At the end of the day, markets are about timing. If you're right at the wrong time, you're wrong. Government debt is a result of failed policies and we're suffering the debt service at an unsustainable rate. I'm absolutely on the same page w you from a terminal standpoint.

My only point in posting about what you responded to in such animated fashion is that there are always opportunities if you step back and observe.

I'm not sure we can make the right policy choices fast enough to turn things around but much like climate change, our fiscal environment has been 'years away from collapse' for decades. Somehow, in that time frame the dollar has gained strength relative to all other fiats, equity markets have climbed ever higher and standards of living have increased.

Yes, wealth disparity has increased, purchasing power has decreased, debt has exploded. Our trajectory is bad. Other countries are worse. You're 100% correct in pointing out all the dumb stuff we're spending money on but you have to get the timing right at the end of the day.

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The government pays the interest on the debt with taxes.

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Yes, but it also pays interest with global capital it has sucked in from outside of the US via Treasury purchases from foreign governments. To the same extent you correctly point out that it crowds out US private investment by gobbling up tax revenue, it does so to the entire world through their increasing need for dollars.

It's anathema to suggest we entertain his opinions, but in The Alchemy of Finance, George Soros highlights his idea of the "Imperial Circle" as it pertains to the U.S. Dollar. Interestingly enough, and maybe more palatable, he's observing the economic behavior of Ronald Reagan. Paul Volker wrote a foreword to Soros' book. Stanley Druckenmiller has talked at length about the Imperial Circle - I'm just name dropping for effect but the point is, this is a widely recognized phenomena. The Imperial Circle describes a situation we likely find ourselves in now and increasingly so moving forward - higher interest rates make US Treasuries a favorable place to park money which leads to a decline in global economic activity which makes the dollar even stronger and reinforces the effect - the circle.

This doesn't necessarily work if the rest of the world doesn't need dollars to operate - but they do. They might not forever, but they absolutely do now. The euro-dollar market dwarfs the American dollar market and there is no quick way out of that. Our monetary system predicated on debt will always end in exponential debt growth, then crash. That's a feature, not a bug. Along the way, The rest of the world is either along for the ride or must find an alternative which is not quick in the making. We'll suffer the ultimate flaw of the system, but other countries will suffer first.

US Treasury Secretary Connally said in the 1970's "The dollar is our currency, but it's your problem."

Buffet is bearish on everything. He doesn't buy green bananas or try 30 day free subscriptions to anything.

Baby Billy said:

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Kansas Kid said:

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flashplayer said:

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I am also of the mind that there probably is not any historical example for the situation we are in. Everyone's attempt to call when this musical chair game stops is probably futile.

We have been hearing a lot of people pretty fearful of an impending collapse or mini collapse, or even a slow multi-year burn back to reality. Lots of cash sitting out of the market right now, including my own, but we may end up looking like fools when it ends up taking decades to unravel instead of a few years.

Personally, I'm licking a finger and holding it in the air to see which way the wind is blowing this summer, and if not much has changed by the end of July I will probably go on a buying spree with half my cash looking to go long with conservative trailing stops and then slowly buy in with the remainder over the next year.

I have set aside a decent sum to start building up my stockpile of lead and brass reserves, all the while knowing that will not save me if we get to the point of needing it.

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No one knows when the music stops but it will at some point based on every other time a country has gotten to this level of indebtedness. I don't subscribe to the bullets and gold idea.

I believe the world will go on but it will be a very difficult time like the 30s in the US and most countries. How the world will reset is hard to say but the sun will still rise in the East. Vast sums of wealth will be destroyed and there will be a few winners but almost everyone will feel pain.

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How long have you been calling for this "reset"?
You seem like the type of person who takes all of their money out of the market when the Dow is at 30,000, tells everyone to wait for the 'reset' while the Dow climbs to 40,000-45,000, then brags about how good of a deal they got and how they told ya so when we crash back down to 30,000.

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Contrary to your thoughts, I am essentially 100% invested with no gold or some of the other disaster hedges that some people think will protect them. I think the best protection against what is coming is not holding cash. I expect to get hit but just not as bad as I would if I was sitting on cash waiting for the other shoe to drop.

Out of curiosity, do you think the US is going to be able to manage all of the current and future debt without significant pain? We have a high deficit to GDP level despite not being in a large war or during a recession.

Time and time again, we have learned that timing the market is a fools errand.

Better to dollar cost average and ride the ups and downs.

One day, there will be a market pull back. Yup. No question. With absolute certainty. (And if you can tell me the day, we will all be zillionaires).

Tex117 said:

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Time and time again, we have learned that timing the market is a fools errand.

Better to dollar cost average and ride the ups and downs.

One day, there will be a market pull back. Yup. No question. With absolute certainty. (And if you can tell me the day, we will all be zillionaires).

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Exactly. I will change my allocations based on relative values but that is far different than pulling out of the market. The only time I increase cash is if I know I will need the money for a large purchase within the next few months.