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Mr. Luddite[_4_]

On 1/13/2018 1:11 PM, wrote:
On Sat, 13 Jan 2018 07:02:02 -0500, "Mr. Luddite"
wrote:

On 1/12/2018 8:12 PM, wrote:

I could argue either side of that. You do have a ****load of Gen Exers
and Millennials chucking money into the market with their 401ks and
that tends to support the bull but I still have a hard time ignoring
the debt problem and the lack of real growth.
We already borrow all of the money to run the government beyond
entitlements and interest on the debt. What happens when revenue does
not even cover that? The Fed already monetized $4.5T of our debt by
buying unsold bonds. When will the world figure out our debt is a bad
bet and stop renewing their bonds? Things will happen fast then.
I know US "paper" is supposed to be the safest thing in the world but
so was real estate ... until it wasn't.
I was the one on these yacking boards who said real estate was
cruising for a fall but I was 10-15 years early. I did not believe the
elasticity of the financial markets to absorb that much bad debt. When
it finally popped it was much worse than I predicted tho because it
brought down the banking industry with it, not just the real estate
market. I did not really understand the effect of the derivatives.
This situation is worse than that.
If the federal debt bubble pops the 30s will look like a bump in the
road. It could take down "money" as we know it.

Debt as it relates to global economics is a transparent, phony concept
period. There's no underlying standard or base to it. Debt is only
real to common people tied to the banking systems via mortgages, credit
cards or loans and the penalties for defaulting are governed only within
the rules of the banking systems.

Global (national) debt doesn't mean a thing. To be concerned with it
assumes you think a "note" is going to be called and it is going to be
repaid someday by someone. It isn't. It's factored into global trade
and international finance. To think it is like a bank loan that has a
maturity date tied to it isn't real. A maturity date doesn't exist.
If there aren't enough revenues to pay the phony interest, the
government just prints more money.

The problem is the interest we pay on a lot of that debt is real
(private holders, foreign governments and now, SS/MC recipients) and
there is a limit to how much money the government can just "print"
before runaway inflation gobbles us all up. To start with the interest
on the short term paper the government has to sell over to cover that
interest will skyrocket, making the problem worse. This was the basis
of a lot of Perot's "charts and graphs" that insured we would never
have another viable 3d party candidate. Nobody wants to tell the
emperor he has no clothes.

You are really starting to sound like those people denying that there
was ever a problem with housing. "I mean, who doesn't pay their
mortgage" or so it was explained.

Not me on the housing thing. I don't profess that I understood it all
but I felt there was a major crash coming as early as 2002. We had
purchased two houses in Florida and the annual appreciation at that time
was about 23% in the Jupiter area. A guy I met down there was big time
into flipping houses and tried several times to get me to join in with
him buying and selling. No way, Jose'.

We did ok on the two houses we had when we sold them but the warning
signs were becoming clear. We got out in the nick of time.

But, going back to the national "debt". I remember when Reagan came
along and starting reversing the economically timid policies of Jimmy
Carter (who still increased the national debt by 43% over his four year
term). Reagan took a lot of heat for "spending our way to prosperity"
and significantly increased the national debt. Well, that was almost 40
years ago. We're still here and the sky hasn't fallen. I remember
talking to a money guy during the Reagan expansion and I recited the
standard "national debt" concern that many had at the time. He just
shook his head and said, "It only matters if it ends and you have to pay
the piper. It's not going to end ... there's no bill to pay ... it's
all artificial".

In fact, the last POTUS who actually *reduced* the national debt was
Calvin Coolidge in FY's 1924-1929. Shortly thereafter the stock market
crashed and we were in a deep depression.