Monday, March 30, 2009

The One-Two Punch That Will Destroy Uncle Sam

Democrat, Republican, Green, Independent, Libertarian, etc.… I could personally care less. It doesn’t matter what political affiliation you have. If you are a red-blooded American, you will be in the same boat with everyone else. “Our” boat has a leak and it is about to get a lot bigger.

We have been “Bailing” out banks, insurance companies and investment companies to the tune of Trillions of dollars. Our president tells us that the problem is going to get worse before it gets better. This might be the only thing Barack Obama has said that I actually agree with. There is one small caveat, and that is to say the problems I am talking about are the ones caused by him and his Congressional enablers .

Recent news headlines warned that the member nations of the G20 are proposing a new world currency and to drop the dollar. For most Americans, this is a non-story. I am not sure why, because this is perhaps the most important story in our history since it has the potential to destroy us.

The G20, which is a group of the largest 19 economies plus the EU, controls more than 80% of the world’s gross domestic product. Should they be successful in moving forward, their actions will be catastrophic for America.

I am not a conspiracy theorist, nor someone who is pessimistic about America’s future. But I am scared stiff of what is hovering on the horizon.

Currently, the U.S. has a national debt in excess of 10 Trillion dollars. In the first three months of a new presidency, President Obama has proposed and Congress is about to actually approve, more debt-based spending than our nation has ever spent. By the word “ever” I mean all of the presidencies from George Washington up and through George W. Bush combined.

The combination of the G20 proposal and the actions of our elected officials will destroy the US dollar and the economy of the United States. The sovereignty of our nation is at stake and the media either doesn’t get it, or is so busy being the cheerleader for the Obama administration they are blinded by their infatuation. We are under attack, and it is from within.

The money Congress and the Obama administration are spending is money we don’t actually have. So, we have to borrow it from other nations. If we cannot borrow it, then the Treasury will print it. Since we dropped the gold standard in 1971, our dollars are not backed by anything of value beyond the full faith and credit of our government. Since the purchasers of our national debt have expressed concern about the security of their “investment”, they are essentially saying our credit rating is suspect and they have no faith in our ability to repay.

In “econospeak”, they are saying they do not believe we can support our current debt levels, and the spending spree the Administration and Congress are on is not sustainable. That is a wake up call because they are absolutely correct.

After the Second World War, most nations pegged to the dollar which was backed by gold. A dollar or a Federal Reserve note could be exchanged for one dollar of gold upon demand. In 1971, when we dropped the gold standard, we put all of their wealth on the same system. As we continue to devalue our currency, and borrow more and more money we are destroying their system at the same time.

So, their solution is to un-peg from the dollar. If this happens, they will flood the system with dollars as they sell their reserves and convert their treasury to a new currency. This flood of dollars will essentially make a dollar worthless as there will be far too many dollars backing up too little goods.

The most recent nation whose currency took this path was the former Soviet Union. They were destroyed by a devaluation of the ruble, caused by high inflation, and a lack of productivity, caused by socialism, from which they still suffer to a degree. Yes, I said the “S” word.

What I don’t fully understand is how is it that the so called smartest people in the country, who have been educated in some of the finest institutions of higher learning, can turn out to be so stupid as to not actually learn from prior mistakes? Call me old fashioned, but that principle is what kept you from touching a hot stove twice when you were a toddler.

How ironic that the most powerful nation on the planet can be destroyed by a piece of paper? These events are in progress and can be stopped. The American people must wake up and take this nation back from those that are either ignorant or willfully seeking to change this nation to one that is dependent upon others for its survival.

Our Congress is currently trying to solve a long term problem with a short term solution. Their approach is short-sighted and incredibly dangerous. I believe it borders upon treason and we must solve this problem with our most powerful weapon. Our vote.

We must resolve ourselves to plug the hole in the boat, throw those who are helping to make the hole bigger (Congress and the administration) overboard. Just as we cannot save our boat by pumping more water on-board, we cannot borrow our way to prosperity. Contact your congressional representatives today and tell them how you feel.

Thursday, January 29, 2009

The Secret To Build A Robust Economy, A Stronger Dollar, Renewed Confidence In America, and To Leave A Better Country To Our Children In Just 6 Steps.

For all the rhetoric and gloom and doom prophets that say we must spend our way back to prosperity, I say “Take your snake oil and hit the road!” It is time to approach our issues with the reasoned, thoughtful approach Americans are famous for, and finally solve things once and for all. And, in the meantime, prevent this from happening again.

I would like to present to you what I believe is the ONLY real solution and I hope you will join me in making it come to be a reality.

For far too long, we have been conditioned to think in certain terms with no regard to keeping our feet firmly planted on the ground. We talk about deficits, but not about our debt. We are told that our deficits are a small percentage of our GDP, so don't worry. One of my mentors many years ago told me, "Percentages lie, and liars use percentages." We must be concerned about our debt, as it will soon be unsustainable.

I have also been amazed over the last several years that we permit our government to toss around numbers in BILLIONS like a billion dollars is nothing. When in fact, Congress is spending someone else’s money and we need to regain control and put some common sense in place.

Not too long ago the clock that tracks the national debt of the United States of America actually ran out of digits because the our debt is too large to be displayed. The national debt of the US is approximately at $10 Trillion dollars. That would look like $10,000 Billion.

To keep this number in perspective, if you stacked the national debt up using $1 bills, the stack would go on for 468,000 miles. And we are talking about borrowing more, assuming we have takers who are interested in loaning us the money. If we don’t, then our plan is to print the money which opens up other issues.

It is a fact that we can no longer delude ourselves as Americans to think that Congress is capable of solving this problem without our intervention. WE THE PEOPLE must solve it, and we must demand action right now. We must make it mandatory or else it will never happen.

Here is what must be done to save our great nation from becoming an abject financial failure and destroying a critical component of what actually makes us the Land of the Free. The ideal of free enterprise is what has made America great. It has bettered the lives of more people throughout the world than can be counted. That coupled with a government for the people, by the people and of the people are what makes us an economic superstar.

I am of the opinion that “the people” have stopped showing up because they don’t feel their voices are heard. "The people" don;t know what to do to solve these problems. What I am completely certain of is that we must get “the people” back involved in order to get our government working again and to stop this impending colossal trainwreck.

So, here are the steps WE THE PEOPLE must take.

First, we must contact our representatives and demand they pass legislation to place an Amendment to our Constitution requiring a balanced budget before the people. The sole exception to be in times of war, that is declared by Congress. During these times, our government may issue bonds to generate the capital necessary to successfully prosecute the war if it is necessary. After the divisive attitudes towards our efforts in Iraq, we can no longer afford the War Powers Act to enable Congress to state that the President “got us into this mess” when in fact the declaration of war rests upon the shoulders of Congress. The American people have every right to expect our branches of government to actually fulfill their roles.

Secondly, we must demand that our government pass legislation that REQUIRES a separate line item in the budget that puts a portion of our budget to be applied to retiring our debt.

Third, we must require that all amendments to legislation be specific to that bill. Adding a requirement to spend $20 million dollars to study the mating habits of a lizard to a transportation bill can no longer be tolerated. If someone wants to study the lizard, the legislation for this project should be able to stand upon its own merit. Riders and amendments such as this are costly, sneaky and plain wrong.

The responsibility to ensure this rule is followed will be accomplished by the President of the United States. The chief executive is responsible for submitting the budget, and he should have the right to a line item veto for all appropriations that were not included in his submission. The system of checks and balances will work, but it is hobbled by an all or none requirement. The old approach of, “We’ll give you what you want, but you have to agree to spend the people’s money frivolously” has got to stop.

Within the framework for the balanced budget requirement, emergency spending bills to continue the operation of government because Congress and the President cannot conclude the people’s financial business in a timely fashion should not be permitted. Should an emergency measure be required because we are at war, then all appropriations shall be deducted from the actual budget upon its passage.

We must demand an end to baseline budgeting. This is the method whereby a “cut” is actually a reduction in a projected and expected increase. This strategy also creates an environment for governmental agencies to spend EVERY dollar budgeted, even if they don’t need to, because if they fail to do so, their budget will be reduced in the coming year.

Fourth, we must demand that all tax cuts shall be permanent when placed in to law. This means there shall be no more tax cuts with a sunset provision where they will expire. It should be common sense to understand that the money actually belongs to those who make it. Government shall not assume it is theirs to give and take. If you need to increase taxes, then do it by the book. Legislate it and let the people see you do it.

Fifth, we must reduce the tax burden on businesses, both large and small, so there is more capital to invest in growth, equipment, marketing, sales, etc. This will also serve to reduce the reliance upon credit which will aid the banks as they recover from recent events. It is difficult to understand that our nation has one of the highest corporate taxes while being the leader in free enterprise. Capital will flow to where it can grown and do the most good for a business. High taxes on businesses are bad ideas, since the majority of Americans are employed by small business.

Sixth, we must begin to teach our young people more about economics, personal finance and civics so they are better equipped to fully appreciate the opportunities that exist here in America, but to also be better equipped to enter the world and prosper. We do not teach our young people about investing, financial planning, and debt management and as the Baby boomers age we absolutely must begin to do so.

By taking these six steps we will strengthen the dollar and financial markets all over the world. The world will see that America is committed to preserving our place in the world. Confidence will return, which will spur more investment.

We will begin the process of reducing out of control spending, and begin to repay the money our country owes. This commitment alone will do more to strengthen our economy than any stimulus package ever could.

We will also get our government to actually do its job and serve the needs of America’s future, as well as fulfill their sworn duties of office. Our government is broken, and these steps are but a beginning. All great stories must have a beginning. The story of America’s resurgence to economic greatness should begin here. Today.

Wednesday, January 28, 2009


Hello and HAPPY NEW YEAR... this is my first post of the year and I hope you will take a few moments to read this, as your action (or inaction) will affect Generations…

Obviously, the election cycle is over (thank heavens) and Barack H. Obama won. As a veteran, I will support him as the President, however, my support is rooted in love of country. Not love of Barack Obama.
While he is the President of ALL Americans, we cannot blindly follow whatever he says. We owe if to ourselves and the country we will leave behind to our children to stop this bill RIGHT NOW. Much like the $750 Billion TARP bill that had to be passed immediately or grave consequences would occur, we are being told that it is CRITICAL to act NOW…. We don’t actually know where all that money actually went, but we do know where it didn’t go…. The world didn’t end… the sky did not fall…. And we are now $750 BILLION deeper in the hole…. With nothing to show for it.

Don’t believe the hype… this problem didn’t pop up overnight, and taking a little time to address the problem with a solution that will actually work, and makes sense is called for.

There is no denying that our country is in the midst of an economic down turn, and how severe it will turn out to be is yet to be seen. What I do understand, because history has proven it, is that simply printing almost a TRILLION dollars to spend it like drunken sailors at a time when Americans are cutting their OWN spending is patently WRONG in principal. Not to mention practicality..

A study of history shows that massive government spending did not pull our country out of the great depression. What caused the turn around was World War II.

As recently as the 1990’s Japan spent tons and tons of money, and it did not pull their country out of an almost decade long recession.

In the late 1970s when inflation was in excess of 15% annually, what pulled the US out of a solid recession, and ridiculously high interest rates were tax cuts for ALL Americans…. A reduction in the capital gains tax, and a pro business approach.

History has proven, that WAR and tax cuts have been the catalysts to turn our economy around.

It does not matter who the President is. What matters is adding another TRILLION dollars to our already 9 TRILLION dollars in debt is a bad idea. It would be a bad idea even if the country had a booming economy. A stimulus bill should be FOCUSED on cutting taxes, getting capital to the market to spur on investments and small businesses. Right now interest rates are down, but if we continue to print money, we will see a return to those high rates.

To keep things in perspective, if you could stack 10 trillion dollars up, the stack would be more than 468,000 MILES long and would extend beyond the MOON by more than 200,000. There are THREE solutions to our national debt…

1. Default on it…. That would be bad……

2. Monetize the debt… (Print More money to pay it off) which will cause HYPER inflation at a scale like this…. (Google hyperinflation or Weimar Republic)

3. Pay it off…. Which requires discipline… will require a balanced budget amendment and a line item in the budget to pay off our debt. This strategy requires our representatives and Senators to be adults and responsible with OUR money…

What is contained in this bill is ridiculous, and this bill is NOT a stimulus package. In fact, according to some estimates there is less than 12% of this bill that is actually designed to stimulate our economy. Additionally, less the 21% of the money will be spent in 2009 (Yes it is still January of the 2009).

I am fully prepared to support our President when his ideas are good. This bill does not meet that criteria.

Don’t take my word for it. Read it… but I urge you to call your Congressman/Representative, and Senators and tell them DO NOT SUPPORT THIS BILL. Difficult times require thoughtful, deliberate action. Right now, the action needed is YOURS, MINE and all Americans…

ALL of the phone numbers follow…. GET involved in solving this problem… do not blindly trust the same morons that caused the mess to begin with, and permit them to follow a course of action that is PROVEN NOT to work….. PLEASE FORWARD THIS BLOG ALONG TO THE PEOPLE YOU KNOW……
Email me for a list of all the US Represntaitves contactnumbers...

Friday, October 3, 2008

Who Did What and How Do We Fix It?

How Did We Get Here?

Boy, I have had a lot of calls lately about what is going on in this country. So, here is an assessment of what actually happened that is not in “legalese” or “mumbo-jumbo” that a normal person could understand without some kind of translator.

Before we talk about what happened, we need to talk about what banks and lenders really care about when making a decision. This will provide a foundation and bring this issue to a point of sensibility.

A bank or lender cares about three basic things:

The borrower’s ability to re-pay. (income)
The borrower’s willingness to repay. (Credit)
Adequate collateral to secure the note. (Appraised value)

That is about it in a nutshell. If you get these in line with underwriting guidelines, you can make the loan.

Now enter The Community Re-Investment Act law that was passed by Congress to make home ownership accessible to lower income families. Although the idea of bringing the American Dream of home ownership to everyone sounds great, the strategy was fatally flawed because rather than bring the dream to lower income families, we needed to bring them to the American Dream.

So, rather than create an environment for people to improve their economic situation by lowering taxes, creating jobs, and building families, Congress chose to take the easy route, once again, to lower standards for those families and people who don’t make much money.
The American way is to become someone great, the American way is to make your life what you want it to be. It is called the American “way” because it is the WAY, as in path, to achieve the American Dream.

So, back to Congress, the Democrat party which needs people to be “victims” in order to flourish, makes it easier via regulation, rather than do the heavy lifting. Taking the easy road is not being progressive, taking the easy road is simply setting people up for future failures.
Writing laws that enable people to improve their lot in life is hard work because it might mean you could be perceived as un-caring and insensitive. I am not saying that minorities are like children, but my 7 year old thinks I am insensitive and un-caring when I require her to do what is right and what is best for her. No matter what she thinks, I owe it to her to do what is best for her, even if it means I am unpopular. I do it because I truly care about her future. I care about her future more than mine.
We, as a country, need to require people to stand tall and actually expect our citizens, all of them, to do what it takes to become more affluent by their own efforts. The Democrat party, by their own laziness, and the endorsement thereof, is systematically destroying minorities and the African American community.

Their action with the CRA was the fulcrum of leveraging the housing market to a point of collapse.

The Community Re-Investment Act was well intentioned to make credit and loans available to geographic areas under served by banks and lenders. In an effort to prevent “red-lining” of areas that a bank might choose not to lend in. This law required banks to have a percentage of their loans made within urban areas which are historically populated by lower income people. But, it was not based on common sense. Legislatively forcing banks to offer home loans to people who really could not be reasonably expected to repay was a mistake.

So, in order to comply with federal law, banks ultimately relaxed their guidelines and Fannie Mae and Freddie Mac designed loan products to fit the borrower. Since you cannot verify what you do not have as far as income goes, stated income loans were made more available, and ”no doc” loans which did not require any proof of income were also created.

Since lower income families are unable to save much money, 100% financing programs were designed that increased loan risk further. The rates had to be held low in order for this scheme to work.

Lastly, since there was a correlation of poor credit with lower income credit requirements were significantly relaxed.

The recipe is almost complete. The law of supply and demand being what it is began to see home prices climb at an unprecedented rate since there is now a tidal wave of new home buyers. Many more buyers than sellers drove home prices higher, and people thought it would remain that way.

We compromised the integrity of the lending business on all three critical components and banks had to go along or face severe penalties and fines. FannieMae and FreddieMac guaranteed these loans and then sold them to investment banks who had YOUR money. Over time these guarantees became worthless once the level of foreclosures began to hit. This was not a wave, it was a Tsunami. It was compounded by the federal government requiring changes to revolving credit accounts (credit card) effectively doubling the minimum payments which is a story in itself.

We also found out that the CEOs of Fannie and Freddie lied about their earnings and solvency, and cooked the books to get paid colossal bonuses. Cronyism and shoddy accounting was the order of the day. These people need to go to jail for a long time, although there is no call for investigations, which should tell you who is really responsible…

Now you know what happened.
Once again, by playing around in the market, lowering standards, and taking the easy way to help minorities and cities, our government has nearly destroyed an entire industry and economy. And might still yet.

But no one is actually taking any responsibility. The Speaker of the House of Representatives recently stated that the Democrats are not responsible. It is easy to point a finger at the chief executive. He is charged with executing and enforcing the laws of the land. George Bush did not cause this problem. Congress caused this problem. There was a historic effort to prevent any regulation and oversight of Fannie and Freddie by the Democrats, yet it is the Democrats screaming and yelling that the Republicans and the Bush Administration did not "regulate" these Government Sponsored Enterprises.
The obvious irony being that it was a regulation that started this whole damn mess.

The lowest common denominator here is the idea that minorities and lower-income families are incapable of achievement. If cities are struggling and banks don’t want to lend there, it is because of the conditions created by local, state and federal government.

Stop electing the people over and over who are not improving things. The only way to inject accountability in to the process is to stop supporting the people who tell you that you cannot achieve, and that you are not part of the dream. We don’t need them to achieve. Lowering the standards is never the solution. The American spirit and liberty is what we need to achieve great things. Liberty means less government.

Now, we must raise the standard for our elected officials, and demand they put the interests of American ahead of their own political agenda. There is not one instance I know of where throwing government money at a social problem fixed it. Not education, not health care, not welfare.

There is only one “way” to get to the American Dream, and that is the American way of personal responsibility and accountability. Drive and dogged determination to accomplish what you think you cannot. While Democrats and Republicans alike have ownership of this problem, the problem is here. We need to go get those that are responsible and hold them to account, but we must work on the solution. The solution has been and always will be “We the People”.

Monday, September 29, 2008

Wall Street Doesn't Insect With Main Street

This is an article I posted back in early spring, and I hope you might enjoy it!

Why Wall Street Doesn't Intersect With Main Street

Have You Checked Your Map Lately?

If you did, you would notice that Wall Street doesn't actually intersect with Main Street. I know this might strike you as a strange observation, but it illustrates a greater point. The point is that there is an enormous gap between how Wall Street sees things as "good" and what the reality on Main Street, where most of us live, actually looks like.

So, what is the difference between a Bear and a Bull, and more importantly, why does it matter to you and me?The "bull" thinks life is just peachy and that there is a great opportunity and future immediately ahead, and a "bear" thinks life is going to be rough in the coming days. Personally, I am not sure what the immediate future holds for our economy, but in a recent article I mentioned that the writing is on the wall about some pretty serious issues to come. I am talking about substantially higher taxes, low wages, inflation, a devalued currency, and a government that is no longer acting for the people and by the people. For if they were, the People's voice would be heard, and we would actually be solving the most pressing issues of our time instead of just talking about them. These things most certainly need to be addressed. They don't need more speeches or for us to talk about them anymore. We have talked it to death. As far as I know, hot air hasn't actually solved any real pressing problems, except for making a balloon float or getting your hair to dry a little quicker.I think the real reason the cherry blossoms show up a lot earlier these days, is not because of any impact of "so-called" Global Warming, but because of the huge amount of hot air in Washington, D.C. Just a theory of mine.

If we cannot address the most pressing issues of our time, then we must admit that we cannot depend upon the government to come to our aid when we retire. That places the ball squarely back in our court, just like it was for our parents. Like it or not, that's the way it is.

As the fundamental building blocks of our retirement system continue crumbling from abuse and neglect, it becomes more apparent that we must stand up on Main Street and take care of ourselves. We must support our local businesses, and communities. We must begin to pay back the money we have borrowed or face hardships like those that our grandparents and great-grandparents lived through. We are however, running out of time.

I am optimistic about the future, but my optimism is based on Americans coming to our senses. To be specific, I am talking about the debts owed by both the US government and the personal debt of it's citizens. Collectively and personally, we are leveraged to the hilt. Our country and most of us have a cash flow problem. We cannot begin to solve our problems without getting serious about debt.As April 15th quickly looms ahead, most Americans are furiously trying to look for ways to pay less in taxes, but most will do nothing about the enormity of the impact interest expense has on their financial condition. The irony is that both are voluntary.

Although Main Street isn't connected with Wall Street, Main Street has a direct connection to the Road to Prosperity. Here are the directions on how to get there from where you are:You must keep the money you earn, and the only way to do that is to stop giving it away to banks, credit card companies, and the government. We must stop robbing ourselves and our kids of our future.I wish you luck on your journey to your future, and will look for you on the Road to Prosperity.

Master Your Debt, Master Your Destiny.

Tuesday, May 20, 2008

How To Show Your Mother-In-Law She Was Totally Wrong About You

I used to think "Mother-In-Law" jokes were pretty stupid, that is, of course, until I actually had one. A mother-in-law that is. Now, I have a complete understanding of how those jokes came to be. I actually laugh at them now. In fact, I tell a few of them these days.

In fact, I am pretty certain that every one of them since the dawn of time has been written about my mother-in-law in particular.

So, what does this have to do with money you might ask?

Most mothers don't think their kids, even if the "kid" is in their forties, can make very good decisions. Especially when it comes to selecting a spouse.
In fact, most mothers don't believe that there is really anyone actually good enough for their son or daughter.

Chances are that you deal with this too. It makes no difference if you are male or female. A mother-in-law is a mother-in-law. Period.

In most families, the the wife is the "family treasurer". Now most women will tell you it is because their husband"just doesn't do it, and doesn't want to do it". What they leave off of that sentence is "...well enough to satisfy me." but that is a discussion for another day.

The dynamic between a mother-in-law and daughter-in-law is much different than what is between a son-in-law and mother-in-law. I don't know why its like that, nor do I think I want to know, but since the finances are usually handled by the woman in the family, the idea that things aren't going well on the financial front is not just fuel for the fire. It is JET fuel for the fire.

So if you are the family treasurer, and want to prove "her" wrong about your "worthiness", you might consider nudging that spouse of yours to learn how to become debt free. This one step, will not only get your mother-in-law on your side, even if only for a moment or two, but will also do the following:

Save you THOUSANDS of dollars.

Position yourself to retire.

Improve your cash-flow.

Avoid depending on Social Security and Medicare.

Have a better relationship with your spouse.

Be able to afford sending your kids to college.

Last but not least, you could be able to burn your mortgage before your mother-in-law can burn hers! If that is not a good enough reason, I guess I wouldn't know one if I saw one.

The benefits of being successful financially are easy to measure, but the benefit of proving a mother-in-law WRONG is immeasurable. Not to mention incredibly satisfying.

Tuesday, April 8, 2008

The Dirty Little Secret About Your 401(k) Plan That You Aren't Supposed To Know

Do you have a 401(k) plan that you make contributions to? What about a Simplified Employee Pension? An Individual Retirement account? It doesn't matter what the title is, what matters is that the money you have in those accounts will be 100% taxable.

Don't misunderstand, the percentage of tax you pay will not be 100%, although it will be high. What I am stating is that every dollar in the account has not had ANY tax paid on it. So, it is 100% taxable.

Tax deferred savings plans are sold on the premise that A.) It will cost less to live in the future. B.) The amount of tax we pay will be less in the future, since we will have less income.

How anyone could possibly think it will be less expensive to live in the future doesn't do the grocery shopping.

Secondly, if it will cost more to live in the future, how is it possible that we would need less income in the future? More importantly, who would want less?

Here is the dirty little secret I am talking about. The best way I can explain it, which I have been doing for a number of years now, is to ask yourself, what 401(k) actually represents.

It represents a reference to the Internal Revenue Service's code, or tax law that covers tax deferred savings plans. Few people know very much about their retirement plans, so I think it is time to disclose the truth about how we , Americans, are being set up to fail.

Now that you know what 401(k) represents, ask yourself this question;

Is it a logical assumption to think that our government, who has trillions in debt, and runs a deficit every year, would devise a way for you to pay LESS in taxes?

I don't think so, and I will tell you why:

1. PROBLEM: The Baby Boomers are coming of age, and they are going to demolish the Social Security Plan. Since Congress raided the Social Security Trust fund like a band of pirates, and spent the money leaving nothing but some worthless I.O.U's, there is no money. There is no surplus. Social Security is a pay as you go plan these days. RESULT: The ONLY way to salvage the Social security plan is to either dramatically CUT benefits by extending the age of eligibility (which they have already been doing) or to raise taxes.

2. PROBLEM: Medicare is scheduled to be broke sometime around 2019. The first Boomers, who were born in 1946, will only be 73 years old at that time. Life expectancy is about 88 years now, so they will be on it a while. There were about 76MILLION babies born between 1946-1964. Medical costs are climbing at 4 to 5 times the inflation rate. RESULT: There is no mathematical way this program can sustain itself, in it's present form, without shifting more costs to you, or raising taxes. Or a combination of both.

3. PROBLEM:The infrastructure in the U.S. is crumbling, and needs repair. Bridges and roads are falling apart. RESULT: Not too long ago there was a bridge that collapsed in Missouri from neglect. It is the just an indicator of the condition of our transportation system. This will cost hundreds of billions above current highway and gasoline taxes currently being collected.

4. PROBLEM: The inflation rate in this country is being skewed by changing the components of the calculations. RESULT: The result is lower numbers and a false sense of security. As if that wasn't bad enough, with countries like China and India who each have populations in the BILLIONS putting pressures on consumable and durable goods, the prices we pay have no where to go but up. Our monetary policy is in distress. Look at the banking business.

5.) PROBLEM: State governments are being heavily burdened with unfunded mandates from the federal level and most are running deficits. RESULT: State taxes and property taxes will have to rise. Medicaid is a primary culprit.

6. PROBLEM: The average American family, in particular, Baby Boomers, are seriously in debt and will not likely escape the debt trap before retirement. RESULT: Serious cash flow problems in retirement and a loss of a huge part of our lifetime earnings to banks and credit card companies.

So, here is where your retirement monies come in to play.

  • If all of the money is taxable and taxes go up, which they will, you will have less of it to spend and you will need to withdraw more if it each month. This will cause your money not to last as long.

  • If Social Security cuts benefits or raises taxes, you will need more of your retirement money each month to survive. See above item.

  • If Medicare cuts benefits you will pay more of your health care costs at a time when you are more likely to need benefits, placing additional pressures on your savings.

  • If it will cost more to live in the future, which it will, your future dollars will not buy as much, and you will need more to survive. You will probably outlive your money.

  • If you are not debt free before you retire, a large portion of your retirement money will go directly to your creditors. the sacrifices you made to save it would be for nothing.

That's bad news, here is the good news. There is a chance to avoid this mess. You MUST get out of debt NOW. As fast as possible, including your mortgage.

The money you are placing in a 401(k) plan would be better used to pay off your debt. You will save thousands of your own dollars, and you will alleviate the cash flow pressures you are destined to experience in the future.

While I am not a conspiracy theorist, I can tell you that if I am smart enough to see this stuff, you can bet the farm the government knows it too. There are trillions of dollars in 401(k) plans and tax deferred plans and the government can't wait to get their taxes on it.