401(k) as Dangerous as the Dollar

Prophets are famous for being without honor in their own country, and it isn’t any fun being Cassandra.  We’re considered alarmist nuts until what we have foreseen comes to pass–and repulsive thereafter if we say “I told you so!”

Well, we told you so about a lot of things, including the plans that the Obama Nation has for your 401K.

To be brutal, the rape artists are moving on their plans to hijack your 401K and replace it with a handsome certificate suitable for framing which says you got a Guaranteed Retirement Account in return for one of your old, unsafe means of preparing for the grim future.  Actually, I made that part up.  You probably won’t get a certificate large enough to frame and hang over your computer as a constant reminder never to trust government with your money, or not to change the rules on you.  What you’ll get is a dud IOU.

Given the speed with which the Left Wing Congress and the “I just sign what they send me” President move, you have at most days to contemplate what is left of years of thrift and deferred gratification.  Those people don’t mess around when they have prey in their sights.

I’m no expert on how a 401K can be restructured, but if I were you I’d be on the ‘phone to my CPA or financial advisor immediately to see if there is any exemption anticipated, any way to get your meager security th’ hell outta Dodge.  What I would really do–and did two years ago–is pay the penalty and close the position out.  You’re going to have to pay taxes on those funds eventually anyway, and far better to snatch two-thirds or so of the prize away before it gets dumped into the general fund and is spent on housing for Hamas, the snail darter, uniforms for the Obama Youth, excruciatingly bad modern “art,” or more perquisites for Congress.  Even half a loaf will be better than none…if you turn it quickly into objects of intrinsic value, such as gold, silver, diesel oil, and emergency rations.

This freight train is building up speed, folks, and actions which were objects of scorn two years ago can be discerned now quite clearly.  Here are some serious warnings:

1.  Empty out your safety deposit box.  Your bank manager will confirm that if there is a Friday surprise he can not guarantee that you will ever have access to it again.

2.  Start pulling your cash out of banks.  Again, turn as much of it as possible into real property–which does not mean “real estate”but tangible assets.  It doesn’t matter if the banks crash before the bond market does or whether the dollar crashes or is devalued first.  The interests rates are so low it is very inexpensive insurance to remove your personal wealth from sinking Bernankes and store it in metal, C-rations (sorry, MRE, “meals, ready to eat”), or cowrie shells.  I’m famous for saying, “The worst that can happen is…” and the worst that can happen is you will lose the premium you paid for gold coins (there are better ways to buy metal), forfeit the 1.13% your funds are accruing in the bank, and have to pay the premium to sell silver ingots back much later.  Don’t stand there like a deer caught in a jack light, and don’t expect any sympathy if you go to the bank one day and see signs that say “Bank holiday.  Closed until further notice.” or “Daily withdrawal limit $300.” There are proposals for those very restrictions floating around, and that limit is going to include transferring funds between banks.  Mr. Paulson asked for permission a while back to post SWAT teams to prevent bank runs.

3.  You’ve been warned repeatedly to accumulate a bare minimum of three months’ supplies of food, water, and Sudoku puzzles, those representing whatever you, personally, would not wish to be without in times of stress and crisis.  Don’t forget the Tullamore Dew.

4.  If the dollar is devalued again history shows that the usual amount is on the order of two-thirds.  If you want to risk getting roughly thirty-three Amero coins for a Bernanke, you keep your innocent faith that this is “just another bump in the road” and that Mr. Obama couldn’t possibly do what Roosevelt and Nixon did.  When the dust settles from what at best will be a controlled demolition you have watched go whoomp-whoomp-whoomp-whoomp-whoomp in a series of rapid shocks you will take what you are given on any assets you haven’t squirreled away in hard money of various kinds including tobacco, soap, fifty pound bags of rice and pinto beans, and canned corned beef.

Our world is a-swirl with forces building hurricane speed, each having an impact on the others.  The concatenation of instability in the bond and stock markets, housing and commercial real estate, the mushroom cloud of increased “money” supply, job losses developing in the auto and tobacco industries due to recent legislation, the Chinese and Japanese at least eying manipulating our currency or replacing the dollar as the standard against which other currencies float, and the possibility that the government is going to appropriate the health industry are just some of the warning signs that indicate it is time to head for the storm cellars with the kiddies, the livestock, a kerosene lantern, a good book, and an enormous picnic lunch.

Those are only the more obvious evils building to gale force.  Ignore the urgency of the klaxons if you will, but this occasionally fey half-Irish lady thinks she knows “Dive! Dive! Dive!” and “Tora, tora, tora” when she hears them.

Call me Chicken Little if you must, but I’m off to stuff some more silver coins under the mattress.  Literally they make lumps which prevent fairy tale princesses from sleeping well, but figuratively you’ll sleep far better if you have prepared for the hurricane before it makes landfall.  It may yet turn and blow away at sea, but a big one is right off your coast, and others are lined up clearly visible on radar.

Take care,
Linda Brady Traynham

June 26, 2009

The Daily Reckoning