myths, page-11

Tetlom, you seem to understand the ramifications of deflation just fine.

Owning investments, especially leveraged ones, is financial suicide during deflation. They all go down in value, and the logistics of getting out of them can be a nightmare - especially real estate.

All assets go down in price during deflation except one - cash. Cash is the only asset that rises in real value (purchasing power) during deflation. And on the other side of the same coin, debt also rises in real terms during deflation. So to be indebted on assets falling in value is the worst scenario of all.

Many still believe that lower returns on safe cash assets is a wasted opportunity. They obviously do not realize that the coming years are all about return of investment - not return on investment. And given the bargains that will present in all asset classes near the bottom of the deflation, these once-in-a-lifetime buying opportunities will only be available for the prudent few who preserved their cash.