How do I protect myself from the US Government?
Homeowner · Hendersonville, TN · Member since 2008 · 68 posts · 7 votes
I watch what the other countries are doing to address the government debt and I know that is coming our way. I want to be prepared.
Callapsed stock markets,devalued currency, and higher taxes are just a few thoughts of our future. I am nearing retirement. I have contributed heavily to my 401K and continue to also save on top of that. I don't want to see all that work squandered because our government has a spending problem.
What are you doing to protect yourself? Or what can I do to be protected from the government screwing up my retirement?
With all the news of goverment debt and the austerity measures being taken how does someone protect themselves from the US government from
How about this? Turn off Fox news and don't worry about it so much.
You have just experienced 3 years of relatively horrible economic times in this country and you are still on pace for a nice retirement. And NOW you are worried? If thee was a time to worry about gov't economic policies, it was 04,05,06,07. News channels and "public opinion" are the ultimate lagging indicators. That has been proven in studies time and time again but we ignore that fact because they rile us up for their own political and business purposes.
All they do is try to spook you with crazy **** so you keep glued to the tube and vote their way. News channels are in the news Business, with a small "n" and a big "B". It is never as bad or as good as they say it is.
People who predict crazy things like the rapture, the end of the world, the end of America as we know it, stocks going to zero, and who use extreme language make for good TV and good church but have ALWAYS been wrong. They ALWAYS say it is different this time and they are always wrong. So why do we keep listening?
We are not Greece, we are not Italy. We are not ancient Rome. We are not even close. There is no comparison. Even when we are down, we are still a giant in the world. They still buy the **** our of our currency and bonds whenever anything bad happens. Did they ever do that with Greece or Italy? No.
Things go up and down....always have...always will. Take reasonable measures (diversify) that have been appropriate for many decades and move on with your life.
The more you worry about the government and how it affects your life...the more it affects your life! Why don't people understand that?
If your desire to avoid government influence and/or taxes determines what you do for a living or where you live or how you live your life, then you are giving the government control your life. Don't give it that power over you. Live where you want and be what you want to be in your life, without regard to the government, pay the cost and forget about it. That is true freedom.
You are incredibly lucky to be living in the US, which is by far the most stable and resilient large economy in the world and overall the most free large country in the world. There is greater "opportunity" here than in every other country combined. The rest of the world knows that, but somehow we have a hard time seeing it. Could it be because we are spoiled?
You are rare in the world to be able to have a retirement at all, now you are worried about how cushy it is. Just enjoy it and stop worrying.
I'd like to go on record here and now... I am not an expert... but I did stay at a Holiday Inn Express once...
:joker:
I hear ya Steve. I have asked myself the same question many times. I think inflation is in the cards and before Bryan gets all bent out of shape ;) we don't need no stinking hyperinflation to ruin our day. Just 4% a year for 10 years is enough to steal half of your wealth.
I recommend getting out of government sponsored retirement accounts (401k, Roth, IRA). When the SHTF the government can and will change the rules mid game. I wouldn't be surprised to see a patriotic new law that states one half of all assets in these plans must be in treasury bonds and no you cannot take your money out anymore as we've change that rule too. I like my wealth parked where I have control over it.
I like hard assets such a real estate and gold (5% to 10% of net worth). Particularly income producing assets. They should keep pace with inflation although may under perform if interest rates go higher (depress house prices). The stock market may go up in nominal terms but in real terms will probably continue going sideways. Having leveraged incoming producing assets is a good play as inflation effectively pays your mortgage for you. You are paying it down with dollars that are worth less and less.
Good luck!
Hey there again J Scott!
Your condescending wording shows I've stuck a chord with you, I'm sorry. Please don't take my advice as an attack. Let me provide you with some accurate information. Let me teach you some things. They may be hard to comprehend, but it's okay. Your knowledge is still of a low caliber.
"there must be a consensus among other experts that the conclusion is true."
First, if you want to know other experts that agree, here is a convenient list:
1. Ron Paul
2. Peter Schiff
3. Milton Friedman
4. Rand Paul
5. Henry Hazlitt
6. FA Hayek
7. Ludwig von Mises
8. Murray Rothbard
But that's just off the top of my head. Just because you don't think there is more experts, doesn't mean there isn't. So be sure not to use an appeal to ignorance to qualify your case. Maybe it will work out in your investment career though.
If you want to talk about all the other Keynesian experts, they were wrong. So if you want me to side with the wrong, just because they are the majority, well that's on your ignorance. I know that you probably follow whatever is popular blindly like a sheep, but I'd recommend you not to.
"In this case, most experts don't believe that there is an inevitable collapse coming in the next 10 years."
Yeah, I agree, that was a statement by me though. Not any of the experts I've cited. It's my belief that it will come within the decade. All the experts merely say, they don't know when, but soon. So I take that, although ambiguous, as within about 10 years from now. You are absolutely right, I don't think even one expert has said any amount of years. Just soon.
"the argument you were making is purely inductive"
Sorry, but you we're talking about predicting the future here. Not what 2 + 2 equals. This may be hard for you to understand, but the future, when it comes to the economic state of the US, is unpredictable in SOME aspects. Like time. What may also be very hard for you to understand is, in life, most reasoning is inductive. Crazy right!
I'm sorry, but inductive reasoning doesn't mean something is automatically false. You love using the argument from fallacy, fallacy don't you! Twice already! You're good!
Just so you know, using little teenage phrases like, "btw" makes me hard pressed to take you seriously. Are you going through a mid-life crises or something?
I myself have taken logic classes and aced them. I've taken programming, engineering, anatomy and physiology among other varied subjects. So, when you take the steps to go to College and need help in say a logic class, I'm here for you. You've messed up so many times, I can tell you'll need someone's help. I'm just saying, I'll, "hold your hand" through the process. You may be old, but your mind is still young. I'll help it mature. Any time,
Manuel
Steve,
Thanks for asking a question I struggle with too. I see bad times coming – the same things you do. As this thread shows, it’s hard to know for certain how to protect your financial life since there are so many different opinions. Until the future arrives, we’ll never know who’s right here. Although I worked hard over the last several years to try to understand the right way to invest my money to build a (hopefully early) retirement fund, I’m not an economist or a millionaire. With that in mind, here are my thoughts. It’s long, but I would love to hear your comments and ideas.
I started investing diligently with IRA's/401k's with the plan that they would be about $3M at retirement so that I could pull out 3% a year as a salary. This was the first exposure I had to the stock market. As I've watched the balances seesaw, I've learned that these accounts aren't a sure path to financial freedom. Good to help diversify and forced savings, but I don't have a lot of control over the outcome. Fund managers more in the know than I am and emotional trading by amateur investors like me determine my stocks' value. My focus going forward is to hire a financial advisor a wealthy acquaintance uses to help me invest these funds in something that will hopefully protect the initial investment as well as provide a steady return. I think I'll look to invest in stocks related to healthcare, basic food, and elderly housing – funds instead of individual stocks. The accounts will never be at the $3M mark and I see now that they will be too volatile to count on a consistent income anyway. But when I can take the money out without penalty, they can give me either seed money or backup funds for a business that can produce more cash flow.
I’m now focusing on finding different classes of assets that are more within my control that will produce monthly income in excess of what I need. When the real estate market took a nose dive years ago, I bought several rental properties and financed them through a local bank. I plan to buy several more while the prices are still depressed. Cash flow is king, but it’s not the only thing I’m looking for. While I’m not counting on appreciation, I’m also looking for marketability with these newer ones - good 3 bedrooms in a blue collar, good school district area. I hope to have most paid off by the tenants within ten years. I can then use the equity as collateral for other businesses, sell them to conventional buyers, or sell them on land contracts or wraps.
Although I know I'm better off than some, like you, I don't feel totally secure. Even with a good real estate portfolio, I know there are downsides. People can double up or stay with relatives if times turn really bad driving vacancies up and rents down. Higher unemployment can bring more evictions, lost rent, and turnover costs. Then comes the EPA's lead laws, the SAFE Act, the ever present lawsuit threat, and rising interest rates which all affect the real estate I'm investing in now. I don't think there's a perfect investment that is totally safe from all the ways the government can muck it up. And, I'm angry with the politicians that seem to thrive on dissension and don't seem to have the ability or will to deal with the problems our economy is facing. I plan to just try to not put my eggs all in one basket any more. Use Weiss ratings to check out the banks and insurance companies I use to hopefully avoid companies that are possibly heading towards trouble. Keep enough emergency cash instead of relying on HELOC's which can disappear overnight. And, reduce the amount I need each month by downsizing my home when I can, reduce my debt, and avoid costly indulgences like brand new cars. But even though I think we're heading for some tough times, I know that I can't stop investing. There's still great rental housing to buy. I'm also working on positioning myself to take advantage of some even better deals that I think will be here in a year or two. Good luck and I'd like to hear more of your ideas.
Fantastic 2nd post Jamie. Thanks for sharing your thoughts.
Nope, I'm just a condescending prick, especially when someone takes a holier-than-thou attitude without a clue what they're talking about...
....
"In this case, most experts don't believe that there is an inevitable collapse coming in the next 10 years."
Yeah, I agree, that was a statement by me though. Not any of the experts I've cited.
Wait a second. In the course of three sentences, you went from, "Here are all the experts from whom I'm deriving a conclusion" to "The conclusion is mine and not theirs."
In fact, your entire argument is predicated on a bunch of experts saying that a collapse is imminent, but then when I say that the experts aren't saying that, you reply with, "I agree..."
So, apparently we're both in agreement that your claim is just your opinion, and not based on any formal logic.
I'm glad we finally agree on that.
I appreciate that. I may have some real estate questions for you as well, if you don't mind...
To understand the ego of Manuel Acuna and J Scott is not so difficult. They conduct themselves like an old ragged economic book, read by Jimmy Carter, placed on Bill Clinton’s presidential desk with an imported “Spain Cigar” puffed under a Washington capital tepee while asking, "Who in college thinks their s**t smells better than a Spanish tobacco leaf" while Newt Gingrich expands his American economic nostrils?
Thanks...My observation
Hi Jamie,
What I have done for the last 30 years is just save. After poor returns on the 401K for over a decade and what appears to be trouble on the horizon I am concerned.
I am haunted by a photo in my elementary school history book. It was just after WWII. A photo of a woman with a wheel burrow full of German marks going to the grocery store. Their currency was worthless. I know emotion should not drive decision making, but I realize that regardless of my diligent saving what happens with our economy can render all the work pointless. Thus, I know I need to change course.
What I have gotten from responses here has helped. I have wanted to get in to rental homes for a while. Now, my needs for a stable retirement and my interest in real estate have converged. I believe this is just what was needed for me to take the plunge.
Thanks...My observation
Wow, I'm not sure any of that made sense, but being described as a combination of an economics textbook, various past Presidents, an imported cigar, and a current Presidential contender is quite flattering...
I'm not sure I deserve it, but thank you, sir!
Hi Steve,
Welcome to BP!How have you enjoyed your thread replies so far??? When a thread turns into silly ego arguments and vulgarity, it is time to shut it down. The book-learned never enjoy the discussions with the experienced or those asking initial basic questions about REAL ESTATE.Remember, they already have all the answers. Happy New Year. Rich
Sounds to me like an argument that can be made both ways Rich.
The trouble is that the non doom and gloomers have the fact that things are not melting down on their side. It is impossible to prove that things won't melt down to the believers though. It is always just around the corner. So we wait...
Partisan economic theories aside, the question is a good one; How do I protect myself from the US Government?
Bryan, you've posted good arguments for borrowing at fixed rates to the hilt. Rich, you've shown us how to get protection from taxes beyond what most of the population can imagine. J Scott, you've shown us how to create substantial income right out of the chute in your rehabbing business. There is still value to give to Steve and other readers here without blowing up the thread.
I think it depends on your economic outlook and the weight you're willing to put behind your beliefs.
Not to open up another argument, but as an example, if Manuel truly believes that an economic collapse is inevitable within the next top 10 year (and for anyone else who believes this), I really don't understand why there is any other option besides cashing in everything you have, transferring your net-worth to another currency and moving to another country.
On the other end of the spectrum, for those that believe the status quo (not necessarily today's conditions but the "typical" economic conditions of this country) will continue indefinitely, I see no reason to change any course from where it previous has been, assuming you believe that course was previously correct.
Now, I guessing, many are like me in their belief that the economic landscape is changing -- perhaps not catastrophically, but certainly non-trivially. For me, this has led to several assumptions/beliefs/opinions:
I belief that I'll one day have less control over my retirement funds and I may see less return from them (both in terms of ROI and in terms of legislative benefits), so my solution has been to stop funding my retirement and to put all my earnings towards my businesses and investments.
I see short-term deflation followed by fed-generated inflation, so at some point I'll start leveraging more to take advantage.
I see taxes on all classes likely rising in future, but I presume that capital gains rates will stay about the same (maybe up or down a bit) and therefore will focus on generating more in capital gains and less in business earnings.
Additionally, I believe we'll see a mostly stagnant economy for the next several years, so I'm continuing to do the same things I've done the past several years in terms of distressed real estate and taking advantage of a down market.
But, these are just my assumptions of where things are headed, and my common-sense reactions to them. Again, for those who believe the change will be catastrophic, perhaps a more major deviation is appropriate.
Steve:
I have had the same problem and have seen a fair # of people with all of their retirement assets invested in the stock market and have their knees cut out from under them in 2000 and again in 2008. I, as others in BP, would suggest taking money out of the market by rolling smoe of it into a SDIRA/401(k) and investing in real estate to diversify assets and develop income into the retirement account that is not stock dependent. I have not regretted doing this in 2005-2006 and have a much more stable retirement portfolio as a result.
Dennis
Rich,
Could you provide a basic example of your asset allocation and estate planning tactics? I'd be very interested.
J. Scott (and others), what is driving your concerns about retirement vehicles?
I believe that Social Security will be means tested and that I won't see a penny of it. As such, I simply consider it a tax and do not factor it into retirement planning (it would be very little money to me anyway).
I'm curious about this too. I see this as a standard part of the SDIRA or Solo K provider's literature. They claim that the national debt is almost equivalent to the retirement assets tucked away so the common refrain is that the gov-mint will seize it.
What I don't understand is how this is any more or less likely than the government seizing anything of value. This includes gold, which has been seized in the past. Since the gold bugs generally overlap appreciably with the alarmists this seems like a less educated decision about how to store wealth to me on their part.
The truth is there is NO protection from the government. If the government wants to do wacky things with the currency, economy, etc. they can do it. We have an armed citizenry and that would be your only real recourse in periods of craziness. That and being completely self-sufficient for basic necessities.
I would also be curious what these soothsayers plan to do with the all-but-certain collapse we have coming. Please be very specific about your plans/intentions and what the cause of the "meltdown" will be. Is it a currency meltdown? A confiscation of property? Some other craziness? Please do enlighten those on the board that are misinformed.
I certainly don't believe the government would ever seize retirement assets, or even do anything to reduce their value. More likely, I could potentially see the government overhaul the entire retirement system (I.e., eliminate social security) and in the process restrict the use of retirement funds. All this in the name of trying to force the lowest common denominator (those with the least money and least investing skill) to save as much as possible.
I don't see it as a well thought out plan to overthrow capitalism (as right wing talk radio might have you believe), but that doesn't mean it couldn't be the by-product of well-intentioned though misguided policy.
I could write a whole lot more, but am on my iPad so it's tough to get it all down...
I would be interested in seeing more of your thoughts on that J...that is not something I have thought about.
What would drive this restriction? Would it be a misguided attempt to shore up the insolvent payroll tax confiscatory system that doles out money to poor investors in their twilight years? Are medicare, medicaid, and social security all in play in this scenario you are envisioning? If so, wouldn't a more palatable political trick be to simply kick the can down the road and increase payroll taxes?
Well, we already have an estate tax levied upon someone's death, so it seems that it could be within reason for the govt to levy a 'one-time' wealth tax to bring about a deleveraging of U.S. govt debt. After all, what else is going to pay down this debt, other than through transference (overt or covert) of the wealth of private individuals. What would be taxed? Financial assets would be the easiest target due to their liquidity.
This is of course politically [probably] untenable, so printing money is probably the path that would be initially chosen, creating moderate inflation to deal with the problem. But can inflation be kept moderate, once we head down that path?
It’s tempting to just say that we’ve always had crises, and we’ve always persevered through these and come out the other side, but we have absolutely never experienced anything even remotely like the enormous debt overhang which exists in the developed world today. I was just reading that total debt-to-GDP levels in the developed world (OECD) rose from 160% in 1980 to 321% in 2010 (private+govt debt). And this doesn’t even consider the cost of aging populations and unfunded cost of caring for the elderly, which drive the numbers north of 600% of GDP, or close to $100T in the U.S., which is $1 million per household. The credit boom of 30 years has run its course, and some sort of reckoning will inevitably occur.
On an optimistic note, I'm also hoping for, and expecting, quantum technological leaps in energy, health care, etc., to help alleviate the problems. In the meantime, maintaining most holdings in non-financial assets seems prudent.
Your condescending wording shows I've stuck a chord with you, I'm sorry. Please don't take my advice as an attack. Let me provide you with some accurate information. Let me teach you some things. They may be hard to comprehend, but it's okay. Your knowledge is still of a low caliber.
"there must be a consensus among other experts that the conclusion is true."
First, if you want to know other experts that agree, here is a convenient list:
1. Ron Paul
2. Peter Schiff
3. Milton Friedman
4. Rand Paul
5. Henry Hazlitt
6. FA Hayek
7. Ludwig von Mises
8. Murray Rothbard
But that's just off the top of my head. Just because you don't think there is more experts, doesn't mean there isn't. So be sure not to use an appeal to ignorance to qualify your case. Maybe it will work out in your investment career though.
If you want to talk about all the other Keynesian experts, they were wrong. So if you want me to side with the wrong, just because they are the majority, well that's on your ignorance. I know that you probably follow whatever is popular blindly like a sheep, but I'd recommend you not to.
"In this case, most experts don't believe that there is an inevitable collapse coming in the next 10 years."
Yeah, I agree, that was a statement by me though. Not any of the experts I've cited. It's my belief that it will come within the decade. All the experts merely say, they don't know when, but soon. So I take that, although ambiguous, as within about 10 years from now. You are absolutely right, I don't think even one expert has said any amount of years. Just soon.
"the argument you were making is purely inductive"
Sorry, but you we're talking about predicting the future here. Not what 2 + 2 equals. This may be hard for you to understand, but the future, when it comes to the economic state of the US, is unpredictable in SOME aspects. Like time. What may also be very hard for you to understand is, in life, most reasoning is inductive. Crazy right!
I'm sorry, but inductive reasoning doesn't mean something is automatically false. You love using the argument from fallacy, fallacy don't you! Twice already! You're good!
Just so you know, using little teenage phrases like, "btw" makes me hard pressed to take you seriously. Are you going through a mid-life crises or something?
I myself have taken logic classes and aced them. I've taken programming, engineering, anatomy and physiology among other varied subjects. So, when you take the steps to go to College and need help in say a logic class, I'm here for you. You've messed up so many times, I can tell you'll need someone's help. I'm just saying, I'll, "hold your hand" through the process. You may be old, but your mind is still young. I'll help it mature. Any time,
Manuel
Well get off Mises and start reading what has actually happened, and most of it was NOT like
Friedman, Hayek, Mises OR Rothbard actually predicted.
BTW, All those guys are dead.
Want to know what happened with Milton Friedman and the Chi boys "predictions" in real life? Look to Chile experiment. NOTHING came out as predicted. In fact they trail Latin America in just about everything thanks to "free markets" BS.
Every government sets the rules to an economy, just like every football game needs rules and a ref!
How were the Keynesian's wrong again? Didn't Ronnie Reagan triple debt by using the growth of gov spending?
You guys really need to get off this libertarian garbage, as you can't point to ONE successful nation, EVER to use it. It ALWAYS evolves into other things (like US monopolies late 1800's)...
Ron Paul is a joke, as is every other "libertarian" economist/politician!
I don't see it as a well thought out plan to overthrow capitalism (as right wing talk radio might have you believe), but that doesn't mean it couldn't be the by-product of well-intentioned though misguided policy.
I could write a whole lot more, but am on my iPad so it's tough to get it all down...
Seen you on several forums now, enjoy reading your intelligent, well thought out presentations.
SS has been changed dozens of times since it was founded, I'm sure it will be changed many more times too, but doubt it will ever go away. Thankfully it keeps about half the US seniors out of poverty!
As you point to, right wing radio is just entertainment, playing to a base of ignorant followers without critical thinking skills.