IndiNations: The Cost of Cash

Below is a summarized transcript of the IndiNations podcast from 6/2/26. The full video is included at the bottom of this post.

The Hidden Price of Playing It Safe

In this episode of IndiNations: Seven Generations Investing, we discuss why holding large cash balances can feel safe for Tribal governments and Native organizations, but may also create hidden long-term costs. Cash can play an important role in liquidity, operating needs, and rainy-day reserves, but when too much money sits idle for too long, inflation and opportunity cost can quietly reduce the resources available for future community priorities.

Safety and Prudence Are Not Always the Same Thing

For a Tribal treasurer or CFO, keeping community assets in the bank can feel like the safest choice. The money is visible, accessible, and often insured. But the larger question is whether the safest option is always the most prudent one. Fiduciary responsibility requires more than avoiding visible losses. It also requires asking whether community assets are being positioned to support the Tribe’s mission, time horizon, and future needs.

Why Tribes Often Stay in Cash

There are real reasons why many Tribal governments and Native organizations maintain high cash balances. Historical mistrust of financial institutions, uncertainty from government transitions, the absence of an established investment policy, and the visibility of paper losses can all create a higher degree of risk aversion. At the same time, opportunity cost is often invisible. A statement showing the same cash balance may feel reassuring, even if the purchasing power of that money has declined over time.

Cash Feels Safe, But It Still Carries Risk

Cash can feel like a warm blanket because it provides immediate security. But community assets are held for a purpose, and that purpose should guide how the money is managed. The key questions are: who is this money for, what is it intended to accomplish, and when will it be needed? Once those answers are clear, cash can be placed in the proper context instead of becoming the default destination for every pool of assets.

Inflation Is the Silent Killer

One of the biggest hidden risks of cash is inflation. Since January 1987, the U.S. dollar has lost more than 60% of its purchasing power. Even in normal environments, inflation slowly erodes what each dollar can buy. During periods of higher inflation, that erosion happens faster. For long-term community assets, sitting in cash may preserve the nominal dollar amount while reducing what those dollars can actually accomplish in the future.

Investing Can Help Preserve and Grow Purchasing Power

We compare several asset classes from January 1987 through April 2026, including short-term U.S. Treasuries, the U.S. bond market, U.S. stocks, international stocks, and gold. The results show that even lower-risk investments such as short-term Treasuries historically helped preserve and grow purchasing power, while higher-risk assets such as stocks produced much larger long-term growth, but with much larger drawdowns along the way. The lesson is not that every dollar should be invested aggressively. The lesson is that time horizon matters.

Drawdowns Are Real, But They Need Context

Investing involves periods of loss, and those losses can be uncomfortable and highly visible. The slide deck shows worst-period drawdowns ranging from -6% for short-term U.S. Treasuries to -51% for U.S. stocks and -59% for international stocks over the measured period. That is why assets needed in the near term should not be placed in volatile investments. But for long-term assets, volatility may be the trade-off required to pursue higher returns and allow compounding to work over generations.

The Tribal Treasury Model

We believe in a time-based framework for organizing Tribal assets. Operating cash and rainy-day holdings needed over the next 0–24 months should prioritize capital preservation and safety. Reserve funds and capital projects with a 1–7 year time horizon may use a more balanced approach to risk. Long-term assets with a 7+ year horizon can generally accept more volatility in exchange for higher potential returns. This structure helps align investment decisions with purpose, timing, and fiduciary responsibility.

Final Thought

Cash has a role, and in some cases holding cash is absolutely appropriate. But cash is not risk-free when measured against inflation, purchasing power, and long-term community needs. For Tribal governments and Native organizations, the goal is not to take unnecessary risk. The goal is to match each pool of money with its mission and time horizon so community assets can support both today’s needs and future generations.