From: murphy@rock.enet.dec.com ()
Subject: Re: Social Security is a Tax?
Keywords: n
Reply-To: murphy@rock.enet.dec.com ()
Organization: Digital Equipment Corporation
Distribution: usa
Date: Thu, 15 Oct 1992 20:54:17 GMT


In article <1992Oct15.155309.12966@lmpsbbs.comm.mot.com>, upp@ssd.comm.mot.com (Steve Upp) writes:
|> Newsgroups: misc.invest
|> Path: ryn.mro4.dec.com!dbased.nuo.dec.com!nntpd.lkg.dec.com!news.crl.dec.com!deccrl!caen!uunet!panther!mothost!lmpsbbs!upp
|> From: upp@ssd.comm.mot.com (Steve Upp)
|> Subject: Re: Social Security is a Tax?
|> Organization: Motorola LMPS
|> Distribution: usa
|> Date: Thu, 15 Oct 1992 15:53:09 GMT
|> Message-ID: <1992Oct15.155309.12966@lmpsbbs.comm.mot.com>
|> Keywords: n
|> References: <1992Oct15.000006.23139@gumby.dsd.trw.com>
|> Sender: news@lmpsbbs.comm.mot.com (Net News)
|> Nntp-Posting-Host: 145.1.55.196
|> Lines: 66
|> 
|> < ** soap box mode on ** >
|> 
|> Twenty years
|> have gone by and we continue to expect government to spend more than
|> we're willing to give it.  We'll get what we deserve.
|> 
|> IT IS ULTIMATELY OUR RESPONSIBILITY TO OVERSEE THE JOB DONE BY OUR
|> REPRESENTATIVES IN WASHINGTON AND WE HAVE FAILED MISERABLY
|> 
|> Since I'm posting this to misc.invest I guess I should bring up
|> something that relates directly to investments.  I have come to the
|> conclusion that government bonds are no longer a good investment.  The
|> primary reasons (tax issues aside) for purchasing government bonds is
|> their safety.  However, if you look at projections for the US
|> governments revenue and expenditures through the end of the decade it
|> is clear that there will come a point in time where there won't be
|> enough money to pay all of the interest on the debt.  Sooner or later
|> investors will realize this and the market for newly issued bonds will
|> dry up.  With the government no longer able to sell its debt it has no
|> other choice but to default.  If this happens bond holders will be
|> left with nothing....absolutely nothing....
|> 
|> If bonds crash (an understatement), stocks won't be far behind.  I'd like
|> to hear some discussion on how an investor might protect himself in the
|> coming times.
|> 
|> < ** soap box mode off ** >
|> 
|> Thanks, It always feels better when you get things off your chest.
|> 
|> ---
|> Steve Upp   	    	    	    	    	    upp@comm.mot.com
|> Motorola Land Mobile Products Sector  	            (708) 576-4953
|> 1301 E. Algonquin Road, IL02 Room 4413
|> Schaumburg, IL 60196
|> 

If the US government defaults, we are all in VERY DEEP crap.  Obligations of any
sort will be subject to default at that point, because so much money is invested
in government securities.  In the event of a government default, the first safe
hedge might be a tangible, like gold.  But not certificates, you would want
possession.  An even better idea might be canned goods, a plot of land, some
fertilizer, seed, livestock, and guns.  All bets would be off.  In this case,
accumulated wealth would mean nothing.  You have $90,000 in a federally insured
savings account?  Big deal, the government defaulted!  In some ways, I think
this has an irony to it.  Perot says we are now borrowing from our children.
Yes, and no, on the off(?) chance of collapse.  Because of low taxes, wealth
is accumulating in the upper age groups who have worked for many years.  But if
the government collapses, all of that wealth will be meaningless, and it is
the 45 and up group that are screwed as their lives works vanish in smoke.  It
is much easier to start over if you are young and strong.  But the young will
not have an easy road to hoe.  Basically, we must close the deficit and debt.
That will mean great sacrifice, and a low period of growth.  But IMO, we have
had low growth throughout the 80's because the wealth that was accumulated 
because of that "so-called" growth does not really exist, it is merely a
representation of what is owed by the government.  

Murph