Senator
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I think some of the other numbers need to be how much the other world currencies are being printed. If other countries print money faster than the USA, we are still good.
Risk of excessive gov debt/obligations
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I think some of the other numbers need to be how much the other world currencies are being printed. If other countries print money faster than the USA, we are still good.
Fermion
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
Which is perfectly ok since the manufacturer will have changed the form factor of the milk container to make the pint look like a gallon.
Which Roger
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If the US government does get in over its head with debt, I don't think the outcome would be the most direct one - some sort of default. Rather, it would manifest itself in other ways: Higher taxes, higher inflation, slower economic growth, recessions, etc. In this scenario, non-government assets (e.g., stocks) would be affected as much or more than treasury bonds, government pensions, etc.
CaliforniaMan
Full time employment: Posting here.
+1
Very good advice. There are plenty of things to worry about, this is not one of them. I have been hearing this kind of stuff since the early 70s. People can always make a good sounding argument that the sky is falling, and since there is money to be made doing it, they will.
That is not to say there is not risk. There is, and we don't know what it is. That is why we stay diversified. Choose the mix that you are happy with and enjoy life. The end of the world will come, but in all likelihood, your death will precede it. So be happy!
1. If Feds are going to increase rate, how much budget deficit it is going to add up and where it is going to come from?
2. Do you know any top level economist who thinks that our Debt could be repaid without inflation or with moderate inflation of 1.5-2% under current economic conditions?
3.Could monetizing of our Debt trigger hyper inflation (as China, Russia, Japan, some Middle Eastern countries are selling our Debt)?
4. Most of us know well that "easy money" policies moved stock market much higher but what the Wall Street reaction would be on actual rates raising to normality?
5. Do you know major foreign buyers of our Treasury Notes and how they compare with internal buyers (Feds, many US major Banks, private citizens)?
2. Do you know any top level economist who thinks that our Debt could be repaid without inflation or with moderate inflation of 1.5-2% under current economic conditions?
3.Could monetizing of our Debt trigger hyper inflation (as China, Russia, Japan, some Middle Eastern countries are selling our Debt)?
4. Most of us know well that "easy money" policies moved stock market much higher but what the Wall Street reaction would be on actual rates raising to normality?
5. Do you know major foreign buyers of our Treasury Notes and how they compare with internal buyers (Feds, many US major Banks, private citizens)?
The debt servicing ratio to GDP is a whopping 1.24% as of 2015 -- the lowest it's been since about 1974 (see https://research.stlouisfed.org/fred2/series/FYOIGDA188S). Note that the inflationistas/gold bugs/sky is falling folks have been predicting fiscal doom for close to 10 years now, and yet it never seems to materialize.
Yup.
And the fiscal disaster that DID happen (housing collapse -> bank crisis) wasn't well predicted, was it
.In 2007 we could just as easily said debt is too high, pensions are at risk and then cashing out pensions to go all in the market would not have been the safe decision
Future is hard to predict so I don't worry that much about what I can't control.
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Yup.
And the fiscal disaster that DID happen (housing collapse -> bank crisis) wasn't well predicted, was it
In 2007 we could just as easily said debt is too high, pensions are at risk and then cashing out pensions to go all in the market would not have been the safe decision
Future is hard to predict so I don't worry that much about what I can't control.
Sent from my HTC One_M8 using Early Retirement Forum mobile app
Well, certainly there were some indicators that household debt servicing costs were worrisome (see https://research.stlouisfed.org/fred2/series/TDSP). And people often make the mistake of equating government and household debt, which are two different beasts.
Are Texans foolish or first to recognize dangers we face? Texas laying the groundwork for electronic gold-based money - Business Insider
CaliforniaMan
Full time employment: Posting here.
And don't forget the last time that we had a decade, actually 11 years, of budget surpluses. That was 1920 through 1930. How well did that turn out?
Markola
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Maybe the good old Serenity Prayer will help the OP:
Grant me the strength to change the things I can;
Acceptance of the things I can't;
And wisdom to know the difference between a sharknado and an arachnoquake.
Grant me the strength to change the things I can;
Acceptance of the things I can't;
And wisdom to know the difference between a sharknado and an arachnoquake.
audreyh1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
And the Pollyanna's can come up with meaningless statistics like this to explain this absolutely booming economy growth we have today. Don't know why those silly folks in the Feds would have kept interest rates so low and pumped money into the economy through quantitative easing when our economy is so strong as indicated by such meaningful statistics.
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And the Pollyanna's can come up with meaningless statistics like this to explain this absolutely booming economy growth we have today. Don't know why those silly folks in the Feds would have kept interest rates so low and pumped money into the economy through quantitative easing when our economy is so strong as indicated by such meaningful statistics.
Interesting take, except it has nothing to do with the subject. The statistic I quoted doesn't say anything about how robust the economy is. It's a measure of how dangerous current debt levels are.
Mod note: the "Hi, I am" forum is for new members to introduce themselves and share details about their financial plans. This thread has become a discussion on gov't debt, so it was moved to the "FIRE related political topics" forum.
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HFWR
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
And the Pollyanna's can come up with meaningless statistics like this to explain this absolutely booming economy growth we have today. Don't know why those silly folks in the Feds would have kept interest rates so low and pumped money into the economy through quantitative easing when our economy is so strong as indicated by such meaningful statistics.
Liquidity?
GTFan
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This is where you go off the rails worrying about debt, because we've been printing money to buy back bonds for years now with no impact on inflation. And this will continue to be the case as long as the dollar is the gold standard currency.
I think a lot of folks get way too worked up over the debt because they equate US government funny money with real-world personal debt. The two are completely unrelated, and in fact the economy as a whole would do a lot better if we simply spent more of that Monopoly money on stuff that matters, like rebuilding our crumbling infrastructure. The jobs, consumer spending, and taxes that resulted would pay that back.
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Fedup
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I have a healthy dose of skepticism. But I don't believe in US government is going bankrupt. That said, I store up on seeds, just in case I need to grow my own food to survive like Cuba. Actually, I have been for years buying lots of seeds because I love sprouting them. Not so much because of fear.
I'm in the process of buying a large expensive home, so I'm suddenly less concerned about inflation than deflation. Nothing like borrowing 300-400k in long term fixed rate debt to ease inflation concerns.
Inflate away Uncle Sam.
Deflation is now what terrifies me.![:-\](https://www.early-retirement.org/sk/forums/images/smilies/undecided.gif "Undecided :-\")
Inflate away Uncle Sam.
Deflation is now what terrifies me.
I think your finances are in fine shape, and the political risk to your pension is a lot less than the risk to everyone else's savings/investments.
The military pension fund is an accrued account. In 1984 Congress changed the accounting law and required DoD to set aside personnel funds every year to fund the projected retirement expenses. That money is invested in special-purpose Treasuries which pay a ridiculously low (but very safe) yield. Raising taxes is always an option, but the military's pension fund is already more safely funded than just about any other pension plan in the world. It's certainly better funded than Social Security, Medicare, or Medicaid.
One of the reasons that DoD pushed so hard for the new blended retirement system is to reduce their expenses of funding military pensions. (When your pension fund has such a low yield, you need a lot of principal to grow tomorrow's pensions.) Ironically, shifting some of the retirement savings burden to tomorrow's servicemembers will make the extant pensions even more secure. In other words, you got yours.
Should You Choose The Military's Blended Retirement System? - Military Guide
Between the mechanics of currency inflation and of deficit spending, the U.S. (and other governments) can continue to run deficits of about 2%-3% indefinitely. You can't run family finances this way, but government finances can be run differently because of the power to tax and print money. It would be nice to require the government to have a balanced budget, but government deficit spending (and all the other economic stimulation) was the biggest factor in repairing the damage of the 2008 financial crisis.
Like me on Oahu, if you're planning to spend the rest of your life on Guam then you'll need the shotgun ammunition and MREs for a CAT 5 hurricane before you'll need them for a military pension crisis.
Senator
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Isn't this the same as any other Government liability? The US borrows from the pension account... Like SS? It will have to be paid with future income.
I don't know the answer to that one.
There are plenty of briefs and studies and other white papers that describe DoD's funding of the military retirement system, but I've never read anything about anyone (including DoD) borrowing from the account.
Military pension obligations from before 1984 were originally fully funded by Congress and given to the Treasury to manage as part of the switch over to the new accrual system. That legacy money is gradually being drawn down by servicemembers who have been retired for at least three decades. It could go on for another 3-4 decades but I don't know if the Treasury lends out those assets.
I monitor the social media of all of the relatively rational mainstream military supporters and critics, and I've never seen anything about borrowing. If there was any Congressional borrowing from the DoD account, I'd imagine that DoD would be at least as vocally unhappy as the muckracking military media and the vigilant veteran's groups. They're already publicly adamant about issues which have far less financial value than the pension fund, and the "Keep Your Promise" crowd would (appropriately) show up on the steps of Congress with pitchforks & torches.
Fermion
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
That crowd is a fair weather crowd though, and if we get into a situation where SS is cancelled and old people are starving in the street, I imagine the "Keep Your Promise" crowd will grow quite thin.
CaliforniaMan
Full time employment: Posting here.
Everything is paid back with future income, private or public debt as well as private or public investments. In fact, one could say that all value comes from the expectation of future income. Why do your stocks or bonds have value? Because of the expectation of future income. That is all there is folks.
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