Weighing an Investment That Promises No Risk

[Charpress]

That is why I absolutely love the new indexed products that have a generous minimum guarantee. You don't have to get into the "What-if" and "If the market does in the next 5 years what it did in 1989-1994" etc. etc. etc.

You just lay it out like it is: "If you know what the market is going to do in the next five years, then I wish you would tell me because I would like to be rich too. If you don't know where the market is going but you want some decent minimum guarantees that you can rely on regardless of market performance..."

Yeah, I tend to get gloomy about the future. But then I have calculated exactly what the national debt actually means in a common sense sort of way. To sum it up: we're so screwed.

 

[insuranceexec]

I think one important thing is overlooked in every scenario that financial planners put together based on ANY historical period before now.

Personally, I seriously doubt that the averages from any post WWII period will ever again be a model for what is going to happen in the future. Why? Because American expansion after the war was enormous. However, we have sent our industry and capacity to expand overseas. If you look at the US stock market prior to the Depression, you will see 2% as typical growth and you will see decades-long periods of no growth. That, I think, is what we are going back to.

If you buy into this argument, and every senior I discuss this with sees where I am coming from with it, then fixed annuities look damn good. Indexed annuities with generous minimum returns look better still. The tremendous debt we are taking on is going to finish us off at some point. I seriously think that if the US stays on the current track, the US will have to default on all of it's debt at some point. That means the 70% of debt that is foreign-owned will be worthless overnight.[/quote]


You are absolutely correct.

China is holding the explosive device, US CURRENCY, and waiting to detonate.

 

[Charpress]

You are absolutely correct.

China is holding the explosive device, US CURRENCY, and waiting to detonate.

It is really interesting to try and predict where the US/China co-dependency is going. They own most of our debt thanks for one thing to the trade deficit. On the other hand, if they pull the pin on the debt grenade, they are screwed on their exports which is the only thing funding their capitalist/communist system.

If China starts to have a shrinking economy, then the billions of Chinese who have taken on some high expectations over the past few years are going to be very pissed. So, they also have to worry about where that might go if the pin is pulled.

Not a good scenario no matter what happens. The only thing for sure is that things can't just rock and roll forever like they are now. Debt is debt and an accounting has to come at some point and the debt either has to be paid or there has to be a default.

I'm betting on a default.