Viability of HBPP with perpetually low interest rate Fed

General Discussion on the Permanent Portfolio Strategy

Moderator: Global Moderator

User avatar
moda0306
Executive Member
Executive Member
Posts: 8142
Joined: Mon Oct 25, 2010 9:05 pm
Location: Minnesota

Re: Viability of HBPP with perpetually low interest rate Fed

Post by moda0306 » Fri Mar 01, 2019 8:31 am

stuper1 wrote:
Sun Feb 24, 2019 11:45 pm
boglerdude wrote:
Sun Feb 24, 2019 11:39 pm
> we still have the highest interest rates of any advanced economy

Population growth is the easy money. When people stop wanting to move to the US, the party's over
That's why I refer to our economy as a Ponzi scheme. It all depends on the rate of growth not slowing down, which needs more consumers.
That's not a ponzi scheme. That's capitalism. But I agree with your overall assessment. The system isn't designed to just produce what it did last year. It has to continuously expand lest it will collapse.
jacksonM
Executive Member
Executive Member
Posts: 306
Joined: Wed Sep 26, 2018 1:59 pm

Re: Viability of HBPP with perpetually low interest rate Fed

Post by jacksonM » Fri Mar 01, 2019 2:14 pm

moda0306 wrote:
Fri Mar 01, 2019 8:31 am
stuper1 wrote:
Sun Feb 24, 2019 11:45 pm
boglerdude wrote:
Sun Feb 24, 2019 11:39 pm
> we still have the highest interest rates of any advanced economy

Population growth is the easy money. When people stop wanting to move to the US, the party's over
That's why I refer to our economy as a Ponzi scheme. It all depends on the rate of growth not slowing down, which needs more consumers.
That's not a ponzi scheme. That's capitalism. But I agree with your overall assessment. The system isn't designed to just produce what it did last year. It has to continuously expand lest it will collapse.
I don't think the capitalist system was actually "designed". It's the product of evolution.
stuper1
Executive Member
Executive Member
Posts: 740
Joined: Sun Mar 03, 2013 7:18 pm

Re: Viability of HBPP with perpetually low interest rate Fed

Post by stuper1 » Fri Mar 01, 2019 2:34 pm

moda0306 wrote:
Fri Mar 01, 2019 8:31 am
stuper1 wrote:
Sun Feb 24, 2019 11:45 pm
boglerdude wrote:
Sun Feb 24, 2019 11:39 pm
> we still have the highest interest rates of any advanced economy

Population growth is the easy money. When people stop wanting to move to the US, the party's over
That's why I refer to our economy as a Ponzi scheme. It all depends on the rate of growth not slowing down, which needs more consumers.
That's not a ponzi scheme. That's capitalism. But I agree with your overall assessment. The system isn't designed to just produce what it did last year. It has to continuously expand lest it will collapse.
Well then I have some questions and maybe need to learn more. It sounds to me like maybe capitalism is a ponzi scheme. How about a place like Japan, which admittedly I know next to nothing about. Does Japan have a capitalist economy? I looked up some statistics for them. Their immigration rate is about 17% of ours. Over the last 30 years, their GNP has increased by about 50% and the US's has increased by about 130%. So, compared to Japan, we have six times the number of immigrants per year, and we are getting 2.5 times the amount of GNP growth. Is this a good tradeoff for us? I personally doubt it. I think our immigration rate is too high to allow good assimilation of the newcomers. Who is profiting mainly from our extra GNP growth? Is it middle class people or people who are already very rich? Maybe we would be better off if our ponzi version was a bit less aggressive.
pmward
Executive Member
Executive Member
Posts: 343
Joined: Thu Jan 24, 2019 4:39 pm

Re: Viability of HBPP with perpetually low interest rate Fed

Post by pmward » Fri Mar 01, 2019 3:01 pm

stuper1 wrote:
Fri Mar 01, 2019 2:34 pm
I think our immigration rate is too high to allow good assimilation of the newcomers.
Actually, the opposite. If you look at the research, immigrants are much more likely to become millionaires than native born Americans. We natural born Americans take our country and what it offers for granted.
User avatar
Kriegsspiel
Executive Member
Executive Member
Posts: 1531
Joined: Sun Sep 16, 2012 5:28 pm

Re: Viability of HBPP with perpetually low interest rate Fed

Post by Kriegsspiel » Fri Mar 01, 2019 3:14 pm

stuper1 and moda, it seems that you're both hinting at Ricardo's law of diminishing marginal returns? IE, adding more workers while other inputs remain static results in diminishing increases in output.
Only a few prefer liberty-- the majority seek nothing more than fair masters.
- Gaius Sallustius Crispus
User avatar
Kriegsspiel
Executive Member
Executive Member
Posts: 1531
Joined: Sun Sep 16, 2012 5:28 pm

Re: Viability of HBPP with perpetually low interest rate Fed

Post by Kriegsspiel » Fri Mar 01, 2019 3:20 pm

pmward wrote:
Fri Mar 01, 2019 3:01 pm
stuper1 wrote:
Fri Mar 01, 2019 2:34 pm
I think our immigration rate is too high to allow good assimilation of the newcomers.
Actually, the opposite. If you look at the research, immigrants are much more likely to become millionaires than native born Americans. We natural born Americans take our country and what it offers for granted.
Doesn't seem relevant to stuper1's point though. (Cultural) assimilation is independent of financial status. You could argue something like "so what? Let (foreign immigrant from X) keep their culture as long as they contribute to America's GDP." But I think that's what stuper1 (correct me if I'm wrong) is arguing is a undesirable goal insofar as maintaining a cohesive country.
Only a few prefer liberty-- the majority seek nothing more than fair masters.
- Gaius Sallustius Crispus
User avatar
Smith1776
Full Member
Full Member
Posts: 66
Joined: Fri Apr 21, 2017 6:01 pm

Re: Viability of HBPP with perpetually low interest rate Fed

Post by Smith1776 » Mon Mar 04, 2019 1:30 pm

It seems to me that the PP is still as relevant as ever, even in a low interest rate environment.

Those low interest rates are putting the hurt on other, more traditional portfolios, as well. >:D
User avatar
blue_ruin17
Senior Member
Senior Member
Posts: 108
Joined: Sat Aug 13, 2016 11:16 pm
Location: New Brunswick, Canada

Re: Viability of HBPP with perpetually low interest rate Fed

Post by blue_ruin17 » Sat Apr 06, 2019 10:33 am

I am less concerned with the viability of HBPP in the context of perpetually low interest rates than I am interested in HBPP's ability to survive the consequences of "perpetually" low interest rates.

In this regard, I am unconcerned.
"Like a confident pack, a confident portfolio provides both strength in fact, as well as — and this is the part I bet you’re missing right now and the focus of this note — strength in spirit."
User avatar
Mike59
Full Member
Full Member
Posts: 76
Joined: Mon Dec 08, 2014 4:07 pm

Re: Viability of HBPP with perpetually low interest rate Fed

Post by Mike59 » Thu Apr 25, 2019 9:22 pm

Concerns about perpetually low interest rates are perfectly valid, they can go lower, and may even go negative as you've stated. The problem is- what if you align yourself for this expectation and are wrong? I'd rather have a portfolio that takes my emotions out of it and forces me to mechanically transfer profits from a running bull to a bear in preparation for a reversal whenever it happens.

When I've lost money with investing, it was when I thought I'd have to prepare for catastrophe (watching news and checking prices daily) and aligned myself too far on one side of the bet (ahem/cough silver 2011) .. :o
AnotherSwede
Senior Member
Senior Member
Posts: 125
Joined: Mon May 11, 2015 10:24 pm

Re: Viability of HBPP with perpetually low interest rate Fed

Post by AnotherSwede » Fri May 17, 2019 10:45 pm

europeanwizard wrote:
Sat Feb 23, 2019 1:08 pm
pmward wrote:
Sat Feb 23, 2019 8:01 am
How has Euro PP performed in that environment?
Gold: 1,7%
Bonds: 0,9%
Stocks: -0,5%
Cash: 0,7%

So an average of 0.7% in 2018, thanks to gold. I'm switching out of a Euro PP, and taking steps toward a global PP. I've already moved out of EU stocks, and taken a global stocks fund. I'll probably do the same for bonds.
Funny how currency matters ... I have a "global" golden butterfly, with cash in SEK and evaluating in SEK.

SEK having lost 25% to all currencies, the global PP is doing great. Everything is doing great. Except cash.
Post Reply