Episode-690- Not the End but a Massive Shift of the World as we Know It — 30 Comments

  1. As reader of much of the lit on the so called End of the World material I have found your piece one of the best balanced articles yet. Most think that we are going to face massive fighting in the streets with mobs. I could come to that, but most likly it will be a slow moving event that creaps up on us. Like the creaping inflation that is coming but most wont see it till it is to late to prepare. Unfortuneatly it causes many to be lulled into a sense of apathy and fail to act when they should be making prep for troubled times.

    • @Graypeddler, did you listen to the podcast, it goes a lot deeper than just the notes. I think you will enjoy it.

  2. loved the comment about the neighbor maxing out their cc and golly i got some airline miles….I am a Dave Ramsey fan and that made me laugh. Especially the fact that 75% of Airline miles are not redeemed – Consumer Report.

  3. Jack, re: Cash option in the 401(k)’s

    I used to administer 401(k)’s. Sadly, it is not illegal for a 401(k) plan to be lacking in a cash fund, and I dearly feel it should be illegal. It was very very rare that I ever saw one that lacked a cash fund, but they do exist (I dealt with thousands of different 401(k) plans that my firm handled, and I was intimately familiar with the fund choices found in nearly a hundred of those plans). Perhaps I saw maybe 5 plans out of a thousand that lacked a cash option in the lineup of investments available to each 401(k). My firm always strived to convince the HR officers of those company’s whose 401(k)’s we handled that they should always have no less than one cash option available for their employees to choose from, and certainly never to have zero cash options. We were successful most of the time in showing them the light. But there’s always some bone-headed ingoramus out there who just can’t see the good sense of it. So when it came to those 5-out-of-a-thousand plans, we did as they asked and set up the plan to their liking. And every year, when we renegotiated our service contract with them, we always revisited the fact that they had no cash option, and would try and try and try to convince them. (It didn’t cost them money to have the cash option in their plan. We didn’t charge extra or anything like that. It was just sheer stupidity on their part.)

    I was generally appalled when I found such a rare plan. And usually the best such a plan had to offer their employees was a bond fund or (worse!) an investment contract fund. I have a personal revilement for investment contract funds because if one of the contracts in that fund goes south, the whole fund gets frozen and heads to court, and so then people’s money gets tied up for years until the bankruptcy laws can sort it all out. I worked in high finance for almost 8 years, and that was back in the late 1990’s and early 2000’s when the economy was still good, and when such contract failures were rare (I only saw 3 contracts fail out of literally hundreds). I can only imagine how many investment contracts have tanked-out since 2008, and how many 401(k)’s are right now tied up as a result.

    My three favorite cash option funds: Treasury Money Market Funds, Federal Money Market Funds, and Corporate Money Market Funds. They are always a dollar per share. They CAN go south on you (any investment can tank, that’s why they’re called investment!), but cash funds like these pose the lowest likelihood of crapping out. The dollar-per-share is the real beauty here because –aside from a huge banking collapse hitting this country (which did happen in 2008)– money markets ALMOST never budge in their price, just in their yields.

    As for your strong strong advice for employees to demand their money be taken out of any plans that have no cash option, I’m afraid that there is almost no way for that to happen if they are still employed by the company (unless the laws have changed since my tennure in the investment world). And yet, I am certain that one very well articulated conversation with HR by one very well-spoken employee would be enough to get that HR officer to arrange for a cash fund to get added to the investment lineup in less than 3 months. HOWEVER, if for some reason the company itself refuses to budge (due to bone-headed syupidity), there is another avenue to take. Specifically: if enough employees who are all from the lower pay grades within the company’s pyramid of employees all simultaneously refuse to contribute any more money to their 401(k)’s, that development will trigger an unavoidable domino of legal problems for the company, and they MUST act ASAP if they want to avoid getting into trouble with the Department of Labor and the IRS. The trigger mechanism I am referring to is called “non-discrimination testing,” which is mandated every year by the DoL to be done on all 401(k) plans. If a company’s 401(k) plan fails non-discrimination testing, then the whole plan can be stripped of its tax-deferred status, and then everyone in the plan –including the rich upper-ups in the company– have to suddenly pay ALL the taxes they have not paid so far in the tax deferred plan. And as you can imagine, the rich upper-ups probably have lots more in the plan than the lower-down, so they have a lot more to lose. Non-discrimination testing is an annually-required set of DoL-prescribed calculations to determine if the plan is unfairly favoring the more-highly paid employees over and above the lesser-paid employees. One such measurement is to see if there are too few of the lesser-paid employees even contributing to the plan. Another measuremet is to see if the amount higher-ups are contributing is disproportionately larger than the amount the lower-downs are contrinuting. So if a huge crowd of lesser-paid employees all decide to boycott the plan, the company has to do one of several things to prevent the dreaded dominos of non-discrimination failure from getting triggered: a) give all the lesser-paid folks a raise and hope that they will decide to start contributing some more to the plan, b) heavilly restrict how much the more highly-paid folks are allowed to contribute (which REALLY pisses off those highly-paid folks!), c) either start an employer match (if there wasn’t a match already) or increase the existing match.

    If a plan fails non-discrimination testing for one year, the company usually has to pay a hefty fine to the DoL. If it repeatedly fails year after year, the whole plan get get disquaified, and then the taxes have to be paid. It is VERY VERY RARE that any 401(k) plan in this nation ever gets disqualified. Out of the thousands of 401(k) plans my company administered, I only saw 3 disqualified plans in my whole 8 years working there, and 2 of them had already happened before I even started working for that firm. It’s a nasty, messy business when a 401(k) plan loses its qualified status. NO ONE wants to see it, not the IRS not the DoL, not the company’s HR officer, and not the company’s board of directors.

    • Two things I want to add:

      1) Giving the lower-down employees a pay raise also helps the non-discrmination testing because those who are already already contributing to the 401(k) will automtatically have their contribution go up due to the fact that they are contributing a PERCENTAGE (not a fixed dolar amount but rather a percentage) of their gross pay. So if their gross goes up, then the dollar amount of their 4% (or their 2% or whatever percent they are contributing) also goes up.

      2) As for “cash funds” being a dollar per share. The very fact that they are priced at a perfect dollar per share is the reason why they are called as “cash funds.”

      One share = $1. Always. And the way you make money is by the fund yielding a percentage for you. These funds typically fetch 4% per year in an average year, 6% in an awesome year, and 1% or even nothing at all in a crappy year. But your shares will ALMOST never go down below a dollar per share. If they do, that is called “breaking the dollar,” which means the fund went bust on you –an extreme rarity for cash investment. Twenty years at a time go by before any money market funds in this nation ever “breaks a dollar,” and that would only happen if a full blown banking collapse were to rip its way through the economy.

      I have had investors ask me: “Are money market funds safe?” And I always answered “No. The truth is that no investment is ever ‘safe.’ It’s just that those kinds of funds pose the least risk, but the risk is still there.” And then I would expain HOW a money market could lose you money, and I would explain about “breaking the dollar.”

      So then some investors would ask: “Is there anything safer –or at least ‘less risky’– than a money market fund?” To which I would reply: “When rich people get nervous over the economy, they flee into money markets funds. Money market funds are sometimes called ‘safe harbor’ investments where you and your figurative financial ship can figuratively ride out a financial storm. And when those same rich people get EXTRA nervous about the economy, they flee into gold and silver.” But there is no such thing as gold or silver (not even a precious metals fund) in a 401(k) because they are deemed way too speculative for retirement accounts.

      Rght now, I suspect the majority of all cash option funds (money market funds) are yielding 1% or less this year. But een though they are earning squat for you, as long as those funds do not “break the dollar,” your money will at least stand still at a perfect dollar-per-share and won’t shrink. There’s no guarantee that the dollar won’t be broken in the fund you are in. But that’s just about all that safe harbor can offer anyone when a storm is raging.

  4. Spirkodamas, I believe that you are right on with this one.

    I showed those USA vs the world statistics to the guys that I work with and they were speechless. I don’t think the sheeple are really aware what kind of uphill battle this country is in if we continue on our current path.

    Thanks for everything you do.

    • I think Ron Hood was the first person to call me that, thank you very much for the pleasant memory of my friend and brother.

  5. I was wondering which cities are not paying on their bonds. Is their a list or articles? It was just mentioned “some cities” with out a few specifics.

  6. i have several of ron and karens videos, i was very sorry to hear that news, he will be missed .

  7. I work for a major aerospace company and we have no cash option in our company 401k. Each year (for the past 4 years) I make my yearly request with HR and the corporate interface between the company and the 401k administrator and each year I’m shot down and sent a lengthy email explaining why.

    There is one option which might be open to folks in a similar predicament. I’m allowed to transfer 50% of my 401k into 401k brokerage account which then enables me to put the money pretty much anywhere. While only half, it’s better than nothing.

    • Well Tim, if that were me it would take at least a 25% match to keep me using the 401K and with that I would not do 1 penny more than what they match.

      The rest (or all if they don’t match) would go to an individual IRA. In fact I hate 401Ks and would never use one unless there was a significant match.

      Some would point out that you can save more with a 401 than an IRA in many circumstances. My response? I don’t care, I don’t want all my savings in a highly regulated locked up account anyway. So IRAs provide me plenty of room for that classification of money.

      401s are largely a scam anyway, not having a cash option is now just another example of why.

      • We get dollar for dollar up to 6% of our salary and a 2% bonus on top of that. So, if I put in 6%, I get 8% – this is the extent to which I use the 401k. I do not actively inveest in an IRA, but instead use excess to continue paying off the mortgage early and to invest in tangible goods. The mortage is the only debt we have and I won’t be pleased until it’s gone!

        • Actually you are getting a 102% return that way so I would do it too. Just keep an eye on it as best you can and try to use what they provide to keep some of it pretty safe. My concern is the safe option with out cash is bonds and I believe the bond market is about to get totally fing nuked over the next few years as states and cities default.

        • Jack since you feel strongly that the economy and bond market will crash any ideas as to what areas might be safe havens?

      • I am new to the survival community, I work in financial services witha focus on investments. I have a series 65 license to do this. I agree about 401(k)s. Most people are unaware they can take thier 401(k) and move 50% of it in most cases. this is called an in service non hardshipe withdrawl or tansfer. I recommend to my clients most people use this option to secure thier money in a safer way to hedge the market cvolatility. the average 401(k) in our country hasonly $40,000 in it. this is disturbing because corporate america now uses 401(k)s to replace having to fund a pension. The Times wrote a very interesting artcicle about the real facts on 401(k)s I suggest everyone reads it.

  8. For some of us, TEOTWAWKI as already occurred. I’d prefer to not be in this situation, but my reality has radically changed from just five years ago, and I’m learning to move on to a new world order of no job, no security, scrabbling for cash, the underground economy, eating only what I grow, potential homelessness when the foreclosure comes through.

    And listen, what happens to the formerly middle class’s attitude when their reality has shifted so far? Anyone think they’ll still be the placid, pliable people they once were? Not a chance.

    It can happen to anyone.

  9. Sorry to hear about Ron Hood. For 7 years Ive been showing his dvds and videos to my scout troops and educating them for what might come their way. I’m going to order their magazines to show my support and appreciation for the work they’ve done

  10. Jack – loved the show today (I was the guy who called a few shows back with the suggestion of co-opting 12/21/12 as the Survivalist’s Day of Great Positive Change). The show today seemed to expand on that idea excellently.

    I’m currently reading “The Miracle of Freedom: 7 tipping points that saved the world” by Stewart. In this book they describe 7 events from history where the world as people knew it at the time changed forever. Specifically, they describe events that, had they gone the other way, would have led to a completely different world today than what we enjoy. One of the stats from the book is that of all the people who have ever lived on this planet only 5% of us live(d) in what we would consider a “free society”. The natural state of man has always been serfdom and only through heroic actions of individuals and constant vigilence do societies arise that value personal liberty. I fear that the “change” we are seeing in our society today is a regression towards that baser state. Thank you for again reminding us that what we do matters – in spite of the dramatic changes we see in the world as we know it.

  11. Ron many be gone, but I am still a Hoodlum. I thank Ron for what he created and for what he has left behind for for all of us. He may have left too early, but the time he spent here was well used. I one of the fortunate ones to have met him and I am proud to call myself his student.

    Ron, we miss you
    I’ll catch up with you in the
    next valley

  12. I’m going to download and listen to this one because Jack mentions climate shifts. If he’s started to give this factor some recognition, there’s still some hope.

    • If you are going to expect that I will pray to the religion of Maurice Strong and Al Gore you are going to be VERY disappointed.

      Of course I am concerned about climate shifts the sure as hell pre date man and fossil fuels. Only and idiot would deny natural climate change.

      Of course the climate changes on earth, it also changes on Mars.

      • Love your shows Jack, found them recently and I am hooked. I do agree with Clate though – I’m constantly surprised a smart guy like you who seems to do large amounts of reading and research is still a man made climate change denier.

        I do however think that regardless of the politics, or the science, I think America is in serious trouble unless it weans itself off oil.

        At a macroeconomic level, a country makes money by either exporting raw materials (eg Australia), or by bringing in raw materials, making more expensive products from those materials, then exporting those products (eg German cars).

        With oil, America buys 25% of the worlds supply, then burns up 80% of that without producing much from it. As oil gets more expensive, (which it will), America is forced to compete with countries that use oil far more efficiently.

        Then there is the strategic problem. If anyone wants to harm the USA, all a hostile nation would need to do is a) block oil exports through the Straits of Hormuz or b) encourage the usa to keep doing quantative easing, making the dollar weaker and therefore the price of oil more expensive to Americans but cheaper to the rest of the world. America spends more than the next 20 countries combined on defense, but ignores this huge risk.

        The best solution I see is to make oil MORE expensive via tax. This worked in the UK during the 90s, when the chancellor put up tax on fuel at 5% above inflation with every budget. The result: smaller cars, less wast, a far more efficient economy. The UK is in trouble at the moment, but it would have been far worse without that tax.

        I really hope the USA stops using so much oil, for it and the rest of the free worlds benefit.

  13. Good show. I like the focus on the whole “AS WE KNOW IT” part.

    Most of the survival blogs and boards are full of people who are expecting some god damn “Mad Max” meets “The Road” meets “Book of Eli” future and the reality is that it probably won’t get that bad.

    People who are spending all their time worrying about having their guns and firing positions figured out inside their homes to ward off a swat team type of invasion probably won’t be ready when the more probable eventuality of losing their job and income takes place.

    By the way, in response to some of the comments regarding potty mouth language on the show — I happen to enjoy and agree with your various rants in this show that would trigger those responses.

    Also, I would be offended as a listener if you stopped “keeping it real” to appease the goody two-shoes crowd. No matter what you say you will offend SOMEONE (lol).

  14. I like the fact you mentioned Rick Perry. I believe him to be part of the Bilderbergs & just another puppet. We don’t want the same old tricks we are playing with now for the next 4 years…I say “NO” to Rick Perry!!

    • @Foxy, Perry has been to Bilderberg (at least once possibly twice) and the confirmed time was right before the last election when I figure he got is marching orders, basically stay in Texas for now.

      Right after that he tried to sell half the damn toll roads in Texas to a company from Spain, singed the mandatory vaccination executive order, etc.

      I called him out as our next president after Obama even before Obama was elected. Nothing has changed, he is still our next president, hear me out.

      He will either jump in now (he only has about 60 days to get off the pot this time around) and if he does he gets the Republican nod. No one can beat him because outside of Texas he is seen as an ideal candidate.

      Or he is told to wait a bit, no one in the current field will beat Obama and Perry takes the lay up in 2016 against Joe Biden.

      The man is sleaze, but those that get the full backing of either parties machine and the real powers behind the curtain always are.

  15. First time listener and love the show. You make it seem clearer and not full of doom and gloom. Keep up the good work.