Episode-1064- Listener Feedback for 2-5-13 — 23 Comments

  1. Did the Dow break 14k because it’s that valuable, or because our money is so worthless that it takes that much to buy one share of each company on the Dow? I vote for the second over the first.

    • Neither answer is really that accurate by itself. It broke 14K because confidence has largely been restored and the plan is a bull run and big investors know it. You have to remember inflation IS part of the plan.

  2. My wife and I moved from our home of 25 years to a small community 2 years ago. We have no desire to go back, but have not put our old house on the market yet. It is paid off, so other than taxes, the cost to keep it is minimal. We are now renting, but would like to buy something here if possible.
    Given the false recovery you feel has started, do you think it would be best to put it on the market now, or wait to see if home prices rebound?

  3. On the subject of trading systems and currency. I’d love to hear from someone on trade beads. The history and unique beads from all over the world are pretty cool and there is still a pretty big market in them.

    I’m not suggesting collecting them to use as currency, but they do have some collector value and the skill of creating them is all but lost.

  4. I would love to have six more years to prep before the bust! You can do a crap load in six years! =)

  5. I read Jim Kunstler’s blog, and his contention is that the Fed is driving the current stock market rally. He’s calling it a “cattle drive” of “liquidity” attempting to create a “stampede” of investment into this (ahem) Free Market Institution.

    I have no clue as to the timeline of all this, but it sure seems that savvy investors know the game and will play it for what it’s worth. Then again, there will likely be “lessons” taught to those on the outside track by those truly on the inside track.

    Yer’ average investor, who believes everything they’re told while chewing their cud a few hundred yards from any tracks, will end up as hamburger in the end.

    • They said in the trading circle, “The bull makes money, and the bear makes money, but the hog get butchered.”

  6. Jack, I think an entire show dedicated to the miserable realities of retirement accounts may be in order. I’m 32 and have been squirreling away money in a 401k and a Roth. I have an opportunity to buy a Grandparents house at a considerable discount (nice yard, neighborhood, dream come true) and am expecting my 2nd child towards the end of the year. Needless to say I’m going to be needing some cash. I have some liquid, but not enough.

    I’m stunned at how hostage my money is. From what I can tell (I’ve yet to call the company) my 401k cannot be withdrawn at all while I’m still with the company, only loaned. My Roth can be withdrawn but with penalties, even on the principal which makes up a huge portion of the account.

    What exactly is the point of these? The tax advantages? Really? The difficulties at getting to the money far outweighs any sort of advantages. These things may be just another relic of the industrial age.

    • I came to the same stunning realization about six months ago. My conclusion is that these vehicles were designed to keep middle and working class people captive to the current financial and monetary system. It is a giant ponzi and needs new payers at the bottom to allow the continued theft at the top. I had my suspicions before, but I credit Jack with connecting the dots I couldn’t quite put together on my own.

      Any principal(basis) paid into your Roth, 5 years ago or earlier can be withdrawn without penalty. I did just that and stopped making any new contributions as well. I’m putting that money into a credit union money market account instead. I plan on using it to buy property soon. With the real rate of inflation about 10%, paying a bank 3.5% to use their funny money to buy a house seems like a decent invesment right now.

    • My employer matches my contrabution to my 401k dollar for dollar up to 3% of my pay. I figured that money I put in is now locked up forever (till im retired) but it had a 50% growth rate on day one. Even better for me is that this is a Roth401k.

      If they did not match, I would not bother. 3% of my pay is not much I can’t do with out. (ruffly $20 a week of my pay)

      I agree that it sucks that you can’t touch that money, your money, with out major hits. My thought is they don’t want you to stop working early in life and living.

      • Well, 50 years from now when it has experienced 500% inflation tax and is subject to likely 30-40% income tax you may not feel the same way.

  7. @decline

    I’m in the same boat as you – putting money into a 401 that I can’t withdraw without getting permission from my employer. Like yours, mine allows loans to be drawn from the funds contained within. A few years ago, I did a sizable loan from it to use as a down payment to buy my house. That was about a year before the market dropped in 2008. Since then, I’ve paid back the loan and as a result, bought back into the funds I had allocated at much lower cost than what was sold for the loan.

    Recently, I did another loan to buy some acreage to use for recreational activity, BOL, and eventually retirement. When I went through the loan process on the management company’s website, it dragged me through page after page of graphs showing how my funds would perform if I *didn’t* do the loan, and text that shouted “Doom awaits you if you pull your money out!!!” (I am paraphrasing, of course). I had to run through this little gauntlet, checking boxes that ‘I acknowledge said doom and gloom’, ‘I accept that I’m being an unbelievable fool by taking money out of the market now’, ad nauseum (paraphrasing again). All the while, I’m wondering, upon what exactly are they basing these performance projections? The stock market is nothing but legalized gambling and all these dire warnings sounded like the stereotypical gambling addict who says he has a “system” for winning.

    I figured the piece of dirt I was looking to buy was a safer bet.

  8. Don’t let them get to you Jack!! You, I and others that are serious about our monies get it and thank you for your effort you put into all your shows, In all situations their will be some weeds in the harvest. The fruit will still be harvested.
    Your survival friend, Tony

  9. I see that after a decade the commodities are reaching fair value. After that comes over valuation or the blow off top. I see the little guy coming in at the end getting badly beaten. The bond market is at its end of the line as well. Bond investors will start running out of that market. So what’s the next move in the markets for money? I can see all that money driving up the equities for a future secular bull market with a rising currency.

  10. Jack, I look forward to your full show about QE-Liquid and the ensuing double-dip (crash?) in the markets. I’ve seen your QE-Forever videos and agree that it will work… to serve the interests of others. Can’t the Fed just isolate from the economy the mortgage payments they now receive, just like the banks were doing? Seems like the Fed could just track and counter-act the spending forces of the very wealthy who seem poised to buy.

    You keep saying things like “when it’s over” or “one big boom before the bust.” Please clarify what’s going bust. The dollar? Bonds? Dollar losing reserve currency status?

    Thanks Jack.

    • Dollar losing reserved status already. Asia is already trading in Yuan and some of the European nations also doing the same thing.

      Happened about several months ago.

  11. Wow, check out the SP500 over the past 30 or 40 years. Huge spikes for 2000 dot com bubble and 2008 housing bubble. Now we’re back up there again. What will drive the next correction?

  12. Just wanted to say the listener call in shows and feedback shows are actually some of the shows I look forward to the most!

    • Same here. I like some of the information shows also, but mostly listen to the feedback and Q & A shows.

  13. Hi Jack.

    Standard air pressure is 760 mmHg (millimeters of Mercury). Is there any indication on the dial what the air pressure is inside of the container when the air has been evacuated? I’m trying to figure out how much of a vacuum is in the jars.



  14. Hi Jack.

    Oxygen makes up approximately 21% of air. A 21% vacuum would be fine if the Vacucanner could magically remove just the oxygen molecules.

    I’m assuming that it can’t do that, so in order to know how much oxygen remains we have to know what percent vacuum is in the jars.

    There are standards in the canning industry on % of O2 remaining. I just want to make sure that what I do at home is on par with what the original packager does.

    So the reason that I’m “over thinking” it is to help ensure the safety of the long term food stored. Also, if I should have tossed in an O2 absorber but didn’t, I’m out a few thousand dollars with of repackaged food.


  15. Any federal legislator who wants to skim the retirement accounts early does not understand how the system works.
    Jack alludes to this fact in the show.
    The retirement accounts are designed so that income tax reaps 8% of the account principal per year in the form of income tax. This income tax is collected in the years that citizens don’t have very many deductions to the income tax, i.e. no new mortgage, no children at home, frugal giving to charity, etc. In the case that a citizen passes early and they have an account principal value of $1m to 3.5m (again, as Jack mentioned), we have a retirement account which suddenly qualifies for the estate tax.
    Even in the case of a Roth IRA, the citizen is going to spend non-taxed distributions on goods and services, which will be taxed directly and indirectly.
    Saver beware! Use the Roth IRA and Roth 401-K as much as possible, and the Keogh where available. In your later years, ensure you are equipped with trusts and frugal living so that you are not fleeced.