The best cash rate in America is 4.01%. Inflation is 4.2%. Every dollar parked at the top rate in the country is still shrinking — slowly, politely, by design.
By Ruslan Averin.
This is Ruslan Averin's capital note on what cash is actually for when the real return is negative.
The arithmetic nobody enjoys
Top-tier money market accounts pay up to 4.01% APY — a genuinely competitive rate, and dramatically better than the sub-1% national average most deposits actually earn. Set against 4.2% CPI, the math lands at roughly -0.2% real for the diligent saver and -3.5% or worse for everyone else. The hot CPI print that revived Fed-hike expectations is the same force keeping these yields elevated — savers are being paid almost, but not quite, enough to stand still.
The wrong conclusion and the right one
The wrong conclusion: "cash is trash, deploy everything." Negative real carry of 20 basis points is not a crisis — it is a fee. The right framing is what that fee buys:
- Optionality. Dry powder exists to buy drawdowns. In a year with an oil shock, a $2 trillion megacap unwind and rate-hike risk back on the table, the option has obvious potential exercise dates.
- Solvency insurance. Reserves that cover real liabilities prevent forced selling — the single most expensive event in private portfolio management.
- Rate participation. If hikes materialize, money market yields follow upward within weeks; locked long bonds don't.
The discipline is shopping the rate (4.01% versus the sub-1% average is pure negligence arbitrage) and sizing cash to its job — reserve and ammunition — rather than as a default allocation.
The bottom line
Cash in 2026 is a slightly negative-carry call option on everyone else's panic. Pay the 0.2% premium gladly, at the best rate you can find — and make sure the position is sized for the opportunities you intend to take, not as a substitute for having a plan.