Oh Keep It Under Your Mattress

CBS News did a piece the other night about how the collapse of MF Global had wreaked havoc with farmers who had put their cash reserves, which they “were saving to buy feed and seed” into that financial firm. “They thought their money was as safe with MF Global,” the reporter intones, “as
it was at the local bank.”

Oh, give me a break. They thought nothing of the sort. They put the money at MF Global because they were greedy and they got burned. The local bank was offering low interest rates while the New York financial house was offering high returns, and the farmers wanted the extra money.

Everybody who puts money into investment has to know that high return on investment is a trade off against risk, and that safety and return exist in inverse proportion to each other. If they don’t know that, then they should keep their damn money in a sock under their mattress and allow it to lose value.