I’m including political risk as a nontraditional retirement risk in this presentation, because in addition to economic volatility, we live in a time of political volatility, dysfunctional government, and massive government overreaching and overspending.
I truly believe that we have political risks that effect economics and effect your future, and while we can’t do very much about it, we should be aware.
First, when talking about inflation, most people point the US monetary base as a leading indicator of future inflationary forces.
Indeed since the financial crisis of 2008 we have seen a massive increase in the monetary base meaning via amount of dollars in the system.
This is a political choice to print money with abandon, and it produces not only inflation, but overall instability and geopolitical currency weakness.
However, dollars in the system and dollars in circulation are different.
Here we see the velocity of money, which means how often a dollar is turned over and is a good measure of economic activity.
Even though we have a vast new amounts of dollars available, very few dollars are in circulation and those dollars are in circulation are plummeting.
A lower velocity of money is a deflationary force and reflects deleveraging, and debts being paid off.
One of the debts not being paid off, however, is the federal debt. It is increasing at such astronomical rates it is almost impossible to visualize. Over 15 Trillion by some standards…
But possibly many time more than that by other accounting standards.
Truthinaccounting.org is a spectacular website that highlights REAL accounting.
So while official numbers is $15 T of debt, they estimate the total of unfunded liabilities such as medicare, Medicaid, social security, and states funding is a more astronomical $76 Trillion
This is just too hard to believe-
Political Risks In Retirement
Political risk is the elephant in the room- how do you manage the risk of an out of control Government on a print-and-spend monetary binge?
Summary of Political Risks
- Unemployment and Underemployment Is High
- Federal Debts Are Massive And Out Of Control
- Money Printed With Abandon
- Monetary Base Exploding
- Us Government On Edge Of Fiscal Cliff…
Solutions To Political Risks:
- You Can’t Control External Threats…
- But You Can Take Personal Responsibility…
- Don’t Depend Solely On Social Security
- YES! Buy Your Own Private Pension Annuity