You might be forgiven for thinking that cash is facing a reduced role in the economy of the future. New technologies such as Bitcoin and other cryptocurrencies are snapping at the heel of the established system. Governments want to push down the role that cash plays in criminal acts, further demonising the humble cotton note.
Yet, despite all these pressures, cash is actually being used in more ways than ever.
The Federal Reserve recently released figures that highlighted the rise of dollar bills in the American economy. Back in 2010, notes in circulation made up 6% of GDP – this increased rapidly to 9% by 2018, mainly driven by the use of the $100 bill.
In 2005, the $100 bill sat well behind the $1 and $20 notes in terms of overall value. Yet at the turn of this year it shot above all other denominations.
Why has this happened? Economists believed that the financial crash in 2008 and the resulting uncertainty that spread throughout the following years has given cash the ultimate insurance status.
What’s the best way to store cash? In the highest possible bill of course. Hence, you may not actually see many $100 bills when you’re out shopping – they’re far more likely to be stashed away under millions of American mattresses.
The hoarding is not just confined to the US. The Federal Reserve believes that people across the world are hiding dollars as a hedge should their local currency dive.
One thing’s for certain - you’ll be happy if you’re a fan Benjamin Franklin because he’s never been so popular.
When Parliament votes on the Brexit deal on the 11th December, its decision will cause instant reaction across the currency markets. Whether tha reaction is good bad or ugly will depend on your position, but whichever way it goes it should be the stabilising finish to the Brexit process.
With markets sitting on uncertainty it means many investors are making huge bets about what way currencies will go. Whilst these choppy waters continue, it will be a rather turbulent time for anyone buying or selling currency. The trick to buying and selling at the right time is….there is no trick. You have to try to foresee events and reach a general conclusion about what way the wind is blowing rather than analyse every tiny detail of world events.
It is very rare that markets will shift so significantly to cause you massive gains or losses in the short term and so you should continue to buy and sell when it is necessary for you. You can be a little up or a little down, but usually it will remain roughly level within a 24 hour period.
The key is to watch for those events on the horizon that history tells you will make an impact. The Brexit debate on the 11th is one of those events.
So on the 11th keep your eyes and ears on the event itself, don’t wait and see what’s happened on the 10 o’clock news that night because by then it’ll be too late.