Simon Carr: How to save? Go deep into the red

You can't stuff it under the mattress – police will confiscate it under terror laws

The Wall Street Journal reports on the new values being inculcated in business schools. Scepticism is the latest thing, to get finance students through the next decade or two. "You cannot sell a [financial] product to a client if you yourself don't understand exactly what it is," says some French finance professor. It'll never catch on.

No, we have to do it ourselves. No one's going to be sceptical on our behalf. And the first principle of scepticism is that no one's going to give us an even break. On that basis, please consider this discussion on what to do with your money.

Why would you invest in financial products? You give your money to professional investors who use it to buy into some multi-level debt instrument. This is a $50 word for a shelf of box files containing a million loan contracts. None of the bankers, analysts, traders – the people who own these box files – have actually looked inside them to see what the assets are worth. Why not? To be fair, there are an awful lot of them. And they have all been rated AAA by professional agencies.

Nonetheless, they contain the ownership deeds for a three-legged cat farm in Nebraska, and a caravan valued at £280,000. But they have the highest possible imprimatur from the most respected financial institutions in the world. Ah, but it seems the ratings agency was given very large fees by the bank itself to give this collection of box files the highest rating available. Sceptics can see that is septic.

So don't invest, save. Find a pension scheme, a sober, conservative fund and give them all your cash.

But why would you do that? Putting money into pension funds is just a roundabout way of giving it to people who lend money to peculiar breeding ventures in Nebraska. Old sobersides, who runs your fund, puts your money into a scheme that buys into a plan that has most of a venture consisting of a 300-outlet franchise of three-legged cat farms across the central American plains. You can't get away from cat farms when you're parceled up with everyone else.

So, hide the money. Salt it away. You can't stuff it under your mattress (the police will confiscate it under anti-terror legislation). Just put it in the bank in a some modest, interest-bearing account. Maybe the bank won't go bust. That is possible, even the most sceptical among us must concede. And even if it does go bust, the Government guarantees the first £50,000. They'll pay up on your losses; though, owing to a lack of money, they may give you a stop smoking outreach officer instead of the cash (read the small print). So, if money isn't even safe in the bank, be virtuous. Be practical. Be responsible. Rebuild your balance sheet and pay off as much debt as you can. Be a sucker. Because when we look into the past, we can see how they're going to get out of this mess in the future. They're going to increase public debt massively, then they'll print money to service it and use inflation to run the debt down.

So what we want is enormous debts ourselves that inflation will degrade over the next decade. That's how Alistair Darling is recommending we do it. True, he isn't putting it quite in those terms, but his meaning is perfectly clear to those of a sceptical bent.

simoncarr@sketch.sc