FED has Life and Death Control Over Your Retirement Plan

Say Goodbye to your Retirement Plan

Your Retirement Plan is not set in concrete. Many Baby Boomers and others believe in certainty and worse still take no precautions, just in case of a problem. Your retirement plan is a living breathing dynamic thing to be managed, nurtured, protected and treasured. Don’t leave it to someone else to manage it for you.

I find evidence of indifference, ignorance or even boredom whenever I talk to people about the need to control their retirement nest egg and manage their retirement plan. I watch as their eyes glaze over or they try to change the subject. I don’t talk about it any more.

If the FED meets every month to adjust it’s monetary policy, what good is your annual meeting with your financial planner? You could be 364 days too late on taking some action to offset the FED’s meddling which could seriously affect your retirement plan or impact your retirement nest egg negatively.

I listen to Mr Bernanke’s every word, but because he talks like Nostradamus you have to interpret his quatrains.

The FED have all sorts of tools with which to hide what is really going on and this can play havoc with your retirement plans. For instance they can raise or lower interest rates just like that, if they perceive this needs to be done to “protect the economy”. You would do well to learn all you can about the FED.

In 2007 Retirement Plans were virtually guaranteed

Whilst we  now all know about “Black Swan Events” now, most financial crisis can be predicted, ask Nassim Taleb with author. The only problem is because central banks resort to all sorts of trickery to avoid letting you know there may be problems, you cannot take action to protect your retirement plans.

Let’s face it though if Mr Bernanke came out and said in 2007 that there was likely to be a financial crisis because of all the shenanigans on Wall Street, your panic right, cash out all your investment and sit and wait.

The problem is with our investment systems everyone else will do the same thing and the financial crisis would be self-fulfilling and maybe far more worse.

That alone is one reason to get rid of the FED and allow the markets to determine interest rates.

Mass exits from investments might be a good thing. The first loss is the best loss in trading and I believe it is the same for the economy. Just look at all the billions of tax money paid to keep the economic bubble going.

Couldn’t we have let the crash happen and then just help those people that needed help, rather than giving all that money to the banks? The billons of dollars would have been better used helping the unemployed don’t you think?

It is absolute nonsense to say the economy will collapse and never recover. Of course it will. You would still have your money. You would still need to buy food, clothing and other goods.

The only problem would be banks would be in real trouble and possibly collapse and would change hands for next to nothing on the dollar. I say what’s wrong with that?

It’s just like this fear of deflation. Those people and businesses with large loans, who took on too much risk would suffer. But the assets they borrowed against would still all be there for someone else to buy at considerably reduced prices. In effect increasing the value of the dollar or at least it purchasing power. How can that be bad? A stronger dollar would help you not hurt you.

A Strong Dollar is Good for your Retirement Plan

What do you think the strong dollar would do for your retirement plans. As assets deflate and the dollar can buy more, wouldn’t your retirement nest egg increase in value?

Many people may lose their houses if they cannot pay off their mortgage, but then again if the taxpayers are to help anyone, instead of giving billions to the banks it should have been given to the people as a reverse tax so they could control their lives. The banks would then have to deal with the people as equals if the people had the money to pay off their house mortgages.

We have massive house deflation and the FED has not been able to do anything to keep house prices inflated has it? All power to the FED I don’t think.

The Keynesian trained economist (most of them these days) will all tell you that it will bring on massive deflation and no one will buy anything as they wait for better prices. This is all rubbish.

Housing is still in the doldrums and maybe people are waiting for the bottom on such a big investment but all the other economic activity of living would have to continue. The housing asset is still there for rent if you can’t buy it.

I bought an LCD 46” TV two years ago for $2,000. I did a great deal with a $700 discount. That same TV today for can get for $700. Was I a mug to buy then? No because I had no idea our dollar (Aussie) would get so strong and imports so cheap. Plus I wanted to enjoy the LCD 46” TV then, not wait two years in the hope that prices came down.

By the way prices dropping in the technology products is not deflation as such.

Since the FED regulates monetary activity of the financial markets through the banks (fractional reserve banking), controls the price of money (interest rates) and the volume of money (quantitative easing or printing money) in the economy they really do have life and death decisions over your retirement plans. So you need to listen to Mr Bernanke, or get his speeches deciphered. Then ask your financial planner to revise your retirement plan to take advantage of or take defensive action again whatever Mr Bernanke meant in his speech.

Not just Americans but the whole world should take notice.

Right now the FED is paying the banks interest on the money they deposit with them. This is new because the idea used to be the money was in the banks, where it could be loaned out. So banks got no interest from the FED and naturally only kept their minimum reserve requirements money there.

Just think about this. You get zero interest in a bank that is getting maybe 3% interest from the FED, much of it on the billions you gave it to stop it going bankrupt. Where is the economic sense in that? It is just plain nuts.

Now why would you think the FED is paying interest to the banks now? Well it created a real problem for the economy when printing so much money to bail out the banks that it decided it had better pay the banks some interest on the money it gave them, to encourage the banks not to lend the money out. If they do Mr Bernanke knows inflation would sky-rocket and he would not be able to control it.

True Money Supply and Your Retirement Plan

If this money gets out into the economy kiss goodbye to your retirement plan unless you take action to capitalise on the situation. Go to the Ludwig von Mises site and play with the chart below. Understand what it is telling you and think about how it can affect your retirement plan.  If you don’t think about your retirement plan no one else will.

Your Retirement Plan will be destroyed

It is easy for the FED to control the money supply between the FED and the Banks and how much the banks lend out. As that money moved into the economy the FED can still reign in inflation by withdrawing money from the economy or raising interest rates. But they are reluctant to do so because governments take exception to anything that might upset the people.

However once the general population believes the paper money is becoming worthless through inflation Mr Bernanke will have no power to stop inflation becoming hyperinflation. Just ask a German who was around during the 1930 hyperinflation in Germany when a million Marks could not buy a loaf of bread.

In Germany once the people lost confidence in paper money that was the end. Even a wheel-barrow with a $1Mn in it could be worth more that the $1Mn if you waited for a day or to. People were getting paid millions every few hours and had to spend it quickly on anything they could find to buy. Then they could us that item to barter for something they needed.

Printed Too Much Money will destroy your Retirement Plan

It is a natural law if you print too much paper money then once it gets into the economy there will be too many paper dollars chasing too few goods and inflation will occur to balance things up again.

The second law is once the people lose confidence in the currency hyperinflation is the result. This is far more dangerous to your retirement nest egg.

The FED printing money could be the single biggest threat to your retirement plans. It’s as simple as that. You don’t feel it now because Mr Bernanke control how much of it is getting into the economy. So watch what they do and every time Mr Bernanke makes a speech contact your financial planner to get it decoded and adjust your retirement plan accordingly. Failure to do this will certainly send the retirement plan down the toilet if we have another financial crisis.

The FED has printed so much money that if the banks loaned it all got out into the economy prices would sky-rocket (a term recently used by President Obama to express his desire for electricity prices).

The other problem is because our financial system uses the fractional reserve banking system, banks can make the problem much worse because they can loan out as much as ten times the amount of money they deposit with the FED. Aren’t we lucky the banks are not lending right now?

Let’s get this straight. The Banks get billions of dollars of taxpayer money and money printed by the FED. They use that money to do high frequency trading to game the stock market knowing the FED will protect them. The taxpayer money and the printed money they don’t find a use for is deposited with the FED where it earns interest. That all seems perfectly reasonable to me. Steaming mad

Once that money gets in circulation people may feel better off with more money in their pockets for a time. But the demand for products will cause prices to increase and inflation will ensue. This has happened throughout history, it is a natural law despite the FEDs attempts to stop it.

Mr Bernanke may be hoping he can raise interest rates to offset the inflationary effects of too much printed money getting into the economy. No one has ever pulled this off in the history of the world. Maybe he thinks he can do it?

Remember Mr Bernanke is the man who has life or death control over your retirement plan, so listen to everything he says or suffer the consequences.

Leave a Reply

CommentLuv badge