The federal government owes me one million dollars

[Bigote]

With a recent purchase of TIPS the total amount of US government bonds I own broke the $1MM mark.

It seems weird to say 'The federal government owes me one million dollars'.

Makes me feel better about paying my taxes.

[AndrewJackson]

I will never ever ever understand government debt. It is like a ponzi scheme that goes on perpetually until the society falls into ruin.

Here is why I refuse to "invest" in these instruments:

1. The federal government has produced deficits for the last 30-40 years. (ie
2. There unfunded liabilities are at least 5x GDP or and at least 25-30 times annual tax revenue.
3. Just in the last 6 years, the federal government has added over 7 trillion in debt.
4. The only way your "investment" will pay off is if a greater fool is found to continually roll over the nations debt.

[AlanStache]

'The federal government owes me one million dollars'.

You had better have your pinky finger in the corner of your mouth while saying that; and be wearing a white suit while sitting in a revolving chair and petting a cat.  I would so go villain if I were you :-P

[Thegoblinchief]

I will never ever ever understand government debt. It is like a ponzi scheme that goes on perpetually until the society falls into ruin.

Here is why I refuse to "invest" in these instruments:

1. The federal government has produced deficits for the last 30-40 years. (ie
2. There unfunded liabilities are at least 5x GDP or and at least 25-30 times annual tax revenue.
3. Just in the last 6 years, the federal government has added over 7 trillion in debt.
4. The only way your "investment" will pay off is if a greater fool is found to continually roll over the nations debt.

I'm not about to buy bonds myself, but "Economics Explained" has a really good explanation of government debt, what it is, why it's necessary, etc.

[dragoncar]

That's awesome -- it didn't even occur to me that you were talking about bonds. 

[Another Reader]

Back before the internet and anything except mainframe computers, my father would go to the Treasury auctions in San Francisco and buy bills and notes in $10k increments.  He didn't take wads of cash, so it was never clear to me how the transactions took place.  Between those and the later treasury money market funds, the Federal government owed him quite a bit as well. 

[warfreak2]

I figured you were about to get the biggest tax refund ever*

*not actually anywhere near the biggest tax refund ever

[Stackfault]

Good for you!  And way to have fun with it.  :-)

[Hedge_87]

I figured you were about to get the biggest tax refund ever*

*not actually anywhere near the biggest tax refund ever

+1 I thought holy shit batman!I was wonder how somebody could over pay by a million dollars!

[Kriegsspiel]

Dude, is bigote the richest person here? He/she keeps making all these threads like "I just deposited a thousand trillion dollars in my bank account in a pair of jeans" and "I sold my million buck condo in Manhattan, no biggie." And now this.

Ok, in all seriousness, bigote, what kind of online bank do you use? I'd like to know, just for the interest rate comparison and whatnot. Also, what is your birthday and your pet's name? Feel free to PM me.

[desk_jockey]

I will never ever ever understand government debt.

And the “Most Appropriate Username to Comment” award goes to AndrewJackson.

[Bigote]

I will never ever ever understand government debt.

And the “Most Appropriate Username to Comment” award goes to AndrewJackson.

My thoughts exactly.    I always appreciated the irony of putting his face on the $20.  Someone at Treasury had a sense of humor.   

[Bigote]

Ok, in all seriousness, bigote, what kind of online bank do you use? I'd like to know, just for the interest rate comparison and whatnot. Also, what is your birthday and your pet's name? Feel free to PM me.

Should I tell you my mother's maiden name while I'm at it?   :)

[Another Reader]

Clearly we need to add a thread called "The race to $10,000,000 net worth."

[Kriegsspiel]

"One time, I lit $1,000,000 on fire, like the Joker in The Dark Knight, and giggled. It meant nothing to me."

 - Bigote

[Bigote]

Not sure where this is coming from.  Im anything but wasteful.    I drive a 17 year old car.  I'm hardly burning cash. 

[Another Reader]

I was only sort of joking about the race to $10,000,000.  When Arebelspy put up his poll on net worth, I suggested segmenting the over $1M range.  That idea was not implemented because no Mustachian would aspire to such a lofty net worth.  My guess is that there are a fair number of readers and contributors well over the $1M mark.

I can think of several people on this forum that have or had really good financial engines working for them for many years and are probably well on their way to eight figures.  From reading posts over the last several years, most of the high net worth folks appear to be "Millionaire Next Door" types, people that would be attracted to this forum.  In Bigote's case, a job in the financial world in Manhattan was key to his success.  Driving that 17 year old car (to be fair, he did live in NYC), just incrementally increased his already high savings rate. 

[dragoncar]

I was only sort of joking about the race to $10,000,000.  When Arebelspy put up his poll on net worth, I suggested segmenting the over $1M range.  That idea was not implemented because no Mustachian would aspire to such a lofty net worth.  My guess is that there are a fair number of readers and contributors well over the $1M mark.

I can think of several people on this forum that have or had really good financial engines working for them for many years and are probably well on their way to eight figures.  From reading posts over the last several years, most of the high net worth folks appear to be "Millionaire Next Door" types, people that would be attracted to this forum.  In Bigote's case, a job in the financial world in Manhattan was key to his success.  Driving that 17 year old car (to be fair, he did live in NYC), just incrementally increased his already high savings rate.

There aren't many mustachians who aspire to such high net worth for their own spending.  For example biotite drives a 17 year old car.  I think those who are pushing 8 figures are planning for charity, gifts, or otherwise just have way more money than they plan to spend on themselves


See also the "no true mustachian" fallacy

[Kriegsspiel]

Not sure where this is coming from.  Im anything but wasteful.    I drive a 17 year old car.  I'm hardly burning cash.

I was just thinking about lighting stuff on fire, nothing personal.

[AlanStache]

I was just thinking about lighting stuff on fire, nothing personal.

Should we be worried about your lack of adult supervision? 

[Kriegsspiel]

I've heard that it's good advice to continue living like a college student. I'm choosing to live like one that goes to WVU.

[adam]

I will never ever ever understand government debt. It is like a ponzi scheme that goes on perpetually until the society falls into ruin.

Here is why I refuse to "invest" in these instruments:

1. The federal government has produced deficits for the last 30-40 years. (ie
2. There unfunded liabilities are at least 5x GDP or and at least 25-30 times annual tax revenue.
3. Just in the last 6 years, the federal government has added over 7 trillion in debt.
4. The only way your "investment" will pay off is if a greater fool is found to continually roll over the nations debt.

So tell me how safe you expect any of your other investments to be if the United States Federal Government collapses.

/buries gold in backyard

[warfreak2]

If you could borrow as cheap as the government can, you'd borrow $7 trillion too. Governments borrow to invest, not just on infrastructure but also things like "making sure that people without secure incomes don't starve or freeze to death", which turns out to be a fine investment because a reasonable proportion of those people therefore become productive taxpayers who support their families. Unless you immediately set the money on fire, taking out a loan doesn't decrease your net worth, and the US government has long maintained a positive net worth.

[AlanStache]

Actually, ammunition has spiked so much that buying it in 2007 would now constitute a very successful investment, were you to liquidate your supply.

Getting off topic but might be interesting to look at alternative investments that have killed the sp500.  I understand guitars have done well too.  Personally I am counting on my collection of Daredevil graphic novels :-p

It is a bit of a rabbit hole once you start looking at what will happen if the US govt failed, not much would be safe.  And most anything that would be 'safe' after a default would be doing almost nothing before a default.  Either buy land in Montana or stay on the treadmill.

[rocksinmyhead]

Unless you immediately set the money on fire, taking out a loan doesn't decrease your net worth, and the US government has long maintained a positive net worth.

wow, I feel like an idiot for never having thought of government debt in this way, but that... makes so much sense.

[The Money Monk]

If you could borrow as cheap as the government can, you'd borrow $7 trillion too. Governments borrow to invest, not just on infrastructure but also things like "making sure that people without secure incomes don't starve or freeze to death", which turns out to be a fine investment because a reasonable proportion of those people therefore become productive taxpayers who support their families. Unless you immediately set the money on fire, taking out a loan doesn't decrease your net worth, and the US government has long maintained a positive net worth.

Why borrow cheap when you can not borrow at all? The government has the constitutional authority to coin money, free of interest, yet they choose to borrow from private institutions.

[The Money Monk]

I've always figured that if you really think the government is going to collapse and take civil society with it for a long period of time, you need land in a rural area, a lot of social capital, a lot of weapons and ammo and enough food/medicine/potable water/supplies to keep you going for however long it takes for civilization to get going again. Plus, depending on how ruined you think we are, enough fertile women and genetic diversity to restart the human race. I see preppers buying a bit of junk silver and some MREs and I can't help but thinking "Go big or go home!"

although it would get gnarly, a Government failure to pay bonds or something similar isn't likely to go full mad max apocalypse scenario. Companies and the stock market would still exist, etc.

Also as a monopoly issuer of fiat currency there is not really any realistic way for the government to default unless they decide to. It's much more likely that they will monetize massive amounts and cause serious inflation, but not actually fail to pay.

[warfreak2]

Why borrow cheap when you can not borrow at all? The government has the constitutional authority to coin money, free of interest, yet they choose to borrow from private institutions.

Free of interest, but not as cheap as issuing bonds - it costs money to print money, every dollar they mint is a net profit of only ~$0.80. That's an immediate loss of 20%. Plus, the more of it they print, the less the rest of it is worth (c.f. Zimbabwe).

[MrCash]

'The federal government owes me one million dollars'.

You had better have your pinky finger in the corner of your mouth while saying that; and be wearing a white suit while sitting in a revolving chair and petting a cat.  I would so go villain if I were you :-P

A monocle, top hat and cane are definitely needed as well. :)