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Old 09-14-2018, 06:11 AM   #61
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To pick a nit, this isn't true... a bondholder has no right to call the bond and demand immediate repayment just because they are uncomfortable... the most that they can do is to either sell it or wait until the debt matures.

There are a small minority of US debt that the Treasury has the right to call but none that are callable by the holders.
Bond holders can sell anytime, and US Treasuries (govít debt) is considered the most liquid market in the world. Still, if for fear of loss they all attempted to sell their holdings, it would have the same effect as described - global financial chaos. The point (despite the nit) is the amount of debt is not an issue and the holders do not expect or even want repayment. If they did, they wouldnít be able to get it. The trust underlying this is enormous, perhaps even unrivaled.
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Old 09-14-2018, 06:18 AM   #62
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Totally agree on the trust part. Also agree that if there was a lot of confidence and a lot of selling it would create chaos and higher interest cost on new issues for the U.S. government but there would be no need for the government to redeem the bonds until they mature.

It is just that one of my pet peeves is any notion that China (or holders in general) can somehow demand immediate payment... that part just isn't true but I see it claimed all the time.
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Old 09-14-2018, 07:12 AM   #63
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It is just that one of my pet peeves is any notion that China (or holders in general) can somehow demand immediate payment... that part just isn't true but I see it claimed all the time.
I have never expressed that view and do not subscribe to it. If anything, just the opposite. The bond holders here have the clear disadvantage. They have a surplus of capital, mostly in $US, they donít want but have no options other than US Treasuries.
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Old 09-14-2018, 07:34 AM   #64
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This has been an interesting discussion. Unfortunately, it was more weighted to a discussion about whether or not the situation is as bad as the article and others believes it to be.

Let’s assume it is bad and that some day the “chickens will come to roost”. Which I personally do believe. That’s how one feels when you’re born at the end of the baby boom and you watch pensions disappear, employee benefits diminish and are staring at a 25% reduction in SS. Politically I’m glad it was pointed out how both parties brought us to this point. So with that assumption, what would you do, should you do, to protect yourself? 25% gold in you portfolio? Be prepared to cut your living standard in half? Ignore it and hope the worst of it hits after you’re gone with the belief that you’ll still be better off than most because you’ve saved and know how to LBYM”s? WWYD?
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Old 09-14-2018, 09:35 AM   #65
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This has been an interesting discussion. Unfortunately, it was more weighted to a discussion about whether or not the situation is as bad as the article and others believes it to be.

Letís assume it is bad and that some day the ďchickens will come to roostĒ. Which I personally do believe. Thatís how one feels when youíre born at the end of the baby boom and you watch pensions disappear, employee benefits diminish and are staring at a 25% reduction in SS. Politically Iím glad it was pointed out how both parties brought us to this point. So with that assumption, what would you do, should you do, to protect yourself? 25% gold in you portfolio? Be prepared to cut your living standard in half? Ignore it and hope the worst of it hits after youíre gone with the belief that youíll still be better off than most because youíve saved and know how to LBYMĒs? WWYD?
First, get past being a young boomer. You knew that going in & it is what it is. Besides, youíve LBYM, saved, planned & FIREd based on that knowledge so, give yourself some credit.

Second, put yourself & DW into a situation that makes you less anxious about potential futures. There are lots of options; you just need to decide whatís right for you & DW. But, honestly, itís just more of what youíve done successfully thusfar. FWIW, here are our Ďbackupí plans.

BackUp Plans

A. Use cash buffer: We keep 3-5 yrs in CD/bond ladder
B. Cut expenses: We have three budgets - optimum, median & bare bones
C. Do consulting work: An option for me for a few more years
D. Sell rental house: Essentially trading current income for a big chunk of cash
E. Take SS earlier: We currently plan to defer to 70.
F. SPIA: Buy a single premium fixed annuity (SPIA) to help cover "essential" expenses. Use Fullmer's "annuitization hurdle" concept or Otar's "zone" concept to guide any annuity purchases.
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Old 09-14-2018, 10:05 AM   #66
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First, get past being a young boomer. You knew that going in & it is what it is. Besides, youíve LBYM, saved, planned & FIREd based on that knowledge so, give yourself some credit.

Second, put yourself & DW into a situation that makes you less anxious about potential futures. There are lots of options; you just need to decide whatís right for you & DW. But, honestly, itís just more of what youíve done successfully thusfar. FWIW, here are our Ďbackupí plans.

BackUp Plans

A. Use cash buffer: We keep 3-5 yrs in CD/bond ladder
B. Cut expenses: We have three budgets - optimum, median & bare bones
C. Do consulting work: An option for me for a few more years
D. Sell rental house: Essentially trading current income for a big chunk of cash
E. Take SS earlier: We currently plan to defer to 70.
F. SPIA: Buy a single premium fixed annuity (SPIA) to help cover "essential" expenses. Use Fullmer's "annuitization hurdle" concept or Otar's "zone" concept to guide any annuity purchases.
Thatís really good. All any one of us can do is determine how we might survive tougher economic times for any reason. And if tough time hit you, they are going to hit others less well off even harder (something my husband has to occasionally remind me).

It does no good otherwise to agonize over big problems like the national debt. Inform yourself to vote well and have some contingencies in mind.

Thatís a good list.
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