Bigworld, Thanks for the Rinear update. It's clear the US debt bomb will unravel at some point, with the timeline being the main question. I'm figuring the $40-50 trillion area is where global confidence in the dollar runs into big trouble. A guess, but that's the level I'm using for my own investment planning. At the rate we're going, the 40 tril level will be reached within a few years (see below). The official US debt is currently 34.5 tril, but has been increasing by ~1 tril every 100 days (!), so the math paints a very grim picture. Anyway, my bond allocation ladder goes out to Dec 2026, and I'm reluctant to go out much beyond that.
As Jim Rickards points out, a fiat / unbacked currency relies on confidence, and when that confidence is lost, things can snowball quickly. When Bretton Woods collapsed in 1971, the dollar went full 'fiat' with no backing at all, and Kissinger / Rockefellers scrambled to cook up the Petrodollar idea, which ensured constant global demand for dollars and US Treasuries from global oil sales. The US military could also be used to intervene if an oil producing country tried to wriggle out of the dollar system. The Petrodollar system worked great for decades, but is nearing the end of the road. We're now seeing global de-dollarization of trade accelerating, the BRICS expanding and planning their own gold-linked alternative to the dollar, and countries loading up on gold. The US resorts to sanctions, de-SWIFT-ing, and wars, but meanwhile the debt bomb clock keeps ticking.
A logical strategy would be to gradually move out of financial assets (stocks / bonds) and into more hard assets, like paid-for real estate, land, gold/silver, etc. The tentative timeline for the debt bomb looks like 40 tril (2026) --> 50 tril (2029), which means the next US President is most likely captain of the Titanic. If we assume 3 trillion of new debt per year, and 50 tril as the upper boundary of global confidence in the dollar, we have until 2029 at the latest -
Mid 2024 -- 34.5 tril
Mid 2025 -- 37.5 tril
Mid 2026 -- 40.5 tril
Mid 2027 -- 43.5 tril
Mid 2028 -- 46.5 tril
Mid 2029 -- 49.5 tril
In addition to moving more into hard assets, another idea would be to move to a place like New Zealand, where a US dollar crisis should have a much lower effect. To retire to New Zealand apparently requires 1.25 mil in assets (in NZ dollars), so approx $750 K in US dollars. Moving to New Zealand would also escape the lunacy of US politics, etc.
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