Ponder this, please:
Ponder this, please:
(OP)
All things being equal, let's assume that Globalization continues. Many macroeconomists view this as the great "leveling of the playing field", in the sense that America will experience dramatic wealth deflation to a level around the average of the rest of the world.
This means wages will go down. So too will the cost of living, but not at the same proportion as wages will. Deflation is a mother.
So vision an America, maybe 15 years from now, where all of us are working in the new "adjusted" economy, making less money and buying less stuff.
My question: What happens to those people, who upon reaching retirement age need to sell stock for retirement funds? Those people have expected that their portfolio will be worth x% more at retirement age than when they initally invested. If Americans at large are making less money, who in the world will be there to purchase the stock at an inflated price required by the sellers?
Please correct me here, but it looks as if the stock market is a futile place to invest for retirement. Foreign investment in this country won't last forever. Those investment dollars will move to other countries where wealth is being inflated, not deflated.
*http://www.imf.org/external/pubs/ft/def/2003/eng/043003.htm*
I would really like to read your thoughts on the matter.
This means wages will go down. So too will the cost of living, but not at the same proportion as wages will. Deflation is a mother.
So vision an America, maybe 15 years from now, where all of us are working in the new "adjusted" economy, making less money and buying less stuff.
My question: What happens to those people, who upon reaching retirement age need to sell stock for retirement funds? Those people have expected that their portfolio will be worth x% more at retirement age than when they initally invested. If Americans at large are making less money, who in the world will be there to purchase the stock at an inflated price required by the sellers?
Please correct me here, but it looks as if the stock market is a futile place to invest for retirement. Foreign investment in this country won't last forever. Those investment dollars will move to other countries where wealth is being inflated, not deflated.
*http://www.imf.org/external/pubs/ft/def/2003/eng/043003.htm*
I would really like to read your thoughts on the matter.





RE: Ponder this, please:
Have no fear, American arrogance works in our favor, that's why we allow it to happen. We will not allow ourselves to be less than number 1 in world power. (Now before I get flamed, there is a reasonable observation as to why I say these things, but the full explanation is much too long and would still leave confusion unless spoken in person. I can try to elaborate to those who request it, but please don't flame me for these remarks.)
--Scott
For some pleasure reading, the Round Table recommends FAQ731-376
RE: Ponder this, please:
I heartily agree with rhodie -- I predicted 10 years ago that the middle class in the US will eventually disappear as those with money continue to tear apart the living standard we used to have... (they continue to be adversely affected by their greed)
RE: Ponder this, please:
RE: Ponder this, please:
Without something like a 8-15% compounded return, you'll never be able to save enough to live off of. For those of us who're going to get screwed out of SS, there's going to be a huge problem.
All that said, it seems like the multinational corporations will continue to be profitable because they are creating new markets as they create new wealth in the 3rd world. So, there should be some big companies that at least pay dividends to their stockholders.
I don't think they'll be able to sustain the stock prices as they are. Of course, I'm *still* in the market because I'm forced to gamble on a high return, just in case.
Rhodie, I think I'm going to stop reading your threads!
RE: Ponder this, please:
I know exactly how you feel. I get so engrossed in the problems of the state of the world, I periodically just shut everything down and ignore any new information. But then, I start thinking about the stuff I've already learned/read, and it festers in my brain and I end up thinking about it anyway.
I'd venture to reason:
Rule No. 1: Ignorance IS bliss!
Rule No. 2: Permanent bliss is unattainable. (viscerally or physically)
Therefore: Permanent Ignorance is unattainable.
I'd really not like to think so pessimistically, but I really can't help it.
All of your comments on the above topic are appreciated.
------------------------------
swertel:
Also, the US has shifted industries many times in the past.
But never like this. A "shift" never displaced 4 million jobs in five years. (That rate is quickening, too.)
Industry had better come up with another cash cow quick!
We've never been tasked to weather anything resembling the scope of this problem before.
We will not allow ourselves to be less than number 1 in world power.
That echoes the attitude of ancient Rome many centuries ago.
RE: Ponder this, please:
Also, many companys are now multinationals already. This means that their current value will only go up as the rest of the thrid-world and second-world become consumers of their products.
i.e. spread out investment now if you truley believe this globalization will happen.
RE: Ponder this, please:
Stock is only worth what people are willing to pay for it.
If people are unwilling or unable to pay for your retirement portfolio, then all you own is an asset in an extremely unliquid form.
RE: Ponder this, please:
A miniature example of the process of globalization that you're describing might be a comparison of Germany before, during and after reunification. Would you agree?
I don't know to much about how the reunification went except that the West Germans disliked (fiscally) the immediate results. But in the end havn't all the boats risen?
A more extreme example might be when and if N & S Korea merge. There would definetly be a period of adjustment for the S Koreans.