131–140 of 693 posts
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Oh no! Boomers will lose 401(k) value! The horror!
A big chunk of those boomers have almost nothing. The only thing they'll have to look forward to is poverty.
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It’s even worse - if the Fed actions tank the markets, then millions of retirees who have been enjoying high market values are screwed and have no other source of wealth or income. I do not envy the position the Fed is in.
It's rough. On the one hand, retirees bring nothing of real value to the economy. We serve them because of the obligations they built up over their working careers. But, they get the focus of attention because a) they have all the money, b) they have all the time to be engaged in politics, and c) they vote. But they're purely an extractive cost center. A kind of economic parasite that keeps getting bigger and bigger…
Not true. If retirees have money, that's money they got paid for doing actual contribution. If you devalue that money that's devaluing their life's work and contributions.
Not an advocate for crypto etc, but it feels wrong that a bunch of folks like Powell etc get to decide the fate of whole generation's peaceful retirement.
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You think retirees are keeping all their savings in cash in their mattresses or something?
The point is, the things that make the economy work and grow is the production of things. Regardless of how many investments a retired person has, they by definition do not produce things.
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It’s even worse - if the Fed actions tank the markets, then millions of retirees who have been enjoying high market values are screwed and have no other source of wealth or income. I do not envy the position the Fed is in.
This is always the case though, there are always retired people. They have raised rates and damaged market values in past. Its a decision they are comfortable taking. Plus, at least current US retirees have social security, which may not last another 20+ years in current form (unfortunately for people paying in today).
However, it would be prudent to assume that the social security benefits will have less and less purchasing power (since each USD will have less and less purchasing power), and the government will not increase the amount of the benefits sufficiently to offset the decrease in purchasing power.
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Yes, because it increases the money supply. We are supposed to tighten when things are good by raising rates. At this point they need to raise rates to pull money out of the system. Because with covid, not only did we cut rates, we put in a HUGE amount of money and that was really irresponsible. And now we are seeing the repercussions with inflation lowering the value of the dollar.
We should recall that not only did the US cut rates and spend a lot of money through the covid recession, when things were bad, it ignored that first bit of advice before Covid when things were good (it's hard to remember now how hot the economy was in 2016-2019, but it was really hot), by cutting taxes and continuing to print money and keep the rates low to cover it. As the tax cut detractors correctly predicted, th…
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In particular a bursting of the housing bubble that has been reinflated (and then some) since the last time it popped in '08.
There's no evidence at all for this. The exotic mortgage products (e.g. reverse ARMs) have essentially disappeared, people's homes are well capitalized, lending standards are much higher than they were, there's very low levels of home equity debt, overall debt payments as a percent of household income are at very low levels. The people waiting for a housing crash are going to wait a long time. This one chart sums it…
Plus while reverse amortization might be less common, ARMs generally are still very popular and you'll see a hike in overall debt service associated with rising interest rates.
I don't know what's gonna happen with the housing market and I don't think it'll crash either but I think part of the reason is because private equity has bought a huge amount of housing - BlackRock bought what, 10-15% of the houses sold in 2020?
Conceptually the answer in the theory is to suck up the excess money with taxes, which of course is not going to fly in the US. But maybe this inflation will make that more viable in the future: "Ms. Kelton and her colleagues make clear that the pandemic relief packages did not follow one of M.M.T.’s key tenets — they did not try to account for resource constraints ahead of time. In an M.M.T. world, the Congressional Budget Office would have carefully analyzed possible inflation ahead of time, and lawmakers would have tried to offset any strain on available workers and widgets with stabilizing measures and tax increases."
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Probably not. Estate taxes are low
Estate taxes don't exist for 99.7% of people. A married couple can exempt the first $24M of their estate from any Federal taxes. https://www.kiplinger.com/taxes/601639/estate-tax-exemption-... Mind you, this also avoids a ton of tax that would otherwise be due had they not died via the step-up in basis... it's a massive giveaway to the rich. https://www.investopedia.com/terms/s/stepupinbasis.asp
Which supports the claim that they are low, and, consequently that young people (who often stand to inherit from their elderly relatives) have a stake in the investments of old people not getting wiped out.
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Oh no! Boomers will lose 401(k) value! The horror!
What a horrific ageist and bigoted comment. This literally could mean the difference between living independently or not for a lot of people. Not to mention everybody working today with a 401k as their retirement plan will lose value no matter their age, which means they have to work longer than planned. This is a real life impact to a lot of people.
Retirees who are fortunate enough to have substantial retirement assets should take precautions against risk. If they haven’t then that’s their problem. I’m retiring in 30 years, my retirement accounts are all stocks. If I was 65 I’d have my 401(k) heavily in bonds and fixed income.
Anything else is just greed.