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When will the machine stop?
Old 07-28-2019, 03:44 PM   #1
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When will the machine stop?

I just read this in an article, referring to the current budget deal in Congress:

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The federal deficit is set to exceed $1 trillion every year starting in 2022. According to the Congressional Budget Office, spending as a percentage of gross domestic product (GDP) rises to 21 percent this year, on track to 28 percent by 2049. Only three years (the war-time years of 1944 and 1945, as well as 2000) have had higher spending-to-GDP ratios. The federal debt held by the public will increase to 92 percent of the economy in 2029, up from 78 percent this year. Interest on the debt as a share of the economy will soon surpass defense spending.

This is an unsustainable fiscal path.

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I always come back to the quote from the economist Herbert Stein: 的f something cannot go on forever it will stop.

If I were 80 or more, I probably would not worry too much, but since this forum is the 摘 (early) crowd, many people are probably my age (63) or even younger.

I know the arguments about 鍍he rules for government borrowing are different than for individuals, etc., but what do people think about this?

More importantly, have you. or do you plan to soon, make changes to protect your assets from some type of financial collapse?
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Old 07-28-2019, 03:49 PM   #2
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I tend not to worry about things outside of my control.
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Old 07-28-2019, 04:06 PM   #3
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I don't see any financial collapse any time soon. We're in the midst of one of the best economies on record.

Recessions come and go, corrections come and go but those are normal, healthy market actions--and buying opportunities--and quite removed from 'financial collapse'!
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Old 07-28-2019, 04:11 PM   #4
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Whatever goes down the FIRE crowd will be monetarily ahead of the non-FIRE crowd.
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Old 07-28-2019, 04:16 PM   #5
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Originally Posted by BoodaGazelle View Post
If I were 80 or more, I probably would not worry too much, but since this forum is the 摘 (early) crowd, many people are probably my age (63) or even younger.

Some are a lot older than 63!

I know the arguments about 鍍he rules for government borrowing are different than for individuals, etc., but what do people think about this?

I don't watch the news or read this cr@p so I don't think about it.


More importantly, have you. or do you plan to soon, make changes to protect your assets from some type of financial collapse?

My plan is to move to Mars once Musk colonizes it.
Answers above in red...
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Old 07-28-2019, 05:27 PM   #6
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When Porky shows up.
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Old 07-28-2019, 05:35 PM   #7
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But let's not confuse a recession, large or small with "financial collapse" which many folks less savy might equate.
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When will the machine stop?
Old 07-28-2019, 05:54 PM   #8
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When will the machine stop?

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We're in the midst of one of the best economies on record.

Only because the 兎conomy doesn稚 recognize debt and deficit among its contributing factors.
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Old 07-28-2019, 06:12 PM   #9
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Thanks to all for replying. I fully understand not worrying about things beyond your control, but I guess what I am hearing is that other than asset allocation, most of you do not consider things like the (article mentioned) national debt something to worry about.
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Old 07-28-2019, 06:37 PM   #10
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Only because the “economy” doesn’t recognize debt and deficit among its contributing factors.
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Thanks to all for replying. I fully understand not worrying about things beyond your control, but I guess what I am hearing is that other than asset allocation, most of you do not consider things like the (article mentioned) national debt something to worry about.
People have been saying "Yes, but...." and adding qualifiers to the health of the economy for decades. I have one, primary measure, the one thing I care about: How my portfolio is doing over time.

For the past 30+ years, it's done quite well (thank you very much) through ups, downs, red/blue DC administrations, recessions, bull/bear markets, global cooling, global warming, large deficits and small ones, acid rain and oil shortages.

The past decade, and this current year in particular have been extraordinary. Will it keep up this pace? Likely not, but every month that I bank an extra percent is one more percent in the gravy column; I'm already 3 years ahead of where I expected to be.

For me, it's not so much about not worrying about things I can't control, but more not worrying about things I don't worry about.
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Old 07-28-2019, 07:48 PM   #11
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Reading the previous posts makes me think about the subprime mortgage. Maybe people had the same answer: who cares about the mortgages?

My question is: If I do worry about the national debit, how could I do to protect myself? Buy gold?
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Old 07-28-2019, 07:51 PM   #12
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Whatever goes down the FIRE crowd will be monetarily ahead of the non-FIRE crowd.
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Old 07-28-2019, 08:02 PM   #13
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Reading the previous posts makes me think about the subprime mortgage. Maybe people had the same answer: who cares about the mortgages?

My question is: If I do worry about the national debit, how could I do to protect myself? Buy gold?
According to all those gold commercials, that's the thing to do! But then they do have a vested interest in you buying precious metals much like a financial adviser that wants you to cash out your pension and let him invest it for you.

If this country goes bust, home grown veggies and livestock are probably your best bet.
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Old 07-28-2019, 09:29 PM   #14
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I知 63 also and believe the debt issue can be kicked down the road long enough that I will not be affected too seriously. Unfortunately our kids and grandkids may have to pay for irresponsibility of prior generations. What痴 truly scary is this new attitude of carelessness and lack of effort to even admit its a problem.
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Old 07-29-2019, 04:23 AM   #15
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Reading the previous posts makes me think about the subprime mortgage. Maybe people had the same answer: who cares about the mortgages?

My question is: If I do worry about the national debit, how could I do to protect myself? Buy gold?
IF it gets so bad that you need gold then we already have one foot in the toilet toward collapse. Then the big question is who will you trade with and what will you buy with the gold? What you will trade for most would be food and few people will be willing to give theirs up.


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Old 07-29-2019, 05:10 AM   #16
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IF it gets so bad that you need gold then we already have one foot in the toilet toward collapse.
Yes. I would say both feet would be in the toilet by that point, and if so, we're all screwed. But I just don't see that happening in our lifetimes.

Financial collapse is one thing. Market cycles, recessions and corrections are another. I do believe that a true, massive 1929 type depression has been pretty much regulated out of existence; but let's remember that there were many (my grandfather being one) who made a fortune during that time. Not everyone was in a bread line.

What we should worry about are the professional and political fear mongers who will be running around screaming "financial collapse" at the next minor downturn, taking advantage of those less sophisticated for their own gain.
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Old 07-29-2019, 05:18 AM   #17
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Whatever goes down the FIRE crowd will be monetarily ahead of the non-FIRE crowd.
Probably, but that's also what this thread is about, to see if there's a best way to position ourselves in case this happens:

Quote:
More importantly, have you. or do you plan to soon, make changes to protect your assets from some type of financial collapse?
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Old 07-29-2019, 05:20 AM   #18
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have you. or do you plan to soon, make changes to protect your assets from some type of financial collapse?
I have always had an asset allocation that I can live with.

Define what you mean by "financial collapse" to get more on-target answers. That term is too vague and means different things to different people. Have you lived through a financial collapse?
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Old 07-29-2019, 05:32 AM   #19
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I have thought about gold before, but I always come back to the idea that a gold coin, which costs over $1300, and which would presumably skyrocket from there in a SHTF scenario, would not really work to buy daily food, would it? (I guess with enough hyper-inflation it might...)



Rather than gold, I would look into pre-1965 silver coins.
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Old 07-29-2019, 05:38 AM   #20
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I have always had an asset allocation that I can live with.

Define what you mean by "financial collapse" to get more on-target answers. That term is too vague and means different things to different people. Have you lived through a financial collapse?
I was thinking about things like: U.S. default on debt, hyper-inflation, terrorist nukes, etc. Definitely more than an economic downturn, which, like most of us FIRE-ees, I think I can weather.
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