Is There Any Way This Can End Well?

[der_kommissar]

Yes. If you have been around here long enough, you've probably heard the assortment of older posters on here argue against the evils of deflation, the merits of perpetual ZIRP and other measures to "save the system". But nowhere in their adulation for these monetary hijinx do you ever hear them lament the "cost" to future growth, future debt saturation, future structural problems that this "save us at all costs" mentality engenders.

I suppose that much of this has to do with basic demographics (i.e. massive population booms following WW2), and the structural imbalances brought about with lowered birthrates and a system that depends on the younger generations supporting their elders as they approach retirement age...Nonetheless, the economy has become a secondary consideration to asset markets and that is where ZIRP is creating all sorts of major problems.

 

[qxr1011]

economy has become a secondary consideration

economy (or the laws of economics) was always a second consideration

first consideration is to feel good... now

 

[k p]

Great discussion guys! I am amazed how at work, all those boomers getting ready to retire on their fixed and expensive pension plans want to travel the world while keeping their expensive house back home and expect to, in retirement, make the same amount of money they did while working, because their expenses will be even higher after retiring since they will be living the good life. Its astonishing when I read articles of people who have a net worth of over 2 million who think they don't have enough to retire on. (only half of this might be equity in the house)

Hopefully, at the very least, these boomers spend every last dollar and put it back into the economy. But I fear that once they see their retirement funds dropping, they will tighten up their belts, hoard the money, and this will further accelerate the decline without this consumer economy moving forward.

Gosh, I really wonder what will happen once people realize that $800 iphones are a waste, or that they simply can't afford them anymore. Who will pay $100 for the stock... how about 90... how about 80... how about 70? When the growth is gone, who is going to buy stocks to keep the price up when everyone will know that all these big companies have no more growth? When the stocks go down and the boomers lose so much more money that they thought they could spend in their retirement, who is going to step in to prop up the consumer economy?

 

[tommo]

Regardless of WHO ends up paying the debt, the question I think is more interesting is by what mechanism will they pay?

There is no way USA will default on their debt in a conventional 'nope sorry how about getting half back'. There's as much chance of that as the Chinese army marching up to Yellens front door..nukes at the ready..and ask for their money back.

OR the treasury print so much money it becomes utterly worthless. But that won't work because every other country is doing that too. It becomes a case of the least worthless currency becomes the most expensive...which ironically with probably be the USD

 

[k p]

Funnily enough.. I just read this article from Ichan saying the same thing... hmmm...

http://www.businessinsider.com/carl-icahns-warning-on-stock-market-2015-9

 

[romik]

R the treasury print so much money it becomes utterly worthless. But that won't work because every other country is doing that too.

That's what most likely will happen, there can be hyperinflation across the board.

 

[Nine_Ender]

Regardless of WHO ends up paying the debt, the question I think is more interesting is by what mechanism will they pay?

There is no way USA will default on their debt in a conventional 'nope sorry how about getting half back'. There's as much chance of that as the Chinese army marching up to Yellens front door..nukes at the ready..and ask for their money back.

OR the treasury print so much money it becomes utterly worthless. But that won't work because every other country is doing that too. It becomes a case of the least worthless currency becomes the most expensive...which ironically with probably be the USD

Higher personal tax rates for Americans are coming. In a fair world, the assets of core baby boomers who built up little empires on cheap tax rates and an easy job market would be partially used to pay for the debt and lack of social services they left younger people. Nothing about the US is ever fair though, and US politicians continue to support the rich boomers and their wealth and only when that generation dies out will things finally change.

 

[Nine_Ender]

OR the treasury print so much money it becomes utterly worthless. But that won't work because every other country is doing that too.

This isn't occurring. Not even close. Some Elite Traders think it is occurring, but proper research says otherwise, and that the US slowing down or ending QE ( as they have done ) may stop the "Debt to GDP" levels from becoming all time highs. And if that is the case, why on earth would the US have hyperinflation, it has never had it, not even close ?

As for "every other country", Canada again is an example of somewhere real that isn't doing this. Government debt financing was never massive since 2008, and they ran a 1.9B surplus this year.

The "doom porn" continues unabated on here. What I'd like to see to partially support these theories is real data that blows away historical highs. So "Debt to GDP" needs to be at least 140%. Unemployment rates have to easily exceed 2009 levels. A recession needs to be on for at least 2-3 years. American based companies need to stop making massive amounts of money.

My point, jumping the gun and assuming these "doomsday realities" are already here isn't smart. Again, I believe in the resourcefulness of NA people in a capitalistic society. No matter what dumb asses get elected in US government ( and this has often been a problem ), things usually get done somehow. Find some competent people and give them real decision making power, things will get much better. Bernanke was one such person, he got things done, and the US would be in far worse shape without his proactive stance on the brink of collapse in 2009 ( probably why he's so unpopular with the gloom and doom crowd on here ).

 

[achilles28]

Jesus Christ! The Boomers didn't do what you claim. It was the Politicos. As a group the Boomers are as stupid as a mud fence. They didn't "double down" on ANYTHING!!!!!)

One more STUPID comment like that, and I'm going to have to put you on ignore...

You're claiming, "60-yr old politicos made laws and policies... therefor ALL Boomers are at fault"?

Anyone with half-a-brain can see the fallacy of that argument.

Scat is an awesome guy. He's a Vietnam combat veteran and a life-long defender of the Constitution. And a great trader. He's one of the few good boomers, that actually fought for this country and cares deeply about it.

 

[achilles28]

Yes. If you have been around here long enough, you've probably heard the assortment of older posters on here argue against the evils of deflation, the merits of perpetual ZIRP and other measures to "save the system". But nowhere in their adulation for these monetary hijinx do you ever hear them lament the "cost" to future growth, future debt saturation, future structural problems that this "save us at all costs" mentality engenders.

I suppose that much of this has to do with basic demographics (i.e. massive population booms following WW2), and the structural imbalances brought about with lowered birthrates and a system that depends on the younger generations supporting their elders as they approach retirement age...Nonetheless, the economy has become a secondary consideration to asset markets and that is where ZIRP is creating all sorts of major problems.

Yup. Boomers inherited the richest, freest country in the world. They gave their jobs away to Asia. Gave their freedoms away to Government. Imported a mass of third-world parasites,. And voted themselves the Treasury in the form of entitlements.

That said, not all of them are bad. Scat is a great guy and a true patriot. One of the good ones. My dad is another one. He knew what was going on. Many Boomers are useful idiots, or just plain greedy. They don't give a toss about freedom or free markets. They only care about their real estate and stock market portfolios. Justice will be served. Most of these old farts will never see their paper promises once a Greece-style collapse hits. The vast majority of medical costs are incurred near end of life. Money will dry up and granny and granpa won't get squat. Serves them right.

Also, many Boomers are waking up from their trance. Trump and Carson lead the primaries and they're looking for a total overhaul of the shitty, corrupt system. Perhaps there is hope yet.