Embar Angylwrath wrote:I really can't beleive some of the ignorance on this board when it comes to economics...
Who is more ignorant? If the federal government isn't around, what's the stock market going to look like? Do you honestly believe that without a US government the stockmarket will retain 10% of it's current value?
Embar Angylwrath wrote:
Look... stocks are a measure of ownership in a company. People buy stocks expecting 1) equity growth, 2) dividends, or 3) both. If a company has a good product or service, a product or service that is salable here in the US as well as someplace else, that company (and the stock it issues) will survive a meltdown of the US economy.
Why?
Because as the stock price slides, the company becomes cheaper to own. That lowers your risk. Lowering risk is an attractive thing for an investor. Look at it this way.. if the US economy tanks, there will be a big sale on US stocks, and investors around the world will take notice. As long as the company produces a good or service that can be bought and sold, there will always be a buyer for the stock. Comprende?
No shit Dick Tracy, I didn't know that! /sarcasm
No before we get too much further let me say that because you laid the government going belly-up out there, I'm taking that, knowing it can never realistically happen.
The obvious factors you are overlooking is that without a US government the following things will happen:
1) Unemployment will sky-rocket and the unemployed will no longer be receiving any form of substantial 'welfare'. All the small companies that do business with the government can't survive working for free. Not to mention all the federal employees that will be working gratias, after all that's what going belly-up means. Not only will you have federal employees unemployed that will trickle down to the state and local level, because some (sometimes the majority) of money comes from the federal government for programs.
2) Without some for of security and regulartory, the banks will fail (more people out of work) as people, like me, will withdrawl 100% of their assets. Some will keep US standards, personally I'll add to my gold collection and buy a couple of very mean pit-bulls and some very big US Army surplus weapons. Not only will the banks collaspe, but most brokers won't be able to save themselves, because they can't divest fast enough from the plummeting stock market. (by the way, my monies will be gone from there too).
Realistically the only way that the US Government goes down is in such a matter that we've lost a war or that they've complete drained the US economy, so that the US Stockmarket won't be worth toliet paper.
That being said, the money is actually safer in the hands of the US government then in the hands of average joe. Now there are exceptions to this, there are people smart enough to get investing help or to invest wisely enough on their own. However the bulk of America is either too lazy or too stupid (sometimes it's a push) to effectively manage their own retirements, if left to their own devices. Personally it makes more sense to require monies going into SS can't be withdrawn except through disability (directly) or retirement. If we keep the government's hand out of the damn jar, the system will be fine, even with 1 or 2% growth.
) SSI is ultra-low risk, but low return.