Deflation does worry me. Being quite young, the US national debt is a of course a concern because of the risk that the effect of compounding on the debt really gets going when the boomers are no longer productive, but rather are drawing social security. Plus of course the risk that congress spends potential budget surpluses rather than retiring debt. Anyway, that was not particularly well written, but I could imagine a world where boomers on fixed incomes twenty years from now have portfolios made up of US bonds, making 6% and with inflation at zero, (or in a deflationary environment) they are all really happy with their 6%. But myself and the rest of the xers by that time are being taxed severely to pay their ss benefits.
And then I can also imagine a world twenty years from now, where another couple billion of the worlds population are enjoying a civilized existence, making ten or twenty times more than the $500 1997 dollars a year they make now, the worlds economy is booming, and very few countries carry huge debts. Real rates of return on boomers retirements are therefore not high...and because they've all been terrified of getting back into equities, they all still work, he he.
Between now and then what will inflate, what will deflate, where is value now and what will be valuable in twenty years? I am so glad I have twenty years to figure this out before I am the age the boomers are now...but I fear it will take me all of that twenty years to learn and understand world ecomomics, on even a very basic level. Hmm, maybe I should buy some more education! Sorry to rant, it is certainly all very interesing and I guess we Americans should really just count our blessings that we live so well, it must be very hard to be in a developing country where everything must look quite screwed up right now. |
