Living Journey

What does the economy hold for us in the future? This is BIG news for those who follow prophecy as the stock market is edging toward shaky ground. Could this be the catalyst for such a world wide economic change? I received this email from Ray Gano and although I don’t agree with everything he says, I thought that the following email was blog worthy. It certainly waves a red flag at the US stock market and it strongly indicates the need to monitor the Greenback as time goes on.

Fortunately here in Australia, we have managed to ride the weathering storm thus far. But for how long we can do this is unsure. Like the old saying goes … ‘The US sneezes - the rest of us catch the cold’.

The other question to ask in light of this is whether or not the US markets will continue to have an effect on the rest of the world, or will the Euro with the help of China be like the phoenix and rise from its ashes with an economy that is strong enough to tip the balance in favour of the Euro. Although not all agree with this and say… that America’s hegemony is strong and will continue to be strong.

Here is the email that talks about the baby boomers and their retirement…

Oct 17th, 2007, the tailspin officially began.

What are you getting so worked up about Ray?

“Under current law, Social Security won’t have enough money to pay promised benefits in 2041 but there is another crunch much, much sooner, the result of the the federal government relying on Social Security to pay for its annual spending.”

“We face a tsunami of spending due primarily to the retirement of the baby boom generation and rising health care costs,” Walker said. “So what’s happened is we’ve gone from 16 workers paying into Social Security for every person drawing benefits in 1950 to 3.3 to one today, and we’re going down to two to one by the time the boomers retire in big numbers and that’s about where it will stay over the long run.”

“We’re going to have tens of thousands of baby boomers retiring every week over the next decade or so and that means that by time we get to 2017, just 10 years away, we will no longer be collecting enough payroll taxes to pay Social Security benefits,”
Source - http://www.foxnews.com/story/0,2933,301997,00.html

But that is just Social Security, let me give you a short history lesson and why there is even more bad news.

In the 1970’s there was a law created that when it came out, it was touted as a great law, a law for the people. The law was called “ERISA” or known as the “Employee Retirement Income Security Act. This is the law that gave birth to the 401(k). One of the reasons ERISA is significant is because it forced millions of employees to become investors, investors without any financial training or education. This is why the financial expert’s advice is “Work hard, save money, get out of debt, invest for the long term, and diversify, diversify, diversify.”

Warren Buffet made a great statement that kind of sums this up..

“Wall Street is the only place that people ride to in a Rolls Royce to get advice from those that take the subway”

Many people know that the Baby Boomer generation is the largest generation in history. Many of our companies made millions from the baby boomer wave. When the baby boomers had kids, Gerber made millions. When the baby boomer kids got older Matel, Hasbro, etc made millions. The baby boomer’s lived life at a fast pace, thus was born McDonalds, Burger King, etc. I point these things out because the baby boomers are a generation to be considered.

When the baby boomers bought, companies made millions.

Baby Boomers have money they have saved for retirement via their 401(k), IRAs, ect.

Between 1995 and 2005 the millions of people who followed the “Work hard, save money, get out of debt, invest for the long term, and diversify, diversify, diversify.” Advice lost an estimated $7-9 trillion. And much worse than losing $7-9 trillion, the people who followed that advice missed out on what the Economist and other magazines called the biggest financial boom in history. So not only did those investors lose money from the 2000-2003 stock market crash, they failed to make a lot of money in the financial boom in real estate and commodities. That is the price of bad advice and even worse not having the knowledge to know better and the education.

But back to ERISA…

ERISA has a major flaw that many people do not look at or even know of. ERISA has a mandatory withdrawal mechanism at age seventy and a half. At that age you MUST start withdrawing your money from the 401(k)s, IRAs, etc. That means millions of baby boomers will be forced to systematically withdraw from their 401(k), IRAs, ect.

Where is all this money invested? It is in the stock market.

As I stated before, when the baby boomers BOUGHT, companies made millions.

This year, 2007, the first baby boomers turn 61.

What will happen when the baby boomers start to sell?

In 2016 it is estimated that there will be 2,282,887 baby boomers that are turning seventy. They all must start selling and pulling their money out of the stock market.

In 2017 it jumps to 2,928,818 more people. That is about 700,000 more people than the year before that will start selling and pulling their money out of the stock market too. (1)

That is 5,211,705 people together. That many people will affect the economy and more are added each year for approximately 20 years. We did not count the immigrants either in the mix. (1)

All in all, that is a lot of stock being sold, or at least trying to be sold.

What happens when millions of people start selling millions of shares of stock?

The prices start to drop and fast.

The laws of supply and demand will come into effect, and the odds of major panic just increased enormously.

So why is there a mandatory withdrawal? Why not just change the laws? All that money that was put in was put there tax free. Uncle Sam now wants his due…the taxes. This is another reason why the huge spending, the fiat currency, etc. This is also why we will probably never see the death tax go away any time soon either.

This is one of the primary reasons Wilfred Hahn and I created our multimedia CD “Escape The End Time Money Snare.”

Folks the storm is coming. We are called to occupy till He returns. He may return tomorrow or may tarry another 20 years, we dont know.

What have you done to prepare for the storm?

Ray
Prophezine

Endnotes -

1- Adapted from Robert Kiyosaki’s book “Rich Dad’s Prophecy”

Other articles of interest are…

• Is another Wall St crash coming? The triggers for 1987’s Black Monday – when Wall Street fell 22.6pc in a single day – are back, writes Ambrose Evans-PritchardExactly 20 years after “Black Monday” – which saw Wall Street plunge 22.6pc – economists have warned of eerie parallels with the tensions visible on global markets today.
• The End of National Currency Global financial instability has sparked a surge in “monetary nationalism” — the idea that countries must make and control their own currencies. But globalization and monetary nationalism are a dangerous combination, a cause of financial crises and geopolitical tension. The world needs to abandon unwanted currencies, replacing them with dollars, euros, and multinational currencies as yet unborn. Benn Steil is Director of International Economics at the Council on Foreign Relations and a co-author of Financial Statecraft.
• First Baby Boomer Files For Social Security Benefits WASHINGTON — Kathleen Casey-Kirschling filed for early retirement Monday, becoming the first baby boomer to start collecting Social Security.Born one second after midnight in January 1946, the retired teacher leads the way for as many as 80 million individuals who will qualify for the retirement payout.”I think I’m just lucky to be at the top of the boom.