Sara, I think what Mike is trying to say is that massive monetary deflation may occur.
All that cash that you are carefully squirreling away will have NO or very little value. Zip, zero, nada, nothing much could be bought for cash. Remember that cash is only paper with printing on it; "value" does not inherently reside in it. It is a faith-based medium of exchange and a lot of the "value" placed in it has to do with how the rest of the world sees the U.S. as being able to produce something real.
Deflation can occur nearly overnight. Once the world's confidence and faith in the U.S. falters down goes the dollar. It is already struggling.
Marc Faber on Feb.22, 2010 advised investors in this way Oddly enough, I NEVER saw this reported widely in the US. It is chilling.):
"The world’s most powerful investors have been advised to buy farmland, stock up on gold and prepare for a “dirty war” by Marc Faber, the notoriously bearish market pundit, who predicted the 1987 stock market crash.
The bleak warning of social and financial meltdown, delivered today in Tokyo at a gathering of 700 pension and sovereign wealth fund managers.
Dr Faber, who advised his audience to pull out of American stocks one week before the 1987 crash and was among a handful who predicted the more recent financial crisis, vies with the Nouriel Roubini, the economist, as a rival claimant for the nickname Dr Doom.
Speaking today, Dr Faber said that investors, who control billions of dollars of assets, should start considering the effects of more disruptive events than mere market volatility.
“The next war will be a dirty war,” he told fund managers: "What are you going to do when your mobile phone gets shut down or the internet stops working or the city water supplies get poisoned?”
His investment advice, which was the first keynote speech of CLSA’s annual investment forum in Tokyo, included a suggestion that fund managers buy houses in the countryside because it was more likely that violence, biological attack and other acts of a “dirty war” would happen in cities. http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article7035913.ece
Funny thing, GS is neck deep in the Greek crisis. Now I am hearing rumors that AIG insured all those crapola CDS peddled by GS. Will we bail out Greece and GS by further propping up AIG? Or will we finally take to the streets and cry "ENOUGH"?
Greece is already experiencing riots, are we next?