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1998-03-11 09:40:29


Programmer Says Don't Panic by Increasing Your Cash Reserves


A programmer posted the following on a programmers' forum -- an odd place to post it, since it's not aimed at programmers.

"Dear unschooled layman - Do not go out and cash out your accounts and start stuffing your money in the mattress. That is the worst thing to do. Right now, begin getting regular hard copies of all your finanacial accounts, including SSA, and keep doing it until December 1999 and beyond. This way you can personally monitor your accounts and detect any problems early enough to correct them. The problems won't begin to evidence themselves in 2000, but before that. It's the hype that is so dangerous - mass panic will not help make the situation go away.IMHO" [IMHO means "in my humble opinion."]

This is a naive person -- terminally naive. It is the unschooled layman who uses his ATM machine daily to take out the maximum allowed who is acting rationally.

You get maybe 3% in your bank account. You pay income taxes on this. So, by going to cash, it costs you maybe 2% per annum. For this, you gain access to cash, which will appreciate dramatically in a recession, astoundingly in a depression, and astronomically in a meltdown, which is what y2k threatens to create. Prices will fall as millions of people scramble for cash. Banks will close. Cash will be king. Cash will appreciate in value. This economic gain for cash holders is income tax free: you don't pay income taxes on the money you save when you buy at a discount.

The programmers are technically skilled, but as economists, most of them are utterly uninformed. Anyone with economic training can see the logic of cash. Yet this person tells us to avoid an investment -- cash -- that could produce 2 to 1, 5 to 1, even 10 to 1 gains in 2000, and which costs us about 2% per annum over the next two years to invest in -- a low commission structure for anything that could pay 10 to 1, let alone save your life.

My father in law's father and mother escaped the Armenian genocide by the Turks in 1915 because he had a hundred pound note. He bought his way across Russia and bought tickets for himself and his pregnant wife to New York. He had cash in a crisis. It saved his life.

Don't listen to programmers who are posturing for their peers. "What, me worry?" they are announcing. "No big problem. We can do it! Yea, programmers! Go, team, go! Avoid cash!"

Get cash. Lots of it. In small bills. Do it now, while you still can.

Programmers are people who fear a bank run because it will bankrupt the companies that pay their salaries. Bank closings will leave them unemployed. They, above all, need cash. But they are too blind to see this. They have faith in programming. They rarely bother to ask, "What about noncompliant chips?"

Don't be as blind as a programmer.

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