Soaring Government Spending “Crowds Out” Private Investment Returns
This resource goes to the heart of what drives stock valuation, and why the future may be very different indeed from the past. There is no long term rate of return in the market that can be expected to indefinitely repeat in a vacuum, independent of the economy and rest of the world.
Rather, market returns are based on growth in the private sector. One of the greatest changes in the US economy in the modern era took place in 2008/2009 - although it has received surprisingly little notice, and there has been comparatively little discussion of the profound implications for investors. The private sector plunged to an extent far greater than what is shown in the overall GDP numbers - and was replaced by the public sector in a sharp and enduring, deficit-financed substitution that changed the fundamental composition of the economy.
Because the investment models that drive conventional financial planning assume a rapidly growing private sector, this fundamental competition between the government and private investors for the limited annual growth in real resources may lead to a collapse of stock market values and conventionally invested retirement portfolios.
The ripple effects may potentially collapse most pension funds – and their government and corporate sponsors – across not only the US, but the rest of the developed world.
Bullets In The Back: How Boomers & Retirees Will Become Bailout, Stimulus & Currency War Casualties
Currency wars have their victims, much like military wars. What differs is who the victims are and what the casualty rate is. In a military war, the casualties are usually under age 25. Even in a deadly campaign, most soldiers are not victims because they are in support capacities.
The age of the casualties in a currency war is upside down compared to military war, because the worst of the damage is inflicted on those above age 50. Moreover, it is not just a few, but almost everyone who is on the front lines, and thus almost all become a casualty.
The latest financial headlines may seem arcane, with a vocabulary that is difficult to grasp, but the bottom line is unavoidable – the United States government and the Federal Reserve, in a belated defense of the fundamentals of the US economy, have effectively declared their intention to destroy the life savings of older Americans and devastate their future standard of living. It is the necessary "collateral damage" and all.
The Mythical Retirement Magic Money Machine
Is it just bad luck that your retirement investments are currently worth much less than what you had been told to expect? Something nobody could have predicted? Or were there fundamental problems all along, that were ignored by many experts?
In this article we will take an unconventional perspective on the conventional financial planning model. We will explore why the advice you were getting was fatally flawed, and why what was bad advice in the past is still bad advice today. And once we understand these flaws, then we can start to do what really matters, which is taking effective action to protect ourselves.
