So What Does Any of This Mean To Me?

How does any of this effect me personally, Daily? or even change my life?

Glad you asked -

If we plan our lives and we do, based upon false or misled assumptions (thing CPI, value of a debased dollar) they we probably will not get o our goal. now if you just hope to get somewhere You will.

Lets' think about a basic retirement plan- If you watch TV or listen to the talking head gurus you should save 10-15% of your income (or max out) into a 401(k) or IRA and balance with a Roth too and when you get to retirement you can live on 4-5% on you r nest egg with our out living it Sounds great.
So if I want to live on a 50k income in retirement I need to have 20-25 times this ( 1-1.25 Million) saved just before retirement right?

Well lets dig a little deeper

This whole plan that EVERYBODY supports or uses has some assumptions (what did your Mama tell you about Assume?)

1 - You can choose how much you retire on (the 50k) How do you know what your lifestyle and need will be in 20, 30,40 years form now? Or what the Government will mandate? Or what you will choose to do or health care you want to do?

2 What if you don't get the magical rate of return the market NEVER promises? (Doesn't the SEC make them say Past performance is no indication of future performance?)

3 Inflation is constant or the CPI is accurate, this is a farce, CPI is only accurate if you do not use or use food or fuel, and buy exactly the goods an services they choose . (which changes every 10 years, has your life changed in the last 10 years?)

4 The poor Trinity Study that states that if you only with draw 4% you will not eat into your nest egg, This study Assumes that you are fully invested is the same market and risk factor while in retirement that you were invested in to get to retirement, you never have a 1987 or .com collapse or 2008-2009 type years in retirement (correction or crash) [that seems to be every 10 years] , - If you do that the whole things is hogwash. so how much can I withdraw safely?

You can only tell at the end of each year, not 20 years in advance.
So don't be retired for more that 10 years and begin right after a correction a big one, boy that sounds exciting.

Wait... What if we Assume inflation is 3% (total hog wash) they your current 75k income will need to be over 150K in 30 years, to have the same lifestyle and if the "assumption" of 80% income in retirement is used then you still will need 120k to have a similar lifestyle. What if inflation is Higher? How would we know?

Can yo see Why "just a little " inflation is BAD!

Don't forget this -
you can NOT assist parents or children and YOU MUST have your mortgage paid off - Whhoa,. what about mt tax bite on the mortgage - so sorry.

All of this income you saved for is now fully taxable as Ordinary income ie the same as you pay now. There is a rumor you pay less tax while retired- ONLY IF you make much less income and to change brackets.

Uncle Sam gets a bite at that apple one way or another, that's why they are called "Qualified Plans"; Qualified by Uncle Sam and the IRS.

Wait if tax rates go up or brackets move or there are brand spankin' new taxes what will that mean?

All I know is that Congress (you voted for 'em) has made promises we can not pay currently so we (American's , not just Working Americans) will have to pay that some how, I do not know how.

(Not to mention the Debt we have on our grandchildren , children and our shoulders - To save companies that profited in the good years [no problem with that]; then made BAD business decisions and didn't save for a rainy day SO, WE the entire population pay for it)

Those Green Things, The Dead Presidents and a few others

But when have you actually stopped to consider what money is – what it
means, what it stands for?

Here is a snippet from Judy Shelton's A Guide To Sound Money (available as a free pdf)

Open your wallet and take out a dollar.
What you will notice first about this green-tinged piece of paper – all U.S.
banknotes measure 2.61 inches wide by 6.14 inches long – is the imagery.
If you are holding a one-dollar bill, you no doubt recognize the portrait of
our nation’s first president, George Washington, encased in an oval frame.
He seems to gaze back at you.
Turn it over now and you will see the powerful symbol of a pyramid with
an “all-seeing eye” at its apex. The pyramid is meant to denote strength
and duration, while the floating eye signifies divine guidance in the
American cause. An inscription in Latin in printed above, Annuit Coeptis,
which translates as “He Favors Our Undertakings.” There’s a banner below
imprinted with another Latin phrase, Novus Ordo Seclorum, meaning “A
New Order of the Ages.”

It refers to the new era launched in 1776 by the Declaration of
Independence – The American Era.


The Founders were keenly aware that America’s bold approach to
organizing civil society under the overarching principle of personal
freedom could potentially change the destiny of mankind. It was based
on a radical concept: self-government. And it relied on the essential
notion of natural rights granted by our Creator – a remarkable theory that
meant citizens were deserving of equal rights and equal protection under
the law.

The Latin words, E Pluribus Unum, proclaiming “Out of Many, One.”

And indeed, it is faith in the American idea that unites us,
the shared belief that individual liberty can be wholly
consistent with a profoundly moral nation. The daring commitment to
self-rule invoked by our Founders would prove justified by the ability of
Americans to thrive and prosper when entrusted with economic freedom
and personal responsibility.

The images printed on our currency are meant to underscore our belief in
the great American experiment. They are aimed at providing assurances
that our nation’s confidence in self-government is merited.
And on all U.S. forms of money – every banknote, every coin – you will see
the declaration: “In God We Trust.”

It’s a sobering thought that should serve to remind us that we must never
take our money, or our unique form of self-rule through accountable
government, for granted.

Alas, the integrity of U.S. currency cannot be guaranteed by appealing
to an authority beyond human control. When it comes to government-
supplied money, you cannot outsource trust by invoking the Creator.
Instead, it’s important to realize that money is a man-made invention of
sorts – a useful innovation arising from the marketplace.


It is our responsibility, as self-governing citizens of the United States, to
demand sound money that will remain useful for future generations and
ensure that the sanctity of the American idea prevails.

Was Ben Franklin Right ?

Why is it - that those who want a safe job with a big company and stay there for 30-40 years, and are willing to trade lower pay for the security and a gold colored watch.

These are the same people that are so foolish and unsafe with their retirement income behavior? They expect the grandfatherly company to "take care of" their retirement account either with a Pension or full faith and trust that the 401 (k) , at the company, is the only way.

Is this just the group-think or following the expected behavior promoted and don’t think one layer deeper ?

Why would those who promote (read TARP recipients): what to do and how to do it with your retirement income do that?

Why would they do and say those things?

What do they get from it?

What are the alternatives?

What are the down sides of each opportunity?

Could any of this change in the future?

Is there any unseen risk?

IS There A Risk Of - Highly Unlikely BUT Horrific Potential Event? (think, Stock Market and Real Estate Market falling at the same time)

Ben Franklin - They who can give up essential liberty to obtain a little temporary safety, deserve neither liberty nor safety.

Taxation

If I could JUST KEEP ALL THE INCOME I EARN, and NOT pay TAXES. Then I could keep it in a coffee can in the backyard and retire .

Keep dreaming, There is always some Joker who says he doesn’t pay taxes because it is illegal or some other dribble. I would not suggest you try this if you like being able to choose when you wake, eat, exercise, who your bunk-mate is or get medical attention.

Taxation is the result of government growth and promises that government makes to people which it can not pay for.

Good ol’ Abe Lincoln and the Civil War changed us from These States that where Untied for a particular reason (Life Liberty and the Pursuit of Happiness) and had states rights as well as a LIMITED Federal Government into The United States and a ever growing Federal sprawl. The short sighted Southern States could not see the States Rights and Slavery were two separate issues in the North. So here we are today.

As government makes promises it’s check book can’t pay and there is always a good rationalization to right a check to somebody who “Needs” it. We must increase new taxes, raise the tax rate on existing taxes and add people to the pool to be taxed. Look at the 80/20 rule and who pays taxes in this country.

Thought- if a progressive tax is fair, why not have a progressive pricing the minimum need to survive?

Food or Vegetables ~ for the indigent they are free, if you earn less that $40k gross you pay cost of production (as approved by a Federal Agency, Ha Ha), as you earn more, the prices increase at a rate commensurate with the tax rate. There the rich would pay more just to eat, that would be fair, Right?

WRONG

Humans just don’t work that way – anybody who could earn close to $50k would find a way to ratchet it down to below the $40k barrier. Those with no shame would claim indigence, for all of their family members except one person, who would end up eating as a courtesy of the other family members.

Have you ever thought about how may times a single dollar get taxed by Federal, State, County, and city taxes and fees in a single year?

If that dollar is circulated, at a velocity of 9 times ( number of transitions per year) , how many times is it taxed? 9 minimum, unless it is ever used as payroll, then you so automatically add all the taxes that reduces your gross pay to your net pay. (Fed t income tax, SS, Med, County, City, State, State Disability) Or if a transaction has a "add" on top of the state tax; a county, city or a product dependent tax associated. So a dollar moving through the economy growing by 25% can get taxed by up to 50%+, looks like a net loss to me.

there is even a thought out there that the taxes paid are not compensated by any present service rendered by the government’s apparatus. The government pays interest on capital which has been consumed and no longer exists. The treasury is burdened with the unfortunate results of past policies. - L Von Mises Human Action 4th ed.

Is there a way to have transactions that are not taxed? Glad you asked….more later

Fractional Reserve Banking

Fractional Reserve Banking?

Simple really and profitable if you can get into it.

Imagine you have a $100 bill and you march of to your favorite Banking institution and deposit it into you account. From that moment until you withdrawn some or all of it, that money is in your account for you to oogle over and have.

Well, according to our courts the bank now has possession of it, and can do as they please with it, all the while you have it in your account (really)

Now Banks are not know for swashbuckling adventure, So they would never foolishly offer that capital just to make a high return, unless they had some one insure their mistakes (FDIC) LOL

The FED or Federal Reserve System, mandates that the banks have some amount of that capital on hand, think “It’s a Wonderful Life” and Jimmy Stewart saying” Now Sam how much do you really need?” So you can withdraw dollar bills. On average 10% of their deposits , will be on hand (some more, some less). What happens to the other 90%? The bank get to do as they please. So they crack the whip and put it to work, by lending it . Lending it out to any and everybody they think can repay (or are mandated to lend to), the higher the risk of repayment the higher the rate.

So let me get this straight, the bank is charging interest on money they lent and that same money is still in my account? Yep

It gets better, If that loan($90) is to a person who banks with the same bank, and they deposit the money. The bank keeps 10%($9) on hand and lends the other 90%.($81) All the while giving credit to that person for the full deposit on the money that is still in Your account - WHEW. If this keeps going on you can take that measly $100 and turn it into $900 of lendable money for the bank. Or, what they could do is keep the $100 in the vault and just lend out $900 in one swift action, then receive interest payments on money that never existed. What a gig.

Is there a way to borrow money that is not made our of thin air legally and then pay interest on money from thin air? Yep More later….

Debasement/Inflation

Debasement and Inflation how do they work together?

For debasement and inflation see post on January 10, 2011, now to continue…

So what are we to do if the monetary system is debased and that causes inflation? So our dollars buy less and less. Which means that in the future (20 years), around the time I want to retire my retired income will have to be twice what it is now, ouch!

So forget this Crazy Idea that I will have less income in retirement or that I will Need Less. Not possible.

We could need double our current income if inflation is only 4% - Now that’s real inflation, not the cook the books CPI number.

[yes, the way CPI is figured keeps changing so CPI indexed payments From the Federal Government can be kept down]

Double is just to keep up our lifestyle, What if our health costs are elective, for quality of life, and not ”approved” how do we pay for that?

Who started that Idea anyway? Uncle Sam ? a Wall Street firm (before they needed TARP)?

If the amount of energy in a community or country (no I will not get metaphysical) is finite until acted upon buy humans, which create more and improve what is stagnate, then we have a rate of increase which may be variable. Politicians being politicians, just like a steady amount of increase in which they have control over. Or get credit for giving away. Can you see why the founding fathers distrusted government as a general rule and the Constitution is a list of restrictive powers for government? Anyway, in order do control or give away more stuff you have to get control of more stuff, If taxes are taxed too much we will have a Revolt,( see American Revolution and English taxation). Soooo government debases in order to have more tokens that are called coins or dollars to pass out and get credit for passing out. Then they (Government) preach that the economy is growing because we have more dollars moving around (GDP). But wait a cotton pickin’ minute these things that look like dollars have less value than a full dollars, but they value only because we are told to accept them as dollars. Poor Keynes thought this was a okie dokie idea as long as he got popular for the idea.

How do we get off this merry – go- round? No politician that is electable is going to fall on their sword to change this.

Who's Incharge of our Money

What if we give a group of people a franchise or exclusive right to store WHE’s ?

If we store our WHE’s as “Money” Is it just sitting there good stewardship? Shouldn’t we put it to work? Even Jesus alludes to this (see Matthew 25:27).

So as a extra little service, these store houses for “money” give you a small amount of interest. Why would they do this?

Because from their desk chair, This is just the ”cost” of the commodity that they will sell at a higher cost than what it costs them (just like you and your Company).

Buy or borrow at X sell or lend for X+1, pretty easy.

Better yet - why do We let then determine the rate we pay on our collective money?

We are the lender, why don’t we set the rate or at least a agreement between both parties? Well if we refuse to do business with them we have chosen not to honor their offer, we are in charge of the rate we receive. Why not receive that same (agreeable) rate from our cousin or neighbor (don’t be crazy and try to get a lower rate, just loose the middle man, the market rate is the market rate.)

Just because we ignore opportunities available doesn't mean that they are not available. We choose where we store/invest our money and the safety or risk, we think we know about, is of our choice. We are Free to Choose.