At the time of the European Debt Crisis about 2010 an Australian lady of Greek origin inherited some money and came to see me about investing it. She mentioned that her sister who lived in Greece had inherited a similar amount. I asked what the sister was going to do with her money.

The lady replied that her sister had immediately bought a property in Greece. That was the only thing she trusted as secure. If she wants security why not keep the money in the bank, I asked? Definitely not, the lady said. In Greece cash is going downhill, devaluing.

It seems that issue may become more important for all of us in the years ahead. Governments in the US, Japan, Germany, Britain, Australia and many other countries are continuing to spend more and borrow to finance it.

Few politicians are talking about financial responsibility. They aren’t worried about balancing the books, ensuring tax collections equal government spending. They are borrowing to spend more to win voter support short term.

In Australia we are told it’s more important to provide cost-of-living relief today than balance the books. The Victorian Premier said it last week. Politicians are leaving it to our children and grandchildren to repay the debts we incur today.

When governments borrow and give handouts they put more cash in consumers’ hands. More cash in circulation chasing the same amount of goods and services means higher prices, inflation. Each dollar will buy less, is worth less.

There is no money tree. Governments must borrow to fund their deficits. They do it by issuing government bonds. Usually those bonds are seen as ultra safe. However that is changing. We have seen it in the US recently.

During President Trump’s tariff standoff with China, bond investors decided the US deficit would likely get much worse. A new issue of US Government bonds met weak demand. Investors required much higher interest rates to lend to the Government.

That scared Trump and triggered his sudden backdown. Bond market interest rates then declined for a time before rising again last week as concerns grew again. Investors aren’t trusting government bonds as much as they used to.

Ratings agency Moody’s downgraded the US Government’s credit rating recently. With political leaders failing to balance the books, more downgrades are likely. The Victorian Government’s credit rating may be reviewed soon.

Gradually reducing confidence in cash and government bonds means investors should seek assets that are in limited supply for their long-term investments – shares, property, good businesses, managed growth funds, even bitcoin.