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Bill Gross: "Go To Cash"

Tyler Durden's picture




 

Autghorted by Bill Gross via Janus.com,

Size does matter you know. There are basketball players, NFL linemen, and the more popular but unmentionable allusion to the bedroom that makes my point, although the older one gets, the more irrelevant playing basketball and football become, if you get my drift. More interesting to me than any of the above, however, is the application of size and its relevance to the animal kingdom. Randy Newman raised eyebrows and a goodly number of hackles three decades ago with his “Short People” ditty – “Short people got no reason, short people got no reason to live” he crooned, and the vertically disadvantaged got mad and the tall people laughed and the world went about its business of favoring size – in this case – when measured from head to toe. Mr. Newman’s parody was so radical that I suspect he was asking us to think, as opposed to expressing an opinion, and if so, he was and may still be more of a Buddhist than a bigot. But I speak not about the size of people here – but to animals of the more ordinary kind.

I am not what you might think of as an animal lover. I’ve had some great dogs and a rather well publicized cat by the name of “Bob”, but on the whole I’ve become more of a life respecter than an inveterate petter of felines or canines. But there’s something about the size of a living thing that increases or diminishes my sense of caring and I’m not sure why that should be. Let’s start at the top of the size chart and see if you share this same bias: Elephants, giraffes, whales. Good vibes? Of course. Who couldn’t love them? They’re either smart, elegant with those long necks, or symbolic of benign power and strength. Would you ever want to kill one? Almost unanimously you’d answer in the negative assuming your name isn’t Captain Ahab or you don’t run a safari company under the name “The Great White Hunter.” But now let’s go small: ants, snails, worms. Feelin’ good now? Not so much I suppose, since almost all of us have eliminated a bunch of these guys with nary an afterthought. Yeah, I know they get into our kitchens and slime across our lawns and driveways, which is something whales don’t do. But a living thing is a living thing no matter what its size. See what I mean? Isn’t this somewhat of an intellectual twister of sorts? Size does matter, but maybe it shouldn’t so much when it comes to living organisms. Small things, as Newman might have agreed, really have as much a reason to live as big things. Don’t get me wrong; I’m not on a stump here calling for the abolition of the Orkin man. I just find it interesting how the bigger they are, the more we seem to love them, but when they get small, we give hardly a damn.

So size does seem to matter in some aspects of life, and it certainly does in the financial markets. Super-size August movements in global stocks are but one sign that something may be amiss in the global economy itself – China notwithstanding. There’s the timing and the eventual “size” of the Fed’s “tightening” cycle that I have long advocated but which now seems to be destined to be labeled “too little, too late.” The “too late” refers to the fact that they may have missed their window of opportunity in early 2015, and the “too little” speaks to my concept of a new neutral policy rate which should be closer to 2% nominal, but now cannot be approached without spooking markets further and creating self-inflicted “financial instability.“ The Fed, however, seems intent on raising FF if only to prove that they can begin the journey to “normalization.”

They should, but their September meeting language must be so careful, that “one and done” represents an increasing possibility – at least for the next six months. The Fed is beginning to recognize that 6 years of zero bound interest rates have negative influences on the real economy – it destroys historical business models essential to capitalism such as pension funds, insurance companies, and the willingness to save money itself. If savings wither then so too does its Siamese Twin – investment – and with it, long term productivity – the decline of which we have seen not just in the U.S. but worldwide.

But this imbalance between savings/investment and consumption is not the only Frankenstein creation that zero percent yields have created. Over the past 6 years and perhaps on average since the beginning of the 21st century, artificially low yields have propelled financial markets and have impacted the real economy in numerous ways which are not well discussed in the financial press nor certainly in Washington, London, Brussels, or Tokyo. I list them below without further elaboration if only because of space constraints. Keeping it short in this case is the right policy.

 

There may be more that come to your mind but my point should be clear. The global economy’s finance based spine is so out of whack that it is in need of a major readjustment. In this case, even the best of chiropractors could not even attempt it. Nor would a one off Fed Fund increase straighten it out. Major global policy shifts – all in the same direction – are required that emphasize government spending as opposed to austerity and that recognize that competitive devaluations do nothing but allow temporary respite from the overreaching global problem of “too little aggregate demand” versus “too much aggregate supply.” It is demand that must be increased – yes China must move more quickly to a consumer based economy – but the developed world must play its part by abandoning its destructive emphasis on fiscal austerity, and begin to replace its rapidly decaying infrastructure that has been delayed for decades.

Bill Gross quote september - IO

What to do as an investor? Recognize that the above recommendations are politically Pollyannaish. The Merkel dominated EU will not change any time soon, nor will Bernie Sanders be elected U.S. President. Global fiscal (and monetary) policy is not now constructive nor growth enhancing, nor is it likely to be. If that be the case, then equity market capital gains and future returns are likely to be limited if not downward sloping. High quality global bond markets offer little reward relative to durational risk. Private equity and hedge related returns cannot long prosper if global growth remains anemic. Cash or better yet “near cash” such as 1-2 year corporate bonds are my best idea of appropriate risks/reward investments. The reward is not much, but as Will Rogers once said during the Great Depression – “I’m not so much concerned about the return on my money as the return of my money.”

In the long run though, the return of your money will likely not pay for college, healthcare, or retirement liabilities. That is the near global conundrum we are faced with as near zero percent interest rates limit capital gains in the future, and if raised too high, will lead to redzone losses. Not much else to say here. Finance based capitalism with its zero bound interest rates has now produced global imbalances that impair productive growth and with it the chances for “old normal” prosperity. Whether you are tall or short, or your portfolio big or small (better to be big!), they’re not going up as much as you hope they would over the foreseeable future.

 

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Wed, 09/02/2015 - 08:31 | 6499027 Cognitive Dissonance
Cognitive Dissonance's picture

Yes. Because fiat paper backed by fraud and deceit (not to mention war mongering) is so much safer than stocks and bonds.

ROTFLMAO

Wed, 09/02/2015 - 08:43 | 6499050 ZH Snob
ZH Snob's picture

bill should take a creative writing course.  he would learn not to spend the first half of this piece with an irrelevant spiel about animals and size if he hopes to get anyone to make it to the second half. 

Wed, 09/02/2015 - 08:44 | 6499070 madcows
madcows's picture

no shit.  i dropped the article.  get to the fucking point Bill.  I don't have the patience to wade through three droning paragraphs about animal size before I can find start of the actual content.

Wed, 09/02/2015 - 08:51 | 6499096 Bobbyrib
Bobbyrib's picture

That reminds me of my college days when my paper needed to be 1000 words minimum.

Wed, 09/02/2015 - 08:54 | 6499109 VinceFostersGhost
VinceFostersGhost's picture

 

 

"Go To Cash"

 

Just long enough to get into gold.

Wed, 09/02/2015 - 09:14 | 6499183 HowdyDoody
HowdyDoody's picture

So we can confiscate it as part of the process of banning cash?

 

Wed, 09/02/2015 - 09:19 | 6499196 VinceFostersGhost
VinceFostersGhost's picture

 

 

It's in the middle of the lake.....good luck.

Wed, 09/02/2015 - 09:37 | 6499257 realmoney2015
realmoney2015's picture

He says he cares about the return of his money, not the return on his money. He also says hold in near cash, not real cash. 

I would go a step further and say hold in real cash.Actual cash held in your home. 

Then I would go another step forward and exchange those dollars ( that Fed openly admits to devaluing) into silver and gold. 

This is the easiest time to 'invest' in American history. We can all see the collapse coming. Get real, tangible assets and out of the matrix markets.

Wed, 09/02/2015 - 10:00 | 6499337 coinhead
coinhead's picture

Go to cash?  Go to coin!

Wed, 09/02/2015 - 10:40 | 6499517 Shocker
Shocker's picture

Go to something, The economy has been giving you signs for a while now

Layoff List: http://www.dailyjobcuts.com

-

Wed, 09/02/2015 - 10:53 | 6499575 Soul Glow
Soul Glow's picture

I work from home and make a bazillion dollars pressing cntrl p!  You can too!  Sign up at fed.gov

- Janet Smellen

Wed, 09/02/2015 - 11:20 | 6499669 robertocarlos
robertocarlos's picture

I collect nickels. The only thing that makes me happier than getting nickels in change is getting American coins in change. A dime is worth 13 cents.

Wed, 09/02/2015 - 13:25 | 6500356 BarkingCat
BarkingCat's picture

Check your decimal point.
You are off by a factor of 10....not in your favor

Wed, 09/02/2015 - 10:32 | 6499490 SilverRhino
SilverRhino's picture

He says he cares about the return of his money,

Then why in the hell would he bother with bonds.   

Just literally have the cash physically stored somewhere in a vault [that you own if it's that much]

 

Wed, 09/02/2015 - 11:34 | 6499709 Tarzan
Tarzan's picture

Problem is to get your employer 401K match you must participate in some fashion.  Call me stupid but I had all my 401K in his Bond fund for a number of years for fear the stock market was about to crash, it did, I was lucky and earned about 6% while everyone got crushed.  A few years ago his Bond fund looked shaky to me so I moved it all to cash, It's been sitting there since... Great call Bill, little late IMO though.

Wed, 09/02/2015 - 12:02 | 6499845 vq1
vq1's picture

god I loathe seeing the accumulation of my employer match in my retirement account that I cant have for another 5 years...

Wed, 09/02/2015 - 12:27 | 6499981 Tarzan
Tarzan's picture

I don't know about you but we can barrow from our 401K and then the interest payed on the loan is payed back to myself, minus some fees.

When I buy a car I walk in with cash, from my 401K, mostly because I'm not convinced it will be there in 9 years when I'll have access to it. ;)

Wed, 09/02/2015 - 12:21 | 6499900 Tarzan
Tarzan's picture

One of My sons recently asked if he should be hording cash for the collapse instead of buying the home they are about to close on.  As much as I hate the over priced Housing market I told him buy the house, he can afford it, and converting dollars into hard assets is the way to go.

The only way I hold cash, other then a stash for emergencies, is because I'm forced to, to get my employer's match.

My garage is full of my red neck retirement.  Everything from nails and screws, to motors, scrap lead and copper, to fishing, hunting and survival gear. You name it, it's the bane of my wife's existence, a land she dare not tread, lest it all fall in on her, haha

If the shit hits the fan, my kids wont be running to their rich in-laws house, I taught them to marry up and they listened well, But they'll be running home with their wives and kids to papa where they know there's beans, bullets, band-aids and good old fashioned DIY know how....

Wed, 09/02/2015 - 12:36 | 6500021 Citxmech
Citxmech's picture

"red neck retirement"  <--  This.

The best thing about having cash around when times are tough is that there are deals good as gold out there on real, productive, tangible, assets.

For instance, I just scored a towable 9cf concrete mixer w/gas engine in perfect shape for less than $2k, delivered.  By the time I'm done with the 2 or 3 projects I need it for on the farm right now, I'll be money ahead of renting/hiring-out and still have a kick-ass mixer.

Wed, 09/02/2015 - 13:32 | 6500405 Tarzan
Tarzan's picture

Thats what 1/10 oz silver coins are for, we didnt get into PM, where I'll get the same piece for a 10th what you just paid, although, I think I've lost them ;)

Wed, 09/02/2015 - 13:40 | 6500472 Tarzan
Tarzan's picture

Kidding aside, I agree

I practice it, that's why my garage is full.  I buy things when there's a deal, not necessarily when I need them.

Wed, 09/02/2015 - 09:54 | 6499312 GeezerGeek
GeezerGeek's picture

You had a boating accident in the middle of the lake? I hope your greenbacks were in a secure, watertight container, or they may soon become - dare I say it? - wetbacks.

Wed, 09/02/2015 - 11:52 | 6499786 BarkingCat
BarkingCat's picture

I have been in cash for at least 4 years, maybe 5.
Yes I missed the upside but I sleep well at night and use my money to add to my stash of items of value.
Additional satisfaction from knowing that Wall Street is not leaching on my market activity.

Wed, 09/02/2015 - 11:02 | 6499608 stormsailor
stormsailor's picture

dude,  what you do is write the first page and a half perfect. then you start writing the lyrics off of an album cover for 4 or 5 pages. then you write the last summary paragraph.

 

a+

Wed, 09/02/2015 - 09:12 | 6499168 ebworthen
ebworthen's picture

Shall we talk about the elephant in the room?

Wed, 09/02/2015 - 09:28 | 6499222 swmnguy
swmnguy's picture

No.

Wed, 09/02/2015 - 09:45 | 6499280 GeezerGeek
GeezerGeek's picture

If I found an elephant in my living room I'd try to eliminate it, just as I would with an ant. An insecticide wouldn't help, but maybe a .338.

If I found a whale in my living room, I'd probably not worry about the whale and wonder how my house ended up under water. Unless, of course, it was the whale from Hitchhiker's Guide.

Gross is wrong about it being a matter of size. It's all about unwanted intrusions into my space. I feel the same way about government.

Wed, 09/02/2015 - 11:01 | 6499604 Funn3r
Funn3r's picture

That's just fucked up about the elephant. How the hell would you get a shot dead elephant out of your house - take the roof off and hire a chinook? Or maybe several days solid chainsawing. 

Wed, 09/02/2015 - 11:53 | 6499791 El Vaquero
El Vaquero's picture

If I shot an elephant in my living room, I'd put a tarp down to keep as much of the blood as is possible off of the floors, then get out the knives and bonesaw and get to butchering.  The only reason that any of it would leave the house is because I simply cannot eat that much meat before it gets some nasty freezer burn. 

Wed, 09/02/2015 - 09:14 | 6499180 MSimon
MSimon's picture

Size matters? I'd like to get my hands on a pair of 42 DDs. The OL doesn't get home 'til 4:30. Dang.

Wed, 09/02/2015 - 09:49 | 6499293 large_wooden_badger
large_wooden_badger's picture

You know, Gross missed a great opportunity with this article, he could have gone on for three paragraphs about boobs instead of animals.

Wed, 09/02/2015 - 11:54 | 6499803 El Vaquero
El Vaquero's picture

The contrarian view on that:

 

https://www.youtube.com/watch?v=XAJroAaf3ZY

Wed, 09/02/2015 - 09:23 | 6499209 ToSoft4Truth
ToSoft4Truth's picture

I thought the same thing... then stopped reading.

Everyone is a creative director.  I’ve noticed Youtube intros are becoming longer and longer.   A two minute intro on a 5 second event.

 

 

Wed, 09/02/2015 - 08:54 | 6499080 Pool Shark
Pool Shark's picture

 

 

Hate to disagree with you Cog, but I think you're wrong on this one.

In at least the beginning of a deflationary collapse, cash is king.

Have you seen what has been happening to commodity prices lately?

When this recession gets going, asset prices (read: equities, commodities, real estate, and possibly even investment-grade bonds) will drop even further.

Anyone remember 2008?

Since then, the fed has pumped nearly $5 trillion into the system and can't even maintain a 2% inflation target. All they can do is cause asset bubbles.

Well, those bubbles are starting to pop, and right now, cash is needed to service those outstanding debts. Cash will soon be in great demand (and short supply).

 

So, yes: for the near future, cash is safer than stocks and bonds.

[Cash, Bonds, Gold...]

 

Wed, 09/02/2015 - 09:13 | 6499171 Cognitive Dissonance
Cognitive Dissonance's picture

I fully agree that cash is king. But what Gross speaks of is not 'cash', but just short term commercial paper.....manufactured electronic 'paper'.

Wed, 09/02/2015 - 10:08 | 6499364 Pairadimes
Pairadimes's picture

When Fed efforts to stave off asset deflation finally fail, as appears to now be on the horizon, hard cash in the short term will be preferable to anything being traded in these ersatz markets. The destruction of wealth will be brutal as civilization reorients itself to real value.

The trick will be to time the replacement of cash correctly. The end of Fed credibility may substantially shorten the anticipated exit window.

Wed, 09/02/2015 - 10:21 | 6499442 Uchtdorf
Uchtdorf's picture

As is the case in almost every article on ZH, the comments are more interesting than the articles which generate the comments.

Addressing your comment, Mr. 20 Cents, about the trickiness of timing, I'm afraid my message will not be one of hope. You, me, and 99.9% of everyone on ZH, must abandon hope when it comes to timing. We are not in the club. We will never be in the club. We do not likely know anyone who is in the club well enough for them to have mercy on us and share info with us. Therefore, we will not get the timing right. We won't. We just won't.

Given this set of facts, my recommendation is this: The next time you go potty, stare at yourself in the mirror and say, "I will not save all my assets, but I will save enough of them to survive the collapse. I will rebuild and make my corner of the world a better place."

 

Yul Brenner enters from stage left and says, "So let it be written. So let it be done."

Wed, 09/02/2015 - 12:00 | 6499830 Not My Real Name
Not My Real Name's picture

Well said, Uchtdorf. At least when it comes to gold and silver, I fear we are close enough to the final inning that trying to time the purchase of wealth insurance "at the best price" is financially reckless. 

Wed, 09/02/2015 - 12:01 | 6499840 BarkingCat
BarkingCat's picture

cheer up. Those in the club will do lot worse than average joes. Their wealth is mostly illusion and will evaporate.
Only those that control, and are able to
protect via force,productive assets will survive on top of the food chain.
If their wealth is based on 1 million shares of Amazon and 5 million shares of Microsoft and 2 billion dollars of some municipal bonds, they are fucked.. Poof, it will be gone

Wed, 09/02/2015 - 12:05 | 6499861 vq1
vq1's picture

i dream of the day mcdonalds turns down a seasoned ex hedge fund manager for a job. "sorry sir you dont have any work experience"

Wed, 09/02/2015 - 13:33 | 6500424 Pairadimes
Pairadimes's picture

You partially misunderstood my meaning. Cash is only temporarily safe. The challenge lies in the continuing requirement to possess it in order to acquire other things of value, until such time as its utility for this purpose begins to fade aggressively. This will be a sociological phenomenon, and one less controllable by the elite. Perhaps I should have been more verbose, but brevity is compelling. I suspect there are enough wise ZHers that we can sort this issue in real-time as we go.

I disagree with the prediction that all of us will lose wealth. The process we are about to undergo will play itself out entirely in the realm of nominal value. These values have been inflated and distorted over a substantial period of time, and reality is beginning to reassert itself. While the total nominal value of wealth will decline, the relative values of many things will change, sometimes dramatically, as a result. Want to increase your relative wealth? Then own the correct things during this process. This is of course subject to many potential political externalities like confiscation, etc., but I maintain that success will be possible.

By the way, it may have been your intention, but in the event that it was not, your comment was framed in a most condescending manner. I find this boorish, and I may not be alone. ZH is indeed fight club, but I prefer Logos and Ethos to Pathos.

Wed, 09/02/2015 - 19:39 | 6502136 Uchtdorf
Uchtdorf's picture

Sorry, no. Condescension was not my goal. I was trying to share a sympathetic word or two. Yours was a very good post. It inspired me. Faith. Hope. Charity, to all men.

I appreciate your more detailed comments. Sometimes I need 'everything' explained to me.

 

Wed, 09/02/2015 - 09:52 | 6499306 GeezerGeek
GeezerGeek's picture

Regarding "can't even maintain a 2% inflation target": do you ever buy food? Or a house in Palo Alto? Some things go up, some things go down. The stuff I need goes up. Relentlessly. Get back to me when hamburger is back to $1 per pound, or even $2 per pound.

Perhaps the Fed/.gov is measuring the wrong things when calculating inflation. By consistently understating such they can continue their schemes to shovel money to their friends, relatives, and ultimately themselves.

Wed, 09/02/2015 - 12:17 | 6499924 vq1
vq1's picture

apparently food price trending down since 2011 (UN FAO food price index) 6 year low. But still high in general

http://www.fao.org/worldfoodsituation/foodpricesindex/en/

 

 

Wed, 09/02/2015 - 09:27 | 6499219 I am a Man I am...
I am a Man I am Forty's picture

corporate bonds, by definition, will always be safer than stocks

Wed, 09/02/2015 - 09:51 | 6499299 SSRI Junkie
SSRI Junkie's picture

tell that to some gm bond holders from a few years back after obola buttfucked them

Wed, 09/02/2015 - 11:09 | 6499640 Jannn
Wed, 09/02/2015 - 12:12 | 6499896 ABG LINE
ABG LINE's picture

Fuck You Bill.

Wed, 09/02/2015 - 08:31 | 6499029 Haus-Targaryen
Haus-Targaryen's picture

Go to AG and AU -- and when the bottom falls out of Real Estate go to Real Estate.  

Go to anything tangible, as the only way to keep this Ponzi going it to print everything that isn't tied down. 

Wed, 09/02/2015 - 08:52 | 6499102 Bobbyrib
Bobbyrib's picture

Go to anything tangible the government can't seize. This may not apply to you if you live in Germany.

Wed, 09/02/2015 - 08:58 | 6499119 tjeffersonsghost
tjeffersonsghost's picture

Question on QE maybe someone can answer. If QE is buying existing bonds then another round of QE would be the FED buying existing bonds from banks that are currently holding them.  This would give the banks cash instead of bonds that the banks can now lend off of, fractional reserve style.  Does this pretty much sum up QE? Can banks lend money fractional reserve style using the bonds as collateral or does it have to be cash?

Wed, 09/02/2015 - 09:16 | 6499189 Next to Arch Stanton
Next to Arch Stanton's picture

I believe (I'm not a bank CFO) that banks can hold US Treasuries as a form of Tier 1 capital.  So, no, they don't need to hold cash for the purpose of reserves.  Right now, most banks are keeping excess reserves at the Fed simply because the banks are not finding enough decent lending opportunities.  The other problem is that the Fed is paying them for these deposits, so it is arbitrage in a sense and therefore they'd rather keep the excess reserves than lend out with some risk albeit at higher return.  There have been plenty of posts here about the decline in velocity of money which is the excess deposits sitting at the Fed instead of being lent out in the economy.  This dynamic is why we have not seen much higher levels of inflation we expect from all the money printing.

 

And to think 4 years ago, I didn't have a fucking clue about any of what I just wrote.  :)

Wed, 09/02/2015 - 09:21 | 6499202 tjeffersonsghost
tjeffersonsghost's picture

Thank you Next to Arch Stanton

Then I guess I wonder why Wall Street is clamoring for another round of QE then? If by having the reserves in the form of bonds to lend but they are choosing to not do so, then what advantage would another round of QE be?

Wed, 09/02/2015 - 10:05 | 6499353 Crocodile
Crocodile's picture

Because they are the major Hedge fund owners and that is unwinding big time in the oil patch.  There is a lot more to it; this is worth the listen to get real perspective.

https://www.youtube.com/watch?v=_9amqA9uUg0&feature=youtu.be

Wed, 09/02/2015 - 10:27 | 6499472 DanDaley
DanDaley's picture

And to think 4 years ago, I didn't have a fucking clue about any of what I just wrote.  :)

 

You and a lot of other folks here...moi aussi.

Wed, 09/02/2015 - 10:38 | 6499509 rejected
rejected's picture

Banks don't need cash to lend. They create it in book entries. And therein is why they hate real deflation.

Wed, 09/02/2015 - 10:42 | 6499530 tjeffersonsghost
tjeffersonsghost's picture

rejected

From what I understand though Rejected is they have to have reserves in which to create the entries, 10 to 1, 20 to 1, 40 to 1, etc reserve to loan ratio.  My question was are bonds considered "reserves" as which to create said "cash out of thin air". If they arent lending or dont want to lend then why do they want QE so friggin bad?

Wed, 09/02/2015 - 08:56 | 6499116 Fester
Fester's picture

A move to real estate would be a judgement call. Your putting your neck in a noose as far as taxes go.

City, county, school district and state will need funding and they have a captured audience.

Wed, 09/02/2015 - 09:27 | 6499216 Haus-Targaryen
Haus-Targaryen's picture

Counterpoint -- I live in Germany, and the "stamp duty" owed on the purchase price is calculated at time of sale.  

In the former East Germany annual property tax is based off of 1934 values, and is so small its immaterial.  

You should consider property investment outside the USSA.  

Wed, 09/02/2015 - 10:11 | 6499378 Fester
Fester's picture

A farm or ranch in South America would be my choice.
Or just buy a small house down there and ride my motorcycle around SA. HMMM

Wed, 09/02/2015 - 11:01 | 6499603 FrankieGoesToHo...
FrankieGoesToHollywood's picture

Your moment will come with Brazil crashing.  I would look for Argentina or Uraguay over brazil though.

Wed, 09/02/2015 - 11:20 | 6499668 sampaine
sampaine's picture

Rural timberland with a water source is an overlooked asset right now.

Wed, 09/02/2015 - 08:45 | 6499035 Dr. Engali
Dr. Engali's picture

Duh......, no shit Schleprock!!!! Glad you get paid so much fiat to state what should have been obvious once QE stopped.

Wed, 09/02/2015 - 08:59 | 6499125 Shleprock
Shleprock's picture

Please dont disparage the Shlep!

Wed, 09/02/2015 - 09:00 | 6499127 Dr. Engali
Dr. Engali's picture

+1....... Lol...

Wed, 09/02/2015 - 08:35 | 6499041 NoWayJose
NoWayJose's picture

The 'Bond King' suggests buying bonds??? Say it isn't so!

Wed, 09/02/2015 - 08:36 | 6499042 Sir SpeaksALot
Sir SpeaksALot's picture

did he mean: "go to silver and gold"?

what is CASH?

Wed, 09/02/2015 - 08:55 | 6499110 VinceFostersGhost
VinceFostersGhost's picture

 

 

 

It's paper.....do I win something?

Wed, 09/02/2015 - 09:10 | 6499161 Ghordius
Ghordius's picture

interestingly, it's "the most liquid item". in the sense of generally accepted as payment for goods or services

it's also the currently most available item, be it in form of credit or bank account entry

but eventually, if the CBs manage to take us out of this liquidity trap, the most sought after item... if you manage to keep it

and this, I fear, is highly dependent on how much. as often it is

"The Merkel dominated EU will not change any time soon... "

Bill Gross, no, I don't expect the EU to change too much soon, but with this "Merkel dominated" you just disqualified yourself from commenting on anything european, in my eyes

Wed, 09/02/2015 - 09:07 | 6499148 Enki Anu
Enki Anu's picture

They have conditioned us so much with printed Toilet Paper, that we forgot GOLD is the real cash. They can not print it to oblivion .

Wed, 09/02/2015 - 08:36 | 6499046 dimwitted economist
dimwitted economist's picture

yes.. cash AND Silver and Gold (if at all possible)

Wed, 09/02/2015 - 08:41 | 6499059 roadhazard
roadhazard's picture

Butt, butt They are going to take our cash away. ZH needs to make up it's mind.

Wed, 09/02/2015 - 08:43 | 6499061 Grandad Grumps
Grandad Grumps's picture

I find it interesting how people who were once revered as demigods of finance, government, media and industry are now being reviled as criminals, liars, fraudsters, parasites or pathetic losers in the game of life.

Who is there left to respect?

Wed, 09/02/2015 - 09:12 | 6499081 JustObserving
JustObserving's picture

Truth has a way of aserting itself.

If you are not a liar or fraudster or a parasite, you should respect your own self first and foremost.

Wed, 09/02/2015 - 08:49 | 6499089 LongMarch
LongMarch's picture

Q:"Who is there left to respect?"

A: Deez Nuts

Wed, 09/02/2015 - 08:58 | 6499121 I woke up
I woke up's picture

No one

Wed, 09/02/2015 - 09:16 | 6499190 Kokulakai
Kokulakai's picture

@Who is there left to respect?

Those who actually produce.

Wed, 09/02/2015 - 08:47 | 6499078 SheepDog-One
SheepDog-One's picture

Brevity is the soul of wit, Bills not doing it.

Wed, 09/02/2015 - 08:48 | 6499084 Wannabe_Oracle
Wannabe_Oracle's picture

I am no where near as economically educated as the average ZH reader, but I'm pretty sure I possess a 'wee bit' of common sense. That said, two CNBC folks communicated (three times) that "the stock market is not the economy." Hmm, I remember my Grandfather telling me stories about how bad the early 1930's were for him, family, and most folks he knew - couldn't we agree that the stock market was a major causal factor then.../

Wed, 09/02/2015 - 08:48 | 6499085 RawPawg
RawPawg's picture

maybe cnbc willl take this as a sign,and use it to tell the sheep..."see,things ain't as bad as ZH tells ya" followed by...'"And know ,cupcake futures are UP"

Wed, 09/02/2015 - 08:54 | 6499108 css1971
css1971's picture

Would you accept corporate bonds in return for a loaf of bread?

Doesn't sound like near cash to me.

Wed, 09/02/2015 - 09:00 | 6499126 RougeUnderwriter
RougeUnderwriter's picture

Buying hard assets - screw fiat

Wed, 09/02/2015 - 10:54 | 6499577 WakeUpPeeeeeople
WakeUpPeeeeeople's picture

Buying 9mm, 45ACP, 308 Win. If it does get bad enough then 50rds should be worth about 10x their weight in gold.

Wed, 09/02/2015 - 09:02 | 6499130 techstrategy
techstrategy's picture

A very worthwhile read, but the prescription is not constructive and will not address the root cause (the "TBTJ" phantom debt ponzi that thrives upon and exploits imbalance via nearly infinite abuse of control of the effective "money" -- privately created and controlled phantom debt claims -- supply and knowledge of ALL financial positions, especially derivatives). The answer is to de-financialize, each and every day. Not cash. ST UST (unlike corporate debt, ST UST are SENIOR to the phantom debt claims) and gold (real wealth without counterparty risk). Build a MASSIVE buffer to position yourself to harness the predatory ZRRO SUM theft against those who've effectively exploited and enslaved humanity with their control fraud. And NEVER use leverage because that is what they exploit. They are hyperlevered against fundamentals. Whatever position you may be in, you can improve it each and every day by doing the fundamentally right thing... The endgame is mathematically certain... :-)

Wed, 09/02/2015 - 09:06 | 6499145 MSimon
MSimon's picture

So the disease - too much government - is the cure according to Bill? Well yes. If the current system is to be kept on life support.

Wed, 09/02/2015 - 09:12 | 6499170 vote_libertaria...
vote_libertarian_party's picture

Gross says go to cash = do the opposite?

Wed, 09/02/2015 - 10:42 | 6499529 meistergedanken
meistergedanken's picture

Sure, you just go right ahead and do that, wise guy.

Wed, 09/02/2015 - 11:07 | 6499632 robertocarlos
robertocarlos's picture

What's the opposite of cash?

Wed, 09/02/2015 - 09:15 | 6499178 Hongcha
Hongcha's picture

All the tart little comments against Bill Gross here ... reminds me of a stitch 'n bitch in the church basement.  Gross could buy and sell all the assets of everyone here 100 times over.

Wed, 09/02/2015 - 09:14 | 6499182 CHX
CHX's picture

White and yellow cash on hold into the next monetary system, some green cash for when SHTF and the transition time. Good luck to all, we will all need it. Lots of it.

Wed, 09/02/2015 - 10:01 | 6499339 Crocodile
Crocodile's picture

Luck is a false hope; Christ is the only true hope.

Wed, 09/02/2015 - 11:00 | 6499594 WakeUpPeeeeeople
WakeUpPeeeeeople's picture

As in: The Lord takes care of those who take care of themselves.

Wed, 09/02/2015 - 09:18 | 6499195 Son of Captain Nemo
Son of Captain Nemo's picture

Go to cash???...

No Bill I was thinking of that other medium of exchange that has an actual store of value that never evaporates even when the market(s) regulating it are rigged!

Wed, 09/02/2015 - 09:57 | 6499324 GFORCE
GFORCE's picture

...that gets confiscated by government. 

Wed, 09/02/2015 - 10:31 | 6499484 Uchtdorf
Uchtdorf's picture

Funny how you failed to mention that 97% of the value of your money has been confiscated via inflation/debasement since the Fed Res got started. You can hide precious metals. It's much harder to hide the zeros and ones in your bank account.

Wed, 09/02/2015 - 11:01 | 6499602 Son of Captain Nemo
Son of Captain Nemo's picture

 It's much harder to hide the zeros and ones in your bank account. (period)

Well done U.

As Ron Paul has always maintained.  Taxes and inflation are other names for the word that begins with a "t" but might as well be an f!

Wed, 09/02/2015 - 09:24 | 6499210 Argenta
Argenta's picture

I dunno, I think we make this harder than it really is.  Gold and silver.  Land.  Firearms (top quality holds value very well over time).  Ammo (desirable and divisible).  All of these things are great stores of wealth.  And isn't that the point of these articles, wealth preservation?

-Argenta

Wed, 09/02/2015 - 09:27 | 6499218 khakuda
khakuda's picture

6 years of ZIRP?  Try almost 7.

Wed, 09/02/2015 - 09:28 | 6499221 SolarSystem1932
SolarSystem1932's picture

"Autghorted by Bill Gross"

Shitgummed typist.

 

 

Wed, 09/02/2015 - 10:58 | 6499592 Oldrepublic
Oldrepublic's picture

authored

Wed, 09/02/2015 - 09:28 | 6499225 ramgold2206
ramgold2206's picture

he's correct to a certain extent, yes absolutely you need cash for current spending but not to store wealth for an extended period of time, a major reset is coming; be prepared.

www.teamramgold.com/about-us  

Wed, 09/02/2015 - 09:29 | 6499230 Crocodile
Crocodile's picture

Bill Gross has a serious mental problem and seems to have his conscience nagging at him and doesn't understand why; like most.

Wed, 09/02/2015 - 09:31 | 6499233 InjuredThales
InjuredThales's picture

It's almost as though Bill Gross doesn't understand there's no long-term effective difference between unfunded government spending and currency devaluation...

 

Just another fool worshipping at the Keynsian cargo cult altar.

Wed, 09/02/2015 - 11:00 | 6499598 Oldrepublic
Oldrepublic's picture

those Keynesian guys should get a free one way trip to New Guinea

Wed, 09/02/2015 - 09:31 | 6499234 Midnight Hour
Midnight Hour's picture

By going into Cash means Paper Money not in the Bank, but outside in a safe place. Banks are not a good place for ones Money What he also should have stated was that we are now in a global economic contraction that will force out those that are naked in the Water for all to see when the tide goes out.

Wed, 09/02/2015 - 09:32 | 6499240 JamaicaJim
JamaicaJim's picture

So....cash, right Bill?

This fucker needs Sam Kinison

https://www.youtube.com/watch?v=nbdnH0J6jw0

Wed, 09/02/2015 - 09:38 | 6499259 ToSoft4Truth
ToSoft4Truth's picture

The Original Fudgsicle®‎, Buffet will guide us. 

Wed, 09/02/2015 - 09:38 | 6499260 Not if_ But When
Not if_ But When's picture

Everything's an orchestrated illusion.  The PPT has expanded operations ever further.

Last week's leaked e-mail from Tim Cook to Jim Cramer w/ reassurances about Apple's China market.  Knowing that the only time people watch this shit network is during turbulant stock market times.  With a CNBC anchor actually identifying a third Fed mandate as maintaining a stable stock market (!)  A stupendous amount of Fed asset purchasing which would be clearly shown in an audit. 

The INCREDIBLE upward revision to GDP.  Disinformation is all over the place.  Just everywhere in a desperate attempt to retain order and power.  It'll probably work temporarily. 

Meanwhile, HFT types are making money hand over fist frontrunning moves up and down.  (Maybe  why a Financial Transaction Tax is not that bad of an idea).

Wed, 09/02/2015 - 09:53 | 6499286 falak pema
falak pema's picture

There is a misprint there : It should read "go to crash".

Crash, Smash, Balderdash.

All part of fiat Oligarchy's new mumbling in total abysmal fumbling; unless it goes nuking and puking the unwashed all over the world.

"We have scammed you  in subprime, then in foreclosure, then we have banged you into irredeemable debt via QE/Zirp, now we will hang you to the chord of El Nino."

And supreme icing on the cake : you will sing climate change is a mirage created by the socialists and statist deniers!

Oh the supreme irony of Stockholm syndrome mania. We go to Auschwitz singing "Arbeit macht frei!"

Long live the Oligarchy ! It has the gullible, the anarchists and the libertarians by their short hairs...Since time immemorial.

The best agents of the powerful were those who revolted first in their innocent youth and then conformed afterward like sheep in wolves clothing. "We learned the hard way".

You bet you did!

Ask Barroso; he was an anarchist at 20 and at Azores aside Bush/Blair/Aznar at 50 !

No wonder he ran the neo-liberal EU commission to make it what it is today!

Wed, 09/02/2015 - 09:47 | 6499288 LawsofPhysics
LawsofPhysics's picture

Yes, yes, when fraud is the status quo possession is the fucking law.

same as it ever was...

Wed, 09/02/2015 - 09:56 | 6499318 GFORCE
GFORCE's picture

Gross knows what's on the horizon and its not a stock crash.

Wed, 09/02/2015 - 10:04 | 6499347 Arthur Schopenhauer
Arthur Schopenhauer's picture

It depends on who you deal with. Some say cash, some say precious metals. It might be a good thing to keep in mind those Mark Dice videos... where he tries to sell silver and gold coins to people on the streets.

Wed, 09/02/2015 - 10:12 | 6499382 A is A
A is A's picture

Yeah, I watch those and I just wonder how many people he has to ask to get that many people who are just completely not interested.

Wed, 09/02/2015 - 10:48 | 6499555 Arthur Schopenhauer
Arthur Schopenhauer's picture

The thing about those videos is you have to imagine somebody standing in front of someone with a microphone, inferring they are stupid.

Well... "they" will naturally reciprocate with their own opinion of the guy holding that microphone... doncha think?

Wed, 09/02/2015 - 11:29 | 6499688 Brutlstrudl
Brutlstrudl's picture

But they don't consider themselves stupid. They consider the interview  an inconvenience and are just being polite. The questions they don't know the answer to don't have anything to do with them

Wed, 09/02/2015 - 11:24 | 6499680 Brutlstrudl
Brutlstrudl's picture

If you have ever seen interviews of College students asked to find a country or state on a map, or explain the significance of july 4th. then you know he doesn't have to go thru too many people to find the ignorant ones

Wed, 09/02/2015 - 12:20 | 6499937 rbianco3
rbianco3's picture

Has there ever been a time in histor where physical commodities (useful ones) are so rare that paper cash might be worth more than gold or silver for heating and outhouse purposes?

Wed, 09/02/2015 - 10:06 | 6499360 Seal
Seal's picture

This is what Druckenmiller has done

Wed, 09/02/2015 - 10:11 | 6499374 SMC
SMC's picture

Cash combined with full spectrum domestic surveillance equals civil forfeiture for the set of players who are not members of Just Us and their minions.

I'd rather continue to acquire productive assets that target the lower end of Maslow's hierarchy of needs.

Wed, 09/02/2015 - 10:16 | 6499407 SheepDog-One
SheepDog-One's picture

Cash....ya know...like corporate bonds. lol wut?

Wed, 09/02/2015 - 10:27 | 6499471 Winston Smith 2009
Winston Smith 2009's picture

"Major global policy shifts – all in the same direction – are required that emphasize government spending as opposed to austerity and that recognize that competitive devaluations do nothing but allow temporary respite from the overreaching global problem of “too little aggregate demand” versus “too much aggregate supply.” It is demand that must be increased – yes China must move more quickly to a consumer based economy – but the developed world must play its part by abandoning its destructive emphasis on fiscal austerity, and begin to replace its rapidly decaying infrastructure that has been delayed for decades."

Exactly the same Keynesian BULLSHIT that got us here in the first place. It should be obvious by now that that theory is completely discredited. 

About that "aggregate demand" crap:

http://davidstockmanscontracorner.com/?s=aggregate+demand

Wed, 09/02/2015 - 12:09 | 6499876 Jstanley011
Jstanley011's picture

"Fiscal austerity," with a debt of $18 trillion and a projected deficit this year of $425 billion. Some austerity. I want whatever it is Gross is smoking.

Wed, 09/02/2015 - 10:32 | 6499487 Redart
Redart's picture

Cash or meanwhile go long on NZDUSD

Wed, 09/02/2015 - 10:34 | 6499494 Dolus
Dolus's picture

It's seems like an unpopular opinion by reading the comments but I always liked Bill's rambling analogies. IMO they add a little fun to the regular doom and gloom. 

Wed, 09/02/2015 - 12:14 | 6499902 Jstanley011
Jstanley011's picture

Ramblings about his penis, and that he doesn't like to pet his pets. Riveting stuff.

Wed, 09/02/2015 - 10:40 | 6499519 Charles Offdensen
Charles Offdensen's picture

"Autghorted by Bill Gross"

Shitgummed typist.

Uuuummmmm, i don't think shitgum suicide authored that. He still lurks but he wont tell me his new handle. I miss his hounding of GW. Too bad he got banned for something other than calling out GW and for something that was a little too truthy.

Miss ya buddy.

Wed, 09/02/2015 - 10:42 | 6499531 e_goldstein
e_goldstein's picture

Parasite bond trading scum says wut?

 

Wed, 09/02/2015 - 10:43 | 6499533 fowlerja
fowlerja's picture

So Bill G. looks at the entire investment world...stocks,bonds,futures,EFT.. and cannot find a damn thing to invest in...so he goes to cash..you mean there is nothing..I mean nothing out there that is worth investing in..you sit with a large financial company with all those high paying smart ivy league minds...and this is the best that you can do...

Wed, 09/02/2015 - 10:53 | 6499571 joego1
joego1's picture

The whole damned thing grosses me out.

Wed, 09/02/2015 - 11:03 | 6499610 Phillyguy
Phillyguy's picture

Gross's analysis is dead on. The current economic landscape is a consequence of the relative decline of the US and attempts by corporations and government to counteract this structural decline and maintain/increase corporate profits. These policies have included tax cuts for the wealthy (Reagan), attacks on labor/unions (beginning with the firing of PATCO workers), job outsourcing to Mexico and other low wage platforms (NAFTA), financial de-regulation (repeal of the Glass-Steagall Act and passage of Commodities Futures Modernization Act of 2000). After his election in 2000, President Bush pushed through more tax cuts for the wealthy and following 911, proceeded to invade Afghanistan and Iraq- conflicts which are still ongoing, have cost US taxpayers $ trillions and led to the creation of ISIS/ISIL/Daesh. In response to declining wages, working people have been relying on credit to maintain their standard of living- refinancing their houses and loading up on credit card debt; policies that led to the financial crash in 2008. The FED responded by bailing out insolvent banks with $ trillions, supplied by US taxpayers (effectively at 0% interest). Capital always seeks the maximal level of return, which inevitably creates financial imbalances. Some of this money found its way into emerging markets. Along with falling commodity prices (especially oil), have further exacerbated financial imbalances – the currencies of these countries have dropped, unemployment & poverty have increased, while the US dollar has strengthened. In the US, QE  has inflated assets- real estate in SF, Boston, NYC, etc. and enabled large corporations to buoy their stock price via stock buy-backs, using cheap (taxpayer supplied) QE money, which reduces the number of outstanding shares, increasing the stock price. Unfortunately, with collapsing equity markets, this stock buyback binge has saddled corporations with more debt along with declining stock price.

Policy makers and corporate CEOs seem to have forgotten a fundamental axiom of capitalism. It is impossible to have economic growth when the purchasing power of working people declines. All one has to do is to look at the labor market. > 90% of “new” jobs in the US are “temp” positions- read low pay, no benefits and no job security. Obviously, people working in these temp jobs are not in a position to purchase a new car without some sort of gimmick. Thus we have sup-prime auto loans to prop up car sales (ZH has covered this extensively). Expect equity markets to continue going down, defaults to increase. Not a very pretty picture.

Wed, 09/02/2015 - 11:07 | 6499621 gcjohns1971
gcjohns1971's picture

I find it interresting that Gross' central prescription is more government spending (the opposite of 'austerity').   I find it interesting that he says that CB action has resulted in less savings and less of its siamese twin - investment while proposing increased government spending.

 

I don't believe there is any evidence at all that there is a better multiplier from gov't spending (which would have to be financed through QE)  as opposed to just the QE.

And other than perhaps the highway system...exactly what business 'infrastructure' does the US government own or have the ability to upgrade?

Honestly.  If business' bottom lines can't pay for infrastructure upgrades, why does he think they'll be able to pay after making a round-trip through all the yet-to-be-greased palms in Washington?????

Wed, 09/02/2015 - 11:15 | 6499657 ToSoft4Truth
ToSoft4Truth's picture

You make a good point.

Before Reagan “Trickle Down Economics” was known as centralized planning or, Communism.

Wed, 09/02/2015 - 11:38 | 6499725 the grateful un...
the grateful unemployed's picture

or voodoo economics

Wed, 09/02/2015 - 11:09 | 6499638 fromthinair
fromthinair's picture

Mr Bill Gross and the other 0.001%ers, Now that you have reached higher grounds by participating in this ZIRP orgy, suddenly you have got the wisdom of cash. You knew that from the beginning but you still mislead people. Return on investment is impossible but you preached the opposite leading by example. I must tell you Sir, that the victories of people who participated in this ZIRP orgy will not be celebrated. There is only so long you can hide behind the veil of your ignorance.

Wed, 09/02/2015 - 11:19 | 6499666 LawsofPhysics
LawsofPhysics's picture

Yes, this has always been a "let the majority eat cake" monetary experiment...

roll the mother fucking guillotines already.

Wed, 09/02/2015 - 11:22 | 6499675 robertocarlos
robertocarlos's picture

It's better to have two cakes.

Wed, 09/02/2015 - 11:16 | 6499653 robertocarlos
robertocarlos's picture

You all are just envious because I have a big stack of shiny coloured plastic which people accept for food and stuff and you just have yellow pet rocks which you can't even exchange for 50 bucks on most American street corners. :)

Wed, 09/02/2015 - 11:55 | 6499770 SMC
SMC's picture

“shiny coloured (for US propaganda consider using "colored") plastic which people accept for food and stuff”… 

Not accepted around here, and we are people who produce “real food”.

ROFL!

Only gold is money.

Wed, 09/02/2015 - 14:48 | 6500848 Axenolith
Axenolith's picture

When gold was $600 or so 2.4 ounces of it and 7 ounces of silver got me a new match grade M1A and a pair of competition Browning Hi Powers. A few months ago 3 ounces of silver got me a 3000 psi air tank racked into a pneumatic tired dolly (for filling my USFT).

You can make a LOT of bacon and venison with an M1A with a Harris bipod and a 24X mil dot scope with parallax ranging...

Wed, 09/02/2015 - 11:34 | 6499707 Wahooo
Wahooo's picture

Another guy throwing in the (Spiderman) towel.

Wed, 09/02/2015 - 11:42 | 6499741 q99x2
q99x2's picture

Robots are not our friends.

Wed, 09/02/2015 - 11:45 | 6499751 the grateful un...
the grateful unemployed's picture

the fed could raise rates without affecting markets negatively if they would lay out the basis for raising rates, (and to me these fed people are stupid government lackeys, which is why i call them irrelevant, and leads me to repeat again and again that they follow policy, they do not make it) the fed could raise rates if they built on their primary mission of market stability, and if in that pursuit they adjusted rates in order to price RISK. in 2008 they could have raised rates, should have raised rates in order to price the market risk at the time. instead of trying to save the whole world, or more properly save the political incumbency, which is why we have market crashes at the lame duck juncture of every eight year cycle. go to cash until you see the next guy, thats exactly what the people orchestrating this market crash are doing. good advice bill, who coined the phrase follow the fed, i think thats his policy in general.

Wed, 09/02/2015 - 12:19 | 6499935 Jstanley011
Jstanley011's picture

If they raise rates, the markets crash. If they don't, the markets crash anyway. The reason it's called a liquidity trap is because it's a trap.

It's like my skunk trap. The only way out for the skunk occurs after the nice man walks up and puts a .22 long rifle bullet through its skull at point blank range. After which the skunk is neutral, really, about whether it gets out of the trap or not.

Wed, 09/02/2015 - 12:26 | 6499971 Clowns on Acid
Clowns on Acid's picture

 After which the skunk is neutral, really, its not about whether it gets out of the trap or not." It also matters how bad you get sprayed as well.

Wed, 09/02/2015 - 12:42 | 6500060 the grateful un...
the grateful unemployed's picture

my point would be that if they set rates at their best estimation of risk the markets will do a fair job of pricing assets. their policy to this point is to double down, where risk is high, they price risk low. this is the problem with high yield and stocks with no earnings and lots of debt. that is fundamentally insane.

Wed, 09/02/2015 - 12:00 | 6499823 Yen Cross
Yen Cross's picture

 Gross says, "Over the past 6 years and perhaps on average since the beginning of the 21st century, artificially low yields have propelled financial markets."

 Ummm...Bill we're moving into the 8th year. 2008-2016

 Also saying people should buy short term corp.bonds? That's the first thing that is going to blow up, when the death spiral starts.

Wed, 09/02/2015 - 12:00 | 6499828 TSA Thug
TSA Thug's picture

I always associated the Randy Newman song with the inflection point for the PC crowd non-sense.

Anyhow, I like Bill's posts.

Wed, 09/02/2015 - 12:32 | 6500007 robertocarlos
robertocarlos's picture

Short people got no reason to live?

Wed, 09/02/2015 - 12:04 | 6499857 monad
monad's picture

Sure, Bill. Cash out your chips into worthless fiat. Woohoo. Not something durable, that you might use to protect what you love from the zombie hordes? Like an oil tanker?

Wed, 09/02/2015 - 12:11 | 6499891 silverserfer
silverserfer's picture

the rambling musing of a fiat whore. Cash is is for suckers and drug dealers. 

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