, raw materials, and basic materials.
The second is that the money will overflow to where the real economy needs it, such as enterprises in urgent need of relief and businesses lacking liquidity.
The third is that the money will overflow into markets with financial properties.
Among these three scenarios, the first one is direct inflation, in which case cash will certainly depreciate significantly.
This is certainly not what the central government hopes to see, but the final result is not subject to subjective will.
I think this scenario is possible, but it's hard to say how likely it is.
If this really happens?
As ordinary citizens, the methods we currently have to fight inflation are actually very limited: mainly buying precious metals, buying niche investment products, and buying real estate.
Among these ways to fight inflation, buying precious metals can be a small part of the layout, but it is only symbolic, and the actual effect is not that great, because:
- Precious metals (including gold and silver) are no longer cheap now, and the risks contained in them must be weighed when buying.
- Of course, the industry predicts that gold may reach $3,000 by the end of the year or next year. But even if this forecast is true, the increase from the current $2,700 to $3,000 is only a 10% increase. This 10% increase is almost negligible in protecting ordinary people from real hyperinflation.
The method of buying real estate used to be effective, but now and in the foreseeable future, I don't believe it can resist inflation. Although the country has introduced many measures, and may introduce more in the future, all these can only stabilize house prices and prevent them from continuing to fall, it is unlikely to reverse the trend and let them rise again to resist inflation.
The ability of the real estate market to appreciate and resist inflation has become a thing of the past in our country.
Niche investment products are meaningless and not feasible for the general public, so I won't go into details here.
So when we really face hyperinflation, for ordinary people, if we don't have investment methods we are confident in, apart from allocating a little precious metals, the only thing left is to put the money in the bank.
Although it may seem like letting the money depreciate, this is more reliable than blindly investing to try to "preserve value".
I guess many readers will not accept this conclusion, but this is the cruel fact.
In this case, everyone is collectively sinking, and it's a matter of who can hold out the longest, who can live longer. As long as we can live one more day than others, there is a glimmer of hope.
The second scenario is what the country hopes to see the most.
If this happens, ordinary people don't need to worry too much, our future situation will get better and better, so we don't need to worry too much about the depreciation of money, it's better to wait optimistically for the new hope that belongs to us.
But I don't know how likely this scenario is to happen.
The third scenario is also relatively likely to happen in my opinion. It's not as good as the second scenario, but it's definitely better than the first scenario, and it's a situation the country can accept for a certain period of time.
If this scenario happens, looking at all the areas with financial properties nationwide, what areas can absorb the huge amount of money released by the country?
I don't think the real estate market is possible.
This money is also unlikely to flow in large scale to overseas markets (the RMB has not achieved free convertibility).
What other areas are left is for the readers to think about.
"The crypto market is also in a slump", this depends on how you look at it.
In the short term, it's hard to say, but in the long run, I've always been optimistic, and I've never doubted it. Even when Ethereum was below $2,500 recently, I was still investing regularly.
