COMMODITIES GURU JIM ROGERS:“I Suspect They’ll Take The Pension Plans Next; I For One Am Worried, And I’m Taking Preparations”

You have no understanding of monetary policy or money itself..............none !

The problem is that one cannot cash out of their 401Ks if they are still employed with the company where you have the 401K.

Nope, I understand a lot. Anyone reading the above will see it.

Ah I see it. Here's your prior post. You're a strong dollar guy. Maybe you're Chinese.

Yeah I sussed this out back in the 80s and decided to spend time enjoying myself.
I semi retired at 55 and fully at 60. Not rich, but not poor either.

I live in Puerto Rico where there is currently a big scandal with the newly elected Governor (Alejandro Garcia-Padilla). It appears that the norm for past few administrations has been to loot the PR government workers' pension funds. They just recently announced funds were down to just enough to cover for 3 months and then there would be a big ZERO for the hundreds of pensioners waiting on their check to survive another month. There will be hell to pay if such a thing happens here.

This week the new gov't hurriedly signed off on legislative reformation of the pension laws which, in a nutshell, means that if you were about to retire within 2 years; you will have to work possibly 5 - 7 additional years before being allowed to retire. Oh and your retirement will provide you with less money and less benefits than ever. Those in this predicament are encouraged to begin a savings plan (401K, IRA, etc.) to supplement the reduction. You can only imagine how this news has hit us all. However, there was no mention of a real investigation to determine who are the culprits to this debacle.

I suspect that what you bring up on your side in Argentina is something that will also happen in the USA, if it has not already. Just this week my hubby pointed out an article to me with the following title:

Obama’s Budget Targets COLAs, Federal Retirement Benefits

[link to www.govexec.com]


Yes, all the gov't are broke - including the USA. What I can't understand is how they continue to fund wars, other governments and ever expanding public assistance programs.

Daily gov'ts diligently look under every rock and doormat for the last red cent they can get their hands on. Unfortunately too many people still think this is something that will never happen with their gov't. The people continue sleep soundly trusing in the idea that their money is safe in the bank. They seem to forget the gov't and the bankers are best buds forever. What happened in Cyprus is a window to the future showing what is going to happen to us. We, the average folk, are the piñatas they regularly hit for "mo' money" while their favored friends and collegues hide their stash in off shore accounts.

Depressing, isn't it?

Marisol, that is bad. But it's not nearly as bad as what we're facing with Social Security and 401K's, because you're talking only about government worker pensions.

The productive class in PR is not affected by it, only those who joined the govvie "for the security". If your govvie workers are anything like ours up here, there are a lot of crocodile tears being cried right now by those not working for the government.

Savings are money put by for future consumption. You need to have cash on hand to stock up on food. Your hardly going to sell your house and eat on the street, so keep savings close and dont waste your income on stupid things or even better start stacking food now while the shelves are full.

If jimmy Rodgers is putting out the warning signals that means its time to get PREPARED.

CalPERS has a high exposure in the stock markets. The CalPERS Board of Directors wants a high level of return; the CIO Joe Dear is concerned about the risky level of exposure. In the event of a market crash, CalPERS would not need to "convince the legislature" to tax anyone, all those directives are in law already and have been for decades.

Oh, and State workers DO pay FICA. I work for the State of California and Medicare and Social Security are withheld from my pay warrant each month, to the tune of almost $400.

And as for "free lifetime healthcare," well that's just not true. Health insurance while working is a benefit which both my employer and I pay into. Health insurance retiring after thirty years with the State is covered 100% but that only lasts for the few years until the retiree reaches age 65 and goes on Medicare. CalPERS members who work past the age of 65 also go on Medicare.

It's a good benefit package but the benefits and job security are IN PLACE OF the higher salary I would get in the private sector. I would be making twice the salary doing the same job in San Francisco or Los Angeles.

I guess lots of people have pension envy....

Where do I start as that post is so wrong in so many ways.
"It is correct that for every liability someone owes, there is a receivable that someone else is counting as an asset"

The basic is true but, you forget to mention that most debt has been levered to create more debt on balance sheet. That is what is effecting the system in negative way.

Next you say:
"The converse is not true: for every asset, there is not a corresponding liability in the monetary sense"
When your speaking about an asset you seem to be talking about something that you own 100% free and clear like a bicycle or something. We talk in financial maonetary policy around here not personal finance. For assets classified as an accounts recievable on any balance sheet there "is" in fact a liability of a counterparty that owes this money. If a bank bets on you not paying back a loan (buys a CDS contract) the value of which the financial institution "thinks" that that bet is worth is what it's value is (In other words there is no "mark to market" so they can value it up to but, not exceeding the total amount of the strike price that they could recover if you default on your loan).

Next you say:
"The net sum of US dollars is not zero, it is vastly positive"
Your kidding right? This one is easy. With leverage in the fractional banking scheme that leverage, in order to be written down to zero, must pay the leverage too. If you have a bank that has a levered balance sheet and owes $1 Billion doesn't mean that they only owe $1 billion lets say they have a 50 to 1 levered balance sheet. They would have to come up with $48 Billion of money they dont have or that hasn't even been printed "YET" to retire that debt to zero. This can be proofed by the fact there is no "mark to market" Reinstate it and what do you have ?. The amount of dollars levered could be a fraction of existing dollars. Thats why nothing is called a default because it would trigger the printing of dollars that don't exist yet to make the insurance claim bets whole, because of the entries as assets on many (fractional) banks balance sheets that the leverage represents.

And this one takes the cake that proves you know nothing of which you speak of:
"And it becomes more positive every time Ben Bernanke does what he gets so much criticism for: printing. He's providing a way to pay down those debts"

I will use a kindergartner thought process to rebut this dumb as a box of rocks comment.
Then why doesnt he just print up $16 Trillion dollars and pay the national debt off ? or Why did he give foreign banks $16 Trillion instead of paying off the national debt.

What will happen to people over 55 who will have their retirement confiscated and medical care denied?

The simple answer seems to move to an affordable country that accepts Americans, but that would not be easy either.

Maybe all those DHS bullets are for those over 55.

MONEY IS THE ROOT OF ALL EVIL ESPECIALLY IF IT IS CONTROLLED BY THE WRONG PEOPLE.

THE DEBT WILL NEVER BE PAID BACK. UNDER OUR CURRENT MONETARY SYSTEM IT IS IMPOSSIBLE. MONEY IS DEBT, ALL MONEY IS LOANED INTO EXISTENCE, IF YOU GIVE THE BANKERS EVERY DOLLAR / EURO / OR ANY OTHER FORM OF FIAT CURRENCY IN CIRCULATION AT THIS TIME, DEBT WILL STILL REMAIN, THERE IS NOT ENOUGH "MONEY" IN CIRCULATION TO EVER PAY IT BACK AND UNDER THE CURRENT SYSTEM THERE NEVER WILL BE.


Money As Debt

Sorry, dude, but Old Trader is correct. You haven't seen all the way through the veil of the illusion.

well I couldn't see it. Bernanke's Fed isn't printing any money at all, they are merely lending via traditional discount window loans, which means it is just digital money.

Do you think they really have the where with all to print and distribute $600 million/hour?

Nice video and post.

MORE INFORMATION REGARDING "MONEY AS DEBT"

[link to www.moneyasdebt.net]

What a bizarre mix of New Age and conservative politics! Strange times indeed.

Gold backed 401Ks: [link to www.goldbacked401k.com]

I also have a soft spot for rural agricultural land. People who lived on farms during the Great Depression #1 at least had a place to sleep and food to eat. Often they also took in their city relative's kids to shelter them. Sounds pretty handy to me.

A LITTLE HUMOR

World Collapse Explained in 3 Minutes

hey guys. very interesting posts in this thread today.

This is for all the posters and participants of this thread:

He is true up to a point. This is a conflict between the manager class and the true capitalist. The latter desires minimal government (unless he is in trouble in which case, bailouts will do.) and the former who is not anti-capitalist but nonetheless an opportunistic leech, is dependent on the infrastructure of the state to maintain his way of life. The two sort of rub along together, occasionally at conflict as the capitalist always prefers less government in a bid to commodify everything.

Old Trader again:

I thought I would go into a bit longer description ... since there seems to be considerable misunderstandings out there, probably caused by the fact that if you take graduate level economics courses (which I have) they IGNORE the basic underlying concepts and go off on interesting, but at the end of the day, irrelevant tangents: (which is why I am a Longwaves Economics guy ... since when looking at it systemically over a multi generational period you HAVE to constantly look at the basics underlying the entire complex system)

--------------------------------

All sorts of misconceptions running around about money, debt and savings.

Money at it's core is merely a transactional device for facilitating trade among various parties. In a closed system that has 10 widgets and 10 money units with nothing else to do with the money but buy a widget, and nothing else, then each widget would be valued at 1 widget. If suddenly the amount of money units increased to 20 then each widget would suddenly be worth 2 widgets ... BUT THERE WOULD NOT BE ANY MORE WIDGETS. There would still only be 10 widgets even if suddenly there were 100 money units.

"Savings" (of money) at their core are merely a "CALL" upon the future work and goods THAT HAVE NOT YET BEEN PRODUCED. The assumption with "Savings" is that the money saved can IN THE FUTURE be used to purchase work or goods. "Savings" by themselves are NOT work or goods (you can't put the plumber's repair job in the bank today for a pipe that breaks in 10 years). (but you CAN "save" "wheat" or "food" etc. for future use. ONLY TANGIBLE HARD GOODS THOUGH CAN BE SAVED DIRECTLY. Other than that "Savings" become a PROMISE by someone else to give you back something in the future that you CAN THEN (IN THE FUTURE) EXCHANGE FOR REAL WORK AND REAL GOODS.

Savings (except for physical hard goods) therefore can NOT EXIST except for the PROMISE of someone else to provide something that can be used to obtain REAL WORK AND REAL GOODS IN THE FUTURE.

Debt: Debt at it's core relies upon the premise that the borrower WILL PAY AN INCOME STREAM to the saver ... and that the principal will be paid back at some time in the future (though on a broad systemic basis this capital repayment virtually never happens and no one expects it to - though it may be shifted from one borrower to another).

Destroy that promise of someone else to provide that work or goods in the future, ie: the debt, and VOILA YOU HAVE DESTROYED THE SAVINGS.


That is why the basic equation reduced to simple terms is:

Savings = Debt

and the corollary is:

Destroying the Debt DESTROYS the Savings.


At it's most basic one can ignore Helicopter Ben dropping freshly printed bills upon the populous that he has made out of thin air. That is merely watering the money supply and at it's core merely reducing the value of the currency (as per the example above) (more supply of dollars to buy the same amnount of product = inflation ... though currently velocity is down so inflation is currently not showing up at the rate the current M1 or M2 aggregate increases would project).


As for fractional reserve banking ... that "money" is virtually irrelevant to my post since the amount of reserves required to be held in nonproductive use is very small compared to the amount of savings loaned out (in the US the amount of reserves it IS more than Europe, which does protect the US system from bad debts more than Europe since there is more "money" there that can be destoyed by bad debt BEFORE it eats into the "productive" amount of loaned out money, but it is still a very small percentage of the "savings" that people have saved).

THUS .... for the economy as a whole one can ignore the watering down of the currency and the small amount of reserves held by the banking system and realize that for all intents and purposes debt = savings and if you reduce one YOU MUST CORRESPONDINGLY REDUCE THE OTHER. If one write's off large amounts of debt then consequently large amounts of savings are also destroyed.

Once the overall economy of any country reaches the point that it can not even keep up with the CURRENT PROMISED INCOME STREAM then you have reached the point at which the Debt MUST BE REDUCED in order to bring the periodic REQUIRED payments back into line with society's ability to generate sufficient income to PAY that promised INCOME STREAM.

One modern wrinkle to overall societal debt loads that did not exist the last time there was a Societal Debt Cram Down situation in the developed Western world (the Great Depression - a time when LOTS of excess debt was destroyed) is that today there are also PROMISED SOCIAL WELFARE PAYMENTS that must be added to the promised true Periodic Debt Income Payments. For Europe in particular those Promised Social Welfare Payments drain a considerable amount of society's resources out of the economy BEFORE the Promised Debt Payments can be made.

Because Social Welfare Payments are ALSO PROMISED PERIODIC PAYMENTS they MUSH imo MUST be added to the actual Debt that any country has accumulated and upon which they must make Periodic (interest) Payments since they are as much a call on society's economic output as the Debt Payments themselves.


As pointed out above if Ben Bernake's could simply Print Money and retire all the debt ... then by gosh we have no problem!! (but then how would you be able to buy something of value in the future with saving you made today?)

Old Trader
(and Longwave Economics guy)

And lets not forget that Rogers is heavily invested in China which is still a command economy, albeit a very profitable one with huge labour surplus which sort of puts this in perspective...it being that the state in America is unprofitable...it supports over paid politicians and workers and needs pruning....Argentina was just a case of very bad management by the managerial class.

Completely agree - but we've been conditioned otherwise and many have a hard time thinking differently. Sold a home first part of 2008 and have rented ever since.

the difference between those european countries and the us is guns

. . .

That's exactly how they want you to think.