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Non-Tech : Another Investment forum -- Ignore unavailable to you. Want to Upgrade?

To: Peter Dierks who wrote (58)	12/11/2006 10:34:45 AM
From: TimF	Read Replies (1) \| Respond to of 340

You can exist on debt forever, as long as the debt is at a manageable level. The question is of course is the US debt at a manageable level. I'd say it is for now, but if it keeps increasing that would change. Also "manageable" doesn't mean ideal. Debt can be something that can be handled without disaster but still be a negative thing. Many people claim it is no crisis to deficit spend because the economy is growing so fast that it can be put off forever. What happens when the economy stops growing due to, say, demographics? The economy shouldn't stop growing for a significant length of time. You will have recessions of course, and you might get longer periods of slow growth (which could be enough to make the growth less then the growth in interest on debt) but if the economy completely stops growing we'd have a problem even with no national debt. As far as the US holding its own debt, that is a sham too. the money was spent long ago. The "Social Security Trust Fund" is a sham, but a lot of ordinary treasury bonds are held by Americans. There is no asset other than more labor left to repay those bonds. Unless we are going to start selling a large amount of federal land there isn't any asset to repay any bonds. Government bonds get repaid through tax revenue. Whether they are normal bonds or part of the "trust fund". My idea is to keep a substantial portion of my assets in non dollar denominated investments. I put a quarter of my 401K in to an international stock fund, and a smaller amount in to an international bond fund. Not as much because I think the US has worse fiscal problems than most of the rest of the world, but for diversification, and also because the developing world will probably grow faster then the US.