re: There Goes The 401(K)

mykey99 — Wed, 17 Dec 2008 02:07:54 GMT

Hi Jane,

For the past 10 or so years everyone seemed to believe that they could put a dollar in the stock market and get paid two dollars without doing anything. Many also seemed to believe that their house was the equivalent of an ATM machine and that credit and debt were two different things. It seemed to work for a while but reality has set in and the free cheese in the mousetrap is now exacting a cost.

Wall Street has always tried to make investors believe that staying in for the long haul will eventually reap rewards. However, over the long haul the stock market is essentially a flat investment. The timing of when you get in or get out for the most part determines whether you come out ahead or lose as does making wise choices in which companies to invest in as opposed to generalized mutual funds. The present bear market has so many things going against it that it is unlikely that stock investing strategies of the 90's and 2000's will allow investors to recoup their recent losses anytime soon or if ever, depending on their age. Amidst all of the financial chaos and talk of deflation there is an elephant or better yet a blue whale in the room. The creation of unprecedented numbers of dollars by the Federal Reserve during the past months in conjunction with existing debt and entitlements has set the country up for financial default, bankruptcy, receivership, sherriff's sale or whatever you want to call being knee deep doo-doo. Our 401(k)s that are now 201(k)s are headed to becoming just (k)s but this will be the least of our worries when the hyperinflation sets in shortly. Right now the Federal Reserve has demonstrated the true value of the US dollar by creating a zero interest cost for borrowing. It should rightly be a negative interest rate. Who would want to pay interest to borrow "money" from an entity that creates and prints its own currency at will? Our foreign bankrollers will certainly stop doing so as soon as the results of the dollar creation orgy become evident, at which time the US will either declare bankruptcy, create a new currency, go to war, or all three. Your panic was an appropriate response in October but unfortunately it should be mounting not subsiding right now. The Wall Street bankers have once again shown themselves for the self-serving entities that they are and Washington, that is, the lifer politicians, is either clueless or fulfilling its role as a dependent, needy, enabling toady.

My outlook is sadly gloom and doom right now but "it's not being paranoid when someone is really after you." I pray some really smart people will be able to figure out a way out of this mess. Where have you gone Alexander Hamilton? Our nation turns its lonely eyes to you.