Money Market funds may not be safe

[FarmerD]

Apparently US money market funds have a 35% exposure to Europe.  Bernanke says they may be structurally unsafe - another reason to keep your cash in short term treasuries. 

http://www.elliottwave.com/affiliates_p ... -Safe.aspx

[AdamA]

Apparently US money market funds have a 35% exposure to Europe.  Bernanke says they may be structurally unsafe - another reason to keep your cash in short term treasuries. 

http://www.elliottwave.com/affiliates_p ... -Safe.aspx

Absolutely. 

[Pointedstick]

I would definitely expect money market funds to be unsafe. I can't imagine preferring one to a high-yield savings account to hold cash in, if I had no other choices. If you're going to take that kind of risk, at least avoid the expense ratios, capital gains taxation, and lower interest rates of MM funds

[Gumby]

Fundamentally speaking, a money market fund isn't really composed of money — nor is a bank account for that matter. Money Market Funds are just lines of private credit (as agency debt, mortgage backed securities, commercial paper) on a piece of paper with a dollar sign next to the amount that is supposedly promised to you if you ever want your money. But, these forms of private credit would implode if everyone decided they wanted real dollars in their hands on the same day. It would be a mess.

Treasuries, held in your name, (as well as cold hard cash) is the only way to have dollar-based savings that are yours and yours alone. Every other dollar-denominated account is really just a private-sector promise to deliver pooled dollars to you under normal conditions. Under extreme conditions, a private sector paper promise is pretty much worthless.

[moda0306]

The PP may not be the perfect portfolio for everyone, but there is SO much to learn about economics and investing built into the 4 PP assets.  If anything, the PP is a jumping off point to a massive education in investing & macro.

Nothing really to comment about MM funds that others haven't... Just pointing out again what great conversation the PP facilitates.  Second to none.  Honor and a privilege, fellas.

[gizmo_rat]

...If anything, the PP is a jumping off point to a massive education in investing & macro.

Really good point, as a "reluctant investor" who had no interest in economics and hadn't heard the word fiat outside of dubious Italian cars, just following through the 'why' of the assets has been a rich scary experience.
The scary part comes from the realisation that monetary system is just "in good faith", but the comfort comes from realising that as an individual there isn't much more you can do to protect yourself. 

[dualstow]

I should preface my comment by saying that I don't mean this sarcastically (I don't):

I'm actually kind of glad to read this news. I always think I'm wasting my time buying SHV, SHY and t-bills. Now, I know I'm not!
Many thanks, Farmer D.

[Lonestar]

Fundamentally speaking, a money market fund isn't really composed of money — nor is a bank account for that matter. Money Market Funds are just lines of private credit (as agency debt, mortgage backed securities, commercial paper) on a piece of paper with a dollar sign next to the amount that is supposedly promised to you if you ever want your money. But, these forms of private credit would implode if everyone decided they wanted real dollars in their hands on the same day. It would be a mess.

Treasuries, held in your name, (as well as cold hard cash) is the only way to have dollar-based savings that are yours and yours alone. Every other dollar-denominated account is really just a private-sector promise to deliver pooled dollars to you under normal conditions. Under extreme conditions, a private sector paper promise is pretty much worthless.

Help me out here.  How do you hold treasuries "in your name".  Most of us that hold LTT are in a brokerage account.  Obviously not paper certificates in our name.  With no more paper IBonds again not in our name.  What about paper series E's?

[Pointedstick]

Fundamentally speaking, a money market fund isn't really composed of money — nor is a bank account for that matter. Money Market Funds are just lines of private credit (as agency debt, mortgage backed securities, commercial paper) on a piece of paper with a dollar sign next to the amount that is supposedly promised to you if you ever want your money. But, these forms of private credit would implode if everyone decided they wanted real dollars in their hands on the same day. It would be a mess.

Treasuries, held in your name, (as well as cold hard cash) is the only way to have dollar-based savings that are yours and yours alone. Every other dollar-denominated account is really just a private-sector promise to deliver pooled dollars to you under normal conditions. Under extreme conditions, a private sector paper promise is pretty much worthless.

Help me out here.  How do you hold treasuries "in your name".  Most of us that hold LTT are in a brokerage account.  Obviously not paper certificates in our name.  With no more paper IBonds again not in our name.  What about paper series E's?

I believe this is referring to actually having them in a TreasuryDirect account. Or maybe even in the form of old-fashioned physical paper bonds.

[murphy_p_t]

there's some guy in cyberspace (tekoa da silva?) trying to sell a report on doing something like this...I think its more aimed at equities...but maybe the same applies?