• Blog
    pension bomb with lit fuse

    The Great Retirement Threat

    Pension expert warns of massive failures ahead
    by Adam Taggart

    Friday, November 20, 2020, 10:18 AM

“We are on the precipice of the greatest retirement crisis in the history of the world. And that makes perfect sense because, first of all, we have the largest elderly population in the history of the world.

Just focusing on the United States: our elderly are woefully unprepared to retire. And in the decades to come we will witness millions of elderly Americans, Baby Boomers and others, slipping into poverty. ‘Too frail to work, too poor to retire’ will become the new normal for many elderly Americans.”

So warns forensic pension analyst Ted Siedle.

And Ted knows what he’s talking about.

He’s a former SEC attorney who has testified on pension abuse before the Senate Banking Committee. And in 2017, he secured the largest SEC whistleblower award in history of $48 million, and in 2018, the largest CFTC award in history at $30 million.

Too many of America’s public pensions are dangerously underfunded due to over-promised payouts vs contributions and poor fund performance. And corporate pension funds are in the hole a collective -$50 billion.

ZIRP has pushed these funds out of conservative investments into highly risky and opaque instruments they have no business being in. And that the rosy case, assuming markets continue their current trajectory.

But given how overvalued they are, even just a period of 0% returns (which respectable analysts like John Hussman are waring will be the return over the next 12 years), let alone a sizable market correction, will unleash a catastrophic cascade of collapses across the pension system.

Which is very worrisome to consider when markets are this overvalued:

US equities Price To Sales chart

Ted strongly advises every investor look at their current exposure to these coming pension failures.

If you’re relying on one for your retirement, what will you do if your monthly payment is cut in half or worse? And even if you aren’t, these failures will send shockwaves across every asset class as these funds reduce their buying and perhaps become forced sellers. How vulnerable is your current portfolio to that?

Which is why now, more than ever, is the time to partner with a financial advisor who understands the risks in play, can craft an appropriate portfolio strategy for you given your needs, and apply sound risk management protection where appropriate:

Anyone interested in scheduling a free consultation and portfolio review with Mike Preston and John Llodra and their team at New Harbor Financial can do so by clicking here.

And if you’re one of the many readers brand new to Peak Prosperity over the past few months, we strongly urge you get your financial situation in order in parallel with your ongoing physical coronavirus preparations.

We recommend you do so in partnership with a professional financial advisor who understands the macro risks to the market that we discuss on this website. If you’ve already got one, great.

But if not, consider talking to the team at New Harbor. We’ve set up this ‘free consultation’ relationship with them to help folks exactly like you.

Related content
» More

31 Comments

  • Fri, Nov 20, 2020 - 10:44am

    #1

    Adam Taggart

    Status: Platinum Member

    Joined: May 25 2009

    Posts: 6469

    4

    Sure, we can chuckle now...

    Cartoonists have long been using their gallows humor to warn us of what's coming. It's not like the inevitable crisis isn't obvious to anyone paying attention.

    Sure, we can chuckle now at the jokes and shake our heads in befuddlement at how dim-witted/corrupt those running the system are.

    But how many of us will still be laughing when the reckoning actually arrives?

    Login or Register to post comments

  • Fri, Nov 20, 2020 - 10:48am

    #2

    Adam Taggart

    Status: Platinum Member

    Joined: May 25 2009

    Posts: 6469

    8

    "Kiss Your State Pension Goodbye"

    For anyone interested in learning more about Ted Siedle's work after listening to the above video, here's an article he recently wrote for Forbes:

    Kiss Your State Pension Goodbye

    When Kentucky senior Senator and Majority Leader Mitch McConnell said this week that he would be in favor of allowing states to use the bankruptcy route to deal with their underfunded public pensions amid the pandemic emergency, state workers and retirees—already struggling with the economic and health crisis—were rightfully alarmed. “Using the bankruptcy route” is code for slashing pension benefits promised to state workers. Under current law, only cities and other local governments can file for bankruptcy and only with permission of the state.

    McConnell supposedly represents Kentuckians and Kentucky already had the worst-funded state pension system in the nation—only 16% funded—before the COVID-19 market meltdown. Chris Tobe, a former trustee of the Kentucky pension and SEC whistleblower, suspects when the pension reports fiscal-year-end performance July 1st, its funding level may fall into single-digits. (Full disclosure: I served as Independent Counsel to Mr. Tobe in connection with his SEC whistleblower complaint.)

    Presumably Kentucky would be the first state to use McConnell’s bankruptcy plan to eliminate state worker retirement security.  Kentucky has over half a million (514,000) current and future pensioners ...

    Read the full article here

    Login or Register to post comments

  • Fri, Nov 20, 2020 - 12:49pm

    #3
    TWalker5

    TWalker5

    Status: Bronze Member

    Joined: Mar 13 2020

    Posts: 47

    5

    Federal Pensions

    I don’t have the assets to justify going with New Harbor. My greatest asset is my military pension that, at least theoretically, should continue as long as we have a semi-stable federal government. My biggest fear is that my modest pension will get overwhelmed by huge increases in inflation. We do get an annual COLA but it is already evident that the COLA does not match true inflation.  Therefore, I have about 25% of my remaining assets in PM, both physical and paper, in hopes of effectively hedging against such an occurrence. I’m certainly open to other ways to insure against the ravages of dramatic inflation, if anyone has suggestions.

    Login or Register to post comments

  • Fri, Nov 20, 2020 - 12:50pm

    #4
    MKI

    MKI

    Status: Bronze Member

    Joined: Jan 12 2009

    Posts: 293

    5

    Underfunded

     ‘Too frail to work, too poor to retire’ will become the new normal for many elderly Americans.”

    Sadly, I think a bigger problem for the elderly in the next decade will be inter-generational angst due to lack of familial ties. The elderly need much more than money and I doubt this will be forthcoming for many reasons: generational division of wealth, few children (baby bust), weak  family ties (divorce, blended families), exploding medical needs (obesity/mental health issues for all generations).

    Put another way: children/family are a resource, and our elderly "me" generation never invested much in family but rather in working and playing AKA eating seed corn. We may witness the knock-off effect of social inventions freshly conjured in the mid-60s: effective birth control, 80% female working, no-fault divorce, and massive immigration. All these are measurably profitable to the short-term economy. Yet all are measurably hostile to family/community. This trade-off may turn out to be a profitable trade for the elderly, it's too early to know. But it would be safer for the elderly to run this experiment with some savings in reserve...

    Regarding pensions and the stock market: the Fed is simply in a tight spot, if they raise interest rates and stir inflation, what about those elderly without much in assets? They will be paying exploding prices for food, rent, and medical care, which will strike terror in those lacking assets and/or jobs. IMO, this thing is a political nightmare for the Fed and society. I'm curious a heck to find out what happens by 2030.

    Login or Register to post comments

  • Fri, Nov 20, 2020 - 1:38pm

    #5
    VTGothic

    VTGothic

    Status: Silver Member

    Joined: Jan 05 2020

    Posts: 335

    7

    Our Wiley Coyote Moment

    We are not "on the precipice." We are off the cliff. Neither pension fund managers, employers, employees, nor government watchdogs and politicians have wanted to deal honestly with this problem at any point in the last (say) 30 years. Everyone has been pretending that plans could be based on 5-7% annual returns even when decade by decade real returns persistently clocked in at 1-3%.

    I suspect that secretly everyone has presumed that when the SHTF the federal government would bail everyone out. That looks less and less helpful as the sovereign debt piles higher and higher. Nevertheless, UBI is coming.

    We should expect a Biden administration (should he prevail, which seems likely) to come after private pensions and 401K plans to fund UBI under the guise of stabilizing the "volatile" return profile of the ""free"" market. Happy days if he doesn't; but it ain't wise to plan around him not.

    Login or Register to post comments

  • Fri, Nov 20, 2020 - 5:50pm

    Mysterymet

    Mysterymet

    Status: Bronze Member

    Joined: May 23 2020

    Posts: 111

    2

    401k Confiscation and UBI

    So my question is should we take a chunk out of the 401k using the covid no penalty benefit and use that to Buy things like PMs, land, crypto etc? I really do not want my retirement savings going to some lazy fart as UBI.

    Login or Register to post comments

  • Fri, Nov 20, 2020 - 7:27pm

    #7
    MKI

    MKI

    Status: Bronze Member

    Joined: Jan 12 2009

    Posts: 293

    4

    401k liquidation

    ...should we take a chunk out of the 401k using the covid no penalty benefit and use that to Buy things like PMs, land, crypto etc? I really do not want my retirement savings going to some lazy fart as UBI.

    No. Many reasons: 1. There is simply too much political power behind 401ks for them to get raided - this includes Vanguard, Blackrock, and other very big money that basically owns our government.  2. The US government will simply inflate their balance sheets to pay for UBI (this is how communism works, we will have lots of cash just no purchasing power). 3. 401k/IRA remain incredibly valuable for asset protection (they are protected from lawsuits, medical bankruptcy, basically from everything but your spouse...even OJ Simpson kept his). 4. The tax breaks on earnings will likely remain for regular folk.

    I had opportunities to get money out of my IRA tax free but left it in for the above reasons. It's too good to pass up.

    Login or Register to post comments

  • Fri, Nov 20, 2020 - 7:51pm

    #8
    Redneck Engineer

    Redneck Engineer

    Status: Bronze Member

    Joined: Mar 16 2020

    Posts: 135

    2

    Brief thoughts on Pensions

    The big questions about pensions:

    1. Are they managed honestly?
    2. Are they managed competently?
    3. Are they viable or sustainable in the current environment (which includes ZIRP)?
    4. What is likely to happen to pensions in the current environment following a market crash and likely currency revaluation?
    5. Are pensions viable if honestly and competently managed in a healthy monetary, fiscal, and economic environment?

    My answers, briefly:

    1. I’d assume some are honestly managed, but the lack of transparency obscures any fraud.
    2. Likely some are, but there is a lot of market and political forces to discourage thinking and investing outside of the mainstream narrative. Narratives encourage herd mentalities, here as elsewhere.
    3. I don’t see how any can be viable. As shown in the interview, ZIRP pushes investors into riskier investments because TINA in the search for yield. And, alternative investments (gold, bitcoin) would be scandalous so unlikely.
    4. They will go bust, sparking a battle between those who have been promised and those who would have to fund those promises. For public pensions, that largely means unions vs taxpayers. As the threat of losing a pension becomes more apparent, people will seek early retirement and cash out in order to get something, which we saw, for instance, a few years ago with Dallas police making a run on their pension.

    As a result of that, one way to bury the conflict is cover over it with UBI. I hate the idea of it, as do many, but a lot of people think they are entitled to their Social Security and Medicare. (Look up the law and you’ll see that we are not legally entitled, and politicians can revoke, cancel, or diminish those benefits as they wish – the only limiter being their odds of re-election.) Inflation remains the preferred way forward, so cap the CPI to pretend we don’t have inflation while they devalue the currency to make it look like you’re getting your promises met.

    The odds are reasonable (meaning not negligible, but not super high either) that the government will take the opportunity to seize pension and 401k assets in a market crash in order to “save” investors. Remember Obama’s myIRA? That apparently quietly closed in 2018. I expect something similar though to come along, mandating we save some % into “safe” government securities. Maybe it’ll be used as a backstop or replacement for SS as well.

    5. I’m not sure an honest pension could exist.

    Compare a pension to other retirement vehicles. If you invest your own money, that’s an IRA, 401k, or brokerage account; clearly not a pension. If it has a defined benefit, that would be something like an annuity; yet pensions aren’t those either. If you pool your money with other investors, that could be a syndication or hedge fund; but those have very well defined investment rules and entry/exit points.

     

    If you pool your money with others, and the early people in get to take their money out first, while the pool grows thanks to more and more people joining in – well, that’s a ponzi scheme. Even in a healthy economy, can a company or public institution perpetually fund a pension? I don’t see how the math can work out. Are pensions just dressed-up ponzi schemes?

    Login or Register to post comments

  • Fri, Nov 20, 2020 - 8:18pm

    Redneck Engineer

    Redneck Engineer

    Status: Bronze Member

    Joined: Mar 16 2020

    Posts: 135

    0

    Redneck Engineer said:

    Downsides to 401ks include:

    1. limited investments. What good is keeping the account if all the options are likely to be halved? If you can invest in PM ETFs, maybe. One possibility is to look at Brokeragelink accounts if your plan is with Fidelity. You can transfer a large % of your funds into a brokerage account, retain the tax benefits, and trade in a much wider range of assets, including PM ETFs. (Contact your plan manager for details.)

    2. The dollar cost average approach to putting money into mutual funds is actually pretty opaque. You can look up the top line fees, but what if there are hidden fees on top of that? One fee that's unaccounted for is the actual price paid when you buy or sell shares. Do you look up the actual price paid biweekly? Does it match what you would pay on the open market? There was a startling article which pointed out that often these "low fee" funds (index or otherwise) may involve the fund companies skimming some money off the top when you buy and sell, perhaps front running the investors. (I did a quick search and couldn't find the article from a couple years back.)

    There are a number of articles outlining a number of negatives for 401k plans. They mostly cover the same points so a quick search can spell out those points. Bottom line is I can see many reasons to get out of 401k plans, but keeping some money in them may help diversify funds to protect against the future. (If we don't know exactly which path the economy and markets will take, hedging is a good approach, so some cash for deflation, PM for inflation, tax-deferred accounts for lower taxes, and after-tax Roth account for higher taxes.)

    You might consider rolling over your 401k into an IRA and doing a Roth conversion. This gives a hedge against paying higher income taxes in the future. Of course that assumes the government honors their promises. So a mix of tax-deferred and Roth gives a decent hedge against future tax rates.

    If we simultaneously face a large unemployment problem and a large wave of retirees without funds, I suspect there will be a lot of public support for UBI, unfortunately. One way to fund it is to just print money. Another would be to confiscate retirement funds while promising victims they will be "compensated" with credits of some kind in these new universal accounts.

    It's hard to see the push for these Federal Reserve digital wallet accounts as anything but the groundwork for that.

    Forecasting is hard, especially about the future. So hedging in appropriately decoupled asset classes and in a mix of pre- and post-tax investment accounts should minimize the downside.

    Login or Register to post comments

  • Fri, Nov 20, 2020 - 8:37pm

    #10
    Redneck Engineer

    Redneck Engineer

    Status: Bronze Member

    Joined: Mar 16 2020

    Posts: 135

    9

    The Retirement Myth

    I think we're at the end of the era in which we were taught to believe every first-world person was entitled to a comfortable retirement. It was always a lie.

    If you wanted to retire, the honest way to do so was to save your own money. That meant working hard, earning a lot, saving a lot, and investing well. With some luck, that would pay off and you could have a few years at the end of your life to enjoy your savings.

    But most people can't, or won't, do that. So they need another source to fund their retirement. That means other people's money. Social Security uses taxpayers. Pensions work for a while, so long as the pool is growing and the ratio of current workers to beneficiaries is sufficiently large. But as the ratio lowers, the rate of money leaving grows faster than the rate of money coming in.

    One way to kick the can down the road is to boost the rate of returns, which happens if we keep lowering the interest rate. But that slowly increases the risk of default, as "safe" investments like bonds yield less and less. There are other secondary effects that limit this effect. For instance, below a certain interest rate, folks realize they need to save even more money, so they lower the consumption rate - contrary to the Keynesian idea that lowering rates always spurs spending.

    All of this means we're headed back soon to the reality that the general population can't retire. Even now, seniors are pushing off retirement because they don't have enough saved, so they keep working longer.

    All of this means we're not just at Peak Prosperity - we're also at Peak Retirement.

    Login or Register to post comments

  • Sat, Nov 21, 2020 - 2:55am

    #11
    VTGothic

    VTGothic

    Status: Silver Member

    Joined: Jan 05 2020

    Posts: 335

    11

    When cut to the chase...

    ...I think UBI in some form is inevitable because AI will displace workers - first manual, then knowledge. Each iteration of AI development and deployment will reduce costs of production and provision, and that's deflationary. Add in the reductions in acquisition of "things" inherent in resource limits - there's more deflationary impact. Also account for reduced future birth rates. In the medium-term, the domestic and world economies will deflate while prices trend toward zero through smart automation and lower demand at the same time as unemployment increases. Result: UBI. Perhaps blended with some kind of "4-hour work week" scenario.

    In the short term, at least the left-leaning wing of the Democrat Party will want to "pay for" guaranteed basic incomes with the excess money sitting around "at risk" in the stock and bond market: who needs private medical care when there's universal coverage (as Obama's Admin argued back in the day)? And who needs private retirement benefits when there's universal basic income (as Biden's Admin may well argue tomorrow)?

    Down the highway a bit: who needs an inefficient stock market, or bonds, when the small and medium cap enterprises have gone belly up from Covid successor lockdowns, and only the few, large corporations remain - the modern guilds licensed by the governments that they fund, all too essential to fail?

    That's one trajectory. The people have to fashion alternatives from the bottom up, as Chris indicates in his just-released articles on the interregnum and moving ahead in life-affirming ways. In my pessimistic moments (which abound right now), I think there's gonna have to be a lot more pain before enough people give up the retirement myth and commit themselves in sufficient numbers to create those alternatives.

    Meanwhile, my answer to Mysterymet's question,

    So my question is should we take a chunk out of the 401k using the covid no penalty benefit and use that to Buy things like PMs, land, crypto etc?

    is "yes, all of that."

    We'll all balance as we best believe equips us for uncertain times, but my strategy has been and continues to be: Land first; free and clear and with infrastructure (even 1 acre is enough; 10 is plenty). That's far more important than a bank account or a stock-and-bond portfolio.

    Close second is BTC, specifically, especially for the next 24 months. Get some exposure now, hang tight and ride the cyclical wave. PMs to follow as possible.

    And stay ahead on crucial core foodstuffs. The perennial Mormon approach of a year's supply is not unreasonable, but at least 3-6 months of what you need to thrive physically. Wean off of prepared foods, carbohydrate and sugar rich foods - they produce co-morbidities, debility, and early death.

    Couple that to getting in shape by getting regular moderate exercise, daily. 1 hour at first if that's all you can; it'll gradually extend to 2, then 4, then a full day of moving about that reduces co-morbidities and increases vitality. The less debilitated, the more able to flexibly meet challenges. It's going to get Darwinian.

    We're off the cliff. It's a dark landing below. Parachutes are no longer optional.

    Login or Register to post comments

  • Sat, Nov 21, 2020 - 8:00am

    Craig

    Craig

    Status: Member

    Joined: Mar 20 2020

    Posts: 9

    4

    RE: when cut to the chase

    VT,  I like your suggestions on assets.  I've been doing mine in exactly the opposite order.  Not through any well thought out plan, just how it's playing out.

    1. Massive stock up on food and supplies first few months of this year.
    2. Started into PMs in May.
    3. Jump started Crypto purchases in May also (ramped up heavy late summer and fall)
    4. Working on the land...

    Sold our house in the suburbs one month ago and signed a year lease on a house.  Will use that time to get some land and get started on all the rest of the stuff we want to do, particularly on producing food.

    Also, on the 401(k) angle, since I'm so frustrated with the limited options provided by my employer, I'll take advantage of the opportunity to get a penalty-free distribution in 2020 and roll it into an account I can self-direct.

    I always appreciate your thoughts, VT.

    Login or Register to post comments

  • Sat, Nov 21, 2020 - 8:27am

    #13
    Mohammed Mast

    Mohammed Mast

    Status: Gold Member

    Joined: May 17 2017

    Posts: 1044

    3

    VT

    "Going , Going, Gone"

    Once again Vt smacks it out of the ball park

    Login or Register to post comments

  • Sat, Nov 21, 2020 - 9:09am

    Mohammed Mast

    Mohammed Mast

    Status: Gold Member

    Joined: May 17 2017

    Posts: 1044

    4

    Redneck

    I remember Peter Schiff saying in 08 that only the very wealthy would be able to retire .

    Retirement does not exist in most of the world. In many countries people have large families so that the children can look after the older folks. Retirement is a very recent phenomenon.

    My perspective is that we are under siege by pirates. They don't have wooden legs and eye patches anymore. They wear three piece suits and have summer homes in the Hamptons. Any money you have is fair game to them. They will raid any and all forms of your wealth.

    The elites a la the "Great Reset" have a plan. It is being executed as we post. It is a plan that involves a lot less people on the planet. The UBI is just a transition step. The term "essential workers" is nothing more than neuro linguistic programming. Who determines who or what is essential. If I am a waitress making minimum wage depending on tips , living day to day, it is pretty damn essential I have a job. UBI is the "New Deal" of this century. It will be a barely survivable stipend. It will buy time for the eugenicists like Bill Gates to "execute" the plan.

    You, me, we are on our own

    Login or Register to post comments

  • Sat, Nov 21, 2020 - 9:11am

    #15
    2retired

    2retired

    Status: Bronze Member

    Joined: Jul 20 2020

    Posts: 90

    1

    2retired said:

    When I retired from medical toil (6 years ago); I was surprised by the difficulty in getting various regulatory bodies (and my referral base) to accept that I was stopping! I realized it is the exception not the rule that docs (independent business types) are able to retire (I earned my cushion outside of medicine). The great Ponzi scheme (stock market/immigration/ population expansion) will pause at some point, and that seems to be near.

    It always reminds me of the old saying: 'Doctors (fill in alternate profession) live rich, and die poor; farmers live poor and die rich'

    Login or Register to post comments

  • Sat, Nov 21, 2020 - 9:24am

    MKI

    MKI

    Status: Bronze Member

    Joined: Jan 12 2009

    Posts: 293

    0

    Zero odds of seizing retirements

    The odds are reasonable (meaning not negligible, but not super high either) that the government will take the opportunity to seize pension and 401k assets in a market crash in order to “save” investors.

    This simply isn't true. There is no motive for the government to do this and it's political poison. And why would they anyway? The Treasury can spend as much as they want, and the Fed can monetize any debts they want, and they can tax whatever they want. Why create a civil war by seizing assets?

    The real risk to retirement accounts is taxes once you take it out. This risk is very real (and anticipated by all with a brain). But this reality has nothing to do with retirement accounts themselves, which will likely experience less taxes (as they do now). What is really likely to get taxed hard is any saved assets like houses or gold or land or bitcoin that is hard to transact without getting caught and lacks political protection from powerful people.

    A good example of political power at work is when some Republican senator tried to do the right thing and when another introduced a bill to lessen the tax deduction to 401k/IRA for just rich people. This seems just common sense for a nation in debt. But by the time the legislation made it to the president's desk it had somehow became a "bigger" tax break! Blackrock and Vanguard actually wrote that legislation themselves. And why not?

    Lesson: get aligned with the big boys, because things will naturally flow that way. 401k/IRA/index funds are the political monsters of our era. Nobody will touch it, and it's why stocks are at absurd levels with no end in sight. Everyone is piling cash into stocks "for the long run" and the Fed and government is on board.

    Login or Register to post comments

  • Sat, Nov 21, 2020 - 9:43am

    Redneck Engineer

    Redneck Engineer

    Status: Bronze Member

    Joined: Mar 16 2020

    Posts: 135

    5

    Redneck Engineer said:

    MKI,

    I hope I'm wrong on this, but I'm hedging just in case. There are precedents for governments seizing assets: FDR seizing gold (today, seizing digital accounts would be far easier and more lucrative) and bail-ins around the world. It isn't much of a stretch to have the US government, the most indebted in history, go after such a lucrative and easy target. Either way, we'll see.

    Login or Register to post comments

  • Sat, Nov 21, 2020 - 10:43am

    S7

    S7

    Status: Member

    Joined: Nov 29 2009

    Posts: 14

    2

    Why risk civil war?

    Because they can. And there aren't enough like minded, heavily armed, well coordinated militias to stop it. Remember that liberal icon FDR and his new deal? What did he do with privately with owned gold? He mandated that everyone who owned it turn it in to the government. And the government and the swamp it entails is too large to correct at this point is US history. You have publicly employed people working 25 years then retiring with a pension, while also able to work another job, so money is not a problem to them right now. A majority of these people have no desire or gumption to go out and thrive on their own. Looking for the easiest path with the least amount of physical work for a paycheck- Government employment, the welfare state with a future. Most have no marketable skills that other people want, need, or desire, so they go to a job where it is a guaranteed paycheck. Justifying it in their mind as necessary to the functioning of society.

    Yes we need public employees, but do we need to provide a career and retirement at the taxpayers expense for a mostly inefficient workforce? Just look at the 5 or 6 state DOT employees in your state, driving 3 brand new trucks to a job site, watching 1 person do the work. I've seen it. I know guys that work with the clowns.

    1) Limit how long a person can collect a salary from taxes. Paying taxes on money that was taken in taxes is not being an economic producer.

    2)Eliminate taxpayer funded state employee unions.

    3) Invest in yourself with skills, tools and equipment you can exchange for other needed supplies.

    If you can't do-teach.  If you can't teach-sell.  If you can't sell- go to work for the government.

    4) When SHTF, if you can't touch it, see it of feel it, it is not yours

    Login or Register to post comments

  • Sat, Nov 21, 2020 - 11:13am

    MKI

    MKI

    Status: Bronze Member

    Joined: Jan 12 2009

    Posts: 293

    1

    Gold seized

    What did he do with privately with owned gold? He mandated that everyone who owned it turn it in to the government.

    This is a perfect example that proves my point. The reason gold was so easily seized by a popular FDR (and this could happen again just as easy) is because the average dude didn't (and doesn't!) have any, making it a political orphan. Not so with 401k.

    But don't get me wrong: all I'm saying is that it's way, way easier to inflate away your retirement or just tax it 99% than to seize it. So that's the route they will take.

    And this is a good reason to own junk silver or silver bars or gold jewelry as they might be ignored when FDR#2 comes knocking...

    Login or Register to post comments

  • Sat, Nov 21, 2020 - 11:40am

    OneStrawFarmer

    OneStrawFarmer

    Status: Member

    Joined: Sep 16 2020

    Posts: 3

    0

    Good supplementary article about the pension crisis, it’s social effects and approaches to solving

    • There’s a very good article about the six possible solutions to the pension crisis  and the problems with each at wwweconomicswatchdig.com It’s a bit in depth but well worth the read.

    Login or Register to post comments

  • Sat, Nov 21, 2020 - 5:42pm

    timeandtide

    Status: Bronze Member

    Joined: Apr 03 2010

    Posts: 59

    2

    Inflation? I'm betting on deflation because it's needed to cleanse the system

    MKI - regarding your comment: "the Fed is simply in a tight spot, if they raise interest rates and stir inflation"

    Why would raising interest rates necessarily raise inflation? If anything it would lower the money supply which would lower inflation. Inflation of food and other everyday living prices is an effect that happens when demand overwhelms supply. This is usually because money supply gets ahead of production but it can also be when productivity falls or does not keep pace with money supply. There seems to be an obsession with the idea of looming inflation at the moment. It has probably come about as yet another justification for investing in the most dangerous and over-valued stock market in history. There is some truth in this - stock markets tend to keep up with inflation except during periods of stagflation where inflation is rising but economic growth is sluggish.

    I think the most likely outcome will be a period of intense deflation. It is what is needed to cleanse a rotten system and because it is needed, it is what will happen.

    Mike Preston made the point that the Fed and other central banks have, by their money printing actions, created a euphoria and complacency that has resulted in stock market historical extremes. The Elliott Wave way of looking at that is to reverse the cause and effect. In other words, a rise in complacency drove central bankers to actions that would have been unheard of 3 decades ago. They are "infected" by the same mood as the rest of us to throw caution to the wind, to abandon the lessons of history and to embrace the foolish idea that "This time it's different." Of course, most people have difficulty with this idea because it seems to contradict the idea of our self-direction. There are plenty of people who avoid troubled because they are contrarian but not enough at any given time to change the prevailing aggregate mood. The mood is changing. The polarization between people and political parties is evidence of that. At some point (which I am sure is not far away) the complacency will be replaced by fear then panic. As Mike points out. the stock market has been trying to top since 2018. The fact that this process is taking so long is indicative of the level we are at in the Elliott Wave stock market wave count. According to Robert Prechter (who revived the almost forgotten Elliott Wave Theory in the 1970s), we are at the tail end of a Grand Supercycle third wave dating from its beginning in 1784. We are now facing a Grand Supercycle fourth wave correction of almost unimaginable severity. A deflation of the size anticipated in EWT will hurt everyone and will financially wipe out those holding debt.

    That means mortgage holders. The historically low interest rates are a wicked temptation to young Australians already obsessed with the idea of owning real estate. The overnight rate was recently lowered to 0.1% from 0.25%. That cannot possibly be to stimulate our economy because the difference is so miniscule. It is clearly to aid the Australian government and the state governments who have taken on almost unimaginable debt levels. The idea that the Reserve bank of Australia is independent is clearly a misapprehension. I am sure the same applies to the Fed and all other major central banks. It would have been better to have let the markets take their course but ever since Greenspan organised the bailout of LTCM in 1998, we have been kicking the can down the road with no appreciable economic return for letting the money supply pour endlessly. At one time a dollar of new money produced more than one dollar of economic return. Now it takes about $8 of new money to add $1 of economic growth. The people responsible for this are not morons yet they have overseen 2 decades of crazy stimulus for no real economic gain. Don't look at broad GDP figures to prove this, look at GDP growth per person. We have gone backwards. Overall growth figures are only up because of immigration which is a Ponzi scheme that disguises the real state of so many economies.

    If the central bank boards are not filled with morons, then what is going on? Elliott Wave Theory and its off-sider Socionomics suggest that our actions are tempered by another unconscious force which is a cyclical mood that influences all of us and drives progress or growth in a two steps forward, one step back succession.

    Login or Register to post comments

  • Sat, Nov 21, 2020 - 6:14pm

    #22
    Nate

    Nate

    Status: Silver Member

    Joined: May 05 2009

    Posts: 480

    8

    2 view points

    Bill Gross said said a reasonable rate of return for a pension should be 4%.  This number includes the long cycle of outperformance (like now) and the long cycle of near no returns coming our way (ala Hussman and Grantham).  Passes the sniff test.

    The view from 30,000 feet is different.  Historically retirements were non existent.  In 1900 about 40% of the population worked in agriculture.  Today it is about 1%.  What has changed?  Fossil fuels.  They have allowed wonderful lifestyles, little effort, and retirements.

    Some time ago Chris said retirement by the masses has been made possible by fossil fuels.  Retirement is an artifact of fossil fuels.  Period.  Forget about money going in or out, rates of return, or fees.  It's all about hydrocarbons.

    Prepare accordingly.

    Login or Register to post comments

  • Sat, Nov 21, 2020 - 7:02pm

    Mots

    Mots

    Status: Bronze Member

    Joined: Jun 18 2012

    Posts: 304

    1

    Forget about money going in or out, rates of return, or fees. It's all about hydrocarbons.

    Thank you Nate
    That 4% return on investment, which you refer to was a valid result of exponential growth in energy, which supported creation of debt in a win win system based on increasing resources to match the investment. But this is over, at least for the indefinite future. CM stated "energy is everything."

    I hope to see a crypto currency or other economic tool tied to generation of energy (not just kw hours or biodiesel etc) , which is everything.  I think that successful individuals and communities will reach peak prosperity by focusing on the production and use of energy to replace the hydrocarbons.  Maybe financial acts and measurement rubrics could serve greater return by linking them to energy. I heard that the proportion of the stock market devoted to energy used to be something like 30% (Exxon Mobil etc) but has dropped to something like 1%.

     

    Login or Register to post comments

  • Sat, Nov 21, 2020 - 9:19pm

    #24

    timeandtide

    Status: Bronze Member

    Joined: Apr 03 2010

    Posts: 59

    2

    timeandtide said:

    A valuable interview because it focuses on the effects that have been caused by unprecedented central bank actions. Mike Preston is absolutely right when he suggests that a financial crisis "can't come soon enough." There is an old expression that says "Don't throw good money after bad" which means that it is better to be realistic and pull the plug early on a bad investment. Human nature, driven as it is most of the time on hope and optimism, resists this. People herd and do what everyone else is doing - until they don't. It's a bit like a flock of starlings swirling around the south coast of England in the autumn. They swirl and there are breakouts before reforming back into the swirl again. At some unexplainable point a breakout continues and the more or less stationary swirl becomes a directional movement off to Africa for the winter.

    That is what is going on at the moment but the breakout to the downside will happen because it will be instinctual. Starlings are driven in an annual cycle. Human cycles are much longer but I have no doubt that they exist. Nothing that central bankers or governments do will alter this because nothing, except fake money and complacency, is supporting an edifice that is ripe for correction. There are plenty of more obvious reasons to guarantee a downturn. The long term effects of Covid, the pull back in immigration, automation, artificial intelligence and demographic ageing. We have no equivalent job creators like we had in the late 19th C / early 20th C when the internal combustion engine drove the car industry which drove highway building which drove hotel construction and the travel industry. We just have a very clever use of silicon which encourages people to spend way too much of their finite time looking at a screen. Yes, the computer has been partly responsible for vast businesses such as computer games and the airlines could not have expanded the international travel industry without computer booking systems. However, as a generator of jobs the modern economy has been a failure. There are a ton of bullshit jobs, mostly in the public sector, and I wonder how long they will last given the debt loads that governments are carrying.

    There is no fixing this situation. We can only take steps to try to limit our personal exposure as much as possible.

    Login or Register to post comments

  • Sun, Nov 22, 2020 - 1:35am

    VTGothic

    VTGothic

    Status: Silver Member

    Joined: Jan 05 2020

    Posts: 335

    0

    @timeandtide

    could you link the Preston interview you referenced in comment #24? I'd like to take a look at it.

    Login or Register to post comments

  • Sun, Nov 22, 2020 - 2:00am

    #26
    derelict

    derelict

    Status: Member

    Joined: Aug 13 2008

    Posts: 23

    2

    derelict said:

    hmmm. If you invested money with John Hussman in any of the last 20 years, you are down on your investment. Maybe one day he will be right, but so far his musings, while erudite, have been a terrible basis on which to direct your dollars.

    Login or Register to post comments

  • Sun, Nov 22, 2020 - 6:30am

    jrice2s

    jrice2s

    Status: Member

    Joined: Apr 11 2020

    Posts: 1

    0

    I Don't feel bad

    I dont feel bad for them. They should have saved there money instead of trusting someone else to save for there retirement. They expected younger people to pay for there retirement when the economy is getting worse and wages are getting slashed. The math does not add up the system is bound to fail.

    Login or Register to post comments

  • Sun, Nov 22, 2020 - 8:29am

    #28
    MGRS

    MGRS

    Status: Bronze Member

    Joined: Feb 28 2013

    Posts: 65

    3

    Solo 401(k) / Qualified Retirement plan to protect your retirement

    For those looking at 401(k)s and wondering what to do with them, don't forget about Solo-k's.  You need a business (doesn't need to be large or even profitable) to roll your old 401k's in.  Go pet sit or mow your neighbor's lawn and do the taxes to make it a business.  Nearly anyone can do it.

    Once formed (it takes some time and setup fees), you can get out of the financialized world - invest in cryptocurrency, rental houses, farmland, and even physical gold or silver held in your own home safe or vaulted overseas.  Your 401k is "checkbook controlled" - it is basically its own legal entity, and you are the trustee charged with managing its investments.  You can invest in most of the things we talk about here at Peak Prosperity.

    If you own "paper gold" stocks and ETFs in a standard retirement account at Fidelity or whatever, you owe it to yourself to investigate this option.  You could have physical PM's in your own safe or a vault instead of financialized contracts that may or may not work out as things fall apart.

    Chris did a podcast on it a few years ago:

    Damion Lupo: The Qualified Retirement Plan (QRP)

    Happy to answer questions about this; pm me.

    Login or Register to post comments

  • Mon, Nov 23, 2020 - 7:10am

    #29
    French connexion

    French connexion

    Status: Silver Member

    Joined: Mar 26 2020

    Posts: 225

    1

    Monday, Monday

    Please excuse me, I haven't read your thread. But when you see the gold market taken down for no reason - not even a new virus vaccine for the third Monday in a row would help it. And why? The Title of the Thread says it all. They are obliged to beggar Paul to pay Peter to keep people's retirement - and other payments coming in. The system is bankrupt - they are reduced to these games to keep it going from day to day. They call it Tools in their Toolbox - someday the justice system will call it something closer to the Truth.

    Login or Register to post comments

  • Tue, Nov 24, 2020 - 1:46pm

    #30
    trendhaven

    trendhaven

    Status: Member

    Joined: Nov 24 2020

    Posts: 1

    0

    Pension dilemma

    The message seems to be that if your pension is in trouble in large part because of expected future investment returns above what is reasonable, you need to see an advisor who will craft an appropriate portfolio strategy for you given your needs, and apply sound risk management protection where appropriate.

    What investments and strategies are available to this advisor, but not to the pension investment committee?

    If forward returns in major asset classes and approaches to holding them are looking low and at risk of drawdown, what is an advisor going to do that is better? Pensions can own precious metals, real estate and other commodities. They can employ “alternative “ strategies.

    I guess the advisor could suggest you take a chunk of your investment savings and buy an annuity to fill in the gap you expect to have in regular payments in retirement.

    What is low return and / or risky for your pension fund is low returns or risky for your own portfolio.

    You need to think about tactical approaches which have a greater chance of delivering returns and avoiding drawdown. Sequence of returns risk is the devil for retirees.

    Login or Register to post comments

  • Wed, Nov 25, 2020 - 10:54am

    #31
    RiverWind

    RiverWind

    Status: Member

    Joined: Apr 27 2015

    Posts: 12

    0

    A Bit of a Digression -----Traditional IRA with Hard Assets Alliance

    I realize this is not the topic in the thread but wasn't sure where to get this information.  I wanted to transfer part of my current IRA to one with Hard Assets Alliance---to put my investments into gold/ silver.  The transfer would be to The Entrust Group in Oakland, CA.   The reviews of this company were extremely negative.   Does anyone have any history with this company or recommend another one they have had a positive experience with ?   Many thanks !

    Login or Register to post comments