Preparing for the Worst
by Robert Kiyosaki
posted on Aug 25 03:00am
POSTED ON YAHOO FINANCE [Rick White’s Comments]
Robert Kiyosaki
by Robert Kiyosaki
posted on Aug 25 03:00am
POSTED ON YAHOO FINANCE [Rick White’s Comments]
Robert Kiyosaki
In spite of the more positive news that is coming out today, preparing for the worst is still a good
idea.
"Is the crisis over?" is a question I am often asked. "Is the economy coming back?"
My reply is, "I don't think so. I would prepare for the worst." I AGREE
Like most people, I wish for a better future for all of us. Life is better when people are working,
happy, and spending money.
idea.
"Is the crisis over?" is a question I am often asked. "Is the economy coming back?"
My reply is, "I don't think so. I would prepare for the worst." I AGREE
Like most people, I wish for a better future for all of us. Life is better when people are working,
happy, and spending money.
The stock market has been going up since March 9, 2009. Talk of "green shoots" fill the air. Yet,
in spite of the more positive news, I continue to recommend that people prepare for the worst.
in spite of the more positive news, I continue to recommend that people prepare for the worst.
The following are some of my reasons:
1. I believe the stock market is being manipulated. I suspect the government, banks, and Wall
Street are doing everything they can to keep the market from crashing. Otherwise, how can you
explain the stock market rise without real fundamental business strength? Our leaders know that
nothing makes the world feel better than a raging bull market. Yep!
Do I have any proof that the market is being manipulated? No. I just smell a rat, or a pack of rats.
Me Too!
1. I believe the stock market is being manipulated. I suspect the government, banks, and Wall
Street are doing everything they can to keep the market from crashing. Otherwise, how can you
explain the stock market rise without real fundamental business strength? Our leaders know that
nothing makes the world feel better than a raging bull market. Yep!
Do I have any proof that the market is being manipulated? No. I just smell a rat, or a pack of rats.
Me Too!
I believe greed, self-interest, arrogance, and fear control the financial markets. I
suspect those in charge will do anything to keep us all from panicking... and I don't blame them.
A global panic would be ugly and dangerous.
2. In my view, this global crisis has been caused by the Federal Reserve Bank, the U.S. Treasury,
Wall Street, and the central banks of the world. They caused the problem, profited excessively in
doing so, and now profit by being asked to fix the problem. He is exactly right in my view.
Every time I hear a politician mention the word stimulus, my mind flashes back to high school
biology class, when I touched battery wires to a dead frog to make it twitch. Today, you and I are
the dead frogs. Pretty soon the dead frog will be fried frog.
In the 1980s, our government's hot money stimulus was measured only in the millions of dollars.
By the 1990s, the government had to ramp the stimulus voltage into the billions in order to get
the frog to twitch. Today the frog has jumper cables with trillions in high-voltage hot money
pouring through the lines.
While most us feel better when we have more high-voltage money in our hands, none of us feel
good about higher taxes, increasing national debt, and rising inflation for the long term. Another
old saying goes, "Sometimes the cure is worse than the disease." I say the government stimulus
cure is killing us frogs. And most of us are not even aware of it.
3. Old frogs don't hop. Another reason I am cautious about the future is that the Western world
has a growing number of old frogs. Between 1970 and 2000, the economy responded to bailouts
and stimulus packages because the baby boomers of the world were entering their greatest
earning years -- their purchasing power increased, and demand for homes, cars, refrigerators,
computers, and TVs boosted the economy.
The stimulus plans seemed to work. But when a person turns 60, their spending habits change
dramatically. They stop consuming and start conserving like a bear preparing for winter. The
economy of the Western world is heading into winter. Yep! Hot wires and hot money will not
get old frogs to hop. True! Old frogs will simply join the bears and stick that money in the bank
as they prepare for the long, hard winter known as old age. The businesses that will do well in a
winter economy are drug companies, hospitals, wheelchair manufacturers, and mortuaries.
Makes sense doesn’t it?
4. The dying frog economy will lead us to the biggest Ponzi schemes of all: Social Security and
Medicare. If we think this subprime financial crisis is big, it's my opinion that this crisis will be
dwarfed by the crisis brewing in Social Security and Medicare...Medicare being the biggest crisis
of all. He is so right on this one. As old frogs head for the big lily pad in the sky, they will
demand young frogs spend even more in tax dollars just to keep old frogs from croaking.
5. The 401(k)Ponzi scheme. A Ponzi scheme, like the scheme Madoff ran, depends upon young
money to pay off old money. In other words, a Ponzi scheme needs tadpoles to finance old frogs.
The same is true for the 401(k) and other retirement plans to work. If young money does not
come into the stock market, the old money cannot retire. One reason so many people my age are
worried, not only about Social Security and Medicare, is because they're concerned about getting
their money out of the stock market before the other old frogs decide to drain the swamp.
The facts are that the 401(k) plan has a trigger that requires old frogs to begin withdrawing their
money at a certain age. In other words, as baby boomers grow older, more and more will be
required, by law, to begin withdrawing their money from the market. You do not have to be a
rocket scientist to know that it is hard for a market to keep going up when more and more people
are getting out. This is little spoken of and little thought about. It will actually accelerate over
time. The additional Ponzi scheme that Kiyosaki does not mention here is the enormous tax
burden on those that have money coming out of their plans. They will be taxed at the highest
available tax bracket (which you can bet will be higher than it is now). You need to be
aware that the bulk of this tax burden can be greatly minimized by proper planning NOW!
The reason the 401(k) has this law related to mandatory withdrawals is because the Federal
government wants to collect the taxes that they deferred when the worker's money went into the
plan. In other words, the taxman wants their pound of flesh. Since they allowed the worker to
invest without paying taxes, the government wants their tax dollars when the employee retires.
That is why the laws require older workers to sell their shares ¬-- and pay their pound of flesh.
Here’s the question: Would you rather pay taxes on the seed or the harvest? Personally,
I’d rather pay taxes on the seed and have the harvest completely tax free! Wouldn’t you?
Demographics show that we are entering a battle between young and old. I call it the "Age War."
The young want to hang onto their money to grow their families, businesses, and wealth. The old
want the tax and investment dollars of the young to sustain their old age.
This war is not coming...it is upon us now. This is one of many reasons why I remain cautious
and say, "The worst is yet to come."
suspect those in charge will do anything to keep us all from panicking... and I don't blame them.
A global panic would be ugly and dangerous.
2. In my view, this global crisis has been caused by the Federal Reserve Bank, the U.S. Treasury,
Wall Street, and the central banks of the world. They caused the problem, profited excessively in
doing so, and now profit by being asked to fix the problem. He is exactly right in my view.
Every time I hear a politician mention the word stimulus, my mind flashes back to high school
biology class, when I touched battery wires to a dead frog to make it twitch. Today, you and I are
the dead frogs. Pretty soon the dead frog will be fried frog.
In the 1980s, our government's hot money stimulus was measured only in the millions of dollars.
By the 1990s, the government had to ramp the stimulus voltage into the billions in order to get
the frog to twitch. Today the frog has jumper cables with trillions in high-voltage hot money
pouring through the lines.
While most us feel better when we have more high-voltage money in our hands, none of us feel
good about higher taxes, increasing national debt, and rising inflation for the long term. Another
old saying goes, "Sometimes the cure is worse than the disease." I say the government stimulus
cure is killing us frogs. And most of us are not even aware of it.
3. Old frogs don't hop. Another reason I am cautious about the future is that the Western world
has a growing number of old frogs. Between 1970 and 2000, the economy responded to bailouts
and stimulus packages because the baby boomers of the world were entering their greatest
earning years -- their purchasing power increased, and demand for homes, cars, refrigerators,
computers, and TVs boosted the economy.
The stimulus plans seemed to work. But when a person turns 60, their spending habits change
dramatically. They stop consuming and start conserving like a bear preparing for winter. The
economy of the Western world is heading into winter. Yep! Hot wires and hot money will not
get old frogs to hop. True! Old frogs will simply join the bears and stick that money in the bank
as they prepare for the long, hard winter known as old age. The businesses that will do well in a
winter economy are drug companies, hospitals, wheelchair manufacturers, and mortuaries.
Makes sense doesn’t it?
4. The dying frog economy will lead us to the biggest Ponzi schemes of all: Social Security and
Medicare. If we think this subprime financial crisis is big, it's my opinion that this crisis will be
dwarfed by the crisis brewing in Social Security and Medicare...Medicare being the biggest crisis
of all. He is so right on this one. As old frogs head for the big lily pad in the sky, they will
demand young frogs spend even more in tax dollars just to keep old frogs from croaking.
5. The 401(k)Ponzi scheme. A Ponzi scheme, like the scheme Madoff ran, depends upon young
money to pay off old money. In other words, a Ponzi scheme needs tadpoles to finance old frogs.
The same is true for the 401(k) and other retirement plans to work. If young money does not
come into the stock market, the old money cannot retire. One reason so many people my age are
worried, not only about Social Security and Medicare, is because they're concerned about getting
their money out of the stock market before the other old frogs decide to drain the swamp.
The facts are that the 401(k) plan has a trigger that requires old frogs to begin withdrawing their
money at a certain age. In other words, as baby boomers grow older, more and more will be
required, by law, to begin withdrawing their money from the market. You do not have to be a
rocket scientist to know that it is hard for a market to keep going up when more and more people
are getting out. This is little spoken of and little thought about. It will actually accelerate over
time. The additional Ponzi scheme that Kiyosaki does not mention here is the enormous tax
burden on those that have money coming out of their plans. They will be taxed at the highest
available tax bracket (which you can bet will be higher than it is now). You need to be
aware that the bulk of this tax burden can be greatly minimized by proper planning NOW!
The reason the 401(k) has this law related to mandatory withdrawals is because the Federal
government wants to collect the taxes that they deferred when the worker's money went into the
plan. In other words, the taxman wants their pound of flesh. Since they allowed the worker to
invest without paying taxes, the government wants their tax dollars when the employee retires.
That is why the laws require older workers to sell their shares ¬-- and pay their pound of flesh.
Here’s the question: Would you rather pay taxes on the seed or the harvest? Personally,
I’d rather pay taxes on the seed and have the harvest completely tax free! Wouldn’t you?
Demographics show that we are entering a battle between young and old. I call it the "Age War."
The young want to hang onto their money to grow their families, businesses, and wealth. The old
want the tax and investment dollars of the young to sustain their old age.
This war is not coming...it is upon us now. This is one of many reasons why I remain cautious
and say, "The worst is yet to come."
The key in planning now is to “lock in” your recent gains, maintain a position of low risk
(in market value and purchasing power) and be prepared to take advantage of the
opportunities that will arise.
(in market value and purchasing power) and be prepared to take advantage of the
opportunities that will arise.
Call our office to arrange a no cost/no obligation time to discuss your situation.
Rick White
Registered Financial Consultant
American Planning Group, Inc.
919-848-2788
Registered Financial Consultant
American Planning Group, Inc.
919-848-2788
Ask for Donna to schedule a time.
