Looking Forward To Dow 11,000

Even for us, however, there is another advantage. In the Dow 11,000 world, the bankruptcy of social security, currently expected in 2033, probably will not occur. Social security and other pension schemes have been growing steadily more unsound since 1995 and especially since 2008 because productivity growth in the economy has been so much below par. However, in the Dow 11,000 world, capital will be properly allocated and productivity growth will return to its healthy normal level. There will be additional economic growth beyond what is currently expected, and Social Security and indeed Medicare systems will become steadily more solvent. The Social Security bankruptcy date of 2033 will recede further, into the mists of the distant future. Since Federal revenues will also be higher than expected, budget deficits will also decline, returning the U.S. fisc to its healthy state of the 1990s. So even us old folk whose retirement savings pots are damaged can take heart: social security will remain there for us, so long as we live.

The world of Dow 11,000 involves some short-term pain, but in the long run, we will all be better off. So above all, let us not allow Congress, this or a new President or the Fed to ruin it by re-distorting an economy that has been distorted by silly interest rates for far too long.

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(The Bear's Lair is a weekly column that is intended to appear each Monday, an appropriately gloomy day of the week. Its rationale is that the proportion of "sell" recommendations put ...

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