Fed Meeting: the Pause Returns - Review of Impact to Savers
The Fed decided today to hold rates steady. The target range of the federal funds rate remains at 1.50% to 1.75%. The following is an excerpt of today’s FOMC statement with the all important rate description:
The Committee decided to maintain the target range for the federal funds rate at 1-1/2 to 1-3/4 percent. The Committee judges that the current stance of monetary policy is appropriate to support sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee's symmetric 2 percent objective.
All of the FOMC voting members voted for today’s policy action. Unlike the last four meetings, no one dissented.
Summary of Economic Projections
In addition to the statement, the Fed released an updated summary of economic projections (SEP). In the first table of this summary, you can see the Fed’s economic projections for future years and how they compare to the Fed’s September projections. There were no changes in the GDP projections. For the unemployment rate, there were slight reductions in future rates. For PCE inflation, the only change was the projected 2019 core PCE inflation. In September, core PCE inflation for the end of 2019 was projected to be 1.8%. Now it’s projected to be 1.6%. This strengthens the case that it’s not necessary to hike rates.
Fed’s Dot Plot
At the bottom of this first table in the SEP, the forecast most interesting to savers is the projected federal funds rate. The median projected federal funds rate for 2020 shows no change. Further details of this can be seen in the dot plot at the bottom of the SEP. Out of the 17 FOMC participants, 13 of them are projecting no change in the federal funds rate in 2020. The other 4 are projecting a 25-bp rate hike. More participants project higher rates in 2021 and 2022. No one is projecting a rate cut in future years. For 2022, only one participant is projecting a rate that will remain at its current level. All other participants are projecting rates that are higher from its current level by a range of 25 to 125 bps.
The good news from the dot plot is that no one on the Fed thinks there will be rate cuts in the next three years. Many on the Fed think there will be rate hikes in the next three years. Based on the dot plot history, I wouldn’t take the dot plot too seriously. For example, the dot plot from December 2018 showed that no one on the Fed projected rate cuts in 2019.
Press Conference
At the press conference today, many questions came up about inflation and its impact on rate decisions. This gave Fed Chair Jerome Powell the opportunity to reiterate his view about what he’ll need to see in inflation before deciding to raise rates. With an answer that was very similar to one in October, he said that it’s his view that it would take a “significant move up in inflation that’s also persistent before raising rates to address inflation concerns.” This supports the low odds of a rate hike in 2020.
Based on the SEP and the inflation projections, it would appear the odds of a rate hike will also be low for 2021 and 2022. One reporter asked about this inconsistency of the dot plot suggesting rate hikes in 2021 and 2022 while the inflation projections show inflation rates never exceeding 2.0% in those years. Here’s an excerpt of Fed Chair Jerome Powell’s answer of this question:
None of us have much of a sense of what the economy will be like in 2021. So I think what may be behind some of that is just the thought that over time it would be appropriate if you believe that the neutral rate is 2.5%, it would be appropriate for your rates to move up in that direction.
This is another example of why we should be skeptical of the dot plot.
Future FOMC Meetings
The next three FOMC meetings are scheduled for January 28-29, March 17-18, and April 28-29. The March meetings will include the summary of economic projections. All meetings now include a press conference by the Fed Chair.
What Savers Should Expect in 2020
Based on Fed Chair Jerome Powell’s comments about inflation, we may be starting a long period in which the Fed holds rates steady. Based on the recent history of inflation, it’s doubtful things will change anytime soon to meet the Fed Chair’s informal criteria for rate hikes.
Online Savings Account Rates
Online savings account rates have remained near the target range of the federal funds rate. As the federal funds rate has moved down, online savings account rates have generally followed with some lag. The good news for savers is that the online savings account rates have generally not fallen as much as the federal funds rate. Here are a few examples from the popular online banks. All percentages are APYs, which are accurate as of 6:00pm 12/11/2019:
- American Express High Yield Savings: Peaked @ 2.10%, Now @ 1.75% (-35 bps)
- Synchrony High Yield Savings: Peaked @ 2.25%, Now @ 1.80% (-45 bps)
- Goldman Sachs Bank Online Savings: Peaked @ 2.25%, Now @ 1.70% (-55 bps)
- Ally Online Savings: Peaked @ 2.20%, Now @ 1.70% (-50 bps)
- PurePoint Financial Online Savings: Peaked @ 2.35%, Now @ 1.80% (-55 bps)
I think we may see a few more online savings account rate cuts in December and January, but rate cuts should now slow down with the Fed holding rates steady. With the target federal funds rate range now at 1.50% to 1.75%, I’m afraid we should expect most online savings account rates to move near this range.
CD Rates
As we have seen in 2019, CD rates can fall even when the Fed is holding rates steady. One thing that tends to lead CD rate changes is changes in Treasury yields, and Treasury yields have been on the decline since November 2018. I’ve listed the yields of the 10-year and 5-year Treasury notes that occurred after the last ten Fed meetings. Most of the declines occurred before the Fed decided to start cutting the federal funds rate. The yields since September appear to be stabilizing.
- Nov 8, 2018: 10yr @ 3.24%, 5yr @ 3.09%
- Dec 19, 2018: 10yr @ 2.77%, 5yr @ 2.62%
- Jan 30, 2019: 10yr @ 2.70%, 5yr @ 2.49%
- Mar 20, 2019: 10yr @ 2.54%, 5yr @ 2.34%
- May 1, 2019: 10yr @ 2.52%, 5yr @ 2.31%
- Jun 19, 2019: 10yr @ 2.03%, 5yr @1.77%
- Jul 31, 2019: 10yr @ 2.02%, 5yr @ 1.84%
- Sep 18, 2019: 10yr @ 1.80%, 5yr @ 1.68%
- Oct 30, 2019: 10yr @ 1.78%, 5yr @ 1.61%
- Dec 11, 2019: 10yr @ 1.79%, 5yr @ 1.64%
Brokered CD rates are the first deposit products that respond to Treasury yield changes. Like the Treasury yields, brokered CD rates have plummeted since November 2018. The top 5-year brokered CD rate was 3.60% in November 2018. As of last week, it’s down to 1.95%. That’s a fall of 165 bps. On the positive side, this is up from the last meeting when the top 5-year brokered CD rate was 1.90%. It’s also up from the September meeting when the top 5-year rate was 1.70%.
Direct CD rates from online banks and credit unions haven’t fallen as much as Treasury yields and brokered CD rates. Here are a few examples of how 5-year CD rates have fallen at five popular online banks. All percentages are APYs, which are accurate as of 6:00pm 12/11/2019:
- American Express 5yr CD: Peaked @ 3.10%, Now @ 2.15% (-95 bps)
- Synchrony 5yr CD: Peaked @ 3.10%, Now @ 2.25% (-85 bps)
- Goldman Sachs Bank 5yr CD: Peaked @ 3.10%, Now @ 2.15% (-95 bps)
- Ally Bank 5yr CD: Peaked @ 3.10%, Now @ 2.15% (-95 bps)
- PurePoint Financial 5yr CD: Peaked @ 3.10%, Now @ 2.05% (-105 bps)
A few of these CD rates are down only slightly from October. That may be a sign that we are at or near a bottom for CD rates.
Deposit Account Strategies
Without the possibility of Fed rate hikes anytime soon, deposit rates will likely be pretty stable in 2020, and it may take multiple years before we see substantially higher rates on savings accounts and CDs. The Fed’s dot plot may be the best case scenario for savers. In that scenario, we see a Fed rate hike of 25 bps in both 2021 and 2022. The economy would probably have to be very strong for such rate hikes. That would put upward pressure on CD rates before the first Fed rate hike. Once the Fed increases rates, online savings account rates would slowly follow.
The other scenario is that there will be an economic slowdown next year. Even if there’s no recession, a slowdown may cause the Fed to cut rates a few more times. Even if it’s not severe enough to cause more Fed rate cuts, it would probably keep inflation muted, and that would cause the Fed to hold rates steady for a long period of time. In any of these pessimistic cases, deposit rates either hold steady or decline.
In this type of rate environment, it seems doubtful that we’ll see any widespread CD rate increases in the next one or two years. Thus, mid-term and long-term CDs make sense now. If you’re optimistic about the economy, choose mid-term CDs. If you’re pessimistic, choose long-term CDs. If you had suspended your CD ladders by not re-investing maturing CDs into new long-term CDs, it’s time to continue with your CD ladders by investing those funds back in long-term CDs.
Mid-Term and Long-Term CDs with Small Early Withdrawal Penalties
If you are worried about locking money into CDs, look for CDs with early withdrawal penalties (EWP) of no more than six months of interest. The best deals are currently from credit unions that are still offering CDs with yields close to 3% and with EWPs of only six months of interest. Two examples as of 12/11/2019 include Justice FCU (5-year Jumbo CD with a 3.21% APY) and Dover Federal Credit Union (5-year Jumbo CD with a 2.90% APY). Both of these credit unions make it possible for people in any state to join via an association membership. There’s also the 3.00% APY 37-month IRA Certificate Special from Navy Federal Credit Union. Unfortunately, there’s no non-IRA equivalent of this Special.
To see how the EWP affects the yield when you close a CD early, please refer to our CD Early Withdrawal Penalty Calculator.
Add-On CDs
If you have CDs that won’t be maturing until later this year or next year, consider add-on CDs with long terms. Open the add-on CD now and you will lock in today’s CD rate until the CD matures. If rates fall by the time your current CDs mature, you can fall back on that add-on CD by making additional deposits into the add-on CD. Those additional funds will then begin earning that same CD rate that was set when the add-on CD was opened.
Add-on CDs haven’t always worked as advertised. There have been a few credit unions that didn’t fully honor the add-on feature of their add-on CDs. GTE Financial almost did this in October, and there remains the possibility it could still do this sometime in the future. If interest rates fall more than expected and the institution didn’t specify a maximum balance level, the risk increases that the institution may renege on its add-on deposit promise.
One add-on deposit 5-year CD that’s nationally available is the 5-year Growth Certificates at Mountain America Credit Union (MACU). Unfortunately, the rate has fallen to 2.40% APY as of 12/11/19. In late 2018, this rate had been as high as 3.51% APY. There’s only a $5 minimum initial deposit. The main downside to this add-on CD is a maximum balance of $100k (in any one or combination of Growth Certificate accounts). MACU allows members to add money to their Growth Certificates at anytime. The account also requires an automated monthly deposit of at least $10. The $100k maximum is a downside, but I think it increases the odds that you’ll be able to add deposits all the way to maturity.
A couple of online banks have add-on CDs, but they’re shorter-term CDs.
The new internet bank, Rising Bank, offers two add-on CDs. These are called Rising CDs, and they have terms of 18 months and 3 years. For add-on CDs, the longer term ones are best for hedging bets on interest rates. The 3-year Rising CD has a 2.10% APY as of 12/11/2019 (Rate had been 3% in March). Unfortunately, it has a high minimum deposit requirement of $25k. There’s a maximum balance of $500k, which is an important limitation to note. Another important limitation is that you are allowed to make no more than two additional deposits during the term of the 3-year Rising CD, and each deposit must be a minimum of $5k.
The 3-year Rising CD also provides two options to increase the rate if the 3-year Rising CD rate should happen to rise. I don’t consider that an important feature, especially in our current environment. It’s not clear in the CD disclosure, but I’ve been told by a Rising Bank official that this rising rate feature is completely independent from the add-on feature. In other words, you can exercise the add-on option without the interest-rate option. So if the CD rate falls, you don’t have to worry about your CD rate falling when you make the add-on deposit.
The online bank Bank5 Connect has been offering a 2-year add-on CD since 2013. The Bank calls it the 24-month Investment CD, and it has a 2.10% APY as of 12/11/2019 (Rate had been 60 bps higher in July.) According to the Bank5 Connect’s account disclosure for the Investment CD, “You may make an unlimited number of deposits into your account.” Minimum deposit is only $500.
No-Penalty CDs
With rates likely to fall, the no-penalty CD is a good way to avoid short-term rate reductions while maintaining liquidity. Unlike a regular CD, there’s no early withdrawal penalty. So there’s no lock on your money except for the first six days from account funding.
In the last year, no-penalty CDs have been introduced at a few online banks and credit unions. Below is a list of noteworthy no-penalty CDs with their APYs as of 12/11/2019.
- 2.00% APY 11-month Flex Time Deposit ($100k min) - M.Y. eBanc
- 1.90% APY 11-month Flex Time Deposit ($10k min) - M.Y. eBanc
- 1.90% APY 13-month No-Penalty CD ($10k min) - PurePoint Financial
- 1.90% APY 11-month No Penalty CD ($25k min) - Ally Bank
- 1.90% APY 7-month No-Penalty CD ($500 min) - Goldman Sachs Bank USA
- 1.85% APY 11-month Liquid CD ($5k min) - Citizens Access
- 1.80% APY 11-month No-Penalty CD ($1k min) - CIT Bank
- 1.80% APY 6-month No-Penalty CD ($500 min) - Investors eAccess
- 1.75% APY 14-month No-Penalty CD ($10k min) - PurePoint Financial
- 1.73% APY 11-month No Penalty CD ($5k min) - Colorado Fed Savings Bank
- 1.70% APY 11-month No-Penalty CD ($500 min) - Goldman Sachs Bank USA
- 1.70% APY 11-month No Penalty CD ($5k min) - Ally Bank
- 1.65% APY 13-month No-Penalty CD ($500 min) - Goldman Sachs Bank USA
- 1.65% APY 11-month No Penalty CD (no min) - Ally Bank
- 1.65% APY 11-month No-Penalty CD ($10k min) - PurePoint Financial
When comparing these types of no-penalty CDs, longer terms are an advantage. The only reason to go for a shorter term is if the rate is higher.
Uncertainty of Future Rates
I don’t see much chance that rates will rise in the next year. Fed Chair Jerome Powell has again expressed his view that it would take a “significant move up in inflation that’s also persistent before raising rates.” That appears very unlikely for 2020. Thus, don’t expect online savings account rates to rise in 2020.
It’s possible that we could see some CD rate increases if the economy remains strong. As we saw earlier this year, the state of the economy can drive CD rates even when the Fed is holding rates steady. However, most of the CD rate cuts occurred after it became apparent that the Fed was going to cut rates. CD rate cuts continued as the Fed lowered rates. So until it becomes apparent that the Fed is going to hike rates, we probably won’t see widespread CD rate increases.
It’s important to remember that no one, including me, can predict future interest rates. Last year was a reminder of this when it appeared we might be seeing 4% savings account rates in 2019.
It is common sense and not complicated.
That strategy is unlikely to produce a higher after tax return. Assume you are in the highest state income tax bracket in the country as a resident of the People's Republic of California. Even if you are paying that highest rate in the country for your state income taxes that deduction is only worth 0.266%. So if there's a fully taxable option that pays more than 0.266% (which is about a quarter of 1%) more than the state income tax exempt option -- which there likely is -- you will end up with more money with the fully taxable option even after paying the taxes.
Of course if you are in a lower tax bracket than that the advantage of the tax exempt option is even smaller.
That said, past performance is not necessarily indicative of future gains or losses. A really good year can be followed by a really flat or down year in Mr. Market. History has shown that, over long periods of time, the stock market has well exceeded both bonds and CDs.
I personally prefer a "bucket strategy:, as I've noted in other threads. Keep enough in my cash bucket (CDs and liquid stash) to cover expenses for the next fifteen years or so. Let my stocks and bonds ride, subject only to RMD withdrawals.
You can see how bad inflation has gotten in many various sectors year over year in the link below:
https://twitter.com/byHeatherLong/status/1204771315355443200
Here are the numbers (from the BLS) by month for 2019:
2019 JAN----FEB----MAR--APR---MAY---JUN----JUL----AUG--SEP---OCT---NOV
2019 1.55% 1.52% 1.86% 2.00% 1.79% 1.65% 1.81% 1.75% 1.71% 1.76% 2.05%
as you can see only April @ 2% and Nov @ 2.05% are at 2% or greater, the rest of the year has been below 2%.
https://www.nytimes.com/2019/11/21/us/california-housing-crisis-rent.html
2019 JAN----FEB----MAR--APR---MAY---JUN----JUL----AUG--SEP---OCT---NOV
2019 1.55% 1.52% 1.86% 2.00% 1.79% 1.65% 1.81% 1.75% 1.71% 1.76% 2.05%
You but look at X, Y, and Z cherry picks won't change that.
Are there areas, like tuition, that exceed those rates. Yep. Nobody ever claimed otherwise, equally there are areas that are below those rates as well (which you wish to ignore).
And, BTW, the SS COLAs aren't a matter of overall "inflation" being "higher" than reported, but rather a matter of what they use to determine the COLA being based on an index that doesn't reflect the typical Senior's interaction with the economy (that whole "different people interact with the economy differently" thing). But that's a whole different discussion. If you want to know more about that look into CPI-W vs CPI-E
Where in the world do you come-up with SS losing 34% of it's purchasing power?
I trust the BLS numbers over some inflation conspiracy theorist posting on this site.
After all, they actually publish the numbers of all of the components of the index.
And, gather data each month from the real world out there.
https://www.cnbc.com/2018/07/26/social-security-buying-power.html
It's impossible to have an economy that is perfect for everyone for lots of reasons not the least of which is that some people are going to make bad choices no matter what you do. The goal is to create the most good for the most people and that's precisely what's happening.
America is currently enjoying the proverbial "free lunch". Trouble is, there is no such thing as a free lunch. Anyone who believes otherwise is delusional.
@D1: For me trade issues are a side show compared to rates, as soon as the rates reversed the markets rose and vice versa, albeit I admit trade tweets have also temporarily bounced the market. (I really don't see how the news media played a direct role in this other than reporting it.) However, I would be interested in hearing from you and others (Ken) your thoughts on the Fed's apparently new QE4 and this "repo" topic--how do these play a role versus the funding rate.
According to a study by fidelity released in Nov 2019, employee savings rates hit a record high, the average employee contribution rate is 8.8%, which is nearly a full percentage point higher than a decade ago
According to Sentier Research (which tracks income on a monthly basis using census data), median household income has been steadily increasing under Trump, rising from $59,471 in Jan 2017 to $66,465 in Oct 2019. That's higher than it's been in at least 50 years — after adjusting for inflation.(for comparison, under Obama, household incomes continued to fall steeply for two full years after the recession officially ended, and then took four years to make up that lost ground. Incomes then flatlined again, posting no overall gain between August 2015 and December 2016).
inflation is at a low 1.6% through June 2019, as reported by the Bureau of Labor Statistics (come on, you've been reading these reports about the Fed, surely you didn't need to be told that inflation has been low, lower than the Fed's preferred "2%" target)
It's not hyperbole, it's stuff that you could easily verify yourself just with a few simple web searches
https://www.forbes.com/sites/investor/2019/11/18/fed-chair-jerome-powell-debt-bubble-warnings/#1cf86ce956ee
In the 1940s the ratio of debt to GDP was about 21 percentage points higher than it is now. That decade was followed by a decade in which the the economy grew by 37% and the median family's purchasing power grew by 30% thanks to low inflation. Unemployment was only a little higher than it is now.
The ratio of debt to GDP can be lowered in two ways, by lowering the amount of debt or by increasing the GDP. If the GDP is high enough it doesn't matter if the debt is $500 trillion, life can still be very good. And the way to increase GDP is to reduce the tax and regulatory burden on the productive elements of the private sector (also known as wealthy people and corporations) to maximize their ability to invest in activities that create jobs and growth. Poor people don't create jobs for economic growth. But neither can their interests be served without the creation of wealth that such policies promote.
If you argue for less dependence on debt and at the same time argue for higher taxes and more regulation, you are arguing against yourself because the two are incompatible.
The government is collecting more taxes today than it ever has in its history. Yet they're spending it even faster. You cannot solve a debt problem by increasing taxes. I'm not sure how many times we need to learn that same lesson.
I understand that it's not intuitive, but in fact the way to a manageable debt is by reducing taxes, reducing unnecessary regulation and liberating the private sector to do what it does best, create wealth. The way to reduce the burden of debt is to get growth out ahead of the debt curve, not to give a bigger meal to the beast that's eating you alive.
You can't tax your way out of debt but you can grow your way out of it.
Following on a previous comment which made an analogy to show how this translates to the personal level there seem to be the same two camps on this issue. Those who believe the way to get ahead is to go out and get a better job, and those who believe the way to get ahead is to get a bigger government check.
You can't fill up a pool by taking water out of one end with a bucket walking around to the other end and pouring it back in. And that's why the policies of those who are in the latter camp always fail.
What do rich people do with their wealth? Do they stuff their mattresses with cash? Burn it in their fireplaces? Sit in their living rooms wearing green visors counting the money, arranging it in stacks and lighting their cigars with hundred dollar bills?
What they do is invest that wealth in things that create more wealth and in the process create more jobs and more wealth for every one else too. Whether directly trough investment in privately held businesses, or indirectly through the capital markets, their wealth is put to work creating the buildings, factories and infrastructure that creates employment for workers, fulfills the needs of consumers, and provides the source of every penny that the government has at its disposal.
Tax cuts for the middle class and poor do better. Middle-income families are likely to spend the tax cuts. During a recession, they need every dollar they can get. They pump the money directly into local shops, who hire more workers to meet the increased demand.
The CBO also compared that to the number of jobs created by other government programs. It included spending on infrastructure, increasing unemployment benefits, and aid to the states. The report found that extending unemployment benefits is more cost effective than any tax cut
Do tax cuts for the rich create jobs? High-income families are more likely to save their tax cut than spend it. During a recession, they don't need the extra money to maintain their standard of living. They already have savings and lines of credit to do that.
"Do tax cuts for the rich create jobs? High-income families are more likely to save their tax cut than spend it."
What does it mean when someone "saves" money?
It doesn't mean that that money remains dormant somehow escaping the economy.
If it is "saved" in a bank, it's used to finance loans for building or buying homes or providing capital for businesses to expand or fund operations. That creates jobs. If it saved in the capital markets, it does the same thing.
This notion that rich people are monetary hoarders is more about envy politics than economics.
If there wasn't a secondary market for stocks, why would anyone buy the IPO? It's precisely because there is a strong secondary market that companies are able to raise the funding they need that results in job creation.
Broad wrote in June, “I am not advocating an end to the capitalist system that’s yielded some of the greatest gains in prosperity and innovation in human history. I simply believe it’s time for those of us with great wealth to commit to reducing income inequality, starting with the demand to be taxed at a higher rate than everyone else.”
Well, Bill, you can pay higher taxes any time you want. Just cut the IRS a check for as much more as you want at anytime you feel they're not already getting enough of your money. No need to force other people to pay higher taxes just because you claim to want to (though, I suspect anyone inspecting your tax returns would find that you use every tax break you can get to lower your taxes, just like everyone else in your tax bracket, which would make you a liar and a hypocrite).
The Gates Foundation spends more on global health each year than most countries. Their work has saved millions of lives.
Gates: “I think our system can be a lot more progressive (that is richer people paying a higher share).
“A key element is making capital gains taxation more like ordinary income (some have suggested making them the same) and having an estate tax more like we had in the past (55% above $3.5M).
“European countries collect a lot more taxes but through consumption taxes, but those are not progressive.
So yes, I have paid $10B but I should have had to pay more on my capital gains.”
There should be more transparency so it is clear who [owes] what and how loopholes are reducing tax collection. Countries need to work with each other on this.
Then write a check for more. Nobody is stopping you Bill
I've heard this before. Sure Gates gives away a lot of money but as a percentage of his GROWING assets it's not big deal. I do not know his motives but it sure keeps the D haters at bay when you give some away. It's a game played by rich folks throughout history.
Ask yourself a simple question: How difficult would it be for you to live in a 100M home with virtually endless wealth to be generous? Yep, not hard at all.
The Trump administration has said economic growth will pay for the added debt and deficit burden, but so far that hasn’t been the case despite the fastest GDP gains of the recovery.
http://www.polidiotic.com/by-the-numbers/us-national-debt-by-year/
Absolutely incoherent for Trump fans to whinge about rudeness.
I think the lessons of history are clear on this point. For every extra dollar the government collects in taxes, it spends two dollars.
It's a function of human nature. When you're spending someone else's money you spare no expense: especially when handing out that money is the source of your political power.
You can't fight human nature any more than you can fight mother nature. Attempting to reduce debt by increasing taxes is a fool's game. And that's why it never works.
The only way to reduce the *burden* of debt is through supply-side economics: creating wealth by increasing incentives and reducing disincentives for those who create it.
Obama's first three years added 4 Trillion to the debt, Trump's first three years added half that. Obama average an 8.8% increase in debt per year during his time in office. Trump is averaging a 3% increase in debt per year. Still bad but nowhere near as bad as under Obama.
http://www.polidiotic.com/by-the-numbers/us-national-debt-by-year/
You are thinking of FY 2018 not FY 2019. in FY 2018 he added 1.3T which is less than the 1.6T Obama added at the same point in his presidency. Obama only had less than 1T debt twice in his 8 years in office. Trumps has already had 2 years of less than 1T debt. When it comes to debt, Trump doesn't hold a candle to Obama's record.
Enjoy the ride but be nimble when the music stops playing.
I've actually lived and worked in foreign countries.
When you factor in health care costs and vacation time, Europeans do quite well.
Germany has 6 weeks of mandatory vacation time.
Oh, and Germany has the highest balance of payments (CIA factbook, 2017).
The US has the honor of having the highest deficit.
Sprechen sie Deutsch?
Germany and several other countries in Europe are a hair away from recession, Sam - sound's like that's just fine with you!
We keep bases in Asia for the same reason - it’s easier to deploy from Japan or South Korea into N. Korea, China, or Eastern Russia from there than from Hawaii and California.
Simply having the force present there is deterrent to those who might decide to act against our interests. More importantly though, it’s an expedience for the United States military
NATO is the only alliance capable of sharing some of the global military burdens that have overstretched America's ground forces.
The American military hospital at Ramstein Air Base, the largest outside the United States, provided specialized care for battlefield casualties from Iraq and Afghanistan as it did for those from Bosnia, Kosovo and the U.S.S. Cole.
In 2004, nearly 15 years after the Berlin Wall fell, United States force levels in Germany had dropped by roughly 75 percent.
A number of developments shortly after the war caused a radical revision of U.S. policy toward Germany. First, U.S. officials realized that resentment toward the Versailles treaty, the punitive postWorld War I settlement, had contributed to the rise of fascism in Germany and to the outbreak of World War II. It would have been foolish for the Allies to risk fueling future German resentment by pursuing an equally harsh arrangement after 1945. Second, humanitarian concern not only to prevent mass starvation and destitution in Germany at the war's end but also to allow Germans to pursue a decent standard of living soon influenced Allied policy. Third, a revival of German industry and commerce would help offset the cost of occupation
The onset of the cold war in Europe was a fourth reason why the United States abandoned its punitive policy toward Germany. As the war came to an end, barely concealed animosity between the United States and the Soviet Union rapidly came to the fore. Fueled by economic, political, and military rivalry in the guise of an ideological crusade, the cold war divided the continent into a U.S.-dominated West and a Soviet-occupied East. The strategic fault line ran through Germany and resulted in the country's partition until 1990. Under the circumstances, West Germany's economic development was clearly in the interests of the United States. An economically strong West Germany could bolster Western Europe's defenses and undermine support for indigenous Communist parties.
According to the U.S. Department of State Nov 4 2019 Bureau of European and Eurasian Affairs
Germany is one of the United States’ closest and strongest allies in Europe. U.S. relations with Germany are based on our close and vital relationship as friends, trading partners, and allies sharing common institutions. Our political, economic, and security relationships, critical to shared prosperity and continued stability, are based on extensive people-to-people ties and close coordination at the most senior levels.
In the political sphere, Germany stands at the center of European affairs and plays a key leadership role as a member of the G-7, G-20, the North Atlantic Treaty Organization (NATO) and the Organization on Security and Cooperation in Europe (OSCE). The United States recognizes that the security and prosperity of the United States and Germany significantly depend on each other. Etc.
https://www.state.gov/u-s-relations-with-germany/
I don't think the State Department agrees the your assessment #93 that they're our adversary.
I'm further suggesting that in many scenarios (perhaps excluding the completely end-of-life scenarios, OR those where folks are so expressly emotionally frightened of equities that they literally find themselves unable to invest in them at all), that nearly every portfolio should have some exposure to equities.