Page 1
Page 2
Page 3
Page 4
Page 5
Page 6
Page 7
Page 8
Page 9
Page 10
Page 11
Page 12
Page 13
Page 14
Page 15
Page 16
Page 17
Page 18
Page 19
Page 20
Page 21
Page 22
Page 23
Page 24
Page 25
Page 26
Page 27
Page 28
Page 29
Page 30
Page 31
Page 32
Page 33
Page 34
Page 35
Page 36
Page 37
Page 38
Page 39
Page 40
Page 41
Page 42
Page 43
Page 44
Page 45
Page 46
Page 47
Page 48
Page 49
Page 50
Page 51
Page 52
Page 53
Page 54
Page 55
Page 56
facilitating cash withdrawals or trans- fers. This change is causing savers and investors to think through what kinds of liquidity they really need and how to make sure they get it. Cash is also one of the basic allocations in investment strategy. We want cash available to invest at the opportune moment. Or we want to go to cash when it is time to sit on the sidelines. As Jesse Livermore once said Every once in a while you must go to cash. Integrity of Digital Systems If the utilities industry had the integrity of the digital software media and com- munications industries we would all be dead from electrocution. It has become obvious that digital sys- tems lack integrity. Frequently these systems have been designed as honey traps to invade privacy and to provide surveillance via consumer functions. Or they are subject to a world of mar- ket manipulation cybercrime and cyber-warfare. The fundamental law- lessness of the digital world is a serious challenge to the global financial system. Our payment and financial transactions flow on train tracks with little privacy and questionable integrity. One of the results of lower financial transaction fees and online access is that cash is an increasingly digital phenom- enon. Consequently it is essential that when systems crash our cash does not disappear with them. Savers are increasingly thinking through what digital lawlessness means to saving and managing cash. Integrity of Financial Institutions Government Regulation and Enforcement Whats not to worry about Rounds of bailouts essentially moved trillions of dollars of bank and private debt onto government balance sheets. Now both government and private debt are running at very high levels. Major financial institutions are consistently engaging in financial fraud often in partnership with governments. We have seen numerous instances such as the Madoff investment scandal and the failure of MF Global to protect investor accounts that have harmed investors and federal regulation and insurance programs have failed to protect their rights. Government enforcement consists increasingly of fining financial institu- tions which is beginning to look a lot like a kickback scheme. Government regulators can share in the profits for allowing these schemes to take place. Bail-Ins In response to public fury over bailouts government regulators in developed markets have been working to create mechanisms where they can resolve the failures of large financial institutions via bail-ins. In a bail-in private creditors must share the burden. 9