Saturday, August 25, 2012

The Basics: Money as debt, since Sumerian times, and digression into 401(k)

I am writing (mostly researching) the history of usury, Jews and their role in world history, from anti-deluvian times to the present (right now researching Ur and Sumeria), but I realized something.

I am a moron, and am writing this blog mostly for myself, to understand... stuff... well, everything, really.

And so launching into a grand history of the Jews in the world, it would be good to start off with the basics of... stuff... in this case, money - what the fuck it is, how is it created.

Now, the fascinating thing is, that this swindle is NOT a modern banking concept.

This has been around even before official recorded history, this has had its pernicious influence during the Sumerian Empire (which predates Egypt, if you are keeping score).

If you want to become educated (especially if you like real history, not the official PR falsehoods, if you have read Phillip Coppens, Graham Hancock and other history authors who question long "settled" agreed on paradigms on what happened), you must, must, must read

Sumerian Swindle (warning - large PDF).

I am a bit pessimistic about our (goyim) chances of making it because "Those who forget history are doomed to repeat it".

And we, Americans, cannot even remember our most recent history of money manipulation - forget Sumer, think 401(k)!

I think all of us in America are familiar with the 401(k) plans and what they represent.

They are (deceptively) called "retirement plans", but what they really are - they are investment plans.

Any plan that has risk in it, because you invest your money in the stock market (whether you buy the stock of your company, or index funds) is an investment plan, pure and simple.

Regardless of tax rules, regardless of employer contributions, if there is risk to the money, it cannot be called a retirement plan!

It is, simply, an investment plan; in simpler terms, a casino, a gambling plan, in which you give your money to people who decide what to gamble on, and get paid for it... whether they win or lose your monies.

When my mother was nearing her retirement from her work, the new fangled 401(k) was getting implemented at her work place, but that the people who had the company's old pension plan would still be under it - only the new employees, from a certain date onwards, would be (basically forced) to "invest" in a 401(k).

I told her to get out now, before the date hits.

Now, the chief difference between a normal retirement plan (pension plan), which was the norm in America, and 401(k), which is the norm now, is RISK.

In a normal retirement, pension plan, it is basically an annuity - money paid directly to you, with no risk, every month, the money that you, the employee, put in the plan while you were working.

And a company sometimes was good enough to put some of their money in it for you, as, say, reward for being a good employee who worked there for a long time.

A 401(k) on the other hand, is your money, which you put in that plan while working, which is then invested in a stock market, and fully at risk due to market manipulations and the banksters.

Traditional pension plans were really the "Defined benefit plans", which simply meant "the benefit on retirement is determined by a set formula, rather than depending on investment returns".

Guaranteed money, no matter how the market does.

It was like putting money in the bank - the money was in play in the market, but you, the employer did not take ANY risk - it was the people who churned this money in the stock market and used it took the risk.

Why did the elites implement the 401(k) in place of a guaranteed, no risk normal, sane retirement plan?

You have answered this question already, I hope - the 401(k) puts the risk on you, the employee/future retiree.

This all started in 1980, with a particular scumbag named Ted Benna, the father of 401(k). Read all about this glorious new financial invention here.

They save a given company tax money.

He established the first 401(k) plan in 1981 for his company, spawning one of the best-known and used employee retirement savings devices. The plan helped his company lower its tax bills and encouraged all employees, not just the highly paid, to save.

By 1985, the 401(k) was very popular — perhaps too popular for some lawmakers. The U.S. Treasury estimated it had lost $10 billion in tax revenue since 1981 due to tax-deferred contributions. Alarmed, it approached Congress to end the revenue drain by changing the law. Benna launched a massive letter-writing campaign and succeeded in retaining the 401(k), although Congress significantly reduced the maximum deferral.

But, there was a teensy problem.

As Benna later realized, the biggest challenge to use of 401(k) plans was a lack of understanding about investing. Markets fluctuate, and education is critical to prepare people to tolerate short-term losses and make commitments to savings and investing for long-term gains.

Most people are not Wall Street whiz kids, and have that stupid look on their face when "latency" and "front running" is mentioned.

In short, most people are idiots... or at least not as knowledgeable about their money as the Sumerian money lenders.

Today, employers have a fiduciary responsibility to help prepare employees to make reasonable investment decisions for long-term planning.

Such training usually involves a meeting where an "expert" comes in and cracks a few jokes and then tells everybody that by investing in his company's 401(k) plan the returns are 7%! (Yes, this really happened to me and my co-workers; I was the only one stupid enough to ask questions and was told the old "past performance does not guanrantee future results", then how is this considered savings for old age; but I digress).

So, how has this stock market been working out for its (supposedly) purpose, retirement money for seniors leaving jobs to go fishing?

Not so good.

New York Times, dated July 2012.

Seventy-five percent of Americans nearing retirement age in 2010 had less than $30,000 in their retirement accounts. The specter of downward mobility in retirement is a looming reality for both middle- and higher-income workers. Almost half of middle-class workers, 49 percent, will be poor or near poor in retirement, living on a food budget of about $5 a day.

In my ad hoc retirement talks, I repeatedly hear about the “guy.” This is a for-profit investment adviser, often described as, “I have this guy who is pretty good, he always calls, doesn’t push me into investments.” When I ask how much the “guy” costs, or if the guy has fiduciary loyalty — to the client, not the firm — or if their investments do better than a standard low-fee benchmark, they inevitably don’t know.

I like this sentence opinion:

Basing a system on people’s voluntarily saving for 40 years and evaluating the relevant information for sound investment choices is like asking the family pet to dance on two legs.

Now, add to that fact the market crashing, multiple times... And you cannot take out money from your 401(k) until retirement, or there are penalties.

What to do - do you pray that the market does not dive bomb, or do you withdraw your money and take a tax penalty (here is a handy dandy withdrawal calculator for yah).

Trick question!

Just joshing yah!

Of course, not having inside information, and being too busy working and dealing with your family issues (such as working so you and yours can survive), the crash happens suddenly, and your money goes from a $100,000 to $50,000.


This author, TERESA GHILARDUCCI, is fun, I like her!

Not yet convinced that failure is baked into the voluntary, self-directed, commercially run retirement plans system? Consider what would have to happen for it to work for you. First, figure out when you and your spouse will be laid off or be too sick to work. Second, figure out when you will die. Third, understand that you need to save 7 percent of every dollar you earn. (Didn’t start doing that when you were 25 and you are 55 now? Just save 30 percent of every dollar.) Fourth, earn at least 3 percent above inflation on your investments, every year. (Easy. Just find the best funds for the lowest price and have them optimally allocated.) Fifth, do not withdraw any funds when you lose your job, have a health problem, get divorced, buy a house or send a kid to college. Sixth, time your retirement account withdrawals so the last cent is spent the day you die.

For extra fun, google her name and discover how paid shill scum bleated and crowed about her, name calling and, of course, "she wants to take your money from you!", which as usual works with us idiot Americans.

Because if it's one thing we like in our lives, it is CONTROL.

And 401(k) was sold to us as "It's your money, and you are in control of where to invest it, to make big profits!".

Nobody told us that the options to invest for a worker would be very few types of plans, that the risk of losing some or most of your money is very real, and that for this to work you would have to be as good as professional, 24/7 stock brokers.

One last thing:

Money in your 401k account retains its tax-deferred status until it is withdrawn. At that point it is subject to regular tax rates. You cannot claim capital gains on money earned from investments within your account. For this reason, it is very unwise to simply liquidate a 401k. The entire sum then becomes taxable within the current year, and that is likely to put you in a very high tax bracket.


Best to not withdraw your money, which you "control", right away - do it in very small amounts, and hopefully you will die before the market loses it all.

And what happens if you happen to die?

Well, then, it depends on the employer, doesn't it?

Who gets your 401(k) when you die?

The federal government sets some of the rules for your 401k plan, but your employer writes more specific rules that fit within the IRS guidelines. That means you may or may not receive all of the nice advantages the IRS allows. For example, while the IRS may allow spouses to keep their money in 401k plans for a while, your specific plan may not. Your plan might say to the grieving widow, “Take your money and go.” Make certain that you read the paperwork for your own 401k plan.

Your beneficiary will be able to roll the funds over into an Individual Retirement Account. (This is a recent change, and you may find older references which say that only the spouse can roll over into a 401k. That is no longer the case.) This is great, because it defers the tax bill until the beneficiary actually withdraws money. The beneficiary should read both Chapter 6 on Rollovers and the plan documents. Then he or she should select a good company to provide the IRA, and let that company handle the rollover. The surviving spouse should not take the cash and then move it into an IRA.

Beneficiaries who don't roll the 401k over into an IRA should check the plan’s rules because the plan, may allow for payments over time. This will spread out the tax bill over many years and thereby allow the money to continue to grow with tax deferral. Even though the IRS allows distributions to beneficiaries over a period of years, many plans do not. Because of the administrative costs, those employers don’t want to be bothered making payments over a number of years. They may require the beneficiary to take the cash in a lump sum.

And that makes you a very rich person in the tax bracket (if you were lucky and/or wise in your investments, of course).

But wait, it gets better!

Remember that pesky RISK thing, where the traditional pension fund meant you took no risk, your employer/financial whiz kid who operated your money took ALL the risk (after all, no matter, this money was 100% yours at retirement, with employer contributions to boot many times).

Well, read on.

If you invest as an investor, with a vision of making it big, and inevitably lose money, you can ease your pain with Capital Losses reporting on your tax form.

But, and here is the good part, if you lose money in a 401(k) plan, well (I am sorry, I am laughing so hard at this), well, this happens:

How to Show 401k Losses on My Taxes, EHow,

The IRS treats the tax deduction for 401k losses as a miscellaneous deduction, meaning you must itemize your deductions using Schedule A to claim the deduction. But only in specific circumstances can you claim a loss on your 401k on your taxes: You must close your 401k, and your tax basis for the account must be less than your total distributions over the life of the account. You cannot claim a loss based on your losses for one year. Instead, the losses are based on the losses over the life of the account.

Did you get that?

"But only in specific circumstances can you claim a loss on your 401k on your taxes: You must close your 401k".

But closing it means the horrendous tax penalty for the whole amount (something which of course you want to avoid, as the entire purpose of this shitty plan is that when you retire to pay little taxes as you take small chunks out of 401(k) each year).

So, effectively, if you take losses in your "retirement" plan, you just suck it up and swallow it.

And the whole tax deferred angle means that you think that because of inflation your money will be worth much LESS than it is now, and you also hope that taxes will be LOWER than now.

I wonder what the inflation will be in 40 years.
And I wonder by how much taxes will be lower than now.


401(k) is for winners, like YOU!

Bonus: Comic Relief
Lets read what a comedian, I mean an "expert", writes.

I will put in my very own laugh track.

My 401k has lost a lot of money – how about yours?, dated 2008 (the crisis year, oh my!).

After reading a few articles about people talking about their diminishing 401(k)s, I decided to check and see just how well mine has been holding up against the crisis. I haven’t checked it in months, because I am in it for the long haul

In it for the long haul.

Yah know, in 30 years laws WILL be changed, who knows what the inflation rate will be, yadda yadda.

You know when an "expert" tells you to put your money in "for the long haul" and forget it, that you have a live one.

and I know that over the last 100 years we have had about 25 recessions and 25 recoveries.

The trick, of course, is to time it so that you invest just after a recession and just before a recovery; after the bust and just before the boom.

So simple!

John brought up a good point that we should be taking advice from Warren Buffett (who has been buying lately since things are so cheap) because he obviously has been successful, rather than people being guided by fear.

The reason Mr. Buffet has been successful is because he not only buys companies, he lords it over them - he tells them what to do and who to fire and whom to hire.

In short, he doesn't just invest in a company - he gets to control it.

Anyway, back to my 401k. It is down. A lot. 37% this year to be exact, and just like you I have the strong temptation to pull it out and hold on to what is left of it, BUT I am not going to. Historically, when things have gotten really bad, a couple months or years later they come back in full force.

That is true - once you have lost 37% of your money, might as well stay in the game, due to the boom and bust cycle.

Trouble is, what if a bust is bigger than the boom?

And compounding interest in a recovery works worse with, say, $50,000 than with $100,000.

But the bottom line is regardless of what happens to our money in the bank, our 401k, or the economy we still have the promise that God is going to take care of us…

Matthew 6:25-27

Ah, he is a christian investor.

And God, of course, has his eye on the stock market.

Good to know.

So, a few things to finish this whanger off.

First, pay off your compounding debt (student loans, credit card), as the compounding interest on those is much greater than the (possible) investment gains in any stock market gambling, including 401(k).

Second, if you don't have debt, why the fuck do you invest in a 401(k), when you can invest in some better options, which are just as unsafe as 401(k), but in which you REALLY have control and are not limited to sleazy plans for idiots?

Third, fuck this shit and read Sumerian Swindle, which I linked to at the beginning.

Do it now.


Anonymous said...

I see you are coming to learn that the the good old US of A is just a big business and a swindling one at that. Always was, one just didn't hear about it. Instead, all that was peddled was George Washington and the cherry tree. You do realize Washington was a slave-holder,don't you? What kind of mentality does a slave owner have? This, the father of the country. The ones who came afterwards were less talented but more venal.

Vito said...

Man, what a fucking boring post.

AmericanGoy said...

Vito - then read the Sumerian Swindle.

It is long and non boring.

AmericanGoy said...

First Anonymous - actually, the whole point of the American Revolution was so that the rich did not have to pay taxes, which were MUCH LOWER than what actually English were paying.

It was a revolution for the elites by the duped idiots.

Propaganda leaflets were printed and this was the first time such propaganda was so successful on a global stage (the French Revolution did not need much propaganda - it was spontaneous rising against incredible injustices and venality).

To realize what the American Revolution was all about, study the winter camp in Valley Forge.

The soldiers (dupes) starved and froze to death, not paid, while the officers lived in houses and lived it up with the ladies.

muthu said...

conventional pension plan and ULIP or market linked pension plans from this two which is Pension Plans good plan...