The Working Class Challenge

Reflections

I want to address some of Bill’s comments.

A recent item, passing as a joke, caught my attention; We can all agree that in 2015 not a single person got the answer correct to, “Where do you see yourself 5 years from now?”

Reflecting back, in 2008; no one would have correctly answered, “Where do you see yourself 12 years from now?”

There is nothing funny about a deadly lab-created virus, or the government bailing out corrupt banks while destroying the retirement plans of millions. Baby boomers were entering their retirement years. Bill was right, we must play by the rules, yet the government changed the rules – big time!

Right after the bailout, I attended a ROMEO (Retired Old Men Eating Out) club breakfast. We were all scared. I was fortunate. Our CDs were called in, our interest income was cut by 2/3, but we didn’t lose any money. Many retired friends, heavily invested in the market, saw their 401k balances drop in half. Some had to sell at the worst possible time, to pay their bills.

The friends who were unaffected had government pensions, including medical care. One friend, a cruise ship “frequent traveler”, reports a huge percentage of people they now meet are retired government workers. The rest of us are doing what we can to adjust to the new reality.

Since the bailout, interest rates have plummeted, with much of the world offering NEGATIVE rates. In mid-2019, QZ.com reports:

“More than $13 trillion worth of debt is paying a negative interest rate. Bloomberg’s Joe Wiesenthal caused a stir…when he tweeted that negative rates are in fact the natural order of things, arguing that assets are a store of value that provide a service. According to this thinking, it makes sense for investors to pay someone to hold their money.

In economics, “natural” is the market price that reflects risk, risk tolerance, supply, and demand. An unnatural rate suggests a distortion either from the government or a market failure.

…. Negative rates could be natural if the world has changed, and it may have.”

Natural, my butt! The government absolutely distorts free-market interest rates.

Investors historically relied on interest from CDs and quality bonds to pay their bills, without worrying about losing money

Chuck Butler recently updated the scorecard:

“There’s something like $19 Trillion in Gov’t bonds with negative yields on the global markets…. What’s a few Trillion more? And if they counted “real yield”, where you subtract inflation…then the U.S.’s stable full of Treasures would be added to the mix…. And people buy these negative-yielding bonds? Instead of getting paid for safety, you’re paying for it! What on earth are these people thinking?”

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