A lot more of that debt is medical-related these days rather than just people buying too much crap like it was in the '80s.

 

The healthcare industry is Hoovering money out of the rest of the economy at an alarming rate.

 

 

There is simply no doubt that people are paying medical bills, car repairs, and other unexpected expenses with their credit cards.  That's how I got into trouble in 2009 when I was laid off.  When your regular source of income disappears and you have a transmission blow and an ER visit in the same month, suddenly you're just a statistic. 

 

 

 

 

 

 

 

Goodness:

 

DOW: 24,792.20 (up to 25.45% year-to-date)

S&P: 2,690.16 (up 20.16% year-to-date)

NASDAQ: 6,994.76 (up 29.94% year-to-date)

 

Say what you will about whether or not the markets are significant indicators of the economy and to what degree (which depends on how you define the economy, I suppose), but rest assured if everything were down those percentages instead of up, there would be a lot of chaos in the job markets. And probably these boards as well.

There are quite a number of examples in the history of the stock market where double-digit returns are followed by flat or negative years:

http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

 

And 20% returns are nothing compared to some of the crazy 30% and 40% years. 

This is the “Dragon Hoard” economy. A lot of gold accumulating in hoards without much effect on the townspeople in the village below. Except when a few of them get roasted by the dragon here and there.

Goodness:

 

DOW: 24,792.20 (up to 25.45% year-to-date)

S&P: 2,690.16 (up 20.16% year-to-date)

NASDAQ: 6,994.76 (up 29.94% year-to-date)

 

Say what you will about whether or not the markets are significant indicators of the economy and to what degree (which depends on how you define the economy, I suppose), but rest assured if everything were down those percentages instead of up, there would be a lot of chaos in the job markets. And probably these boards as well.

 

This is the “Dragon Hoard” economy. A lot of gold accumulating in hoards without much effect on the townspeople in the village below. Except when a few of them get roasted by the dragon here and there.

 

Privatize the gains, socialize the losses.

More than half of the country invests in the stock market. That's a lot of 401k's and Roth Iras that people are self-funding; it isn't just the institutional investors anymore. These gains are having real impacts on people's lives.

Except 401K's are substandard retirement funds. They're very unreliable compared to the old union-won pension funds that Americans used to enjoy.

 

I won't lie to you. My investments are doing very well. But I am not the usual American. I am very lucky to have no debt and some decent investments that allow me to earn a good living. That doesn't mean I should ignore the predicaments facing most Americans. I was once in their shoes and not too long ago. The economy doesn't revolve around investors like me. It revolves around people earning $50,000 or less, with high debt from credit cards/mortgage/car loan that in total were far larger than my 401K.

This is the “Dragon Hoard” economy. A lot of gold accumulating in hoards without much effect on the townspeople in the village below. Except when a few of them get roasted by the dragon here and there.

 

There are more dragons with respectable hoards out there, even if they pale beside the even bigger dragons with hoards a thousand times larger.

 

https://www.cnbc.com/2017/03/24/a-record-number-of-americans-are-now-millionaires-new-study-shows.html

 

A record number of Americans are now millionaires, new study shows

 

As of the end of 2016, there were a record 10.8 million millionaires nationwide, according to a new study from Spectrem Group's Market Insights Report 2017. That's more than ever before and marks a 400,000 person increase from the previous year.

 

And that was before the stock market gains of this year, which have risen faster than a North Korean ballistic missile.

 

Except 401K's are substandard retirement funds. They're very unreliable compared to the old union-won pension funds that Americans used to enjoy.

 

Union pension funds weren't as secure as people thought, which is one reason the PBGC is under such strain.  They could have been secure if more sustainable benefits were promised from them, but businesses for years made habits of making defined-benefit contributions with unrealistically high and inflexible assumptions (i.e., no automatic downward adjustments to benefits paid if fund returns threatened solvency, and no mandatory contributions high enough to pay the promised benefits).

 

Granted, 401(k) plans have no mandatory contribution at all and even the typical advice of just paying enough to get the employer match (usually around 5% max) is woefully inadequate for most people to fund a decent retirement even if they have a house paid off by the time they retire (which many people don't anymore in the era of the 30-year mortgage and frequent moves).  That's compared to what is essentially a 12.4% mandatory contribution into Social Security, which is essentially a mandatory US government bond investment at this point (an awful asset class for an everyday investor, and an even more awful asset class to be nearly 100% invested in, which is what you effectively are if Social Security is your only retirement plan).  But structurally, a 401(k) or similar plan (403(b), etc.) is still generally a better retirement vehicle than most of its alternatives.  It also has the advantage of being portable and immediately vested, which is better for a workforce in which people are less likely to spend their whole careers (or even a large part of their careers) at one employer.

Except 401K's are substandard retirement funds. They're very unreliable compared to the old union-won pension funds that Americans used to enjoy.

 

I won't lie to you. My investments are doing very well. But I am not the usual American. I am very lucky to have no debt and some decent investments that allow me to earn a good living. That doesn't mean I should ignore the predicaments facing most Americans. I was once in their shoes and not too long ago. The economy doesn't revolve around investors like me. It revolves around people earning $50,000 or less, with high debt from credit cards/mortgage/car loan that in total were far larger than my 401K.

 

^you can't design the economy to take care of these people - they will always find a way to be poor.  Bad decisions, poor work ethic, self inflicted health issues from smoking/drinking/bad diet, etc

 

Design the economy to reward those who work, save, invest, educate themselves.  Show them a path to financial success.  401k's can work just fine.  Of course they aren't like a pension but that system is gone for the private sector and it' ain't coming back. 

 

As far as the "dragon hoard" economy, I couldn't disagree more.  The gains in the stock market are having real impacts in average American's lives.  Pretty much anyone with a home, a job and any sort of retirement savings have seen their wealth grow.  Older Americans who might've thought they couldn't retire may now be considering it with the gains in the stock market and housing sector.  That opens up more jobs for young people.  Talk to pretty much anyone these days from a carpenter to a baker to a computer programmer and ask if they are busy, work going well and they'll say yes.

The problem with 401Ks in general is that the vast majority of Americans aren't using them to save enough for retirement.  It's even shown that far too many cash them out switching between jobs.  Check out the interactive chart here -> http://www.fourpillarfreedom.com/visualizing-the-net-worth-of-americans-by-age/ to see what I mean.

 

The real issue will come when the 401K generations get to retirement age+ and cannot support themselves.  At that point you either let them live & die on the streets, or you subsidize their housing, healthcare, food, etc....  All that subsidy is going to require money.  Since our county is up to its eyeballs in debt (thanks Republicans) then the only way to pay for subsidies is taxing those that have saved.

We're at 401k age of retirement.  My parents are in their 60's.  Saved via 401k and other savings accounts.  Paid off their home in Ohio decades ago, sold it & they live comfortably in Florida now.  Save 10% of your salary a year, plus maybe 2-3% employer contribution, you'll be fine.  Add in Social Security payments once people reach that age, should be more than enough to keep folks from dying on the streets.

We're at 401k age of retirement.  My parents are in their 60's.  Saved via 401k and other savings accounts.  Paid off their home in Ohio decades ago, sold it & they live comfortably in Florida now.  Save 10% of your salary a year, plus maybe 2-3% employer contribution, you'll be fine.  Add in Social Security payments once people reach that age, should be more than enough to keep folks from dying on the streets.

 

Anecdotal evidence is fine for your family, but based on the actual statistics as shown in the link I provided your family is the exception and not the general rule.

And yes, we can design the economy to take care of poor people. Civilized countries all over the world are doing it every single day. Only in heartless America is it some sort of mystery.

We're at 401k age of retirement.  My parents are in their 60's.  Saved via 401k and other savings accounts.  Paid off their home in Ohio decades ago, sold it & they live comfortably in Florida now.  Save 10% of your salary a year, plus maybe 2-3% employer contribution, you'll be fine.  Add in Social Security payments once people reach that age, should be more than enough to keep folks from dying on the streets.

 

Anecdotal evidence is fine for your family, but based on the actual statistics as shown in the link I provided your family is the exception and not the general rule.

 

Personal responsibility cannot be ignored in any financial plan.  People make bad decisions every day and look to the government to provide for them.  And America has the wealthiest "poor" people in the world.  Go to Mexico.  Or Asia.  Or South America.  See people living in literal dirt huts.  Then talk about heartless America where we provide air conditioning, cable tv, etc

I'm just saying that it'd be one thing if these "irresponsible" people were a small-ish portion of the population.  When it's nearly 3/4 of all your citizens you have to ask yourself if it's the system itself that has to be fixed.

I'm just saying that it'd be one thing if these "irresponsible" people were a small-ish portion of the population.  When it's nearly 3/4 of all your citizens you have to ask yourself if it's the system itself that has to be fixed.

 

We have social security.  Cleveland is one of the poorest cities in America.  I've done work in public housing for last decade.  Never saw anyone dying in the streets.

I'm just saying that it'd be one thing if these "irresponsible" people were a small-ish portion of the population.  When it's nearly 3/4 of all your citizens you have to ask yourself if it's the system itself that has to be fixed.

 

We have social security.  Cleveland is one of the poorest cities in America.  I've done work in public housing for last decade.  Never saw anyone dying in the streets.

 

True, but Republicans are looking to cut Social Security and Medicare on top of ballooning the National Debt.  Eventually, with the ever growing wealth gap it will mean the money will have to come from somewhere to support the increasingly large portion of Americans that are poor.

I'm just saying that it'd be one thing if these "irresponsible" people were a small-ish portion of the population.  When it's nearly 3/4 of all your citizens you have to ask yourself if it's the system itself that has to be fixed.

 

We have social security.  Cleveland is one of the poorest cities in America.  I've done work in public housing for last decade.  Never saw anyone dying in the streets.

 

I guess because you've never seen it, it doesn't happen.

 

http://www.cleveland.com/metro/index.ssf/2017/12/no_apparent_signs_of_foul_play.html

The real issue will come when the 401K generations get to retirement age+ and cannot support themselves.  At that point you either let them live & die on the streets, or you subsidize their housing, healthcare, food, etc....  All that subsidy is going to require money.  Since our county is up to its eyeballs in debt (thanks Republicans) then the only way to pay for subsidies is taxing those that have saved.

 

That's what happened when the last major defined-benefit pension generation got to retirement age, too--many of the employers had gone bankrupt and the pension funds were not solvent without additional infusions from employers who no longer exist or without government support (which is again where the PBGC comes in).

 

As gottaplan said, we still have Social Security, at least for the moment.  I think we're eventually going to have to have a capital stock tax to keep that system solvent, too, without increasing the payroll tax (effectively taxing the capital improvements in automation that have resulted in lower payrolls than would have otherwise been the case), and that will obviously be a major political point of contention where some people will be arguing to just convert SS into a paygo system and let the benefits fall where they will.

 

I actually suspect that in another generation, we'll have a universal basic income.  People will make bad decisions with that, too, of course, but it will be at least another thin layer onto the safety net, and could grow larger from there depending on the performance of the overall economy, including the gains from automation and other capital improvements.

No matter what happens, other people are always going to spend money in ways you don't like.

http://highline.huffingtonpost.com/articles/en/poor-millennials/

 

A lot of my friends are freaking out (relatively) over this article.

 

(Perhaps this belongs more in the personal finance thread)

http://highline.huffingtonpost.com/articles/en/poor-millennials/

 

A lot of my friends are freaking out (relatively) over this article.

 

Are they having seizures when they try to view it?

http://highline.huffingtonpost.com/articles/en/poor-millennials/

 

A lot of my friends are freaking out (relatively) over this article.

 

Are they having seizures when they try to view it?

 

It's popup book style...you know...to cater to their short attention spa....oh look, a bird.

 

I guess because you've never seen it, it doesn't happen.

 

http://www.cleveland.com/metro/index.ssf/2017/12/no_apparent_signs_of_foul_play.html

 

Most of my conservative friends don't believe things exist when they have not personally experienced them. They cannot place themselves in the shoes of others and, using an open mind and empathy, experience at least a little bit of what others experience. Sometimes bad things happen to good people, and in this country it can take them a lifetime to recover from it. Some never do.

To your point KJP[/member]... I believe that Cleveland families face poverty and malnutrition each and every day. This issue needs to be confronted, period. We don't have an inequality problem in Cleveland, because 35% of our population is equally poor. We have an upward mobility problem. You and I would certainly agree that we want these people to have steady income and better schools for their children, we just have fundamentally different ways to get there.

 

And, as an aside, I am a Conservative that believes those things exist.

I don't think you and I are too different on our ways of getting there. I'm a fiscal conservative but a social liberal. I believe in investing in people to save money in the long run. We spend the tax money regardless -- whether it's in schools or prisons, public transportation or public assistance, foreign aid or military stockpiles, sustainable energy subsidies or fossil fuel subsidies. I just happen to favor the former in each of those choices because I believe them to be more humane.

We don't change the oil regularly then we blame the engine for locking up.

I'm a little late to this party (topic) but as for the booming stock market...to me this one has all the makings of a bubble. I've been investing in stocks heavily since the early 90's. Experienced the dotcom boom and bust, the bubble in the early 2000's and the Great Recession. In that time I have made AND LOST a lot of money. Times SEEM great at the moment and while I still think this market has another 4-5 months of running room I would be seriously considering taking profits now. Better too soon than too late.

 

Greed kills people. The market has been on a major roll since 2010. History tells us it won't last.

I don't think you and I are too different on our ways of getting there. I'm a fiscal conservative but a social liberal. I believe in investing in people to save money in the long run. We spend the tax money regardless -- whether it's in schools or prisons, public transportation or public assistance, foreign aid or military stockpiles, sustainable energy subsidies or fossil fuel subsidies. I just happen to favor the former in each of those choices because I believe them to be more humane.

 

Well stated, although the conservative side would prefer to eliminate "public" everything. 

I'm a little late to this party (topic) but as for the booming stock market...to me this one has all the makings of a bubble. I've been investing in stocks heavily since the early 90's. Experienced the dotcom boom and bust, the bubble in the early 2000's and the Great Recession. In that time I have made AND LOST a lot of money. Times SEEM great at the moment and while I still think this market has another 4-5 months of running room I would be seriously considering taking profits now. Better too soon than too late.

 

Greed kills people. The market has been on a major roll since 2010. History tells us it won't last.

 

I've also been investing for a similar period. As much as I hate the new federal tax bill, it might keep the stock markets inflated for a little while longer, perhaps into 2019. But that only means the crash will be that much deeper when the air does go out of this market.

Greed kills people. The market has been on a major roll since 2010. History tells us it won't last.

 

The crash ("correction") is coming.  It's just a question of when, and how Trump will blame Obama for it....::)

We forget history...

 

https://www.theatlantic.com/business/archive/2012/09/tax-cuts-dont-lead-to-economic-growth-a-new-65-year-study-finds/262438/

 

https://www.washingtonpost.com/news/posteverything/wp/2017/09/28/i-helped-create-the-gop-tax-myth-trump-is-wrong-tax-cuts-dont-equal-growth

 

and are destined to repeat it.  Pay down your debts, a recession is coming.

^you can't design the economy to take care of these people - they will always find a way to be poor.  Bad decisions, poor work ethic, self inflicted health issues from smoking/drinking/bad diet, etc

 

This struck a chord with me.  I would never deny there are people who simply make poor financial decisions and suffer for it.  However, there are systemic issues within our country that exacerbate the effects of these poor decisions, particularly for already poor Americans.

 

1) We're the only developed country in the world where you can go bankrupt due to a medical emergency.  That is embarrassing. 

 

2) Plenty of Americans at every income level make terrible financial decisions, but the most important factor that determines whether it will cripple you for your entire life is nearly always the genetic lottery.  Jared Kushner, for example, might be the worst real estate investor in the entire World and will lose truckloads of money on 666 5th Avenue.  But he'll be just fine won't he?  This has nothing to do with his work ethic, intelligence, diet, or anything else other than the family that he was born into and the one that he married into.

 

3) The fact that many people make poor financial decisions is all the more reason to make sure social security is solvent for the long term.  SS is the sole source of retirement income for about 20% of people 65 and older and we think it's a good idea to let them gamble with that money instead of providing them with a guaranteed income source in retirement?  I'll never understand that argument.  I make plenty of money, fully fund my Roth IRA and very nearly fully fund my 401k annually and I still love having SS and my company pension because they diversify my retirement portfolio.  They provide peace of mind because I know there's a backstop, or safety net... if you will.  We should be expanding the safety net, not removing it.  This aint Cirque Du Soleil!

The gains in the stock market are having real impacts in average American's lives. 

 

https://www.bloomberg.com/news/articles/2017-12-19/trump-asks-how-s-your-401-k-but-most-voters-don-t-have-one

 

Only 1/3 of working adults have a 401k.

 

Only 14% of American families own stocks.

^ 14% directly own stocks. When you factor in 401ks, the number of Americans who own stocks is around 52% according to Gallop - and we're actually at a pretty low point as many people never got back into the market after the recession.

 

So it's safe to say that gains in the stock market directly benefit most Americans. The 48% that aren't invested benefit indirectly, and honestly should be encouraged to invest again.

 

 

 

 

^ 14% directly own stocks. When you factor in 401ks, the number of Americans who own stocks is around 52% according to Gallop - and we're actually at a pretty low point as many people never got back into the market after the recession.

 

So it's safe to say that gains in the stock market directly benefit most Americans. The 48% that aren't invested benefit indirectly, and honestly should be encouraged to invest again.

 

 

Thank you.  And the growing stock market is enabling many of retirement age to consider leaving the workforce which opens up more jobs and wage growth to young people.  So even if you aren't an investor, many are still seeing benefits.

The 48% that aren't invested benefit indirectly, and honestly should be encouraged to invest again.

 

Invest what?  Half the country is barely scraping by.  Any worthwhile advisor would tell those people to build a few months of savings before playing the market, and that might take years.

^ 14% directly own stocks. When you factor in 401ks, the number of Americans who own stocks is around 52% according to Gallop - and we're actually at a pretty low point as many people never got back into the market after the recession.

 

So it's safe to say that gains in the stock market directly benefit most Americans. The 48% that aren't invested benefit indirectly, and honestly should be encouraged to invest again.

 

 

Thank you.  And the growing stock market is enabling many of retirement age to consider leaving the workforce which opens up more jobs and wage growth to young people.  So even if you aren't an investor, many are still seeing benefits.

 

The problem with this is that one reason the stock market has been growing at such a clip is because job and wage growth have not been particularly robust.  The stock market profits greatly from productivity gains without job ad wage growth.  If you could make a company that does everything Costco does with only 10 people making $50k each, that would absolutely be a stock worth investing in regardless of the lack of jobs and wages there.  This is one reason tech stock valuations are so high (though they do definitely face wage growth pressures)--their workforces are often surprisingly small compared to their revenue.

Low taxes, and especially low capital gains taxes, encourage speculation of all kinds.  Real estate, stocks, bitcoin, etc.  If speculative endeavors were taxed at 50%, people would rarely do them, and would instead concentrate on long-term investing.  So collecting dividends and collecting rent and collecting interest on investment-grade bonds. 

 

Again, the only reason stocks are so popular in retirement accounts right now is because interest rates are very low.  Once rates tick over 5% we'll see a lot of people pull back on their 401k stock/bond balance and stocks will stop growing so quickly. 

Low taxes, and especially low capital gains taxes, encourage speculation of all kinds.  Real estate, stocks, bitcoin, etc.  If speculative endeavors were taxed at 50%, people would rarely do them, and would instead concentrate on long-term investing.  So collecting dividends and collecting rent and collecting interest on investment-grade bonds. 

 

Again, the only reason stocks are so popular in retirement accounts right now is because interest rates are very low.  Once rates tick over 5% we'll see a lot of people pull back on their 401k stock/bond balance and stocks will stop growing so quickly. 

 

^and the economy will slow down because people won't be able to finance as much in home purchases or cars, etc

Now that the Republicans have passed their tax reform bill, I think we will see a boost in the stock market and the economy of the next several years. However, it will be because of the tax break that goes to individuals, who will now have more disposable income, not the tax cuts for corporations. Unfortunately, those tax cuts are (1.) temporary, expiring in a few years; and (2.) financed by adding $1.5 trillion to the national debt. No economist with any credibility believes the tax cuts will "pay for themselves" by generating enough economic activity to make up for the $1.5 trillion increase in the national debt.

People still bought lots of cars during the late '70s and early '80s when interest rates were in the double digits. All these guys that buy a new $60K bigass truck that they don't need every 3 years aren't fazed by a 1.5% interest rate increase. The car companies only care about them anyway.

No economist with any credibility believes the tax cuts will "pay for themselves" by generating enough economic activity to make up for the $1.5 trillion increase in the national debt.

 

Those same economists said 3% GDP growth was impossible. Yet here we are.

If the tax cuts will pay for themselves, why stop at $1.5 trillion? Why not add $5 trillion to the national debt in order to give an even bigger tax cut? Our economy would take off like a rocket!

If the tax cuts will pay for themselves, why stop at $1.5 trillion? Why not add $5 trillion to the national debt in order to give an even bigger tax cut? Our economy would take off like a rocket!

 

They're not going to pay for themselves... Congress will get entitlement reform done by March, and that will be where the cost is picked up.

 

Personally, I think any tax cut that isn't budget neutral at least is wrong. Especially from deficit hawks. But entitlement reform is going to be next.... followed by an infrastructure bill that will spend trillions so it won't matter.

 

 

 

Additionally, you just provided my argument against raising the minimum wage.

^ Yabo with all do respect creating a 1.5T hole in the budget makes entitlement reform more difficult.  I don't understand the line of thinking that huge tax cuts will make the deficit easier to control.  Perhaps I misunderstood your point.

 

 

Additionally, you just provided my argument against raising the minimum wage.

 

So you don't believe the poorest workers among us should AT LEAST keep up with the pace of inflation?

Since all of these companies just got a big tax cut, there should be no argument against raising the minimum wage. 

They're not going to pay for themselves... Congress will get entitlement reform done by March, and that will be where the cost is picked up.

 

Personally, I think any tax cut that isn't budget neutral at least is wrong. Especially from deficit hawks. But entitlement reform is going to be next.... followed by an infrastructure bill that will spend trillions so it won't matter.

 

https://www.nationalpriorities.org/budget-basics/federal-budget-101/spending/

 

So rather than reduce our $600 billion we spend on the military annually - which is more than the next 5 countries on Earth combined - we're going to scrimp and save on the $1.28 trillion we spend on Social Security, Unemployment, and Labor? Note that we have separate taxes for Social Security and Medicare, and an Unemployment tax.  Or are we going to cut from the ~$1 trillion spent on Medicare and Healthcare?

We've got to subsidize the share prices of defense contractors or else the terrorists win