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Old 03-28-2017, 05:25 PM   #41
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I haven't seen the obvious 'answer' yet in this thread. "When in doubt, inflate." (AKA QE, monetary actions, purchase of non-treasury assets by the Federal Reserve, etc.)

This is especially true given the natural inclination when assets may not be repaid (due to default) is to not loan, i.e. when people start worrying about return of capital vs. return on capital. [That is, increasing defaults is deflationary.]

So, the obvious answer to me in terms of what 'they' will do is to pay those promised benefits using dollars that are created out of thin air. Since inflation will be the result, 'they' will also need to remove inflation protection for most of the animals on our farm (maybe some of the special animals will still keep their inflation protected promises).
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Old 03-28-2017, 05:58 PM   #42
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Originally Posted by copyright1997reloaded View Post
I haven't seen the obvious 'answer' yet in this thread. "When in doubt, inflate." (AKA QE, monetary actions, purchase of non-treasury assets by the Federal Reserve, etc.)

This is especially true given the natural inclination when assets may not be repaid (due to default) is to not loan, i.e. when people start worrying about return of capital vs. return on capital. [That is, increasing defaults is deflationary.]

So, the obvious answer to me in terms of what 'they' will do is to pay those promised benefits using dollars that are created out of thin air. Since inflation will be the result, 'they' will also need to remove inflation protection for most of the animals on our farm (maybe some of the special animals will still keep their inflation protected promises).
We have had QE for 9 years now please explain why there is no inflation.
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Old 03-28-2017, 06:38 PM   #43
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I haven't seen the obvious 'answer' yet in this thread. "When in doubt, inflate." (AKA QE, monetary actions, purchase of non-treasury assets by the Federal Reserve, etc.)
That's definitely what we see around the world and throughout history.

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Since inflation will be the result, 'they' will also need to remove inflation protection for most of the animals on our farm (maybe some of the special animals will still keep their inflation protected promises).
Similarly, indexing of tax brackets and standard deduction to inflation may be eliminated or (more likely) restricted/capped.

Of course, once this happens, investors normally demand a lot more interest for debts denominated in the "expected to be inflated still more" currency, and a bad cycle develops wherein it can be difficult to raise capital for businesses, etc.

An ugly silver lining: If this becomes the situation in many countries, the US might still come out in >relatively< good shape if US dollars and US government securities are seen as "less bad" than others. People have to put their money somewhere/into something.
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Old 03-28-2017, 08:07 PM   #44
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Originally Posted by copyright1997reloaded View Post
I haven't seen the obvious 'answer' yet in this thread. "When in doubt, inflate." (AKA QE, monetary actions, purchase of non-treasury assets by the Federal Reserve, etc.)

This is especially true given the natural inclination when assets may not be repaid (due to default) is to not loan, i.e. when people start worrying about return of capital vs. return on capital. [That is, increasing defaults is deflationary.]

So, the obvious answer to me in terms of what 'they' will do is to pay those promised benefits using dollars that are created out of thin air. Since inflation will be the result, 'they' will also need to remove inflation protection for most of the animals on our farm (maybe some of the special animals will still keep their inflation protected promises).


Inflation got us out of the massive debt of WWII, but global deflation is the culprit today.
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Old 03-30-2017, 01:27 AM   #45
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Inflation got us out of the massive debt of WWII, but global deflation is the culprit today.
Even more so, inflation got us out of the huge Viet Nam debt. The same inflation caused the biggest threat to FIRE portfolio survivability that ever existed, a bigger threat than even the Great Depression.
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Old 03-30-2017, 01:39 AM   #46
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...So, the obvious answer to me in terms of what 'they' will do is to pay those promised benefits using dollars that are created out of thin air. Since inflation will be the result, 'they' will also need to remove inflation protection for most of the animals on our farm (maybe some of the special animals will still keep their inflation protected promises).
Please do not say "special animals", as all animals are equal.

Orwell called them the "more equal animals".
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Old 03-31-2017, 06:34 AM   #47
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I see a few smaller funds collapsing due to a bad year of returns. Those funds will put pressure on the PBGC which will in turn raise rates on other pensions which are underfunded. That will cause more funds to collapse (and the market will get more unstable as investors either are withdrawing more to make up for lost pensions, or are trying to figure out the winners and losers inthe pension collapse. At this point, Illinois or Calpers will have signs of collapse, and the tax burdens of California and Illinois will increase dramatically. This will lead to more flight from taxes, causing the Feds to step in. This is when the effect on the entire population will be most likely. Fed taxes will rise, "entitlements" will increase, inflation will rear its very ugly head, and the 30's will return. The only way out of it is a major global war to ramp up the economic war engine, and reduce the population. At this point the best currency you could have will be food and ammo! (just kidding).

How will this affect me? I have no pension, so the collapse of the markets is when I will be hit, and I have 3 sons who are in their 20s who would likely be cannon fodder in any war.
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Old 03-31-2017, 07:04 AM   #48
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Only one million pensioners in risk of default? I actually feel relieved by this news, I'd have thought the number 20x this. So how many are likely to end up with nothing but SS, vs getting paid 60% or something? 50k? That's a bummer for sure, but I'm not sure it'll be enough to trip a global recession.
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i have a story about this
Old 04-02-2017, 02:18 PM   #49
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i have a story about this

my brother in law, a real knock around blue collar truck driver nyc guy, pension was after 30 years about 3400 a month, it was one of those multi union type deals so long story short, he gets about 700 bucks a month now he collected 3400 for about 2 years then they lowered it to 1800 for 4 years and this year he gets the great news that 700 bucks is now he number. so as he is in his late 50's he gets a trucking company warehouse supervisor job, calls it 5 1/2 days a week(but works mon-fri and about 7 hours on saturday) makes about 85k , thats before taxes, oh i forgot the 700 pension so add that to it, thats what happened to his multi union trucking pension, he was crushed when he got the news,
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Old 04-02-2017, 02:20 PM   #50
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Yeah, I'd be crushed too! Scary.
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Old 04-02-2017, 02:25 PM   #51
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This is a concern, and why, at retirement, one might consider a delayed annuity or some other investment set aside to cover themselves just for this possibility. This would also cover future changes in social security like reduced spousal benefits, higher part B premiums, and the chained CPI.
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Old 04-02-2017, 02:35 PM   #52
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I see a few smaller funds collapsing due to a bad year of returns. Those funds will put pressure on the PBGC which will in turn raise rates on other pensions which are underfunded. That will cause more funds to collapse (and the market will get more unstable as investors either are withdrawing more to make up for lost pensions, or are trying to figure out the winners and losers inthe pension collapse. At this point, Illinois or Calpers will have signs of collapse, and the tax burdens of California and Illinois will increase dramatically. This will lead to more flight from taxes, causing the Feds to step in. This is when the effect on the entire population will be most likely. Fed taxes will rise, "entitlements" will increase, inflation will rear its very ugly head, and the 30's will return. The only way out of it is a major global war to ramp up the economic war engine, and reduce the population. At this point the best currency you could have will be food and ammo! (just kidding).

How will this affect me? I have no pension, so the collapse of the markets is when I will be hit, and I have 3 sons who are in their 20s who would likely be cannon fodder in any war.
The pension condition of various states, especially CA and IL are poor , but it will not go to Zero, they will either increase general State taxes or revise the pensions to pay out at a reduced rate. The number of people affected in each state is probably a minority of each states population.

This is not a problem or issue for the Fed's, so I disagree that the Feds will be involved, just imagine the public outcry (revolt) of Citizens of stable States, paying for the inflated promises given to Sunny CA, or IL residents.

The war that is next could be a new Civil War, to free tax dollars.
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Old 04-02-2017, 02:36 PM   #53
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Very sad.
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Old 04-02-2017, 02:55 PM   #54
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Very sad.
Makes me more angry than sad. If I was younger I'd be halfway looking for a lynch mob to join. I know zero about pensions but what has happened to pensions in our lifetimes just seems so reprehensible to me. Such misery.
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Old 04-02-2017, 03:27 PM   #55
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Makes me more angry than sad. If I was younger I'd be halfway looking for a lynch mob to join. I know zero about pensions but what has happened to pensions in our lifetimes just seems so reprehensible to me. Such misery.
I tend to think that it was almost inevitable. I'm lucky, I have a COLA'd pension but that plan was born out of the post WWII economic expansion in the 1950's-60's and the optimism that created. They thought the party would never end but of course it did. It's nearly fully funded but I have to wonder if it is sustainable because there is a good chance that I will be paid in retirement far more, and for a longer time, than I earned while working even accounting for inflation and investment returns. For DW that is almost a certainty barring early illness.

They don't offer that plan anymore, it was changed in the 1980's and has been changed a couple of times since. There is still a pension but it is much smaller than it was, there is a cap on COLAs, and defined contributions are a much larger component. But this is made clear from day one for new hires.

Historically "retirement" was something that only the very wealthy could afford - as I understand it people worked for as long as they were physically able to and then were either cared for by family or went to... wherever and were true charity cases.

What I agree is reprehensible is the lack of notice as retirement plans were changed or eliminated, leaving a lot of people like Blue Collar Guy's BIL swinging in the wind without time or opportunity to prepare for the changes. He will also probably have to work for as long as he is physically able to. The accountants had to know that was coming.
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Old 04-02-2017, 03:28 PM   #56
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We have a number of DB-like Plans that continue to pump it cash throughout the month~SSA, US military, VA, school retirement, US corporate pension. If these all fail, our only fallback is our VG stash, but if the above fails, how secure is our VG stash?


Time to make me another drink...
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Old 04-22-2017, 01:35 PM   #57
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The Pension Protection Act of 2006 will help prevent a "crash" for corporations. I'm not aware of any such law for public/government pensions.
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it doesnt cover multi pensions
Old 04-22-2017, 03:45 PM   #58
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it doesnt cover multi pensions

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The Pension Protection Act of 2006 will help prevent a "crash" for corporations. I'm not aware of any such law for public/government pensions.
my brother in law, a real knock around blue collar truck driver nyc guy, pension was after 30 years about 3400 a month, it was one of those multi union type deals so long story short, he gets about 700 bucks a month now he collected 3400 for about 2 years then they lowered it to 1800 for 4 years and this year he gets the great news that 700 bucks is now he number. so as he is in his late 50's he gets a trucking company warehouse supervisor job, calls it 5 1/2 days a week(but works mon-fri and about 7 hours on saturday) makes about 85k , thats before taxes, oh i forgot the 700 pension so add that to it, thats what happened to his multi union trucking pension, he was crushed when he got the news,
PS he just moved to north carolina to follow the new job, his whole future got destroyed, no pension insurance for those thoudands of guys
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Old 04-22-2017, 06:51 PM   #59
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Another factor in my (hopefully wrong) view that a "wealth tax" may be closer on the horizon than we think. Along with "means testing" for many things like pensions, SS, Medicare, etc.
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Old 04-22-2017, 10:50 PM   #60
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Another factor in my (hopefully wrong) view that a "wealth tax" may be closer on the horizon than we think. Along with "means testing" for many things like pensions, SS, Medicare, etc.
with all ur good news ur gonna have everyone jumping off the roof
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