6.2% Projected 2022 SS Increase

Oh, trust me. You ARE in front of the freight train.

Our economy has essentially become state run. The fed can dictate direction now that everybody is either drowning in debt or worried about their cash stash being devalued drastically.

My point of view is about the only way to position is to own cash producing assets that can adjust to inflationary pressure (eg equities or reits).

I think that at some point we’re in for a bout of inflation  that will dwarf any inflation rate we’ve experienced to date.  I think we’re looking at uncharted territory.  I’d get out of bonds, I’m not wild about stocks.  I’d consider commodities, probably metals, maybe certain kinds of collectibles.

Does anybody know much about inflation-indexed treasuries?

[quote quote=5204]Does anybody know much about inflation-indexed treasuries?[/quote]

last time I checked they were yielding negative real, which kinda defeats the purpose.

I’m not as certain as some about inflation. If Bernie taxes the hell out of the economic sectors with free cash flow we might be seeing less inflation than some fear.

Instead a fundamental shift in the share of “G” in the old equation, GDP=C+G+I+(X-M).

So what does an economy look like with less “I”, lower yields on “I” and more transfer payments to drive increasing “C”?

Growth is stifled. The growth premium in stock valuations is reduced. Over time our GDP stagnates and we become more uncompetitive on the margin.

I believe government guided investment decisions produce lower yields than private sector driven investments. The yield on “I” will decline over time. This too will prove to be a negative for GDP growth. I mean really, who would retain the firm of Ocassio, Omar, Talib & Sanders to manage their portfolio. Look at the performance of the public school system.

From an investment standpoint perhaps you consider rebalancing your portfolio across the global market?  Defying a fundamental Buffet axiom, has the time come to disinvest in/shift away from the US?

Do imports subtract from GDP? It would seem to be a domestic job killer just as are the people we are letting across our borders. Not much makes sense to me. It’s either way over my head or something deeper in the works. Do you think a lot of our economic policies are now driven by AI algos?

My econ profs used to tell me that our accumulated federal deficit didn’t matter, since we largely owed it to ourselves. They also said that what really mattered was the trade deficit, since it meant that we were exporting both wealth and jobs.

Maybe true back in 1981, but not as true now.  Foreigners own a little more than $7 trillion of our debt now, which means we send out $140 – $150 billion of our treasure each year.  The trade deficit passed $600 billion a few years ago.  Add in transfer payments from foreign nationals to their home countries (about $65 billion), and what our military spends in foreign countries and we’re getting pretty close to sending $1 trillion annually outside of the United States.

We’re about $21 trillion in GDP, so we’re all sending about 5% of everything overseas right now.

https://www.macrotrends.net/countries/USA/united-states/trade-balance-deficit

https://www.statista.com/statistics/188105/annual-gdp-of-the-united-states-since-1990/

• This reply was modified 4 years, 8 months ago by Mick.

[quote quote=5219]Do you think a lot of our economic policies are now driven by AI algos?[/quote]

I wish. I think our economic policies are driven by ideological zealots. They are not focused on the performance of our economy in a competitive environment. Consider Yellen’s effort to raise tax rates globally. Like the Obama Iran deal, our tax policy would be outsourced to global bureaucrats. Who’s left to represent the American population, our standard of living or our personal freedoms?

The Animal Farm style pigs in DC populate both sides of the aisle and they are the “Interagency”, a term and class of people I abhor. They minimize the power to change of our elected government.

So, to finally get to the point, I don’t think we’re on auto pilot and I’m not at all sure it would be worse if we were.