MarketWatch writes "Fed to savers: Cash is trash". The Chuck Jaffe piece says, "The Federal Reserve has telegraphed the future of interest rates and inflation, and here's the takeaway: "Money-market funds are the Stupid Investment of the Week." Stupid Investment of the Week showcases conditions and characteristics that make a security less than ideal for the average consumer, in the hope that spotlighting trouble in one case makes it easier to avoid trouble elsewhere. The column is not an automatic sell signal, which is particularly true for people who use money funds to park cash that they can plow into an investment strategy on a moment's notice. But most people don't use money funds that way, and that's part of the problem." Jaffe quotes Pete Crane, "There's no argument that cash is dumb in this environment. The question is, 'Is what you want to go to instead of cash even dumber?' If what's important is having your cash ready and at hand, then no return is the cost you pay for convenience." In other news, see also Bloomberg's "Federated Threatens to Sue SEC Over Planned Money-Fund Rules," which says, "Federated Investors Inc., the third- largest manager of U.S. money-market mutual funds, is planning legal action to block rule changes being contemplated by the Securities and Exchange Commission that the company said could destroy the $2.7 trillion cash-management industry."
