International Permanent Portfolio

[MediumTex]

Maybe Mr Market expects the Feds to (as rumored) expropriate our 401Ks and force them into LT Treasuries at 3-4 per cent...?

That will never happen.

What is the most potent political force in our society?  It is money and those who control it.

The political process will always bend to this political force.

There is way too much Wall Street money to be made running the 401k-asino to ever let that cash cow slip away.

[longeyes]

Well, the debate is which beast is hungrier, Wall St. or the Federal Government.  Saying anything will "never happen," in these times, is imprudent.  I think we swore off prophecy when we adopted the PP.    But my speculation was, actually, meant to bolster your own thesis about interest rates not necessarily rising even in times of depreciating currency.

[MediumTex]

Well, the debate is which beast is hungrier, Wall St. or the Federal Government.  Saying anything will "never happen," in these times, is imprudent.  I think we swore off prophecy when we adopted the PP. 

The 401(k) confiscation into long term bonds proposal is an issue that has a lot of overlap with the work I do professionally.

I just wanted to convey what people within the industry are saying about the proposal (which is not being pushed by anyone with any influece--it's just a dumb idea that a few academics have been floating for the last few years).  It's perceived as a DOA proposal.

I'm not suggesting that anything is impossible.  What I am suggesting is that what actually happens in political matters is typically a function of the interests of those who wield the political power.

The problem I have with the way the media presents the 401(k) confiscation idea is that no one reporting on the story ever seems to really know anything specific about the matter.  It's always just reporting the proposal, without mentioning who is behind the proposal and whether that person or group actually has any control over public policy (normally it's just some academic from a liberal think tank who knows that such a proposal will get good press coverage).  Due to the structure of the retirement plan regulatory regime, it would take action by Congress (in the form of a series of amendments to ERISA) to set in motion any kind of 401(k) conversion into treasury bonds.  I have been following this issue pretty closely for the last few years, and so far I am not aware of a single member of Congress who is in favor of this change.  Not one. 

That may be more information than is needed, but I hate that so many people have been alarmed by this issue. 

I would actually love the opportunity to buy long term treasurys in a 401(k) account as part of the available investment choices (outside of a brokerage window).  It has been a great investment for the last three decades, even for those who have no interest in something like the PP.

[AccidentallyKate]

doodle,

This concerns me very much also. I don't believe you can design a truly International portfolio - PP or otherwise. My experience is that you have a financial home country. It binds you to that country and a currency. For a few years I've been traveling from country to country staying weeks or months at a time. My home travels with me. The US is still my financial home. I'm a US citizen. My spouse and child are US citizens. I pay US taxes. If it's around in 25-30 yrs, my spouse and I would like to collect the SS we earned.

You might have two or three financial homes. People I meet in those circumstances use other ways than splitting investment portfolios to deal with the currency exchange issues.

LifestyleFreedom,
I don't think you can go to 4 continents and open accounts. But I wouldn't if I could. It adds too much systemic risk for my comfort level. And even if you do, you're still heavily weighted in 4 economies and one has to be a developing market economy.

Many of the international people I meet tell me they like holding physical gold in multiple countries. Ok, the guy on the megayacht didn't tell me that. He owns a gold mining company with projects in multiple countries.

Interestingly, when I asked if he keeps money- cash, stocks, bonds - in the developing country that he resides in he said "No, mostly in Panama." I asked why and he said he gets better interest rates. I googled it and one site said you get 7%.

Now, I was in Panama a few months ago. They have a currency they call the Balboa. It's only coins. They use US dollars. Hmmm, maybe I should go back and see if I can open an account.

Anyway, I'm still searching for an answer. Cowboyhat's solution sounds interesting.

[l82start]

the thread talking about it hasn't taken off yet but the experimental "bit coin" (cryptocurrency) is a international form of currency with no borders, i don't know if anyone is offering an interest rate on it anywhere yet, i suspect it would behave more like a currency/commodity like gold than anything else,  i don't have the economic know how to look at how the coin works and predict its behavior, and it is to new to have much history yet, but i have a hunch it has a good shot at being/getting big.