Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Old 06-08-2011, 09:17 AM   #21
Full time employment: Posting here.
antmary's Avatar
 
Join Date: Mar 2008
Location: Northern California
Posts: 542
Quote:
Originally Posted by ziggy29 View Post
Seriously, define "safe". Safe from default? There's no 100% sure thing, but Treasuries are about as close as they come, and if they defaulted, return of invested capital might be low on the list of things to worry about. With the virtually unlimited power to tax and print money I see hyperinflation and a tanking of the dollar long before I see defaults on Treasuries. And even that's not a given.
I just read the Reuters news, and this does concern me.
Republican mainstream flirts with brief default | Reuters
__________________

__________________
antmary is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 06-08-2011, 09:19 AM   #22
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by antmary View Post
I just don't know...I have opinions re: politicians, but I'm wanting to cut through all the BS, and have a "just the facts ma'am" approach. I need to leave the emotion out of my investing choices.
Then the "facts" are these . . . the U.S. will not default unless it chooses to default.

Do with that whatever you will.
__________________

__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Old 06-08-2011, 09:24 AM   #23
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by antmary View Post
I just read the Reuters news, and this does concern me.
Republican mainstream flirts with brief default | Reuters
It simply will not happen. No amount of political posturing or grandstanding will cause it. Neither party wants anything to do with an actual default. And a refusal to raise the debt ceiling is not the same thing as a default on existing debt.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 06-08-2011, 09:26 AM   #24
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
Gone4Good's Avatar
 
Join Date: Sep 2005
Posts: 5,381
Quote:
Originally Posted by REWahoo View Post
I'd argue the US has a long history of elected officials who manifest this behavior. The only difference today is we are much better informed due to the diligence of the fourth estate.
Could be. But I don't recall fringe voices dominating the debate before.

Quote:
Originally Posted by antmary View Post
I just read the Reuters news, and this does concern me.
Republican mainstream flirts with brief default | Reuters
__________________
Retired early, traveling perpetually.
Gone4Good is offline   Reply With Quote
Old 06-08-2011, 09:53 AM   #25
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,634
Quote:
Originally Posted by ziggy29 View Post
It simply will not happen. No amount of political posturing or grandstanding will cause it. Neither party wants anything to do with an actual default. And a refusal to raise the debt ceiling is not the same thing as a default on existing debt.
I agree with the first part but how clear is the second. As has been continuously reported, if the debt ceiling is not raised the Treasury will not be able to make good on some obligations. That sounds like "default." It doesn't matter that we could avoid it if we don't. And everyone talks about a "brief" default as if that doesn't mean much of an impact. But, if there isn't much impact it won't be brief - why bother raising the ceiling in that case? On the other hand, if the doom predictions are correct and the economy is catapulted into a double dip no doubt Congress will raise the ceiling and the "temporary" default will end. But there is no guarantee that would undo the damage. It still amounts to a crap shoot with our financial well being.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Old 06-08-2011, 10:46 AM   #26
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by donheff View Post
I agree with the first part but how clear is the second. As has been continuously reported, if the debt ceiling is not raised the Treasury will not be able to make good on some obligations. That sounds like "default." It doesn't matter that we could avoid it if we don't. And everyone talks about a "brief" default as if that doesn't mean much of an impact. But, if there isn't much impact it won't be brief - why bother raising the ceiling in that case? On the other hand, if the doom predictions are correct and the economy is catapulted into a double dip no doubt Congress will raise the ceiling and the "temporary" default will end. But there is no guarantee that would undo the damage. It still amounts to a crap shoot with our financial well being.
This I don't understand. Seems like raising the debt ceiling and servicing the existing debt is (or should be) two separate issues. Just because I refuse to accept an increase in my credit limit doesn't mean I'll stop paying on what I've already charged. If these are somehow linked it would be an "only in Washington" moment.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 06-08-2011, 11:08 AM   #27
Moderator Emeritus
Nords's Avatar
 
Join Date: Dec 2002
Location: Oahu
Posts: 26,616
Quote:
Originally Posted by Gone4Good View Post
Could be. But I don't recall fringe voices dominating the debate before.
You're not reading enough history books...
__________________
*
*

The book written on E-R.org, "The Military Guide to Financial Independence and Retirement", on sale now! For more info see "About Me" in my profile.
I don't spend much time here anymore, so please send me a PM. Thanks.
Nords is offline   Reply With Quote
Old 06-08-2011, 11:15 AM   #28
Full time employment: Posting here.
antmary's Avatar
 
Join Date: Mar 2008
Location: Northern California
Posts: 542
Quote:
Originally Posted by Nords View Post
You're not reading enough history books...
Such as? I would very much appreciate one or two to start with, Nords.
__________________
antmary is offline   Reply With Quote
Old 06-08-2011, 11:32 AM   #29
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 942
Is it possible there could be a technical "default" for political reasons in the US? I suppose so. The level of political discourse is so screwed up in this country anything is possible.

BUT, and this is the key but, even if this does happen, the default WILL BE CURED! All interest will be paid.

So to have any discusion about payment of interest and repayment of principal on US govt. debt is crazy talk.

A discussion of hyper-inflation occuring in the US is a non-event as well.

On the other hand, the methodical, slow decline in "purchasing power" of the $ through "controlled inflation" is an entirely different matter. Indeed, this is a tried and true approach to US monetary policy.
__________________
LARS is offline   Reply With Quote
Old 06-08-2011, 11:32 AM   #30
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by antmary View Post
Such as? I would very much appreciate one or two to start with, Nords.
Here's a hint: you can start with books about the Reconstruction after the Civil War, and that's far from the only era where radicalism ruled the day.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 06-08-2011, 11:37 AM   #31
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by LARS View Post
A discussion of hyper-inflation occuring in the US is a non-event as well.
Is it? It doesn't have to happen because of increased demand. It can also happen because of devaluation of the dollar. I don't see demand-based hyperinflation coming any time soon, but "inflating the debt away" and printing money to try to keep commerce moving is not out of the realm of possibility. And if that extra money supply has any velocity -- that is, if it actually gets injected into commerce instead of contributing to "hoarding cash" -- then it would definitely be inflationary. I'd contend that the primary reason the extra debt and liquidity the government has created in the last 2-3 years hasn't been inflationary is because that extra money supply has had very low velocity -- as often as not "extra cash" was used to put into savings or pay down debts, not to buy stuff that employs people.
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 06-08-2011, 11:51 AM   #32
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
donheff's Avatar
 
Join Date: Feb 2006
Location: Washington, DC
Posts: 8,634
Quote:
Originally Posted by ziggy29 View Post
This I don't understand. Seems like raising the debt ceiling and servicing the existing debt is (or should be) two separate issues. Just because I refuse to accept an increase in my credit limit doesn't mean I'll stop paying on what I've already charged. If these are somehow linked it would be an "only in Washington" moment.
Existing obligations are such that the debt is "scheduled" to go up significantly in future years. It isn't a matter of just stopping the purchases -- they have already been made in the form of obligations. The only way to avoid default while not raising the debt ceiling would be to immediately cut SS, Medicare and defense by a huge number. Of course, that would be a different kind of default.
__________________
Every man is, or hopes to be, an Idler. -- Samuel Johnson
donheff is offline   Reply With Quote
Old 06-08-2011, 11:53 AM   #33
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 942
Quote:
Originally Posted by ziggy29 View Post
... but "inflating the debt away" and printing money to try to keep commerce moving is not out of the realm of possibility.
As I said, this is possible; and, indeed, is a central plank of US monetary policy, BUT this is not hyper-inflation.

Now is hyper-inflation possible in theory? Absolutely. But my point is that the powers that be will not allow, nor is it in their interests to allow, a non-orderly highly rapid (i.e. hyper) deterioration in the value of the currency.
__________________
LARS is offline   Reply With Quote
Old 06-08-2011, 12:18 PM   #34
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by LARS View Post
But my point is that the powers that be will not allow, nor is it in their interests to allow, a non-orderly highly rapid (i.e. hyper) deterioration in the value of the currency.
Did the Weimar hyper-inflation occur because the German government decided to allow it?

I think you may be overestimating governmental power and wisdom.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is online now   Reply With Quote
Old 06-08-2011, 12:28 PM   #35
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 942
Quote:
Originally Posted by haha View Post
Did the Weimar hyper-inflation occur because the German government decided to allow it?

I think you may be overestimating governmental power and wisdom.

Ha
Nope. Doen't think so at all. But feel free to worry about hyper-inflation in the US if you want to waste brain cells.
__________________
LARS is offline   Reply With Quote
Old 06-08-2011, 12:34 PM   #36
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by LARS View Post
Nope. Doen't think so at all. But feel free to worry about hyper-inflation in the US if you want to waste brain cells.
I try not to worry about what I can't control -- I just try to consider that it might happen, and what countermeasures I can take that will help prevent me from being wiped out if it does. I'm not going to do something to protect against a 0.1% chance of a bad result if it means hurting myself 99.9% of the time, but if I can mount a prudent defense against a somewhat more likely (but still unlikely) result, why not?
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 06-08-2011, 12:39 PM   #37
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
haha's Avatar
 
Join Date: Apr 2003
Location: Hooverville
Posts: 22,380
Quote:
Originally Posted by LARS View Post
Nope. Doen't think so at all. But feel free to worry about hyper-inflation in the US if you want to waste brain cells.
I have plenty, so no problem.

But, perhaps you realize that you did not speak to my comment, which was only that I doubt governments must "allow" hyperinflation for it to happen. I said nothing about the likelihood of hyperinflation is the US. less still about my worry or lack thereof about this.
Always easier (and much less useful) to make fun of what someone did not say, than to try to address what they did. On the face of it, if you mean what you said “nope, don’t think so at all”, then it seems odd to think that the US government must allow hyperinflation for it to happen.

Ha
__________________
"As a general rule, the more dangerous or inappropriate a conversation, the more interesting it is."-Scott Adams
haha is online now   Reply With Quote
Old 06-08-2011, 12:40 PM   #38
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 942
Quote:
Originally Posted by ziggy29 View Post
I try not to worry about what I can't control -- I just try to consider that it might happen, and what countermeasures I can take that will help prevent me from being wiped out if it does. I'm not going to do something to protect against a 0.1% chance of a bad result if it means hurting myself 99.9% of the time, but if I can mount a prudent defense against a somewhat more likely (but still unlikely) result, why not?
I agree 100% with this approach. Indeed, I spend way too much time analyzing outlier situations. Hyper-inflation and US default just are not worth spending much brain power on.

Full disclosure: I'm not a believer in gold as a currency alternative. To me it is the greater fool theory at work. So you might say I don't get it...
__________________
LARS is offline   Reply With Quote
Old 06-08-2011, 12:42 PM   #39
Full time employment: Posting here.
 
Join Date: Oct 2009
Posts: 942
Quote:
Originally Posted by haha View Post
I have plenty, so no problem.
You obviously did not mis-spend your youth taking drugs or alcohol if you can make that statement with conviction!
__________________
LARS is offline   Reply With Quote
Old 06-08-2011, 12:49 PM   #40
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,031
Clearly the bond market does not worry about the US defaulting on its debt. Bond yields have increased tremendously in Greece in response to a possible default. In the US, bond yields have come... down.

The way I see it, a default would be very damaging to a lot of generous political contributors. They will apply the right amount of pressure to make sure it doesn't happen.
__________________

__________________
FIREd is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Bonds but no Treasuries? DektolMan FIRE and Money 10 01-08-2009 03:48 PM
Long Term Treasuries lawman FIRE and Money 9 01-02-2009 01:21 PM
Can 95% Safe = 100% Safe? halo FIRE and Money 3 10-14-2008 07:56 PM
Ten Year Treasuries yakers FIRE and Money 6 06-13-2007 01:38 PM

 

 
All times are GMT -6. The time now is 01:40 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.