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imported post
So it seems like the American economy and FOMC accomodation of it has morphed into something machlavelian. One just needs to quote VP Chaney: "Deficits don't matter."
Deficits, fiscal or trade, do not matter to a system turned bankrupt. Appearances do matter though. Some would call that confidence.American fiscal policies are hemorrhaging red ink and its bonds are being snapped up by nations that are exporting to it. But we are keeping their people working and its factories humming. Yetthose foreignersare indirectly being paid (lots of luck) via their nation's purchase of US Treasuries.
The current world economy is based on such a system. Any nation that finds a way around that has found a tool more powerful than any nuclear device. Just try to find it though! The alternative is to throw billions of people out of work. And then what? The world economy and the purchasing power of its largest consumers (the West) is wrecked. It is like cutting off ones nose to spite one's face. The largest beneficiaries for such a strategy are countries that are the least developed since they have the least to lose, i.e. there is less disruption to their minimalist/survivalist lifestyles.
However, apprearances DO matter. There has to be SOME semblance of order. A nation or nationscan't just simply gangster the lion's share of the world's resouces by fiat. And so a balance needs to be maintained whether it is in natural resources/commodities or wages.
Word is that the wealthiest 2-3% of the people control 90% of the nations wealth; even if the amount of those people were doubled (4-6%) or tripled (6-9%) that is still a lot of wealth held in the hands of a comparative few. I would guess they have the most to lose ... so, how are they holding their wealth?
Gold? Whoa! When will gold ever cease to shine? Well, it couldloseitsluster tobillions of unemployed and disgruntledpeople out of the means to provide for themselves or their families due to a bankrupt system?Too little gold to go around for too many unemployed and disgruntles who, if they saved at all, did not hold their savings in bullion.So that won't work either.
What may "work" is if somebody did a Freddy the Freeloader and replicated a lifestyle based on America's current economic system, but the bankruptcy laws have be tightened lately you know.
So it seems like the American economy and FOMC accomodation of it has morphed into something machlavelian. One just needs to quote VP Chaney: "Deficits don't matter."
Deficits, fiscal or trade, do not matter to a system turned bankrupt. Appearances do matter though. Some would call that confidence.American fiscal policies are hemorrhaging red ink and its bonds are being snapped up by nations that are exporting to it. But we are keeping their people working and its factories humming. Yetthose foreignersare indirectly being paid (lots of luck) via their nation's purchase of US Treasuries.
The current world economy is based on such a system. Any nation that finds a way around that has found a tool more powerful than any nuclear device. Just try to find it though! The alternative is to throw billions of people out of work. And then what? The world economy and the purchasing power of its largest consumers (the West) is wrecked. It is like cutting off ones nose to spite one's face. The largest beneficiaries for such a strategy are countries that are the least developed since they have the least to lose, i.e. there is less disruption to their minimalist/survivalist lifestyles.
However, apprearances DO matter. There has to be SOME semblance of order. A nation or nationscan't just simply gangster the lion's share of the world's resouces by fiat. And so a balance needs to be maintained whether it is in natural resources/commodities or wages.
Word is that the wealthiest 2-3% of the people control 90% of the nations wealth; even if the amount of those people were doubled (4-6%) or tripled (6-9%) that is still a lot of wealth held in the hands of a comparative few. I would guess they have the most to lose ... so, how are they holding their wealth?
Gold? Whoa! When will gold ever cease to shine? Well, it couldloseitsluster tobillions of unemployed and disgruntledpeople out of the means to provide for themselves or their families due to a bankrupt system?Too little gold to go around for too many unemployed and disgruntles who, if they saved at all, did not hold their savings in bullion.So that won't work either.
What may "work" is if somebody did a Freddy the Freeloader and replicated a lifestyle based on America's current economic system, but the bankruptcy laws have be tightened lately you know.
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Wimpy wrote:
I can't see a thirty percent drop in the$ purchasing power overthree years. If the holders of those $$s/Treasuries would dump them for purchases, then that could happen, but the Fed is raising interest rates to make that option less attractive.
Our hope, I suppose, is that the US economy and consumer will retrench and growth based on debt. That is the macro picture. The micro picture I believe is an inflation rate based on an unexpected rise of a key natural resource, i.e. natural gas and oil that could potentially distort a market if those costs we added by every producer down the line .. in the supply and demand supply chain. Thus something like an inflation "virus" would infect the whole economy.
Apart from some disinflation from 2000 to 2003, prices are not apt to go down.
Now if the default option for TSP funds was based on an inflation based security, I think that would be not only good, but fair. But to default one's personal TSP-IRA into more risky vehicles stinks ... especially without the owner's consent.
The banking sector is part of America's service economy; it is my hope that it is out in the world tying up every other currency and commodity to keep our money worth something. Lots of luck.
Wimpy wrote:
A weak dollar helps American exporters; it also makes imports more expensive. That's the most important reason why American the largest of our trading partners buy Treasuries: to prop up the $
I can't see a thirty percent drop in the$ purchasing power overthree years. If the holders of those $$s/Treasuries would dump them for purchases, then that could happen, but the Fed is raising interest rates to make that option less attractive.
Our hope, I suppose, is that the US economy and consumer will retrench and growth based on debt. That is the macro picture. The micro picture I believe is an inflation rate based on an unexpected rise of a key natural resource, i.e. natural gas and oil that could potentially distort a market if those costs we added by every producer down the line .. in the supply and demand supply chain. Thus something like an inflation "virus" would infect the whole economy.
Apart from some disinflation from 2000 to 2003, prices are not apt to go down.
Now if the default option for TSP funds was based on an inflation based security, I think that would be not only good, but fair. But to default one's personal TSP-IRA into more risky vehicles stinks ... especially without the owner's consent.
The banking sector is part of America's service economy; it is my hope that it is out in the world tying up every other currency and commodity to keep our money worth something. Lots of luck.
Wimpy
Member
imported post
The risk of saving in the G Fund is inflation. It would take a lot of compound interest to overcome the friction and drag of a 30-40 percent drop in dollar purchasing power over the next 2-3 years. Our assets only do us as much good as they arecorrespondingly able to off-set future expenses. Products don't all of the suddenbecome worth morethan they were worth yesterday...the dollar simply is worth-less. The quicker people understand the fraudulent nature of a fiat currency, thebetter they will be able to protect themselves.
As long as we have out of control deficits, loss of our manufacting sector to Asia, continuing bankruptcies,and a negative U.S. savings rate...the dollar is going down. How far will the dollar go? As far down as it takes to rein in the deficits? How fast will it go? That strictly depends on the con-fidence game. Once confidence is lost it can go very fast and since the dollar is strictly a fiat currency with no underlying value other than the confidence which is placed in it...it is buyer beware.
The risk of saving in the G Fund is inflation. It would take a lot of compound interest to overcome the friction and drag of a 30-40 percent drop in dollar purchasing power over the next 2-3 years. Our assets only do us as much good as they arecorrespondingly able to off-set future expenses. Products don't all of the suddenbecome worth morethan they were worth yesterday...the dollar simply is worth-less. The quicker people understand the fraudulent nature of a fiat currency, thebetter they will be able to protect themselves.
As long as we have out of control deficits, loss of our manufacting sector to Asia, continuing bankruptcies,and a negative U.S. savings rate...the dollar is going down. How far will the dollar go? As far down as it takes to rein in the deficits? How fast will it go? That strictly depends on the con-fidence game. Once confidence is lost it can go very fast and since the dollar is strictly a fiat currency with no underlying value other than the confidence which is placed in it...it is buyer beware.
hehe
bkrownd
Member
imported post
Quips wrote:
I argue that for the vast majority of people a 100% G Fund allocation IS losing money, and having a default allocation of 100% in either money market or bonds is poor - in fact, negligent - financial advice on the part of the 401k managers. How many credible financial advisors would recommend this kind of investment strategy? Risk-free is reward-free, as well. Again, changing the default allocation to an appropriate L Fund is NOT making "decisions about one's private account" that aren't ALREADY being made with the 100% G Fund default. Unless you're trying to say there should be no default at all, which is also unwise IMO.
Quips wrote:
I argue that for the vast majority of people a 100% G Fund allocation IS losing money, and having a default allocation of 100% in either money market or bonds is poor - in fact, negligent - financial advice on the part of the 401k managers. How many credible financial advisors would recommend this kind of investment strategy? Risk-free is reward-free, as well. Again, changing the default allocation to an appropriate L Fund is NOT making "decisions about one's private account" that aren't ALREADY being made with the 100% G Fund default. Unless you're trying to say there should be no default at all, which is also unwise IMO.
G
Greg
Guest
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mlk_man wrote:
mlk_man wrote:
What were you hoping/planning to get out of it? :%
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bkrownd wrote:
However, if decisions are made about one's private account without one's permission, it invites a very good chance of a lawsuit, just as shareholders have sued companies for malfeasance, i.e. Rite Aid, Enron, Merck, etc. etc. etc.
bkrownd wrote:
There is no risk to lose money in the G Fund as there is no risk to lose money in the money market fund(s).
However, if decisions are made about one's private account without one's permission, it invites a very good chance of a lawsuit, just as shareholders have sued companies for malfeasance, i.e. Rite Aid, Enron, Merck, etc. etc. etc.
mlk_man
Banned
imported post
Have to agree with bkrownd here. At least the letting TSP put your money into the L funds based on age part. I know a lot of people who have been sitting in the G fund for years and missed out on a lot of money. I realize that ignorance is not an excuse, but many people just don't know anything about investing their own money. Plain and simple. Been there done that.
One girl I know had her money in a 401K at her work and they, the fund manager I reckon, had her in sitting in their own money market fund and making -.02 to .03% every quarter since the beginning of her employment. She even lost .06% in 2003. How the heck do you do that? NOBODY lost money in 2003!I took over in July of last year and made her over 15% last year and she's currently up 6.3% this year. She's quite happy. All I'm getting out of it is her friendship. That's enough I guess...............
Anyway, I do believe the L fund is better than sitting in the G if you're not going to do anything with it. When one first signs up they might see "guaranteed 4% return" and think the G fund is the way to go.
JMHO
Have to agree with bkrownd here. At least the letting TSP put your money into the L funds based on age part. I know a lot of people who have been sitting in the G fund for years and missed out on a lot of money. I realize that ignorance is not an excuse, but many people just don't know anything about investing their own money. Plain and simple. Been there done that.
One girl I know had her money in a 401K at her work and they, the fund manager I reckon, had her in sitting in their own money market fund and making -.02 to .03% every quarter since the beginning of her employment. She even lost .06% in 2003. How the heck do you do that? NOBODY lost money in 2003!I took over in July of last year and made her over 15% last year and she's currently up 6.3% this year. She's quite happy. All I'm getting out of it is her friendship. That's enough I guess...............
Anyway, I do believe the L fund is better than sitting in the G if you're not going to do anything with it. When one first signs up they might see "guaranteed 4% return" and think the G fund is the way to go.
JMHO
bkrownd
Member
imported post
"Outrageous?" What the XXX are you talking about? TSP ALREADY makes a default allocation choice for you - 100% G-Fund. It would be outrageous for most people to leave it that way for very long. Why not let them make a more sensible default allocation choice?
I'm totally befuddled by your worry about TSP knowing our age. They already know our social security number, address and our income. Who cares if they know what our age is, of all things? Actually, I'd be really surprised if they don't already, but the point is nobody in their right mind would give a hoot.
This whole thread is becoming very loony.
"Outrageous?" What the XXX are you talking about? TSP ALREADY makes a default allocation choice for you - 100% G-Fund. It would be outrageous for most people to leave it that way for very long. Why not let them make a more sensible default allocation choice?
I'm totally befuddled by your worry about TSP knowing our age. They already know our social security number, address and our income. Who cares if they know what our age is, of all things? Actually, I'd be really surprised if they don't already, but the point is nobody in their right mind would give a hoot.
This whole thread is becoming very loony.
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It would be outrageous if TSP automatically determined asset allocation rather than letting the individual do it.
For one thing it borders on invasion of privacy; for TSP to automatically invest one's assets would infer that TSP is looking into one's personal information (age). What gives TSP the right to do that? What will they access next? And if TSP was allowed to do it, what other agency or company would be exempted to access that private info?
The article points out that -- generally -- most people who do not make that decision for asset allocation are those who do not contribute to the plan, but receive the 1% agency contribution.That's about 250,000 peoplewho do that.
What if they did such a thing to the Social Security fund? How about if a choice wasn't given to those -- virtually everybody -- who are under that system? What if itsasset allocation was determined by the individual's age.
It would amount to something between a private account and what it is now.
That would be interesting if not also dicey since the median age would determine asset allocation of the system as a whole.
It would be extremely interesting come retirement time during bull and bear market cycles. Rather than a three legged stool -- social security, IRA, retirement check -- one better be prepared for a freaking four legged freaking chair. What the hell the fourth leg would be, hmmmmmmmm.It would benecessary during bear markets.
It would be revolutionary.
It would be outrageous if TSP automatically determined asset allocation rather than letting the individual do it.
For one thing it borders on invasion of privacy; for TSP to automatically invest one's assets would infer that TSP is looking into one's personal information (age). What gives TSP the right to do that? What will they access next? And if TSP was allowed to do it, what other agency or company would be exempted to access that private info?
The article points out that -- generally -- most people who do not make that decision for asset allocation are those who do not contribute to the plan, but receive the 1% agency contribution.That's about 250,000 peoplewho do that.
What if they did such a thing to the Social Security fund? How about if a choice wasn't given to those -- virtually everybody -- who are under that system? What if itsasset allocation was determined by the individual's age.
It would amount to something between a private account and what it is now.
That would be interesting if not also dicey since the median age would determine asset allocation of the system as a whole.
It would be extremely interesting come retirement time during bull and bear market cycles. Rather than a three legged stool -- social security, IRA, retirement check -- one better be prepared for a freaking four legged freaking chair. What the hell the fourth leg would be, hmmmmmmmm.It would benecessary during bear markets.
It would be revolutionary.
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as far as I can see it's hard to argue against encouraging diversification.
Aha, that depends on 1) your definition of asset class worth diversifying in to being just Four 2) MPT being applicable in global market where Irrational exhuberance is the norm3) alternate view that concentration rather than diversification leading to wealth ( Ask Bill Gates et al) 4) World of Finance not being the same over the next 30 years as it was when Dollar was the God's currency.5) TSP opened up to public at large(starnger things have happened) and then even index funds becoming bloated far quicker than regarded as prudent.
as far as I can see it's hard to argue against encouraging diversification.
Aha, that depends on 1) your definition of asset class worth diversifying in to being just Four 2) MPT being applicable in global market where Irrational exhuberance is the norm3) alternate view that concentration rather than diversification leading to wealth ( Ask Bill Gates et al) 4) World of Finance not being the same over the next 30 years as it was when Dollar was the God's currency.5) TSP opened up to public at large(starnger things have happened) and then even index funds becoming bloated far quicker than regarded as prudent.
bkrownd
Member
imported post
Surely you aren't trying to suggest that returns since just 8/1 are a good way to judge the L funds? (To look at it another way, those negative signs mean the shares are more of a bargain now.)
It is an interesting question whether the L fund allocation model will perform well over the next 20-30 years, or whether they'll tweak it as the times change. However, as far as I can see it's hard to argue against encouraging diversification.
Surely you aren't trying to suggest that returns since just 8/1 are a good way to judge the L funds? (To look at it another way, those negative signs mean the shares are more of a bargain now.)
It is an interesting question whether the L fund allocation model will perform well over the next 20-30 years, or whether they'll tweak it as the times change. However, as far as I can see it's hard to argue against encouraging diversification.
G
Greg
Guest
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"There is no question in my mind," Amelio said, "given the wild success with this, that at some point I would recommend the board ask Congress" to switch the default fund from G to L. :shock::%
:*:h
L-funds Return since 08/01/2005 - Date that L-funds were started as 17OCT05 COB
L2040-1.57%
L2030-1.39%
L2020-0.98%
L2010-0.47%
L-Inc0.17%
"There is no question in my mind," Amelio said, "given the wild success with this, that at some point I would recommend the board ask Congress" to switch the default fund from G to L. :shock::%
:*:hL-funds Return since 08/01/2005 - Date that L-funds were started as 17OCT05 COB
L2040-1.57%
L2030-1.39%
L2020-0.98%
L2010-0.47%
L-Inc0.17%
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