ROSENBERG: Investors Sitting On Cash Will Be Punished By Bernanke
In a post for Canada's Financial Post, Rosenberg argues that people with cash is sitting on the sidelines will get no returns because the Fed will keep rates near zero as long as unemployment is high. And Rosenberg thinks unemployment will be high for a while.
From his post:
People think their money is safe in cash, but it isn’t. Ben Bernanke is telling us that for the greater good of trying to redeploy the US$9-trillion now sitting in bank deposits, mattresses and T-bills, he is going to penalize acute risk aversion and hope that some of that cash finds its ways into more productive assets across the capital structure such as corporate bonds or some form of income equity.
The one thing we know with certainty is that Mr. Bernanke is going to punish and relegate investors who are sitting in cash to negative real returns, not just for another five months or five quarters, but five more years, and therefore cash is arguably the least safe asset class to be in today.
It makes the case for capital preservation and preservation of cash flows in the debt and equity markets and alternatives all that much more compelling. Any wall of worry can be vaulted when Helicopter Ben chases you out of your safe haven.
Read the whole post at FinancialPost.com.