My retirement seminar occurred in November this year. This is a group of fossilized people who gather for one day to hear all of the nuances of our public retirement system. For thirty years, the date "1/1/11" has been etched into my mind. Limping into retirement with a few marbles, a few teeth, and some hair. The word hair, as I use it, is singular.
As I took my seat near the back of the fossil room, we were given these clicker things. They ask you some questions with associated slides and you click on the appropriate answer. They split us into four groups and that way we could have some silly competition. It's all a lot of malarkey and the real reason we were given clicker things is so that our answers would be recorded. There is no real reason to take your name and the serial number of the device you are using unless you are keeping an individual tally. After all, it's not like I came to the fossil meeting looking for a nice new clicker to steal. I have too damn many clickers as it is.
There was a young and well dressed kid, early to mid- thirties I'd guess, doing the speaking that day. He is some sort of retirement specialist. He told a story as an illustration about a retiree he was working with a few months ago. The man had been in our retirement system for a long time. Apparently he was about fifty five and entitled to a couple thousand dollar check each month but kept insisting on cashing his whole retirement out. The kid said that he could not reason with him. The dumb old geezer split with the dough. The point our guy was trying to make was that in about nine years time or at about age sixty four, the retiree would have recaptured everything he had vested and then some. After that length of time, the subsequent months and years were simply free gratis. Everyone in the room chuckled at how seemingly stupid this was. Except one knucklehead in the back of the room fondling his clicker.
Now I have simplified this story somewhat. I do not know that retiree's motives for cashing out. But I do know that I have seriously mulled over doing that exact thing. I did in fact, cash out a large 401k last year and took the penalty. That ten percent penalty might look pretty cheap by the time this coming decade is over.
Americans, in my estimation, have been listening to fear driven stories for years. Remember those bombing drills in grade school and civil defense shelters? The worry of nuclear war? Remember those oil shortages that turned out to be bogus? How about stories of the great depression and dust bowl? All of the recessions we have endured and bounced back from? Americans have grown weary of people crying wolf, to the extent that Americans simply don't pay attention any more. People "crying wolf" get labeled and marginalized. They are ridiculed and scorned. Telling some ugly truth is not what people want to hear. Just like some poor sap that cashes out his retirement despite all of the "common sense" applied by some young kid in a suit.
We are entering the fourth year of this depression. That's what this is. It is not going to go away. In fact, I expect it to get worse. I'd like to tell you why.
Central banks are at the heart of the problem. They control the QUANTITY of our money supply. Think about this. They cannot make excess money, or interest, unless they increase the money supply via the issuance of debt. With static and regulated money supplies, the role of central bankers and primary banks gets pretty ho-hum. Almost dreary. If you decrease the money supply, that means less business, less debt, less interest and profits. Central bankers love financing debt, wars, home loans to anyone with warm blood, student loans. That's how their member banks make money. What we witnessed in 2007, was the blow off top to debt gone wild. Politicians have fueled this insanity and as recently as yesterday, they continue to fuel it. Everyone is desperately trying to ignore and hide from that debt Godzilla. Politicians simply lack the collective will to stop this madness. Our current deficit is fourteen trillion. That is fourteen thousand billion. Our coming obligations such as social security, medicare, federal pensions, put the total bill north of one hundred trillion.
What I am saying is that America is bankrupt. We lack the capacity to pay what we owe. The 4 C’s of lending are: Capacity, Capital, Credit and Collateral. We do not have the capacity, or jobs, to pay this debt burden. The US government pledges your work, and your taxes, when it takes on debt. It cannot tax thirty million jobs that have left our shores. It can't even tax the corporations making dough outside our borders. No workers, no tax money. A bunch of elite folks parking their dough in Lichtenstein. All of this of course brings me back to a young and smart retirement planner dressed in a suit. Maybe an old war horse with a big ass cashier's check that he is now using to buy gold and silver.
Smart young men and dumb old geezers. It's hard to predict which one will prove right. Ultimately, this old geezer settled on the monthly check. I let them have their clicker back. Perhaps, I made a mistake. That's how these things are. Economic collapses don't come around all that often. Its kind of like that man who predicts the end of his life each day- knowing in advance that he'll be right- only once. I feel certain about one thing though. I am confident in America's ability to slick this debt catastrophe onto future generations. I hope. To smart young men with suits on.