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msymonds
01-24-2009, 07:54 PM
I am 100% in G. Now I am hearing the US Treasury is the Biggest Debtor in the world so is it possible for the money in the fund to just evaporate like the money invested in the stock market last October! I am beginning to think I should withdraw the money to one of Safety-I am getting SCARED!

KevinD
01-24-2009, 08:16 PM
I asked much the same question when I first found this site. The answer I got was that if the G fund evaporated that that would be the least of your worries. I think the discussion moved to Mad Max after that.

Today I started clearing the "out parcel" that I own next to my house so I could plant a large garden this spring... :nuts: :blink: :worried:

Show-me
01-25-2009, 08:08 AM
Gardening is a good answer but specifically inflation is your real fear.

KevinD
01-25-2009, 08:22 AM
Gardening is a good answer but specifically inflation is your real fear.

Yes. I am worried about inflation. I've asked here many times but haven't gotten an answer yet...

When's the inflation going to hit and what can we do to prepare for it? :worried:

Show-me
01-25-2009, 08:24 AM
It is a tough question to answer but I will try.

Show-me
01-25-2009, 08:35 AM
Inflation is effected by many factors.

1. Money supply - How much actual money is printed by the US. The more you print the more it dilutes the value of the money that is already in your pocket.

2. Fed. Funds Rate - This is market value of our US Treasuries that we rely on heavily to fund our Govt. due to deficit spending. If our rate is zero and Germany is giving 2%, why would China buy our Treasuries.

3. World perception - The US dollar was considered the fail safe currency and this is why gold and oil is traded world wide in dollars. We are failing to provide that confidence and there is talk of trading oil in Euro's.

I'm sure I missed some things and some point but that is the general layout.

Basically we are seeing a deflation of all commodities due to a weakening world economy. IMO, once we hit rock bottom inflation will kick in. Just look at historical graphs of gold prices from the Great Depression forward and you will see a pattern.

We can not predict when it will hit. How to prepare for it is to delay retirement and take advantage of the COLA. Buy a small position of Gold to hedge against inflation. Food inflation will hit so gardening and chickens could be helpful. Owning some energy sector.

Steadygain
01-25-2009, 11:58 AM
I am 100% in G. Now I am hearing the US Treasury is the Biggest Debtor in the world so is it possible for the money in the fund to just evaporate like the money invested in the stock market last October! I am beginning to think I should withdraw the money to one of Safety-I am getting SCARED!

Msymonds,
FIRST of all WELCOME to the MB.

This is probably the very worst condition our economy has ever been through - DURING YOUR LIFE FOR SURE - and believe it or not it is highly likely to get a lot worse before it gets better.

THE MOST IMPORTANT THING TO REMEMBER NOW IS THAT YOU ARE GOING TO HEAR A LOT OF DOOM AND GLOOM - AND FOR MANY THROUGHOUT THE COUNTRY AND THROUGHOUT THE GLOBE THINGS ARE INDEED GOING TO BE TERRIBLE

ALL THAT NEEDS TO BE SEPERATED FROM THE TSP ACCOUNT AND ALL FUNDS WITH IN TSP - ESPECIALLY G FUND.

Do not buy into the HYPE my friend - because that's all it is.

We have to believe in something and their is absolutely nothing wrong with believing in the U.S.A. and knowing our country will keep the G Fund and our TSP Safe.

I am fully in G Fund and will likely use that fund 100% through most of this year. To use any other fund MARKEDLY INCREASES your risk of LOSS.

So the FOCUS should be: Does G Fund guarantee NO LOSS despite however the Economy and the Markets are responding. To leave G out of fear and stay in C/S/I will only make you realize how foolish it was to leave G Fund.

THE VERY BEST WAY TO INVEST IN THE TSP IS BY FULLY BELIEVING IN ALL 5 FUNDS. THAT GIVES A HUGE PEACE OF MIND AND THE FULL ASSURANCE THAT YOU'VE MADE THE RIGHT DECISIONS.

alevin
01-25-2009, 01:07 PM
Inflation is effected by many factors.

1. Money supply - How much actual money is printed by the US. The more you print the more it dilutes the value of the money that is already in your pocket. Agreed. Some of the articles and commentaries I've been reading suggest the Treasury will drain/resorb some of that excess money supply when they think it safe to do so, to help contain that inflation factor/dilution of value), put us back into low-moderate inflation condition.

2. Fed. Funds Rate - This is market value of our US Treasuries that we rely on heavily to fund our Govt. due to deficit spending. If our rate is zero and Germany is giving 2%, why would China buy our Treasuries. (exactly-our Treasuries will be sold to buy German value (best deal in Europe right now), creating excess supply of treasuries that will need to be repatriated back to the U.S.-read increasing interest rate as T-bond prices fall.)

3. World perception - The US dollar was considered the fail safe currency and this is why gold and oil is traded world wide in dollars. We are failing to provide that confidence and there is talk of trading oil in Euro's. (timing and actuality of any such change is the biggest unknown)

I'm sure I missed some things and some point but that is the general layout.

Basically we are seeing a deflation of all commodities due to a weakening world economy. IMO, once we hit rock bottom inflation will kick in (yep-how high it will be allowed to go is another of the big unknowns, see #1, remember Volker, the early 80s). Just look at historical graphs of gold prices from the Great Depression forward and you will see a pattern.

We can not predict when it will hit. How to prepare for it is to delay retirement (part of my considerations for decision-making between 2017-2023) and take advantage of the COLA.
Buy a small position of Gold to hedge against inflation. (It's somewhere on the list, other ideas coming first tho for me-hope I'm not sorry I dilly-dally).
Food inflation will hit so gardening and chickens could be helpful. Already working on the gardening angle, contemplating chickens as next step after that. Our families survived Depression and WWII with home gardens.

Owning some energy sector. Still trying to decide when and which part of the sector but it's on the list. :suspicious:

For the record, I'm not concerned re G fund either. That's as safe as we can get and still have funds and lives and jobs in the U.S.

Prozium
01-25-2009, 08:59 PM
What happens to the TSP funds if Barclays is nationalized like some of the other European banks?

Show-me
01-26-2009, 05:46 AM
I would say nothing, Barclays only manages the account. The account belongs to TSP and is housed in the US.

Steadygain
01-26-2009, 08:02 AM
I would say nothing, Barclays only manages the account. The account belongs to TSP and is housed in the US.


Finally !!!

That is the bottom line and hopefully we can put this to rest.

Prozium
01-26-2009, 09:49 AM
From what I read, I am under the impression Barclays carries the TSP funds as assets?

The Barclays executives assured the thrift board that TSP assets are protected if Barclays encounters problems with borrowers who cannot live up to their contractual obligations or default on loaned securities.

Blake R. Grossman, chief executive of Barclays Global Investors, and H. Michael Williams, a managing director at the firm, told the board that borrowers put up cash as collateral when obtaining a loan or securities from the TSP. Williams said Barclays also relies on independent financial reviews, credit ratings and on-site visits when establishing credit limits for borrowers.

There have been only two defaults in the history of Barclays's lending program, but Barclays and its clients did not suffer any losses, Williams said.

In the unlikely event that Barclays ever fell into bankruptcy, Grossman said that trust and regulatory laws shield TSP assets from creditors. Asked by Alejandro M. Sanchez, a board member from Florida, if TSP assets were "locked in a room" and kept separate from other assets managed by Barclays, Grossman said yes.
http://www.washingtonpost.com/wp-dyn/content/article/2008/04/21/AR2008042102976_pf.html

"Barclays executives assured the thrift board that TSP assets are protected"

"unlikely event that Barclays ever fell into bankruptcy, Grossman said that trust and regulatory laws shield TSP assets from creditors"

What if they are nationalized?

Steadygain
01-26-2009, 10:53 AM
What if they are nationalized?

If they are it's for our protection.

From the few posts you've made you sound like someone who is very grounded and knows quite a bit.

We have 2 banking systems - Conventional - which are highly regulated; restricted in risks they can take; have ready access to credit from the Fed, and their deposits are insured by the taxpayer.

Then we have THE SHADOW BANKING SYSTEM - the majority of our current crisis stems from this.

Prozium
01-26-2009, 11:03 AM
I owned Anglo Irish Bank it was nationalized and my 1000 shares are now worth $0.

UK is in worse shape then Ireland.

Darling Says U.K. Downturn Is Worse Than Expected
http://www.bloomberg.com/apps/news?pid=20601085&sid=ayMZ4aX8lvMg&refer=europe

It does not give me a warm fuzzy that Barclays is comforting the TSP Board. We seen that show before.

Steadygain
01-26-2009, 11:17 AM
I owned Anglo Irish Bank it was nationalized and my 1000 shares are now worth $0.

UK is in worse shape then Ireland.

Darling Says U.K. Downturn Is Worse Than Expected
http://www.bloomberg.com/apps/news?pid=20601085&sid=ayMZ4aX8lvMg&refer=europe

It does not give me a warm fuzzy that Barclays is comforting the TSP Board. We seen that show before.


Sorry my friend I misunderstood. :o

The Shadow Banking System has to be dealth with and in a very big manner. I've been way more focused on them - and how to deal with them - because I've been forced to see the overall picture.

I can't say anything about where stocks to particular banks and similar institutions will be in the near future. I did try to alert Birch about Fannie Mae - and make known it was going to be a government entity. That brings fond memories of Luv2read - who is one of my all time favorites. Anyway we have a little dispute.

Perhaps the best advise I could give - is look at what happened when the bank you owned became nationalized...:(

GL

luv2read
01-26-2009, 11:19 AM
As safe as:

"backed by the full faith and credit of the U.S. Treasury"

What does that mean, exactly, when they can print as much money as they need to float the banks?

Steadygain
01-26-2009, 11:35 AM
That brings fond memories of Luv2read - who is one of my all time favorites.

Luv2read :) - I hope you noticed the above...


just when I thought I'd never hear from you again...

Prozium
01-26-2009, 03:20 PM
As safe as:


Britain was just three hours away from going bust last year after a secret run on the banks, one of Gordon Brown's Ministers has revealed.

City Minister Paul Myners disclosed that on Friday, October 10, the country was 'very close' to a complete banking collapse after 'major depositors' attempted to withdraw their money en masse.
http://www.dailymail.co.uk/news/article-1127278/Revealed-Day-banks-just-hours-collapse.html

alevin
01-26-2009, 10:58 PM
I have no idea how Brit banks are structured as far as connectivity between investment banking arms vs. traditional deposit-lending arms. Glass-Steagall was repealled here which removed that firewall established during the GD for banks here.

Perhaps the Brits still have a firewall in their banking system and that's why our funds are supposedly separate even from other invested funds as well as separate from checking/savings deposits arena? Anyone know?

Prozium
01-27-2009, 10:08 AM
On the other hand, nowhere in the major developed world are the problems more complex and potentially out of the government’s control as the UK. Virtually all of the ills hitting the US today are similar in the UK (massive debt build up, real estate bubble, income and employment collapse). But, on top of that, the UK shoulders an incredible share of the global banking crisis. Roughly speaking, the US and UK banking systems are about the same size in dollar terms, but the economy and government’s ability to absorb the losses are of radically different sizes. Our extremely rough estimates of aggregate banking system losses in the US are $1.8 trln compared with about $1.9 trln in UK banks.
http://www.jsmineset.com/wp-content/uploads/2009/01/bwam012609.pdf

nnuut
01-27-2009, 11:23 AM
Looks like I lost % money (shares) in the "G" Fund?
Can anyone expain this?:confused: Probably due to rounding, but I never saw my "G" drop before?
5536
5537
5538

Gumby
01-27-2009, 12:50 PM
Nnut,

It is because your c & S funds gained in value on 1/26/09 and your G fund didn't gain much which made the G fund percentage go down.:)

nnuut
01-27-2009, 02:08 PM
Nnut,

It is because your c & S funds gained in value on 1/26/09 and your G fund didn't gain much which made the G fund percentage go down.:)
Oh yeah, it's listing what % I have in the "G", "S" and "C" I gained more in the "C" and "S" !! DUH!!:eek::embarrest: Too many meetings today!!!:blink:

Prozium
01-27-2009, 02:25 PM
Found this story extremely interesting:
Britain is facing return of three-day week

http://www.independent.co.uk/news/uk/politics/britain-is-facing-return-of-threeday-week-1515307.html

Tens of thousands of businesses are already planning to scale back working hours this year in an effort to stay afloat.

Steadygain
01-28-2009, 09:52 AM
I have no idea how Brit banks are structured as far as connectivity between investment banking arms (shadow banking) vs. traditional deposit-lending arms. (conservative) Glass-Steagall was repealled here which removed that firewall established during the GD for banks here.

The shadow banking system is the reason why we are currently in a recession and why this recession is so huge.

Glass-Steagall and the restrictions it imposed on the Traditional or Conservative Banks was done away with in 1999.

It's important to realize that Tradional Banks are forced to operate under the light of day - they are highly regulated; they must maintain a high degree of capital; they are insured and covered by the FED; they are barred against high risk operations.

The Shadow Banking system - has no restrictions, is allowed to operate with minimal capital, and takes the highest risks possible. This system rapidly grew during the Housing Boom and are ultimately what brought the whole mess into being.

After Glass-Steagall was lifted in 1999 - Traditional Banks were now allowed to practice shadow banking operations WHICH WAS DEFINATELY A STEP IN THE WRONG DIRECTION. However - they remained highly regulated banks and their off shoot shadow banking during the housing boom resulted in a very small part of the resulting disaster.

The Shadow Banks - had already been large - and this is when the Financial System developed a monumental shift - because they expanded so rapidly and became so huge they essentially took control. It was the Head of the New York Federal Reserve who brought this to light (and although he recently got a lot of bad press for not paying part of his taxes in a timely manner - he did get appointed and is now in place).

The bottom line is - if any institution or entity operates like 'a bank' then they NOW NEED TO BE REGULATED as traditional banks. Traditional banks NO LONGER do shadow banking operations. If we expect the government to work for the betterment of the nation - then we need warmly and openly welcome them to take control of the entire banking system and bring it under control.

dpmp
05-22-2009, 09:02 AM
The unelected officials run the government and THEY ARE the major part of the shadow banking system.

Shadow banking system is here to stay. You can leave if you want, but they will stay.

Steadygain
05-22-2009, 10:22 AM
The unelected officials run the government and THEY ARE the major part of the shadow banking system.

Shadow banking system is here to stay. You can leave if you want, but they will stay.

Very True

They are somewhat 'elected' amongst themselves - a tight knit group that sticks together and has their own in place at the highest possible levels. They alone have the power to manipulate the Markets and Currencies and any particular aspect (such as 'silver').

They pay the big money to the politicians and fully guarantee the high level goverment and admisitrative 'Financial Big Wigs' are part of their group. There is absolutely no way around it and no way to avoid it. Exposing this on any significant level will absolutely and undeniably guanantee you'll wind up in prison with no chance of ever getting out.

Boghie
06-01-2009, 09:59 AM
Steady et. al.,

I, for one, will not be in the 'G Fund' when the Treasury comes a-knocking for a short term loan to survive on till the CongressCritters vote themselves another credit limit hike.

That short term loan may last a long, long time...

Anyway, why the comment that 'if the G Fund fails than the whole world collapses'.

Well, not really. Today, we just found out that the statement 'What's good for GM is good for Amerca' turned out to be false. Today, who cares about GM. Even the Gubmint blow heading their way is loose change rounding error on the Obama plastic.

Is it guaranteed that the international market (I Fund) and even the American market (C/S) would be long term damaged when the Chinese and the Boomin' Oldsters stop buying Treasury Bonds? Great Depression I hit the private sector, I tend to think that Great Depression II will hit the public sector harder than the private.

abu binat
08-31-2009, 05:24 PM
my head is spinning -- first and likeily to be the last post...
is not the G fund just a 1/2 step away from putting money in a jar on the back porch?

Boghie
08-31-2009, 08:52 PM
my head is spinning -- first and likeily to be the last post...
is not the G fund just a 1/2 step away from putting money in a jar on the back porch?

It earns you a bit over inflation. Right now the 'G Fund' returns 3.25%.
Money market funds are returning 0.50%
Treasuries are 1.5%

We are deflating at about 2.0%.
So, the 'G Fund' is returning an inflation adjusted 5.25%.

So, yes the 'G Fund' is for trust funders and retirees. You can consider it cash holdings. I, personnally, use it as a predator - trying to sell some equities high and then buy on a dip.

Regardless, when the 'C Fund' takes a 37% dump in 2008 the 'G Funds' +3.75% growth is +40.75% better than the S&P. :)

That is a Great Return!!!:p

Zender67
12-26-2009, 12:42 PM
Issues: Dollar printing presses running non-stop. Treasueries becoming more difficult to sell. Other countries backing away from the dollar and us debt. Thin trading volume during "Santa Rally". Alleged insider stock selling way above "purchases". Mutual funds fully invested. Market awaiting private investor to buy stocks....

Is G fund a safe investment, one that will keep pace with, or beat inflation, especially with the "treasurery direct" or "special" relationship?

Thanks.

James48843
12-26-2009, 01:12 PM
Issues: Dollar printing presses running non-stop. Treasueries becoming more difficult to sell. Other countries backing away from the dollar and us debt. Thin trading volume during "Santa Rally". Alleged insider stock selling way above "purchases". Mutual funds fully invested. Market awaiting private investor to buy stocks....

Is G fund a safe investment, one that will keep pace with, or beat inflation, especially with the "treasurery direct" or "special" relationship?

Thanks.

If we could be confident of that, I think we'd all be rich.
No one knows for sure.

IF inflation begins to run hog-wild, then no, G fund dollars will shrink, and inflation will eat you up.

But if inflation does NOT take hold, then G fund will do what it's allways done- eek out a little bit each day.

YOU have to decide what YOU want to do with YOUR money. We can't make decisions for you.

Good luck.

Zender67
12-26-2009, 01:20 PM
Thanks James 48843.

Is this the language from the G fund sheet that would cause the lost value with hyperinflation...



The interest rate resets monthly and is based on the weighted average yield of all outstanding Treasury notes and bonds with 4 or more years to maturity.


Indeed recognizing I must pick my fund selections, not a one looks good right now... Your take?

Warrenlm
12-26-2009, 01:30 PM
"Is G fund a safe investment, one that will keep pace with, or beat inflation, especially with the "treasurery direct" or "special" relationship?"

I believe the answer to this Q, after the first comma, is a flat "no". Safe as FDIC insured bank accounts, sure, but real inflation, coupled with the ordinary income tax to be applied, guarantees that the value will diminish with regard to today's value.

James48843
12-26-2009, 01:30 PM
Thanks James 48843.

Is this the language from the G fund sheet that would cause the lost value with hyperinflation...



The interest rate resets monthly and is based on the weighted average yield of all outstanding Treasury notes and bonds with 4 or more years to maturity.


Indeed recognizing I must pick my fund selections, not a one looks good right now... Your take?


Welcome to the message board.

Here is the best advice I can give someone just starting out-- don't move too quick--not until you are comfortable knowing the risks and rewards-

Please read this thread first- it contains some good information:

http://www.tsptalk.com/mb/showthread.php?t=3629

I recommend that thread to anyone just starting out. Read it all the way to the end. It will take you a little while, but it contains good information on where to start.

None of us here are professional money managers- so it would be wrong for one of us to try and give someone else advice to move YOUR money to the C, the S, the I or the F fund.-

In fact, you'd need to be a licensed financial planner to do that- We're not, so we won't. We're all just feds, like you.

YOU will have to be the one that best determines where YOU should place YOUR money.

Thanks- welcome, and good luck.

Zender67
12-26-2009, 01:37 PM
Thanks Warren and James.

tsptalk
12-26-2009, 01:51 PM
The G fund will attempt to keep up with inflation as it will track those bond rates. Back in the late 80's to mid-90's we saw G fund retruns between 7% and 9%, believe it or not, compared to today's rate of under 3%.

That's why if the Fed starts raising rates, and investors are able to get guaranteed rates near 5%, 6% or more in the not so distant future, the stock market will be more vulnerable. High rates are not good for profits.

Welcome, by the way, Zender!

Zender67
12-26-2009, 02:07 PM
Thanks TSPTalk...appreciate it

Boghie
12-26-2009, 02:28 PM
Think of the G Fund as a cash holding...

You will NOT be able to retire if you invest in the G Fund through your working career. You will not be investing, you will be saving. At best, it will barely clear inflation. Those 7% and 9% returns Tom mentioned were in periods of high inflation - thus a real rate of return of about 1%.

Also, the Feds can raid the G Fund if they are unable to increase the debt ceiling. They have done so a few times in the recent past. They have always paid it back with the proper interest. But, they may be able to raid the fund if they are unable to issue debt. Who knows. This is my pet peve - not generally shared by anybody:nuts:

Definitely read the initial and follow-up posts James pointed you to.

Zender67
12-26-2009, 02:59 PM
10-4 Boghie...

As 2009 comes to an end, the US fiscal environment is "troubling". And I appreciate that no replies come from licensed financial planners... Piece together the news items or headlines and one wonders if we are headed for another major market downturn. Time will tell. Until then, am appoaching the new year with caution - and with appreciation for the posts to my initial querry this morning... A blessed New Year to each of you!