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View Diary: The unforgiving certainty of math (18 comments)

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  •  Aftermath after the math (1+ / 0-)
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    So gjohnsit, as one gloom & doomer to another I have a question. Given all that you say; given the predictions that have been borne out; given the inexorable trends you describe so well, how should people be positioning themselves going forward? How should people, individuals, adapt to this coercive economic insanity?

    Myself, I'm feeling that diagnosing the problem is important, but once you've more or less gotten it nailed, how do you manage to get out of the way of the worst of it, for you and your loved ones?

    For instance, should everyone immediately cease 401(k) contributions and put it in gold or an asian currency CD? Prepare for a hyper-inflationary spasm? Move to the woods?


    •  Boy I wish I had all the answers (2+ / 0-)
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      nchristine, joe shikspack

      Unfortunately I don't. I only have a couple pieces of the puzzle worked out.

        I can tell you for certain that the Eurozone can't continue in its current capacity. How it ends up depends as much on the citizens of Europe (how much austerity will they put up with?) as with the political leaders. My guess would be that several countries have to exit the Eurozone and that rules will be changed for those that are left.

        I can say for certain that the housing bust isn't over yet, but we are most of the way there. Probably another five years until we reach the absolute bottom.

        I can say for certain that Medicare can't continue in its current capacity. Social Security can, but politicians and Wall Street seem determined to gut it, and I think the public will eventually let it happen.
         But even after they gut what's left of the safety net the numbers still don't add up. I'm looking for QE3 and possibly QE4, and that means higher commodity prices. This includes gold, oil, food, etc. Until the power of the international bankers is broken we will continue to see money printing aimed at banker's assets, deflation from things we want (i.e. can be cheap made overseas, like iPods), and inflation on things we need (i.e. food, energy, etc).
          Thus my investment strategy is to invest in real things. Things that can't be inflated by the government or Wall Street.

        In the end, the government is going to need more money, real money, not freshly printed stuff. That means your Social Security, your 401k, your IRA. Things that are invested in companies and commodities. Thus I expect taxes to be drastically raised on withdraws from your retirement savings.

        I think the bloated military budget will be one of the last things to see the much-needed axe.

        Taxes on the rich will never be raised until the power of the bankers is broken. That won't happen until the banks are broken up like Standard Oil was. None of that will happen until people take to the streets and protest. It might require violence before the government listens.

      "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

      by gjohnsit on Sun Jul 24, 2011 at 01:50:00 PM PDT

      [ Parent ]

      •  where are these real things (1+ / 0-)
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        joe shikspack

        to invest in? There's housing, that's real, but as we know, subject to bubbling and inflation by gov't and Wall Street. There's commodities, but they're even more manipulable by those market forces. Frankly I think there's only investing in my own ability to work, and work as long as possible. That's real and not subject to inflation.

        Are you suggesting that the gov't will raise taxes on 401(k) retirement withdrawals to more than regular income tax rates? That would spell the end of that program immediately.

        In terms of adaptation, I've noticed that in third world economies there is alot more underground economic activity - bartering, kickbacks, baksheesh, it has many names and forms. Look for these to increase as the business of survival becomes more splintered and decentralized.

        •  Re: (2+ / 0-)
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          nchristine, joe shikspack

          Normally housing would be a great default. Unfortunately, we are at the end of a record bubble.

             Are commodities manipulated? Sure, but not nearly as much as bonds and stocks. Wall Street doesn't want to see oil prices go up because it hurts the general economy. Wall Street doesn't want to see gold prices go up because it reflects poorly on their commodity - paper money.
             In spite of what Wall Street wants, gold, oil, and commodities in general are in the middle of a 10-year bull market with no end in sight. Why is that? Because the market is stronger than the money printers.
             For instance, if you need some gas to put into the tank of your car, and someone on Wall Street says "Instead of gas, I'll give you these new gasoline credit default swaps." You might accept them, but you will still need to put gas in car? Understand?

            I'm predicting that tax rates on 401k withdrawals are going to go up - a lot. Yes, that will stop people from putting new money in there, but we are talking about trillions of dollars of existing money already trapped there. And if there is one thing the government is certain to do, its short-term thinking in the time of a crisis.

          "The people have only as much liberty as they have the intelligence to want & the courage to take." - Emma Goldman

          by gjohnsit on Sun Jul 24, 2011 at 02:45:06 PM PDT

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