Most understand Negative Equity in the framework of auto loans, but the concept likely extends to debt in general, and more particularly to what is happening with U.S. Government debt.
A $30K car loan over 5 years could cost as much as $45K. The debtor looks at this as a buy now and enjoy for years, paying back with an increase in income, and more likely, because of inflation, paying back with lower value dollars. Then... 5 years from purchase date, obtaining a second loan for the balance... and so on.
As we edge toward twenty three trillion dollars in US debt, (an increase of about ten trillion dollars since 2016), the question may be: "Will this continue, and what will the next 5 to 10 years mean to the economy and personal plans for the future?"
Is there a way to look forward to take advantage of what could happen, or just go with the flow?
Keep in mind, that most ER people are "invested"... a small percentage of the population. Suppose... an individual net worth of $200K vs. $1M. Assuming a 50% deflation, who pays for the Federal Debt?
Maybe I have this wrong, but there are countries that are in better shape than the U.S., with lower government debt, but a lower long term risk factor... think Germany, France or even India.
Growing out of U.S. debt for the past 250 years, has come with advances in manufacturing, technology, and a steady birth rate... a combination that doesn't seem to have a replacement today.
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I fully admit to ignorance of world economics, and worse, can't seem to find an in depth analysis that addresses negative equity. Just looking ahead to possible ramifications of our rapid dive into national debt.
Too much to worry about? or just plain wrong? Won't affect me, but I have children and grandchildren.
A $30K car loan over 5 years could cost as much as $45K. The debtor looks at this as a buy now and enjoy for years, paying back with an increase in income, and more likely, because of inflation, paying back with lower value dollars. Then... 5 years from purchase date, obtaining a second loan for the balance... and so on.
As we edge toward twenty three trillion dollars in US debt, (an increase of about ten trillion dollars since 2016), the question may be: "Will this continue, and what will the next 5 to 10 years mean to the economy and personal plans for the future?"
Is there a way to look forward to take advantage of what could happen, or just go with the flow?
Keep in mind, that most ER people are "invested"... a small percentage of the population. Suppose... an individual net worth of $200K vs. $1M. Assuming a 50% deflation, who pays for the Federal Debt?
Maybe I have this wrong, but there are countries that are in better shape than the U.S., with lower government debt, but a lower long term risk factor... think Germany, France or even India.
Growing out of U.S. debt for the past 250 years, has come with advances in manufacturing, technology, and a steady birth rate... a combination that doesn't seem to have a replacement today.
.....................................................................................................
I fully admit to ignorance of world economics, and worse, can't seem to find an in depth analysis that addresses negative equity. Just looking ahead to possible ramifications of our rapid dive into national debt.
Too much to worry about? or just plain wrong? Won't affect me, but I have children and grandchildren.