Posted on 10/01/2016 7:14:52 AM PDT by LouAvul
If a politician said he thought he should tax the income from your retirement plan, right now, at 50% (no matter where you are in the retirement process, that would certainly hurt the ability of your portfolio to compound), what would you think (other than that he was completely Looney Tunes)?
But that's exactly what the Federal Reserve has done by keeping interest rates low.
It has reduced the fixed-income returns in retirement plans and the broad pension plans upon which so many people are dependent to practically nothing. And the Fed has done this to prop up asset prices.
Here’s why the Fed can’t raise rates
The Fed should have allowed rates to normalize years ago. Now, the Fed has unbalanced the financial system so badly that the markets will likely have another tantrum—no, make that a grand mal seizure—when rates start to rise.
And that means your bond funds will get killed. So will your equity funds. It’s going to be a huge disaster for retirement and pension plans. Any right-thinking person knows that.
That’s why the Yellen Fed can’t get to the point of actually normalizing interest rates. They know the reaction from the stock market is going to be truly ugly. And because they’ve pushed the heroin of ultra-low rates, they are going to be blamed for the withdrawal.
Larry Summers just went on a rant in the Washington Post. It’s instructive reading. His title is “The Fed thinks it can fight the next recession. It shouldn’t be so sure.”
(Excerpt) Read more at newsmax.com ...
>>But that’s exactly what the Federal Reserve has done by keeping interest rates low.
Our whole economy is based on easy credit. Low interest rates are all that keeps us afloat.
Well at least they’ll have the constructs for a narrative they can blame on Trump.
..... if he gets elected.
So my mom has alot of AT&T stock....almost 5% dividend/yield in her IRA. I guess Yellen wants her to have a 2.5% div. Might as well have cash/gold/bullets/toiletpaper/booze/ciggys.
You're right, but in the next debate, when Hillary tries to hold up the current economy as being great, and the previous economy as horrible, Trump ought to school her on the prolonged low interest rate fiasco that has hidden the true effects of the Obama/Clinton economic philosophy. He alluded to it in the past debate, but just didn't drive the point home. He needs to be a little more condescending (like she has no clue what high finance and economic principles even look like). The millennials will get the picture that Trump (successful entrepreneur) will be far better at the helm, than a 30 year politician that has accomplished nothing, other than enrich herself at the expense of taxpayers.
So a few million retirees run out of money to live on. As long as Goldman Sachs doesn’t suffer.
Bullsh*t
All money interest should be 0%.
“Interest” is wealth sucked off by foriegners and govt waste.
This is exactly what Trump was warning in the debate.
The bursting bubble.
Not what I hoped for but better than the 2% or so that my TSP was tied to with Federal bonds and the upside is that the market can tank and we still get the guaranteed w/o losing principle.
Because of previous market dumps, we only have about 60% or so of what we would have had without the two slumps that hurt so many of us before all the QEs and current policy made the market untenable for many of us folks ready to retire or recently retired.
We're some of the "fortunates" (those who actually tried to plan by saving as much as possible and not blowing our future with extravagances) that probably won't have to touch the IRAs until we reach the age where some distributions are required by law.
I really feel for folks caught in the "bubble" that's going on now and who kept putting off the efforts to accumulate sufficient funds to actually retire. I use Walmart and it's a bit sad to see the folks in their mid 60's or even early 70's who have to keep showing up to make ends meet.
People with assets at risk should stop complaining about what the Fed is doing and start making decisions that can minimize the damage and/or make a lot of money.
Why would anyone want to lend you money at no interest? People need a return on their investment.
The interest on the debt would destroy us if they raised them.
Cash is for spending.
PM’s are for saving.
A stretch but ok
Agreed. This would ring the young voters ... Trump should hammer home
Then why would anyone take the risk of lending any money? Your supposition is preposterous.
Then why would anyone take the risk of lending any money? Your supposition is preposterous.
Then why would anyone take the risk of lending any money? Your supposition is preposterous.
Yes, prior to the 2007-8 meltdown, we were able to live off of the interest on the investments in our 401k’s. We actually were increasing our equity in those investments because we did not need all the income that the interest on those investments were providing.
Now, after suffering a 30% loss in our 401k’s thanks to the “investment banks” who got their a$$es saved by the bailout, with current interest rates, we are now consuming our principal. In less than ten years, all of what we put away in the 401k’s will be gone, gone unless they “fvck with the system again” or the government decides to “confiscate” our 401k’s to allow it to continue to pi$$ away more of our money. We are in relatively good shape because we have other assets that we can turn into cash if the need arises, but I am sure we are not the norm for those who are retired and were counting on their 401k investments to carry them to their graves. If Trump actually revives our country, he’s going to need to go on a prison building program so he can house those financial criminals and government employees who are responsible for what has occurred.
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