The problem is that high paying jobs in HCOL cities are highly, highly competitive. There is no guarantee that the OP will be able to come back to high-paying job in HCOL after moving out. In fact, it will be quite difficult, as the move will signify negative things to potential employers.
It is difficult to go wrong if you invest in businesses that are providing real value to people and trade at attractive valuations. It is unlikely to make you wealthy, but it is unlikely to make you poor either.
The problem with 'joining in with the fools' is that it relies on the 'greater fool theory' to make superior returns. And you could well end up being the 'greater fool'.
Can the Fed raise interest rates significantly without bankrupting the Federal government?
The Federal debt needs to be rolled over every now and then. At certain interest rates, the costs of servicing the debt become unacceptably high. Where is that 'breaking point'? If you see some serious analysis of this, please let me know.
But there is a higher bound to which the Fed can feasibly raise interest rates. So it is possible that the Fed will be forced to choose between keeping rates low, keep buying Treasuries and destroy the dollar through runaway inflation, or raise interest rates and bankrupt the US government.
The Fed doesn't set bond interest rates. Rates on bonds are set by an auction. If bond interest rates are low, it's because bond investors want bonds. Which is to say, they think the US government will have no trouble paying them back. So the government borrows cheaply, and investors believe they will be able to continue to.
The Fed sets a different rate, one that banks use to lend money to each other. It forms kind of a floor for lending. They raise it to reduce lending, and thus slowing down the economy in general (and thus reducing inflation).
They've kept the latter at nearly zero -- arguably for the not-great reason of propping up assets. If anything, raising that would make bonds more attractive relative to stocks, dropping the interest rate further. Instead, we've gotten inflation, but only in the asset markets, not consumer inflation.
They actually wanted consumer inflation to be higher, so that consumers would be forced to put their money in asset markets rather than holding it in cash. They've finally gotten their wish, though it's likely that it is due more to pandemic-related shutdowns than to monetary-based demand.
But the Fed is doing QE, which is buying longer maturity treasuries, creating artificial demand, which lowers interest rates.
Short-term treasuries and the fed rate are also directly related. Increase the fed fund rate, and short-term treasury interest rates will have to go up as well to remain competitive.
I think though the overly positive replies in this thread are a bit... misleading. And frankly read a lot like something extremely religious people would write about their newfound religion. It doesn't read like rational discourse.
Of course, once you already have children, you are not going to be regretting it. It would just feel horrible to do so. The children, no matter how difficult they might make your life, are innocent little creatures, and you make it work - what else are you going to do? And the effort you put in, helps with the bonding. And of course you try to focus on the positives and forget the negatives - for your own wellbeing and sanity.
What's misleading is that the people replying are not considering the counterfactual in good faith. What would their life be like had they not taken the plunge? After all, it probably wasn't all that horrible before they made the decision either. Could it be that other options would've made their life better? Perhaps, the stress of children had led to deterioration in their relationship with their spouse, or made both of them age a lot, and they would've been able to enjoy each other's company so much more without. Perhaps it meant they had to give up some of their childhood dreams. Perhaps they had to cling to a job they didn't particularly like (or, indeed, hate) because they could no longer afford to take risks. Perhaps they no longer had the time to grind leetcode and get into a FAANG. Perhaps they would've got the benefits of having children and fewer of the downsides by caring for their nieces and nephews instead, or by just getting a cat.
Otherwise it becomes meaningless. You could ask someone that had children at the age of 16 if they regret it, and you would probably get the same responses as in this thread - 'of course not, best thing that ever happened to me; yes it has been tough, yes it meant I had to make sacrifices with my education and career, but I wouldn't trade the experiences with my child for anything in the world'. Yet we all recognize that having children at 16 is not the smartest idea.
I am one of those people you are describing, and I actually 100% agree with your assessment! But I think I was fair: as I said in original reply elsewhere (not this thread), it may be Stockholm syndrome, but once you’re in you can’t help but be all-in. It is necessary to remain sane, and thus, it changes you.
The only useful semi-rational heuristic I can ascribe to my general stance is that: before I had kids, life was objectively much easier, but I had many regrets and suffered greatly from causes of my own invention. After having kids, my kids are the cause of my suffering and I have no regrets about it. Biology assists you there because it makes you love them even though they are frequently the cause of your suffering.
One of the other _pragmatic_ reasons for having kids that I didn’t actually notice until after having kids, is that old people seem to often (but not always) become confused, lonely, and out of touch with modern realities and culture. Family creates, for many, a lifelong bond that bucks this tendency. Of course there are other stressful bonding scenarios that do this, like for combat vets, but seldom are they so cross-generational. The perspective shifts are also quite powerful, and there’s an amazing amount of high quality children’s media (especially books) that are no less powerful for being written in an ELI5 way…sorta like how good coders write lots of good code easily and great coders write only a tiny bit of code that seems totally obvious to everyone upon reading, but that was never done before. Anyway, most of that stuff I know I would have missed.
Along similar lines, you get exposed to a much more diverse community: the parents of your children’s friends, and various other child-centered communities. Almost all of my closest friends today, I only met as a side-effect of having kids. There’s probably a counterfactual for the childless but I haven’t lived that life and don’t know anything about it!
There are countless pragmatic reasons not to have kids. I think when people ask, “do you regret this life,” it is their lizard-brain kicking in, nudging then towards “yes it is time.” For those of us who have had them, our own lizard-brains kick in with their own reply. An ancient call and response.
After all, all the people smart enough not to have kids never achieved offspring to carry on that lifestyle, and likewise for the pack/community that discourages ever having kids.
As an atheist, my respect goes out to the “achildists” for bucking the trend: it is a dying breed by definition. As a “childist,” like some sort religious nut, all I can do when confronted with the question “do you regret having kids” is share what is in my heart: having kids is tough but I don’t regret it.
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If someone was asking: “should I have kids?” then the answer might be very different! I’d probably say: “…no, why would you want to do that??” If someone is wondering about regrets, though, then they either have kids and have regrets or they are already feeling the call and asking for a lifeline to resist it. In either case, “sorry bub, your lizard-brain won, it’s too late, but here’s what you can look forward to.”
What is your take on the Ray Dalio view? The way I understand it:
1. Lending to the US government (buying treasuries) at low interest rates is not profitable, as you will be paid back in devalued currency. As is, real rates are negative.
2. Investors demand higher interest rates to make it worth their while.
3. US government has to roll over its debt or borrow more, but has to do it at higher interest rates that it cannot afford (what rate would that be?). Fed comes to the rescue by buying treasuries with new money, creating more demand and driving interest rates down.
4. That makes points 1 and 2 even more valid, so fewer 'real' investors turn up to buy treasuries, and those that hold treasuries try to sell them (you don't want to be getting fixed returns in currency that is losing value). That increases supply of treasuries even more.
5. Recognizing this dynamic, people rush to 'cash in' their dollars - buy anything tangible they can. US stocks sell off relative to 'hard' assets, as companies reporting in dollars are not be able to operate effectively.
6. This results in hyperinflation. The above unfolds relatively quickly with no advance warning (you don't want to alert others as you are trying to offload your dollars), turning low inflation into hyperinflation.
So i would say you are qualitatively correct but not quantitatively correct regarding what Dalio believes regarding inflation.
I think Dalio would go as far as saying "Cash is trash" but not as far as saying "the dollar will hyperinflate". He believes strong inflation is coming but that is very different than hyperinflation.
Hyper inflation would generally be defined as a quarter of 50% per month inflation. That means the dollar would have to lose 3/4 or more of it's value over a quarter to be said to have hyperinflated. Supply factors have to totally outstrip demand factors where there is essentially no bid to reach this kind of growth. But 90% of the world has debt denominated in dollars that creates a constant bid for dollars. This simply cannot unwind overnight without ending in a major global solvency event and if that happens every currency on the planet is going to be revalued instantaneously anyway.
Anyway that's a lot of words to say, I dont think Ray Dalio believes hyperinflation is coming. I think he thinks inflation is coming, maybe even a lot of it.
A second unrelated point is that every historical instance of hyperinflation I'm aware of involved a sovereign owing debts in some other sovereigns currency. No one has ever hyperinlfated when their debts were denominated in their own currency. This also is a situation which does not apply to the US.
How do you think a foreign country X focused, US-denominated, ETF would perform during something like this, if the target country had a stable balance sheet? I've thought this would be a decent hedge (though difficult now that everything is global/intertwined), but love to hear the downside risk.
