No fucking comment. Is Liz related to Art?

not manufacturing with exports. Not with exporting raw goods.

Remember after 9-11, Shrub fecklessly implored Americans to go shopping? He was trying to "save" the economy that was challenged after a national disaster.

Sure!
You spend more on the essentials, so you give up on the non-essentials. Just trying to keep afloat, not dip into anything you have saved up.
Non-essentials like clothing, white goods, eating out, that coffee-on-the-run, lusting after a new(er) car, going places, birthday presents, etc.
Put those off to later.

One good thing may be that a new generation learns how to cook at home, and how to pick the best value in vegetables and meat.
(HINT: Seasonal veg, chicken.)
Spices are important - we had homemade Thai red curry, vegetarian, with rice tonight. Double batch made, half frozen for a future meal.
Yes, me, a male of 75 years young cooked it, even did the dishes afterwards!

Back to basics - not such a bad thing.

Economists say though . . . we is gonna be ruined! 'Serious blow'? Not really. Stuff them!

AND THE CHORUS SINGS: give us more money and watch us spend it all!

Input and output, a financial concept some economists don't seem to understand.

We became used to COVID largesse, and that's drying up. We are laden with debt. In the 1970s that was not the case. Many people didn't even have credit cards at the time, or their credit limits were in aggregate about $2000. House prices were nominal by today's measures.

...with their hard-earnd money is such a bad thing.

Sure, there will be less profit and capital gains on corporate stocks held by a very few already excessively wealthy people who would probably take that money out of the economy and hoard it overseas, but, so what?

The last thing we want is for lack of spending to affect the stock market. Yes I know it’s evil, but it holds many people’s retirement portfolios. A lot of workers have 401K’s. A lot of states have their retirement funds in the stock market for teachers, firefighters and state employees. It’d be devastating to see their retirement savings wiped out.

So I got that going for me

...but in the meantime, people being more responsible with the money they control, by spending less, is a good thing.

This was a study I did, a few weeks ago -- for the 3 year period ending April 9:

VFIAX, the Vanguard S&P 500 fund gained 12.9% (total return, including reinvested dividends) when adjusted for inflation. So that's positive, but not much for 3 years.

VCOBX, a Vanguard intermediate term core bond fund that I have is down in nominal dollars (again, with reinvested dividends). And when adjusted for inflation, is down 21.8%.

The stream of income from my fixed income annuity is down 17.9% in purchasing power

I doubt the numbers would be much different if repeated today except VFIAX would be somewhat better while the bond fund would be equally dismal. But here are the links I used
https://www.morningstar.com/funds/xnas/vfiax/chart
https://www.morningstar.com/funds/xnas/vcobx/chart
CPI: https://data.bls.gov/timeseries/CUSR0000SA0

This is from something I wrote about a year ago (all figures are average annualized returns).

What really matters as far as risk is the risk of running out of money in retirement in the face of withdrawals and inflation, and that risk is much higher for people who don't have any equities and only rely on "safe" fixed income investments, which don't even keep up with inflation.

Numerous simulations reported in the American Association of Individual Investors (AAII) Journal and elsewhere have shown that mixed equity-bond portfolios with a high concentration of equities (around 80%) does best in the face of withdrawals and inflation (a typical study is with a 4%/year withdrawal rate in the beginning and the dollar amount withdrawn increasing with inflation. But there are tons of simulations with varying assumptions). IOW its a bigger gamble not to be in the market. I don't wish to take that gamble. I don't wish the pension funds and insurance companies I rely on taking that gamble either.

Nothing holds up as well in the face of withdrawals and inflation than does equities, except perhaps real estate. In other words, it's an even bigger gamble to not have a sizable proportion in equities.



Over the past 20 years, it has grown 6.3710 fold, an average annual increase of 9.7%/year

Over the past 50 years, it has grown 131 fold, an average annual increase of 10.2%/year

and so on.

This is from the below link, which has the S&P 500 total return since the start of 1928. It also has similar for bonds, Treasury bills, and gold. These don't come close to matching the increase in equities.
http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html

I'm using the broad-based S&P 500 as a proxy for U.S. stocks overall. The S&P 500 is about 80-85% of the total U.S. stock market capitalization. The remainder -- midcaps and smallcaps -- have had an even better overall record. I use the S&P 500 because data about it going way back is easier to find than total U.S. stock market.

The above table is through the end of 2022, a very bad year for the stock market. If I updated it through the end of 2023, it would be even better (the S&P 500 had a total return of 26.1% in 2023).

I guess the concern about a failing economy breaking people's retirement plans is wrong then, the post I replied to on that topic, which was the start of this subthread is here:

https://democraticunderground.com/?com=view_post&forum=1116&pid=98072

Well, no, a failing economy will break many retirement plans, whether invested in equities, bonds, or even no retirement savings at all -- in the latter case with families less able to support their elders financially, and state and local governments cutting back on benefits.

Edited to add: And for shorter time periods, like for a few years, relying on all equities is dangerous. Myself, as an old person, I have a 60-40 allocation of equities to bonds and other fixed income. (Not counting my annuity in that, if I did it would be maybe 50-50).

My attitude would be different (less in favor of equities) if my nest egg was smaller and likely to last only a few years.

...group retirement plan funds should be put into the safest possible situation, and unless I'm mistaken, that isn't the stock market.

thanks to the vastly superior long run growth of equities. (I'm speaking of a broadly diversified equity portfolio or a very broad based fund like an S&P 500 index fund; a few individual stocks is very risky) But then I've read innumerable studies over the decades on the subject.   Post#20 should convince just about everyone.

In the https://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/histretSP.html
link, the next best performing asset, corporate bonds, reached a total of $45,546 at the end of 2022, compared to $624,317 for the S&P 500.

$624,317 would meet my retirement needs for a lot longer than $45,546.

But we're a diverse group.

either way he has to be worried. As I wrote in #17, my bond fund is down 21.8% in 3 years in purchasing power.

I think you are missing the part about IN THE FACE OF WITHDRAWALS AND INFLATION, and IN THE LONG RUN. Like the odds are very good that an equity portfolio will last longer than a fixed income portfolio over 20 years or more years IN THE FACE OF WITHDRAWALS AND INFLATION, according to historic experience and simulations that include withdrawals.

Yes, I get it, if one doesn't need the money and so doesn't have to withdraw any, then yes, money under a mattress or a money market account or CD will never go down in nominal value (although in purchasing power it will almost certainly, according to historical experience), whereas a stock fund has some risk of going down in the both the short run (high) and the long run - it can happen.

If one needs to make withdrawals of a few percent a year of the original amount, with the withdrawal amount growing with inflation, then the story is very different about which one is far more likely to last longer

Anyway, if you and the poster want to put your money in bond funds or CDs or money market accounts or whatever, you can. The economy depends on both kinds of investments.

I've never heard of a 401k, and certainly not an IRA that forces people to put their money in stocks. They all offer fixed income alternatives -- at least I've never heard of an exception.

Edited to add: As for union pension and state retirement funds and the like, yup, their equity part could suffer quite a haircut and periodically do. And we don't have personal choices in that. But these are long run investments, which, historically have done much better than fixed income investments, so I'm all for these funds having a sizable equity allocation. Even if $624,000 got cut by 57% as happened in the worst stock market pullback since WWII (housing bubble burst of 2007-2009), it would TEMPORARILY be cut down to $268,000 -- still far more value than the $45,000 bond investment (referring to post#25)..

The myth that we are all benefiting from a system that measures economic success by stock price increases is destroying the planet and not helping the average person.

The median 401k for people nearing retirement - 51-64 year-olds is 70,000. That isn't going to fund your retirement at all, (2800 per year at 4% withdrawal annually) but heck it might help pay off the last of your student loan balance. Meanwhile that same cohort's median net worth is $364,500, so basically their equity in their home plus their paltry 401k (minus the student debt of course.)

The myth helps perpetuate a system that is entirely dependent on consumption based growth. And guess what, we have to stop growing because that system is destroying the fucking planet.

One of the great scams of all time was developing the private retirement fund schemes. Suddenly, everybody was in stocks, man, and we all had to do whatever was necessary to boost the market.

As you correctly point out: The amount of money the average person has in the market is trivial.

But, as you can see from this thread, there are plenty of people who will tell you that we've gotta keep the market propped up.

I’m old enough to remember a very different society. I’m now just filled with dismay and hopelessness. Aside from catastrophic collapse I don’t know how we dig ourselves out.

go for such high prices and sell out everywhere, there's hope for the US economy

I'm buying nothing I don't absolutely need. My car insurance us up 20% with no accidents or claims ever.

Many people are realizing we can't have a roaring economy all the time. Booms are followed by busts. It's better to have little booms and little busts. Remember what happened in 2008 when the hot housing market suddenly went down. Biden understands this and he sticks with basic Keynesian economic principles as much as he can. This is one of many scary things about Trump. He makes money through illegal and unethical means, and he understands nothing about economics.

While there was a little retail boomlet after Covid lockdown ended, it was only to satisfy a year of pent up demand. Reality has now set in and I don't see many people buying more than food these days.

This what happens when a nation's wealth is shoveled to a small bunch of rich guys while wages don't go up.

I don't know why anyone would be surprised that the rest of us aren't able to go shopping.