Posted By RichC on October 2, 2013
In my pile of books, I’m reading one co-authored by Robert Wiedemer called “Aftershock Investor” and he is anticipating, after he accurately pinpointed the housing bubble, that we are nearing two additional bubbles. First, he highlights the dollar bubble as the Fed’s “quantitative easing” continues … followed by the government debt bubble as at the current pace finding lenders will soon become impossible. Seeing that we’re figuratively printing dollars as fast as the presses can run, it is puzzling to me that more economists aren’t concerned.
We’ve only printed about $800 billion in the last 100 years. We’re going to print more than that next year. So, literally 100 years of printing next year.” LINK
While Rome burns this week, the debt continues to climb with no end to government spending in sight. No matter how you slice it, one of these days servicing our national debt is going to take all the tax revenues raised in this country just to pay the interest – although the bubble will surely pop before we get to that point. Who in their right mind will continue to buy our bonds?
The next question that crosses my mind, noting that nearly half our citizens relies on government subsistence is, “are we preparing for this?”
Obviously those in charge in Washington DC aren’t making any headway, be it in raising revenue, growing our way out of the debt or cutting overhead in order to not add any more to the deficit each year. In fact, we are actually adding more and now with underfunded Obamacare health care program rolling out, one can only imagine how much that will eventually add? It is difficult for me to see how we are planning to get a handle on our spending addiction without a very rude wake up call.
As age inches up on me, I’m giving more thought to how I and my generation is preparing for the day we won’t be working? It is coming … maybe not at the magic 65 years old, but eventually health is going to take a toll even if we want to keep working. It is concerning to see the retirement savings numbers compared to where they should be for most Americans … but even if we are saving and are able to depend on social security (questionable) … will the dollar or investment be able to keep up its end of our planning?
For those who do save for their retirement, the statistics aren’t that promising. The conservative pension fund managers use to count on the 7% per year returns for pensioners. For a decade now those funds are far short of what they need to grow and private IRAs and 401-Ks far less stable.
With savings falling short for older Americans, the tendency is to keep whatever they are accumulating in vehicles which have a much higher risk … stocks, equity mutual funds, etc. Older boomers and seniors that I know are hoping to earn enough from growth to offset their savings when they traditionally would have or should have moved to fixed income assets for capital preservation. It is very risky IF Mr. Wiedemer’s prediction comes true … and may be just as risky for even those with a longer period to recover. At the minimum, I fear a market correction is coming even if the upcoming debt ceiling drama is averted … and that’s being optimistic!