As I compose this essay the news of the proposed “taxation” of the depositors of the banks in Cypress via a confiscation of up to 9.9% of the balance from all savings accounts (and then the decision to not take that step) is rocking the financial world. The government of Cypress expressed the need for this measure in order to meet their obligation to the European Union. They called it a “tax on deposits” and “giving depositors a haircut”. I think a better term would be “stealing depositors’ money”. So go to Plan B….seizing funds in pension accounts and turning them into government bonds to pay for the bailout? Plan C?
Of course that could never happen here in America. Right ?
Don’t think that for a moment. First of all, put aside any preconceived notion that the markets are honest and fair to all participants. The multi-trillion dollar printing by the runaway Federal Reserve that is controlled by the mega-sized private banks is nothing more than another engineered plan to acquire your assets. Artificially suppressing interest rates is essentially robbing blind every person who has money invested in a savings account, checking account, money market, or CD. The next step will be to orchestrate a plan to grab every last dollar held in IRAs, 401ks, pension accounts, etc. by those who control the money supply and have the mechanisms in place to manipulate the markets. The game is rigged…and you don’t stand a chance of surviving without implementing a plan of your own.
I have been a Certified Financial Planner for almost two decades and in the financial services industry as a stock broker with both a regional and wirehouse brokerage for a good number of years before that. In 2005 I became an independent advisor because I could no longer stomach the corporate environment and how customers were forced into packaged products. I have seen complete economic cycles over that period of time….falling and rising interest rates….business expansions and contractions….periods of relative peace as well as war…..boom and bust. I have always been able to tell my clients that they could count upon the strength of American Industry, the American Workforce, the American Taxpayer, and the American Consumer to provide stability and steady growth to the American Economy.
I have also been a prepper since the late 1970s. After returning from my wartime military service in Southeast Asia in early 1974, I watched the economy stagnate and then evolve into a chaotic jumble of escalating interest rates and soaring precious metals prices. Americans contended with rising gasoline prices, shortages of heating oil as well as regulated natural gas supplies, a hostage crisis in Iran, and the “general malaise” that Jimmy Carter told us was to blame for all our woes. It wasn’t until the election of Ronald Reagan and some new economic policies that we were able to recover as a nation. Things improved, then got better. The 80’s and 90’s were good and productive years for America.
But the differences between yesterday and today are truly jaw-dropping. Back then the U.S. was economically sound despite the expense of the Viet Nam War financed with newly printed dollars that were not backed by gold (Nixon closed the window in 1971) and the growing (but manageable) social welfare programs. Tax revenues back then essentially covered and met the government’s expenditures. One just knew that every economic downturn would be followed by recovery ….because that’s just the way things worked.
Today the U.S. has spent the nation’s blood and treasure as well as our emotional capital on the conflicts in Iraq and Afghanistan. We have become involved in Libya, Egypt, and Syria. Potential issues with Iran and North Korea loom large. There are 47 million people on food stamps. Unreported millions are unemployed. Spending on social programs has exploded. The housing market collapsed and has never fully recovered. The banking system is on life support. The Federal Reserve is purchasing $85 billion dollars each month (a trillion dollars a year) in U.S. Treasury issues because no one else is willing to do so. Despite government statistics and reports Inflation has driven prices on energy, food, clothing, health insurance, and everyday items beyond reason. Expenditures outstrip tax revenues. Government spending is out of control and we are approaching $17 trillion dollars in national debt with untold (and unfathomable) amounts in promised future benefits, entitlements, mandates, and promissory notes. By some estimates the U.S. has 238 TRILLION DOLLARS in unfunded liabilities. We can’t cover it. We are flat busted. And if our leadership refuses to address and fix the problem, the rest of the world will fix it for us.
People are genuinely concerned and are looking for answers. Yet they are also experiencing cognitive dissonance as well as normalcy bias. They are fearful at what might happen and fearful of taking steps towards addressing that fear because doing so conflicts with their ingrained belief system. They want to believe that an economic collapse could never happen in America. Life continues to be pretty good for most Americans….we shop, vacation, purchase luxury items, and enjoy eating in restaurants. Life appears pretty normal.
But perceptive Americans have an intuitive feeling that something is really wrong. Despite the message spread by the talking heads on NBC, CBS, ABC, CNBC, and MSNBC that the nation is in “recovery” or “the employment picture is improving” or “corporate earnings are growing” these savvy folks dismiss the messages as much akin to the old Soviet press releases back during the Cold War. The mass media has refused to acknowledge that the Federal Reserve’s continued money printing is a complete disconnect from the reported “improving” economy.
I am assuming that since you are reading the “SurvivalBlog “ that you have made plans for your basic needs for the other aspects of survival. My focus is on the financial aspect….protecting the value of what you have worked so hard to put away. Again, set aside all preconceived notions that the marketplace is honest and fair to all participants. What’s the difference between loss of purchasing power via paying depositors low interest rates or stealing the money outright. Depositors will lose money one way or another…thru actual loss (theft) or loss of purchasing power (inflation). And the FDIC doesn’t really exist for the protection of depositors….it exists to protect the banks who operate on a fractional reserve system from bank runs. A perception by the public that their deposits are somehow covered from all risk prevents those runs. If you think your money in the bank is safe, you better grow up. There is also a concerted effort to grab every last dollar held in IRA’s, 401k’s, pension accounts, etc. by those who control the money supply and markets. Americans will find the funds they worked so hard to save for their retirement years raided and invested into government securities. The American people will essentially be forced into placing their retirement dollars into financing the country’s debt. An outright theft. The game is rigged against all of us. If you think your money in the bank or in that 401k, IRA, or pension account is safe, you better wake up and smell the coffee.
So what is a prudent and careful person to do?
First of all, commit this mantra to memory:
BET AGAINST THE DEBT….BECOME YOUR OWN CENTRAL BANKER
I am suggesting that you take the following steps to have control of your funds, maintain purchasing power, and protect those assets from confiscation:
- Start taking inventory of funds currently invested in savings and checking accounts. Try to envision what your life would be like if those accounts would be frozen by a government-mandated tax on deposits followed by a bank holiday.
- Now estimate what your expenses for living normal life for 2-3 months might be assuming you had to pay cash rather than relying upon the use of a credit or debit card or assuming that a retailer or vendor would accept your personal check for a product or service (their banks are closed too, remember).
- Pull those funds from your account(s) and hold as cash (banks are paying little or no interest so what’s the difference?). Please keep this cash in a very safe place (not a safe deposit box at a bank that will be closed). At the minimum it should be placed in a fireproof safe, security box, etc. in your residence or at the residence of a very trusted relative or friend. Tell no one else of your plans other than someone who has the same vested interests as yourself.
- Now assess the remaining balance of the funds in your accounts. You will want to begin the process of converting those funds into a vehicle that will preserve your purchasing power when the fiat currency ultimately collapses….precious metals…gold and silver. Start taking funds out of your account in an amount that will not arouse suspicion (think under $5,000) from a nosy bank clerk who is bound by regulation to report transactions above a certain threshold or that look suspicious. If asked, tell them that you have some home improvement projects or major auto repairs and your guy offers a discount for cash payments. They can relate to those scenarios.
- Think of gold bullion and gold coins as a very good way to place a lot of wealth in a very small package. You will want to have gold for a portion (25% to 40%) of your wealth preservation plan. However, they would not be very useful for day to day transactions. For that I suggest silver (60% to 75%) in the form of one ounce Silver Eagles from the U.S. Mint or (even better) pre-1965 U.S. coins (dimes, quarters, and half dollars) that have a composition that is 90% silver. This is commonly referred to as “junk silver”. Each pre-1965 coin will have actual silver in its composition (dime .0715 oz., quarter .17875 oz., half .3575 oz.). Thus every dollar in face value contains 0.715 oz. of silver. You could also consider U.S. Silver Dollars (0.77oz) minted during the late 19th and early 20th centuries but they often carry a numismatic premium. There are other choices out there that will vie for your investment funds but I have found the U.S. junk silver is usually your best value, easily recognized and accepted, and very liquid. You will want to make your purchases from a reputable and trusted local dealer. Ask around and make a few inquiries. Most will accept cash and are generally tight-lipped. Make your purchases periodically as a way of cost averaging. Take physical possession. Never buy and let someone hold it for you. Store it securely. Again, OPSEC should be of the highest importance. [JWR Adds: The recent advent of the Chinese-made fake Silver Dollars is yet another reason to stick with the smaller denomination 90% silver pre-1965 U.S. coins.]
- Now begin thinking about how you would be impacted if your IRA, tax-deferred annuity, or retirement account would be devastated by a market meltdown, seizure, or government-mandated purchase of printed securities with no real backing. I am an advocate of taking at least a portion of your funds and converting to precious metals. You have worked hard to put away funds for your golden years but what if those funds no longer existed? This will be a big decision and a tough pill to swallow for most people. But I contend that taking a distribution, paying the taxes, and yes, even a possible early withdrawal penalty, and then converting those funds into precious metals will be a wise decision for almost everyone. It is an even easier decision if you are older than age 59 ½ and not subject to the premature distribution penalty. If you are worried about your tax obligation you might remember that the government is essentially taxing your money already via the fiat system that currently exists and that you will be more responsible with your assets than any politician. You might also want to consider making some tax deductible gifts to your church, favorite charity, or philanthropic organization to reduce some of your tax obligation and possibly “bunching” those deductions into one tax year for good measure. Better that they have it where you can see the good works done firsthand. Opening a “Precious Metals IRA” has also been touted as a solution but you are not able to take physical possession of your metals until you actually take a withdrawal/distribution. This means that your metals will be held in “safekeeping” by a custodian….usually a money center bank. How do you think that’s going to play out if the SHTF?
- Lastly, and something else to consider, is beginning to take your Social Security distributions prior to your normal retirement date for full benefits. If you are aged 62 or older you are eligible for Social Security benefit payments prior to reaching “normal retirement age” but at a reduced rate. You will have to do some calculations to determine how much of a reduction it will be from normal retirement benefits, how it will affect your taxable income level, how it will affect survivor benefit levels for your spouse, and if doing so will place a hardship on your living needs. If it makes financial sense and you have other reserves, then taking a reduced monthly check and purchasing precious metals (a certain payout and purchase of hard assets) with those funds might be a wise choice rather than waiting until you reach the normal retirement age (an uncertain promise for payment in fiat currency at some future date). You can log on to www.socialsecurity.gov to access the Social Security calculator link which will enable you to create a variety of personal scenarios.
The U.S. dollar is just the latest in a long line of currencies that have had their value stolen due to decisions made by politicians and central bankers. Taking a valuable commodity like paper and reducing its value by printing numbers, images, promissory verbiage, and fancy artwork is a criminal act. Currency backed by gold and silver will eventually return. But until then it is wise to convert the existing currency to the real thing. Fight the debt….become your own central banker.