Do you remember the crash of 2008? Of course you do. I personally lost about 18% of my 401k value when all was said and done. My 401k options were very limited. It was time I learned more about giving myself more control over how my retirement funds were being invested. I learned that diversifying my savings was the only real way to protect my assets from revisiting what happened to them in 2008. This is where I began my journey to discover more legitimate ways to have control over my retirement plan. I learned that I could carry out a 401k rollover to an IRA. And, in the process of converting my 401k, I rolled 20% of my 401k into a gold-backed IRA. (Financial experts recommend placing no less than 10 percent of your assets in precious metals.)
Since the beginning of humanity, precious metals have been recognized as having value. And even today, a savvy investor has a place for gold and silver in their portfolio. I learned that my employer offered an in-service distribution which, regardless of age, allowed me to rollover the funds from my 401k to an individual retirement account. But there are many considerations and substantial penalties if you don’t follow the rules.
But The Markets Are in Record Territory?
The markets are at record levels and my IRA is performing like a champion heavyweight fighter. As I have watched the markets rise, I often ask myself, and those around me, why the dramatic market increase when the economic fundamentals are not there to justify the gains? There are two significant factors that make our economy less than stellar. The most significant factor to me is that our median wages have decreased by over $3000 since President Obama has taken office. When Mr. Obama took office in January of 2009 the median household income in America was $55,871. In August, 2013, the last available stat, the median income had fallen to $52,236 a year. The second significant factor that discredits the HUGE market gains is the stagnant unemployment rate, which is calculated today in a way that puts the president and his “leadership” in the best possible light. When the national unemployment rate decreases due to the number of people leaving the workforce, it raises red flags for those of us who are paying attention. In October, a poll conducted by Investor’s Business Daily concluded that the real unemployment rate in America today is a staggering 31%. Has the mainstream media reported these findings? Of course not and they won’t. The mainstream media believes that if they don’t report on a story the public will never know about it. Sadly, their conclusion is proving to be mostly true. While I’m talking about government dishonesty I’d like to share another report that also isn’t being covered by the mainstream news outlets. This revelation was reported by the New York Post on November 18, 2013 about the Census Bureau “faking” unemployment data in September 2012. Just in time to help Mr. Obama succeed in his quest to become a two-term president. The official unemployment rate dropped from 8.1% in August 2012 to 7.8% in September due to this fictitious data. With so many lies becoming exposed almost on a daily basis now, how can anyone believe that this administration has America’s best interest at heart?
So, why have the markets been making such huge gains? Two words: quantitative easing. The federal reserve has been printing $85 billion dollars a month since the series of QEs began. Much of this money has gone straight to the markets creating another artificial bubble. Ask yourself this question: why do the markets nosedive anytime the Fed makes public its aspiration to eventually ease off from quantitative easing? When I first recognized this trend a few years ago, I realized that one cannot rely on government to keep their hard earned money safe. I needed to create my own safety net. I decided to take a portion of my 401k and rollover into a gold IRA and convert the rest of my 401k into a self-directed IRA.
Why Invest in Gold?
The global financial system is more interconnected today than ever before, and a crisis at one major bank or in one area of the world can spread at lightning speed. The entire European banking system is leveraged 26 to 1 today. A decline in asset values of just 4 percent would totally eliminate the equity of many of those banks, and once a financial panic begins we could potentially see major financial institutions start to go down like dominoes.
We witnessed a small taste of what that is like back in 2008, and it is inevitable that it will occur again.
Anyone that would tell you that the current global financial system is sustainable does not know what they are talking about. Just look at the numbers that I have posted below.
The following is the global financial pyramid scheme by the numbers:
$9,283,000,000,000 – The total amount of all bank deposits in the United States. The FDIC has just 25 billion dollars in the deposit insurance fund that is supposed to “guarantee” these deposits. In other words, the ratio of total bank deposits to insurance fund money is more than 371 to 1.
$10,012,800,000,000 – The total amount of mortgage debt in the United States. As you can see, you could take every penny out of every bank account in America and it still would not cover it.
$10,409,500,000,000 – The M2 money supply in the United States. This is probably the most commonly used measure of the total amount of money in the U.S. economy.
$15,094,000,000,000 – U.S. GDP. It is a measure of all economic activity in the United States for a single year.
$16,962,310,905,407.53 – The size of the U.S. national debt. It has grown by more than 10 trillion dollars over the past ten years. And has been growing by $1.82 billion dollars per day since September 30, 2012.
$32,000,000,000,000 – The total amount of money that the global elite have stashed in offshore banks (that we know about).
$50,230,844,000,000 – The total amount of government debt in the world.
$56,280,790,000,000 – The total amount of debt (government, corporate, consumer, etc.) in the U.S. financial system.
$61,000,000,000,000 – The combined total assets of the 50 largest banks in the world.
$70,000,000,000,000 – The approximate size of total world GDP.
$190,000,000,000,000 – The approximate size of the total amount of debt in the entire world. It has nearly doubled in size over the past decade.
$212,525,587,000,000 – According to the U.S. government, this is the national value of the derivatives that are being held by the top 25 banks in the United States. But those banks only have total assets of about 8.9 trillion dollars combined. In other words, the exposure of our largest banks to derivatives outweighs their total assets by a ratio of about 24 to 1.
$600,000,000,000,000 to $1,500,000,000,000,000 – The estimates of the total national value of all global derivatives generally fall within this range. At the high end of the range, the ratio of derivatives to global GDP is more than 21 to 1.
Are you starting to get the picture?
Every single day, the total amount of debt will continue to grow faster than the total amount of money until the day that this bubble bursts.
What we witnessed back in 2008 was just a little “hiccup” in the system. It caused the worst economic downturn since the Great Depression, but global financial authorities were able to get things stabilized.
Next time it won’t be so easy.
The next wave of the economic collapse is quickly approaching. A full-blown economic depression has already started in southern Europe. Unemployment is at record highs and economic activity is contracting rapidly.
And for the remainder of President Obama’s term in office, I foresee him and congress continuing to quarrel over debt limits, sequesters, government shutdowns, “Obamacare”, immigration reform, and the multitude of scandals plaguing this administration. Unless, of course, Democrats can hold onto the Senate and overtake the House. This complete absence of leadership leads to world financial authorities making their best effort to diminish the role America plays in worldwide economics. China, India and Russia have already begun to decrease their dependence on the dollar and have been increasing the amount of gold in their gold reserves.
Gold Protects Against Inflation
Hyperinflation and a financial collapse may be merely months away in the United States, according to a financial consultant and Columbia University professor.
Bottom Line Training and Consulting Founder and CEO David Buckner says that although the United States has not yet experienced hyperinflation, such an economic disaster could be just around the corner. Buckner is also a Columbia University professor and the author of the book, Permission to Think. The fiscal guru believes that by October of 2014 or January of 2015, interest rates will increase sharply and kick off a dire domino effect in the economy.
When the topic of hyperinflation is discussed, countries like Greece, Bolivia, and Zimbabwe come to mind – not America. The economic collapse in Germany’s Weimar Republic during the 1920s resulted in Marks losing their value rapidly as panic set in due to hyperinflation.
According to Buckner, hyperinflation has never happened in the United States because a “certain kind of layering” would first have to occur.
Buckner’s “Layering Recipe for Hyperinflation”
- Economic Implosion
- Collapse in tax revenues
- Tax increases
- Unwilling lenders
During the author’s chat with Glenn Beck, he noted that while some Americans think all the steps in the hyperinflation recipe have already occurred, others believe that three specific attributes of our economy will prevent the nation from falling victim to a fiscal collapse. In each instance, Buckner said, defenders of the current system are wrong.
First, those who refuse to believe an economic collapse could happen in America reportedly feel that since “everyone wants to buy our debt,” we are protected from a hyperinflation scenario. The perceived never-ending willingness to buy American debt should not be counted upon, said David Buckner. The fiscal expert noted that China is currently turning its purchased United States’ debt into gold.
Second, he said, some say “we’re not printing money” because “we’re exchanging an asset – a bond – for cash.”
“What they’re not saying is where that bond’s coming from – treasuries,” David Buckner said. “As soon as the government puts it out there, the Fed comes and takes it. It’s circular, it’s absolutely circular. So we are printing money.”
Third, some say America will remain strong because it is a productive country. But so many of America’s top companies – such as Apple – rely on products made overseas, he said.
“And everybody says, well you’re not seeing hyperinflation,” Buckner said, but he said that’s because “the interest rates are so low, nobody’s putting that cash back into investments in the United States. But they are putting it into desperate countries in Europe. They’re putting it into other investments. And the money’s going out there, so the second Bernanke raises the interest rates, all of the sudden the money sucks back into the United States and we have hyperinflation.”
Glenn Beck asked David Buckner what type of event would trigger an economic meltdown.
“We’ve had an event, but … we’ve become comfortably numb,” Buckner said. “So there’s been a lot of hidden stuff that’s going on. The treasuries continue to go out, and Bernanke continues to buy debt. [But] anytime he starts to back off the markets freak out, because they know. The markets know. But we don’t, the people don’t. People who are retired, pensioners, elderly, people who are holding money are going to be devastated.”
Federal Reserve Chairman Ben Bernanke is printing approximately $85 billion per month, as reported in Yahoo! Finance. That amount is equal to 6 percent of the annual GDP. The report on the activities of the Federal Reserve also stated that Bernanke is spending the printed dollars on government bonds in order to stimulate investment, keep interest rates low, and reduce the amount of unemployment. The financial review does not think Bernanke’s plan is working. According to the article, investments are still very low, interest rates are creeping back up, and unemployment statistics remain unpleasant.
“Bernanke’s dangerous policy hasn’t worked and should be ended,” the report said. “Since 2007 the Fed has increased the economy’s basic supply of money [the monetary base] by a factor of four. That’s enough to sustain, over a relatively short period of time, a four-fold increase in prices. Having prices rise that much over even three years would spell hyperinflation.”
Buckner’s company has trained thousands of managers and executives from more than 50 different countries.
Once the dominoes start falling, how long will the collapse take?
“Three months,” Buckner said. “You listen to many of the economists — within three months. And it’s going to be perception more than real price. You’re going to see hoarding, you’re going to see fear. It’s not the actuality. So if they can put a glaze over everybody…it may slow it down. That’s the problem, is we’re dealing with an illusion. It’s an illusion of what is real. We don’t have the money. So the interest rates go up, you’re going to see a domino.”
Do you think hyperinflation could occur in the United States and prompt an economic collapse?
Watch the David Buckner interview below broken into Part I and Part II.
Types of Individual Retirement Accounts (IRAs)
- Traditional IRA — contributions are often tax-deductible (often simplified as “money is deposited before tax” or “contributions are made with pre-tax assets”), all transactions and earnings within the IRA have no tax impact, and withdrawals at retirement are taxed as income (except for those portions of the withdrawal corresponding to contributions that were not deducted). Depending upon the nature of the contribution, a traditional IRA may be referred to as a “deductible IRA” or a “non-deductible IRA.” It was introduced with the Employee Retirement Income Security Act of 1974 (ERISA) and made popular with the Economic Recovery Tax Act of 1981.
- Roth IRA — contributions are made with after-tax assets, all transactions within the IRA have no tax impact, and withdrawals are usually tax-free. Named for Senator William V. Roth, Jr.. The Roth IRA was introduced as part of the Taxpayer Relief Act of 1997.
- SEP IRA — a provision that allows an employer (typically a small business or self-employed individual) to make retirement plan contributions into a Traditional IRA established in the employee’s name, instead of to a pension fund in the company’s name.
- SIMPLE IRA — a Savings Incentive Match Plan for Employees that requires employer matching contributions to the plan whenever an employee makes a contribution. The plan is similar to a 401(k) plan, but with lower contribution limits and simpler (and thus less costly) administration. Although it is termed an IRA, it is treated separately.
- Self-Directed IRA — a self-directed IRA that permits the account holder to make investments on behalf of the retirement plan.