So When (and how) Will We Pay the Piper?

US Government debt, at approximately $237 Trillion is estimated to have ballooned $20 Trillion in 2017. Unless the tax relief act leads to a tremendous jump in US productivity and GDP growth (and taxes paid into the US Treasury), the only option I see is devaluation of the US dollar. I don’t see the US ever admitting to the need to overtly default on our debt.

Roughly one in five conventional mortgages are owed by families paying 45% or more of their income on debt payments. This percentage of people paying this percentage of their income on debt is the highest it has been since just before the housing crisis in 2006-2007. It seems that we do not learn.

Subprime car loans have hit record highs in the last 12 months. The number of people delinquent 90 days or more on their car payments is at an all-time high.

The demographic wave of people retiring or being forced into much lower paying jobs is rolling toward us. These people are selling homes and downsizing. They are reducing their investment risks by reducing their stock investments.

Yet US stocks (the S&P 500) are just 7% or so below the all time highs they hit in January 2018.

When (and how) will we pay the piper?

I don’t know, but I’m glad our automated asset allocation methodology has reduced stocks, increased TIPs (Treasury Inflation Protected Securities) and increased Gold.



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