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Friday, May 4, 2012

We've got five more years

Forget retirement...and retirement savings
You've been sold a bill of goods for the last four to six decades. You've been told that nation-states, democracy and socialism is good. You've been told our monetary system prevents instability. And, while the government and central banks put your unborn children or grandchildren into debt for life they've been telling you that there will be a socialist safety net to protect you and that the "American dream" includes retiring in your 50s or 60s to a wonderful life of golf and lying on the beach.

It even appeared to work for a short while thanks to demographics and the greatest advances in human history.

The baby boom caused by the nation-state (which created World War II) and central banking (which created the depression and funded World War II) was truly a boom creating a once-in-a-lifetime chance to make it appear as though some of these inane socialist theories could work. The end of a ponzi scheme is always when net payments outstrip net income. This occurred in 2010 and there is no end in sight even under the US Government's own heavily massaged and always underguesstimated projections...

There is only one reason it and the US Government hasn't gone bankrupt yet. It's because they can still print dollars to cover all these deficits. But how much longer can that realistically last before hyperinflation sets in and the dollar becomes worthless? We can't see any way it goes more than five more years from here... and that's pushing it.

I've posted about the retirement pipe dream before. Suffice to say, the notion that you can get rich owning slivers of huge pooled funds that own slivers in their turn of gigantic corporations is, at the least, rather overstated. And to realize those presumed gains, you have to cash out your fund shares and find someone to sell them to, God willing for more than you paid for them. Bear in mind that there will be a lot of Baby Boomers trying to do the same thing. It will be a buyer's market for cashed-out 401k fund shares.

For most Americans, these gains (if any) will be tax-deferred, not tax exempt, so keep that in mind also when you're calculating your old age-grocery money.

There is no way out of this. The post-WW2 welfare state is unsustainable and retiring Baby Boomers will kill it. Of course, my father reminds me that people have been saying this course is unsustainable since the 1950's, but we keep grinding on.

5 comments:

Anonymous said...

What course would you advise for a 40-something whose salary will probably top out at a little above 50K? Let's say that complete social breakdown does not happen by 2030, but that there is no reasonable expectation of getting more than a fraction of what gets put in? I don't fool with wall street (at least with my personal income). I own a modest home that I don't predict will increase in value. A "keep your powder dry" argument isn't completely off, but let's say it's not quite that bad.

The Anti-Gnostic said...

Visibilium is better qualified on this sort of thing.

I would say fixed income and a small amount of metals. A second trade you can run from home would come in handy as well.

Anonymous said...

Thanks. Pretty much what I was thinking. When I was in my early twenties, my healthy paranoia about future social instability kicked in and I started learning some practical trades as a backup to my academic background: basic welding and electrical. It's earned me a little money on the side already. After the son's out of the house, I might try to get good enough to have certifications in both.

Ingemar said...

Anon, if/when the shit hits the fan, they'll only be concerned that you can do the job, not what paper you have to back it up.

Anonymous said...

You can break future dysfunction down as:
shit hits the fan scenario- guns, gardens, affinity groups, infrastructure disappears ala Detroit, godknowswhat, papers don't mean shit. Being an a electrician would have a whole new skill set beyond pulling romex. You'd have to be an engineer to produce modular energy sources.

regression to 2nd/3rd world tottering state scenario- Kind of like PIGS states. Not as drastic as shit hits the fan. state institutions abandoned by some people and revered by others, deep debt, kleptocracy, public lands disputed over and snagged by different interests. Some regions preserve civilization's trappings more than others. "Certification" from a trade group may still exist and have legitimacy.

etc...etc...

The scenarios are endless and could combine elements of different dystopia/utopia levels. It's all speculative. I try to be a stay ahead of the game guy. I like to operate on multiple tracks, and anyway, certification if nothing else speeds up my motivation to learn my trades better and make contacts, and it's kind of fun. I've even got a measure of hunter/gatherer/farmer skills. I think you can have healthy paranoia without descending into a garrison mentality.