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Very Hot Topic (More than 25 Replies) Why the market/economy isn't crashing (Read 481 times)
kaz
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Re: Why the market/economy isn't crashing
Reply #10 - Jan 11th, 2020 at 1:16pm
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Jeff wrote on Jan 11th, 2020 at 12:56pm:
Corporate debt is at an all time high


This is a symptom, not the disease.  It's an appropriate response to interest rates. 

Here's a link you won't read and if you do you won't understand it.  But basically it's logical for corporations to carry more debt when interest rates are lower because debt is cheaper than equity

https://www.investopedia.com/terms/o/optimal-capital-structure.asp

  

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kaz
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Re: Why the market/economy isn't crashing
Reply #11 - Jan 11th, 2020 at 1:18pm
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Jeff wrote on Jan 11th, 2020 at 12:56pm:
To top it all off, real GDP growth has been negative since 2005


You're an idiot.  This is absurd.  You certainly confirmed my bias against taking economic and financial advice from hillbillies
  

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SkyChief
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Re: Why the market/economy isn't crashing
Reply #12 - Jan 11th, 2020 at 1:29pm
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kaz wrote on Jan 11th, 2020 at 1:10pm:
This is absurd.  You realize that 10% real inflation would mean that either you doubled your salary in the last 7 years (with compounding) or you can buy half the stuff.

We can buy only half the stuff.

10 years ago, a weeks worth of groceries (for us)  was $65 - $70.  Now the same stuff costs $120 - $130.

Maybe that's not 10%, but it sure is a lot more than 2.5%, which is what we're led to believe.
  

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Re: Why the market/economy isn't crashing
Reply #13 - Jan 11th, 2020 at 1:39pm
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SkyChief wrote on Jan 11th, 2020 at 1:29pm:
We can buy only half the stuff.

10 years ago, a weeks worth of groceries (for us)  was $65 - $70.  Now the same stuff costs $120 - $130.

Maybe that's not 10%, but it sure is a lot more than 2.5%, which is what we're led to believe.


Groceries are certainly expensive and I think it took longer to increase that much than 10 years.  However, I used your numbers and that would be 6% inflation, way short of 10%.  Remember increases compound.

Also, electronics are way cheaper than they were and other items haven't increased that much.

Are you seriously saying you have half the money you did 10 years ago?  Your mortgage, insurance, car, gas and other expenses are also twice as much?  I seriously doubt that. 

I'd put real inflation in the 3-4% range based on buying power.  I still doubt someone getting 3-4% income bump a year for 10 years really has no more buying power
  

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SkyChief
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Re: Why the market/economy isn't crashing
Reply #14 - Jan 11th, 2020 at 1:51pm
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kaz wrote on Jan 11th, 2020 at 1:39pm:
Are you seriously saying you have half the money you did 10 years ago?  Your mortgage, insurance, car, gas and other expenses are also twice as much?  I seriously doubt that. 

We're both on fixed incomes, so we have the same amount of money that we had 10 years ago. It just buys half as much as it did back then.   Cry

Our mortgage is the same, but all other expenses have gone up.

Except haircuts.  A haircut was $18 in 2010, it's only $20 today.
  

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kaz
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Re: Why the market/economy isn't crashing
Reply #15 - Jan 11th, 2020 at 2:14pm
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SkyChief wrote on Jan 11th, 2020 at 1:51pm:
We're both on fixed incomes, so we have the same amount of money that we had 10 years ago. It just buys half as much as it did back then.   Cry

Our mortgage is the same, but all other expenses have gone up.

Except haircuts.  A haircut was $18 in 2010, it's only $20 today.


I'm not arguing inflation doesn't exist.  But it didn't double in 10 years much less the 7 Jeff claimed when he said real inflation is 10% a year.

You can't seriously believe you can only buy half what you could 10 years ago.

I agree though that it's tough living on a fixed income.  I'm not doubting that.  It's just the proportion that I disagree with
  

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kaz
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Re: Why the market/economy isn't crashing
Reply #16 - Jan 11th, 2020 at 2:24pm
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SkyChief wrote on Jan 11th, 2020 at 1:51pm:
We're both on fixed incomes, so we have the same amount of money that we had 10 years ago. It just buys half as much as it did back then


Hey Chief.  A question.  I thought you said your tax bill went up by about $6,000 despite the Trump tax cuts.

My back of the envelope calculation making a lot of assumptions would be that means your household income is roughly $140-$150K.   With a home you've owned for more than 10 years, that should be enough to live even in California.  Am I off with that?
  

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SkyChief
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Re: Why the market/economy isn't crashing
Reply #17 - Jan 11th, 2020 at 2:42pm
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kaz wrote on Jan 11th, 2020 at 2:24pm:
Hey Chief.  A question.  I thought you said your tax bill went up by about $6,000 despite the Trump tax cuts.

Yes, our taxes went up.  There are factors that I won't get into here, so I'm not blaming Trump for the hike in our taxes. 

Fortunately, our combined Social Security income *almost* offsets our Federal Income Tax liability - not quite, but it's close.

kaz wrote on Jan 11th, 2020 at 2:24pm:
My back of the envelope calculation making a lot of assumptions would be that means your household income is roughly $140-$150K. 
  I WISH!   Grin  Grin

  

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kaz
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Re: Why the market/economy isn't crashing
Reply #18 - Jan 11th, 2020 at 2:53pm
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SkyChief wrote on Jan 11th, 2020 at 2:42pm:
Yes, our taxes went up.  There are factors that I won't get into here, so I'm not blaming Trump for the hike in our taxes. 

Fortunately, our combined Social Security income *almost* offsets our Federal Income Tax liability - not quite, but it's close.

  I WISH!   Grin  Grin



You said there are a lot of other factors.  I assumed the $6K was all due to the tax cut.  Also that I remembered that you said it was $6K correctly.  So yeah, I could be way off if things changed beyond the State Income tax cap.

You seem to also be giving contradictory information.  If your combined social security were really "almost" offsetting your Federal taxes, your household income would be a lot more than $150K
  

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SkyChief
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Re: Why the market/economy isn't crashing
Reply #19 - Jan 11th, 2020 at 3:29pm
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kaz wrote on Jan 11th, 2020 at 2:53pm:
You said there are a lot of other factors.  I assumed the $6K was all due to the tax cut.  Also that I remembered that you said it was $6K correctly.  So yeah, I could be way off if things changed beyond the State Income tax cap.

You seem to also be giving contradictory information.  If your combined social security were really "almost" offsetting your Federal taxes, your household income would be a lot more than $150K

Hypothetically, if we earned roughly $95k per year, we would owe roughly $30k in taxes.  If we made $28k in social security benefits, it would roughly almost offset our $30k tax liability.  Roughly.

Hypothetically, of course.  Wink
  

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