Your opinions of the massive debt of the U.S. and WHEN that is going to affect the market?

Discussion in 'General Trading Discussion' started by User911, Feb 11, 2015.

  1. User911

    User911 Well-Known Member

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    Hi,

    I really hesitated to get into the stock market for a long time after 2008, but finally resigned myself to getting involved because there just isn't anything else that offers even marginal returns on (fairly liquid) investment. However, I feel like the massive debt that U.S. carries is a ticking time bomb and I just wonder when it's going to explode in our faces. Any opinions out there? What is your game plan if/when the cow pie hits the fan?
     
  2. My401K

    My401K Well-Known Member

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    There are other things you can invest in besides the stock market, you just have to look around. In fact I normally suggest that people should invest in more then one thing, like grandpa used to say never put all your eggs into one basket. Obviously the more you have to invest the greater your diversity can be, but we all have to start someplace right? I don't ever think of investment as being very liquid, although some investment is easier to cash in then others.

    As far as my plan if things go bad....all I can say is been there done that. Investment by it's very nature is never a sure bet, you can lose your shirt even in a good economy. Investing is speculative, I guess the best approach is don't do it if you can't afford to lose it. At this point in my life I feel things like property are better choices because even if currency changes people still have to live and work somewhere. The bottom line is there will come a day when we will lose it all anyway, so I do not let myself lose sleep over things like money. I have been broke more then once and always manage to claw back out.
     
  3. crimsonghost747

    crimsonghost747 Senior Investor

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    As long as the debt is in USD you don't have to worry about it. It's like government bonds (when they are the issuer of the currency), you won't default on it because you can always print more money. This of course will lead to problems but I would not be too worried about the debt levels. Also keep in mind that the US has loaned a lot of money to other countries, though I imagine a lot of that will never truly come back.

    Also it's crucial to geographically diversify your investments to prevent one country from destroying your portfolio.
     
  4. owesem75

    owesem75 Well-Known Member

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    I think the dollar is affecting the market in any way.. but it is not the only factor that you have to consider. Crimson is right, find your investment comfort level and diversify your investments.
     
  5. petesede

    petesede Guest

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    You have been watching too much Fox News... there is no ´massive debt´ of the USA that hasn´t always been there. The % debt to GDP is actually lower now than it has been in the last few decades. In other words.. think of it this way. If you make $500 per week and you have $5000 in debt.. that is a pretty big deal. But if you make $10,000 per week and you have that same $5000 in debt, it is not an issue. Yes, the absolute amount of our debt has been increasing, but our GDP has been growing even faster.

    If you are against the political party who is currently in power, than you say ´ OMG.. the national debt went from $5000 to $6000 last year, that is the biggest increase ever.

    And again, this talk about ´printing money´ is overblown. The amount of USD in cirrculation, and the amount of USD stored by foreign countries is huge... the amount of extra money we are printing is like spitting in the ocean. Theoretically, yes, printing more money devalues what is already out there.. but it is such a tiny amount that it doesn´t matter.

    And I would be telling you all of this no matter which party was in office.
     
  6. JR Ewing

    JR Ewing Super Moderator Staff Member

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    The $18 trillion is not something that will just go away. And when interest rates go up, it will only get worse. This is something to be concerned about. It's the kind of thing that can ruin a nation eventually. The country really needs to get a grip on spending, entitlements, etc. It won't happen anytime soon, unfortunately.

    We have $100 trillion in unfunded liabilities.

    Debt to GDP is actually way out of hand in the last few years.

    http://www.tradingeconomics.com/united-states/government-debt-to-gdp

    Some of the big increase in the debt was under Bush, of course. The failed Iraq war that almost everyone on both sides of the isle had wanted going back to the early 90's, and the increases in spending after 9-11, etc all had a heavy price, of course.

    But it's only getting worse. We're headed in the wrong direction - some don't even want to SLOW DOWN spending.

    You cannot just print and tax your way out of this forever, unless you eventually want to live in a 3rd world-ish country. We'll likely eventually see the dollar become much weaker and experience hyperinflation / stagflation.


    This has nothing to do with Fox News. The amount of people on food stamps doubling in 6 years, 50 million in poverty, the lowest labor participation rate in 35 years, social security going broke, and the ACA nightmare are very real. When this winds down eventually, I don't think it will be pretty.

    The US government should only be there to protect us from legit harm and fraud, and to help those few who cannot help themselves due to legit disabilities and such. Not to take over the country's private industries, disincentivize productivity, and take care of the population from cradle to grave. Things need to change. You cannot just ignore these things forever. Anyone who tells you otherwise should not be taken seriously at all.
     
  7. User911

    User911 Well-Known Member

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    I particularly agree with your last paragraph. The federal govt. is only supposed to be there to protect from certain things (like our enemies) it's not supposed to fund program after program after program.

    I just look at the entire process as I would a personal budget. I know that I need some type of income and I'm going to have expenses. Sometimes it is wise to borrow money especially when it comes to an investment such as a home to live in or a college education which can pay off multiple times over. I know I need to keep my expenses lower than my income and I need to try hard to save SOMETHING.

    So do I see that on the federal level? Heck no. Not only should we have much more modest debt (from a wise investment), we should have a surplus (savings) to use in case of a rainy day. You know, like if one of our enemies really threatens us and we need to spend money on a war in order to save our skin. We have NOTHING saved for a rainy day, the debt is growing every day and still our president comes up with "free college for everyone"!

    I know some states have really tried hard in the past few years to turn their budgets around, but at the federal level, it is spend, spend, spend. I have read more than one article that countries watching us are putting forth effort to back away from us financially because we are getting so irresponsible with our spending. It's not easy for them to do because we are the USD but they are right. We cannot continue to spend money like there's no tomorrow. There is a tomorrow.
     
  8. Fredrick Jones

    Fredrick Jones Well-Known Member

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    25% of US dollars are in Asian and Arab hands. In the past the US dollar was seen as a safe currency, this is because it is the currency of the IMF. The biggest problem USA faces is Russia,China and India are trying to make a competitive currency to the US dollar and are making waves in the IMF. If Asians and Arabs no longer see the US dollar as a safe place to put their money, it will cause the dollar to drop. I said drop as opposed to collapse.
     
  9. Rainman

    Rainman Senior Investor

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    Embrace optimism. Just like you'll see huge black clouds roll across the sky before there's a storm, the stock market won't crash abruptly. If you are observant, before things get to be pretty bad you'll see the signs of what's coming and bail out before disaster strikes. So debt or not debt keep trading until common sense tells you that it's time to walk away.
     
  10. Hedonologist

    Hedonologist Well-Known Member

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    I don't see there being any single big day where everything goes bang. Just over time it will start to notice gradually as the debt gets more and more unsustainable. Japan is still functioning with it's absurd debt, so the US could go on for a few more years still.
     
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