Why the Stock Market will continue to fall…

[Mean Reversion]

I believe your theory has validity but I have more certainty in another theory: that the government will attempt to inflate us out of this mess.

That is why I want to own a home ASAP (within reason). And why I wouldn’t be surprised to see the stock market priced higher and higher in years to come.

Sure, if you price the stock market in gold or Euros, then the stock market has been pathetic. But nominally, it looks like it has held up because of asset inflation. Thanks to the government printing money at a pace never before seen.

Ironically, the government can’t can’t let the stock market or housing prices drop in price too drastically exactly because of the reason you stated. Baby boomers are depending on their homes and their stock market 401k assets for retirement.

In essence, the government can outprint and outpace the upcoming 401k withdrawals.

[Deal Hunter]

I wouldn’t worry too much about falling stock market value/volume due to people tapping into 401K’s to pay bills. That’s not something that will translate immediately into stock prices because people are really only borrowing on the value of the stocks in their retirement accounts rather than actually selling the stocks in them.

I’d start worrying when these savers turn 70 1/2 and are forced by law to start withdrawing income. THEN they will HAVE to sell stocks to get their annuized incomes. That’s when stock values will start to go down. There will be more people withdrawing from stocks than will be buying into them (due to the larger retired vs. working population).

Nothing to worry about this year. In 9 years, however….

[Deal Hunter]

I wouldn’t worry too much about falling stock market value/volume due to people tapping into 401K’s to pay bills. That’s not something that will translate immediately into stock prices because people are really only borrowing on the value of the stocks in their retirement accounts rather than actually selling the stocks in them.

I’d start worrying when these savers turn 70 1/2 and are forced by law to start withdrawing income. THEN they will HAVE to sell stocks to get their annuized incomes. That’s when stock values will start to go down. There will be more people withdrawing from stocks than will be buying into them (due to the larger retired vs. working population).

Nothing to worry about this year. In 9 years, however….

[Deal Hunter]

I wouldn’t worry too much about falling stock market value/volume due to people tapping into 401K’s to pay bills. That’s not something that will translate immediately into stock prices because people are really only borrowing on the value of the stocks in their retirement accounts rather than actually selling the stocks in them.

I’d start worrying when these savers turn 70 1/2 and are forced by law to start withdrawing income. THEN they will HAVE to sell stocks to get their annuized incomes. That’s when stock values will start to go down. There will be more people withdrawing from stocks than will be buying into them (due to the larger retired vs. working population).

Nothing to worry about this year. In 9 years, however….

[Deal Hunter]

I wouldn’t worry too much about falling stock market value/volume due to people tapping into 401K’s to pay bills. That’s not something that will translate immediately into stock prices because people are really only borrowing on the value of the stocks in their retirement accounts rather than actually selling the stocks in them.

I’d start worrying when these savers turn 70 1/2 and are forced by law to start withdrawing income. THEN they will HAVE to sell stocks to get their annuized incomes. That’s when stock values will start to go down. There will be more people withdrawing from stocks than will be buying into them (due to the larger retired vs. working population).

Nothing to worry about this year. In 9 years, however….

[Deal Hunter]

I wouldn’t worry too much about falling stock market value/volume due to people tapping into 401K’s to pay bills. That’s not something that will translate immediately into stock prices because people are really only borrowing on the value of the stocks in their retirement accounts rather than actually selling the stocks in them.

I’d start worrying when these savers turn 70 1/2 and are forced by law to start withdrawing income. THEN they will HAVE to sell stocks to get their annuized incomes. That’s when stock values will start to go down. There will be more people withdrawing from stocks than will be buying into them (due to the larger retired vs. working population).

Nothing to worry about this year. In 9 years, however….

[Sandi Egan]

Mean,

I agree that the govt is trying to outprint the deflation. I don’t think that’s possible, though: if they print enough to stop the deflation, the people will not be able to buy food with their current incomes. There is just to much debt to cover, IMO.
And boomers – with their fixed incomes – will be hit the most by the inflationary policy.

Either way, I don’t believe it’s possible to escape debt. One way or another it will be paid in full. The question is, who is going to pay it.

[Sandi Egan]

Mean,

I agree that the govt is trying to outprint the deflation. I don’t think that’s possible, though: if they print enough to stop the deflation, the people will not be able to buy food with their current incomes. There is just to much debt to cover, IMO.
And boomers – with their fixed incomes – will be hit the most by the inflationary policy.

Either way, I don’t believe it’s possible to escape debt. One way or another it will be paid in full. The question is, who is going to pay it.

[Sandi Egan]

Mean,

I agree that the govt is trying to outprint the deflation. I don’t think that’s possible, though: if they print enough to stop the deflation, the people will not be able to buy food with their current incomes. There is just to much debt to cover, IMO.
And boomers – with their fixed incomes – will be hit the most by the inflationary policy.

Either way, I don’t believe it’s possible to escape debt. One way or another it will be paid in full. The question is, who is going to pay it.

[Sandi Egan]

Mean,

I agree that the govt is trying to outprint the deflation. I don’t think that’s possible, though: if they print enough to stop the deflation, the people will not be able to buy food with their current incomes. There is just to much debt to cover, IMO.
And boomers – with their fixed incomes – will be hit the most by the inflationary policy.

Either way, I don’t believe it’s possible to escape debt. One way or another it will be paid in full. The question is, who is going to pay it.

[Sandi Egan]

Mean,

I agree that the govt is trying to outprint the deflation. I don’t think that’s possible, though: if they print enough to stop the deflation, the people will not be able to buy food with their current incomes. There is just to much debt to cover, IMO.
And boomers – with their fixed incomes – will be hit the most by the inflationary policy.

Either way, I don’t believe it’s possible to escape debt. One way or another it will be paid in full. The question is, who is going to pay it.

[Deal Hunter]

"Either way, I don't believe it's possible to escape debt. One way or another it will be paid in full. The question is, who is going to pay it."

Technically, there is a way to escape debt.  In 1929, the government stepped in and paid it off for everyone.  That is going to be harder to accomplish in this century, but debt forgiveness has already been done.

Step 1: Our retirement accounts have forgiven the big banks.  Wall street "wrote down" massive amounts of investment value due to subprime derivatives and institutional investors that bought those derivatives were forced to take smaller yields or in some cases, no yields at all.

Step 2: Secondary markets will have to write down even more mortgage debt in order to return purchasing power back to consumers.  Consumption is the heartbeat of our economy.  If debtors don't forgive debts (or upside down mortgages), then whatever little cash consumers get will go toward paying down debt rather than spending it back into the economy.

Step 3: Tax reform will facilitate debt forgiveness.  Banks and mortgage companies will cut homeowners' debts to fall more in line with the market value of homes – thereby returning equity to the homeowner and encouraging consumption again – all in hopes of revitializing the economy.

So, technically, we ALL escape today's debt.  The homeowners, the banks and insurers will be relieved of their obligations by being able to write it all off on taxes.

The problem is that all that debt is reallly just being pushed off to our children – for when they reach working age and take on the tax burden we create today upon their shoulders in the future. 

 

 

[Deal Hunter]

"Either way, I don't believe it's possible to escape debt. One way or another it will be paid in full. The question is, who is going to pay it."

Technically, there is a way to escape debt.  In 1929, the government stepped in and paid it off for everyone.  That is going to be harder to accomplish in this century, but debt forgiveness has already been done.

Step 1: Our retirement accounts have forgiven the big banks.  Wall street "wrote down" massive amounts of investment value due to subprime derivatives and institutional investors that bought those derivatives were forced to take smaller yields or in some cases, no yields at all.

Step 2: Secondary markets will have to write down even more mortgage debt in order to return purchasing power back to consumers.  Consumption is the heartbeat of our economy.  If debtors don't forgive debts (or upside down mortgages), then whatever little cash consumers get will go toward paying down debt rather than spending it back into the economy.

Step 3: Tax reform will facilitate debt forgiveness.  Banks and mortgage companies will cut homeowners' debts to fall more in line with the market value of homes – thereby returning equity to the homeowner and encouraging consumption again – all in hopes of revitializing the economy.

So, technically, we ALL escape today's debt.  The homeowners, the banks and insurers will be relieved of their obligations by being able to write it all off on taxes.

The problem is that all that debt is reallly just being pushed off to our children – for when they reach working age and take on the tax burden we create today upon their shoulders in the future. 

 

 

[Deal Hunter]

"Either way, I don't believe it's possible to escape debt. One way or another it will be paid in full. The question is, who is going to pay it."

Technically, there is a way to escape debt.  In 1929, the government stepped in and paid it off for everyone.  That is going to be harder to accomplish in this century, but debt forgiveness has already been done.

Step 1: Our retirement accounts have forgiven the big banks.  Wall street "wrote down" massive amounts of investment value due to subprime derivatives and institutional investors that bought those derivatives were forced to take smaller yields or in some cases, no yields at all.

Step 2: Secondary markets will have to write down even more mortgage debt in order to return purchasing power back to consumers.  Consumption is the heartbeat of our economy.  If debtors don't forgive debts (or upside down mortgages), then whatever little cash consumers get will go toward paying down debt rather than spending it back into the economy.

Step 3: Tax reform will facilitate debt forgiveness.  Banks and mortgage companies will cut homeowners' debts to fall more in line with the market value of homes – thereby returning equity to the homeowner and encouraging consumption again – all in hopes of revitializing the economy.

So, technically, we ALL escape today's debt.  The homeowners, the banks and insurers will be relieved of their obligations by being able to write it all off on taxes.

The problem is that all that debt is reallly just being pushed off to our children – for when they reach working age and take on the tax burden we create today upon their shoulders in the future. 

 

 

[Deal Hunter]

"Either way, I don't believe it's possible to escape debt. One way or another it will be paid in full. The question is, who is going to pay it."

Technically, there is a way to escape debt.  In 1929, the government stepped in and paid it off for everyone.  That is going to be harder to accomplish in this century, but debt forgiveness has already been done.

Step 1: Our retirement accounts have forgiven the big banks.  Wall street "wrote down" massive amounts of investment value due to subprime derivatives and institutional investors that bought those derivatives were forced to take smaller yields or in some cases, no yields at all.

Step 2: Secondary markets will have to write down even more mortgage debt in order to return purchasing power back to consumers.  Consumption is the heartbeat of our economy.  If debtors don't forgive debts (or upside down mortgages), then whatever little cash consumers get will go toward paying down debt rather than spending it back into the economy.

Step 3: Tax reform will facilitate debt forgiveness.  Banks and mortgage companies will cut homeowners' debts to fall more in line with the market value of homes – thereby returning equity to the homeowner and encouraging consumption again – all in hopes of revitializing the economy.

So, technically, we ALL escape today's debt.  The homeowners, the banks and insurers will be relieved of their obligations by being able to write it all off on taxes.

The problem is that all that debt is reallly just being pushed off to our children – for when they reach working age and take on the tax burden we create today upon their shoulders in the future. 

 

 

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