[billmalarky]

The author sort of covers that in this line:

>I counter that just about nobody thinks of American cash as an investment, except for perhaps currency speculators.

Of course that sort of ignores the fact that bitcoin investors are currency speculators...

[njarboe]

Before the interest rates crashed, many people put most of their money into saving accounts that paid more interest than inflation. They probably thought of this more as saving than investing, but what many people are looking for is a store of value that wont go down and pays a bit of interest. Historically getting 3% on very secure, gold denominated debt was the norm.

Savers don't necessarily want to be investors. Most people don't have the combination of time, interest, temperament, and intelligence to invest well. You used to be able to just buy US bonds or longer term CDs and do OK, but this is no longer the case. Now the savers are encouraged to buy broad market index funds using a time averaged purchase method and never sell the dips (or buy extra during the booms). This just does not sit well for moderately risk adverse people (and this risk aversion is also a trait that makes them want to have savings).

I think the smart money knows that a combination of factors has put the dollar in a less sound footing than in the past (rise of China, $20 trillion US debt, US baby boomer pension, social security, and medicaid obligations, decline in the dollar denominated global oil market, etc) and no long want to hold US dollar based assets (US bonds, US cash, US corp debt, etc). In fact you see a lot of the rich piling up US dollar debt against their assets.

Regular people are now also feeling the fiat currencies are no longer a good store of value, still want to save, but don't want to be investors. So what to save? Copper ingots? Bushels of wheat? Barrels of oil? Bitcoin or some other cryptocurrency could be it. Maybe a few of them could be, but for now they look like a crazy frenzy of Ponzi schemes. The regular public is getting sucked in with many stories of 10x in a year returns and are not familiar with previous 80% crashes. If a a single cryptocurrency does become the default store of value for the masses of conservative savers then another 100x from current price levels is not unreasonable. Bitcoin seems the most likely candidate at the moment.

[aetherson]

"Nobody thinks of American cash as an investment, except for perhaps those who invest in it."

[JumpCrisscross]

> Nobody thinks of American cash as an investment, except for perhaps those who invest in it

Most buyers of U.S. dollars buy it for non-speculative purposes. Out of those who speculate on it, most do so in tandem with buying bonds and borrowing. Most FX is a cousin of rates trading more than hoping your currency goes up.

[aetherson]

> Most buyers of U.S. dollars buy it for non-speculative purposes.

Sure! I didn't say, "except for perhaps those who buy it," I said, "for those who invest in it."

> Out of those who speculate on it, most do so in tandem with buying bonds and borrowing. Most FX is a cousin of rates trading more than hoping your currency goes up.

I agree, but don't feel like we would split these kinds of hairs when talking about other kinds of investment. Like, do we consider shorts and arbitrage and other more sophisticated forms of dabbling in financial markets to be "not investment" because they aren't "buy a stock; hope it goes up"? Perhaps when in technical discussion, but in common parlance, I feel like this is a distinction driven by emotion.

[coldtea]

>Sure! I didn't say, "except for perhaps those who buy it," I said, "for those who invest in it."

Well, if those are statistically insignificant outliers, then "nobody" still stands, as it's a colloquialism for "very few people" or "only stupid ones" -- it doesn't really mean "absolutely no one in the history of the world".

Except if you mean people like Soros and co, speculating on national currencies (but those are few and far between too)

[njarboe]

Those few and far between opportunities is what the consistently great investors shoot for. I think I might agree with Warren Buffet and his view of investing. If you are a professional investor, patience and rare (every few years) big bets when things look very good. Otherwise, full market index funds.