2. Go back in time to 2011.
May 22, 2011
Jim Grant warns of new dangers for investors
Perhaps one way to proceed is to hold cash at the opportunity cost of not much in Treasury bills. You make nothing, but you want to have this money when things are absolutely, not just relatively, cheap.
3. Park the $5,000 in cash as instructed. Don't worry about potential deposit gluts. Join the herd.
It does seem improbable that the inflation rate would ever get beyond 3.5 percent, let alone knock on the door of 10 percent. But I'm here to tell you it's going to 10 percent.
4. Patiently wait for 10 percent inflation, and wait, and wait...
And on the off chance it does happen, don't forget that you could have locked in a 1.84% real yield for 30 years on May 22, 2011 by buying a 30-year inflation protected treasury bond. If inflation does hit 10% then you'd be earning a whopping 11.84% as other investors apparently crash and burn. But hey, no need to play it safe. Anxiously await better opportunities!
Don't let it bother you that the same real yield is down to just 0.96% today and there you are sitting in cash. Remain optimistic in your pessimism! Better opportunities are nearly here!
With its wry observations about investor self-delusion, Grant's newsletter ($910 for an annual subscription) has become a sort of bible among the bold and bearish alike.
5. Use your cash to pay annual subscription fees.
5a. 2011: $4,090... cha-ching.
5b. 2012: $3,180... cha-ching.
5c. 2013: $2,270... cha-ching.
5d. 2014: $1,360... cha-ching.
You now have $1,360. Might need to start thinking about getting a job or something. Since you've been sitting in cash earning "nothing", your cash flow situation will turn dire by 2016! Stop being so delusional about your future! $910 per year is a small price to pay to secure your financial well-being!