WARNING: U.S. Ponzi Retirement Market In Big Trouble, Protect With Precious Metals

The U.S. Retirement Market is in BIG TROUBLE as annual benefits paid out are now larger than total contributions.  Actually, the amount of net withdrawals were the highest in history.  When payouts become larger than contributions… then we have the making of the typical PONZI SCHEME.

Americans who have invested their hard-earned money into a 401K, had no idea that it was the Greatest Ponzi Scheme in history.  Unfortunately, when the markets crack, so will the value of the U.S. Retirement market.  On the other hand, Americans who were wise enough to purchase physical precious metals will protect their wealth as the U.S. Paper Retirement Market collapses.

According to the most recent data by the ICI – Investment Company Institute, the U.S. Retirement Market ballooned to a new record high of $25.3 trillion at the end of 2016:

(chart from ICI- Investment Company Institute Retirement Statistics)

As we can see, the U.S. Retirement Market has nearly doubled since the collapse of the Housing & Banking sectors in 2008.  Total value of the U.S. Retirement Market increased from a low of $13.9 trillion in 2008 to $25.3 trillion at the end of 2016.  It’s not quite double… but close enough.

Furthermore, the surge in U.S. Retirement assets from $19.7 trillion in 2012 to $22.6 trillion in 2013 was due to the Federal Reserve QE 3 policy (Quantitative Easing #3).  This was the year that the monetary stimulus was funneled into the Stock, Bond and Real Estate Market and away from the precious metals.  Thus, the precious metals suffered huge price declines in 2013.

As Americans continue to contribute into their “supposed” retirement plans, few realize that more funds are now heading out than going in.  This is not a good sign at all.  If we look at the most recent data from the Investment Company Institute, Americans contributed a total of $373.6 billion into their Private Sector DC Plans in 2014 versus total benefits paid out of $402.3 billion.  Which means, net contributions were a negative $28.7 billion… the highest on record:

The grey bars represent total contributions while the red line shows total benefits paid.  The net result is shown in the GREEN & RED bars at the lower part of the chart.  Green bars are positive net contributions, while the red bars are net withdrawals.  Unfortunately, the Investment Company Institute does not provide data for 2015 or 2016 yet.  It will be interesting to see if these net withdrawals continue to increase.  My gut tells me that they most likely have.

NOTE: The majority of the Private-Sector DC Plans were 401k’s, which accounted for roughly 98% of total contributions and 91% of total benefits paid.

So, why is the U.S. Retirement Market is BIG TROUBLE?  Well, if we look at the next chart, we find our answer:

The chart shows that the U.S. Retirement Market has increased right along with surge in total U.S. public debt.  Thus, the U.S. Retirement Market’s value is being propped up by debt.   As the U.S. debt exploded from $875 billion in 1980 to $20 trillion currently, the U.S. Retirement Market surged from $822 billion to $25.3 trillion during the same time period.  We must remember the following:

DEBT IS NOT AN ASSET.  Also, the true value is subtracting total debt from total assets

Thus, if we just applied simple math here, the U.S. Retirement market’s net value is approximately $5 trillion… 80% less than what it is currently.  And that $5 trillion figure is likely inflated.  I do realize I am making a very general calculation here, but DEBTS are not ASSETS.

I discussed this in my recent interview on the Hagmann Report, which I highly recommend watching if you haven’t already:

The reason the U.S. Retirement Market is a huge Ponzi Scheme is that it has stored “Digital IOU’s” rather than real physical wealth.  A typical stock price is based on “Net Present Value.”  They take the future value of the company’s earnings and give it a price today.  Unfortunately, companies earnings are based on the burning energy in the future.   There lies the rub.

Back during the 1930’s, most stock prices were based on the BOOK VALUE.  Basically, what the value of the company was worth if all its assets were sold.  Today, a stock price is based on EARNINGS.  Earnings can and will implode when the markets crack due to massive debt and falling oil production.

However, the few Americans who were wise enough to purchase physical precious metals rather than put their money into the Greatest Ponzi Scheme in history, will be protect wealth while most paper assets disintegrate.

$100,000 Physical Gold Investment vs $100,000 Invested in 401K

If an American decided to purchase $100,000 in physical gold over the past 30 years, they would have a true physical asset that they can sell close to that $100,000 figure.  If an American had $100,000 in their 401K, they would have to pay a 10% penalty for early withdrawal.  While a 401K withdrawal is taxed as regular income compared to physical gold taxed at a maximum of 28% capital gains, at least you can hold onto nearly three-quarters of your wealth (likely much higher percentage).

That being said, once the market crash occurs, the value of most American’s retirement assets are going to implode.  I would not be surprised to see at least 50-75% collapse (or more) in the typical U.S. Retirement Account.  Thus, the $100,000 invested in a 401K could fall to a low of $25,000, while $100,000 invested in physical gold, could easily double to $200,000.

Actually, this is the likely outcome.  Mark my words.  A typical American who has invested $100,000 into a typical 401K will find that his or her retirement account will fall to one-tenth its value versus someone who purchased physical gold instead.  The coming collapse of the U.S. and Global Oil Industries, due to lower oil prices, will be the factor that destroys the U.S. Retirement Ponzi Scheme.  It is not a matter of IF, it is a matter of WHEN.

Please continue to check back at the SRSrocco Report as I will be providing updates on the continued disintegration of the U.S. and Global Oil Industry.  Paying attention to what is taking place in the Energy Industry will provide CLUES to the timing of the Market Collapse.

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40 Comments on "WARNING: U.S. Ponzi Retirement Market In Big Trouble, Protect With Precious Metals"

  1. Interesting that you have picked up on this Steve. Mike Maloney presented this just
    recently https://www.youtube.com/watch?v=zdKjHL1fIsM&t=3s Louis Cammarasano made some comments on this as well.

    Several commentators made the point that the Baby Boomers will not exit the market. They will instead withdrawal their tax deferred IRAs and 401Ks and reinvest into plain taxable stocks/ETFs to mitigate the shock drop.

    However the Generation X and Millenials will have no savings to buy these stocks (maybe the Chinese will) as the boomers die off, which begs the question: where will the inheritance tax factor in on all this in a few years? It won’t be tax from the grave, it will be tax BEFORE the grave!

    I stopped funding my retirement account about ten years ago because it has a government “wrapper” around it. You may try to withdraw your retirement IRA or 401K but it will really depend on how much the government is going to tax it (take from it) before you actually see your first penny, whatever it will be worth by that time. I erroneously thought that the market would go nowhere after I sold everything in 2007. Looked like a genius then, but as they say, easy come , easy go. I never got back in, and have watched in complete horror as the FED has propelled this market in a way that I could never have imagined.

    Of course, there is yet another rub: If you try to withdraw from your IRA/401K while you are working, even after 59 1/2 without the early withdrawal penalty, you will be taxed at a higher marginal bracket on top of your current working income. In a way you are penalized for working. Yet you dare not stop working, at least in my mind these days, because you never know what the government, or your retirement nest egg, is going to do. Your retirement may wind up being next to worthless. Thus, best to maintain some kind of cash flow, if only to pay the for the basic bills and beer. Also consider that the government in it’s endless, insatiable thirst for more money will do a stealth raid on IRAs and 401Ks for the “security and benefit” of retirees and credit them with Treasuries to “fend off the speculators.” (Nixon 1971 Deja vu.)

    As far as buying PM’s as I said a few weeks ago about the last smack down, well, it didn’t last long. The PM recovered in 3 weeks and seems that the bottom is getting firmer. It will be very interesting if there is another consolidated smack down sooner rather than later based on this threshold tolerance by the bankers.

    • Good thoughts Hubbs.
      Nice work as usual Steve.
      Thinking PM’s as my retirement nest egg for quite some time now… & really wish peeps would look at them that way; Wouldn’t hurt bullion dealers to market them as such with much greater zeal too.

    • “It won’t be tax from the grave, it will be tax BEFORE the grave!”

      (laugh) exactly right. pre-crime, pre-tax, pre-pay ….

    • Hubbs,

      Concerning that Mike Maloney video, he says some things that are not correct. First one small clarification. You are not required to start taking distributions from your tax deferred accounts at age 70½ as Mike Maloney states. Your first required minimum distribution (RMD) from your IRA must be taken by April 1 of the year after you turn 70½. As far as 401(k) plans, normally you also must also start taking annual minimum distributions by April 1 of the year after you turn 70½, however in some cases if you continue to work past age 70½, the RMD for your current employer sponsored 401(k) will not start until you retire.

      Mike Maloney states that you are forced by law at age 70½ to take your tax deferred savings out over a 15 year period. That is not true. You are required to take out only the minimum distribution amount annually for as long as you live. Also Mike Maloney says that when you withdrawal money out of your IRA account that you are going to have to pay tax on it. Well that is not always the case. It all depends on how large the distribution amount is and if you have other income that could be large enough to make it taxable. My father has taken minimum distributions from his IRA for the last 6 years and has not owed any tax on the distributions since they were not very large amounts and my father’s only other potentially taxable income was from a pension. Both of these combined amounts were not enough to be taxed.

      As far as a stock market crash happening just because baby boomers are forced after age 70½ to take minimum distributions from their retirement accounts, it is NOT really mandated to happen as Mike Maloney states. First, not all the money in tax deferred retirement accounts are in stocks. I think it is something like 70%. Second and most important, you are not forced to take the minimum distribution from the stock portion of your retirement accounts but can be taken from any asset you want within your retirement accounts such as from bonds or from money markets etc… So stocks are not guaranteed to be sold in large amounts by baby boomers just to fulfill their RMD unless the vast majority of them choose to take it from stocks and not from bonds or from a money market fund.

      So no, the ERISA Act, which requires an annual minimum distribution from your retirement accounts after you turn 70½, by itself does not guarantee a stock market crash as Mike Maloney believes.

  2. Quite right Steve, good work…thanks.

  3. So people reluctant to withdraw retirement funds are now forced to, and so this could cause a market crash? I doubt that would happen. These are people that follow the herd and do what they are told is prudent while not needing to change. They will simply withdraw the money and reinvest it back into the market. Slightly risky to the market is that now more investment currency is free to seek herd safety right off a cliff if directed that way. Volatility might eventually exceed the ability for central banks to compensate, but that seems extremely unlikely. USD is the “safety” that most of the herd is conditioned to run towards. These are old people that are set in their ways after a lifetime of memories of what worked well for them. Those that hadn’t saved metals before are unlikely to start now.

    • “So people reluctant to withdraw retirement funds are now forced to, and so this could cause a market crash? I doubt that would happen.”

      already was happening in dallas a few weeks ago, until the city locked down the pension fund and refused any further withdrawals. if people have the option they’ll withdraw, the only reason they don’t is if it’s disallowed. “the roach motel pension fund. you can deposit, but you can never withdraw ….”

  4. Andrew Huskisson | March 29, 2017 at 4:23 am | Reply

    Steve,

    Great Article! Surprise, Surprise! I don’t know how people can be so exuberant, arrogant, and complacent about the stock market just because President Trump say’s something. It’s beyond pale to look at the fundamentals and see the writing on the wall. The Stock Market got’s MOB written all over it. I guess it’s only the 1% that see value in precious metals. We must be the Neanderthals. . .

    • “It’s beyond pale to look at the fundamentals and see the writing on the wall.”

      you don’t get it. there is nowhere else for the fiat debt currency to go, so until that changes then that’s where it will go.

      “I guess it’s only the 1% that see value in precious metals.”

      you’re speeeeecial.

      • Thomas Stamps | March 29, 2017 at 8:38 pm | Reply

        If that’s true the 1% has most of the investments in the stock market also!

        • “If that’s true the 1% has most of the investments in the stock market also!”

          the stock market is a cattle chute for the useful lackey wannabe 1%. the real “1%” do not derive their wealth from the stock market – they take it from us directly using fiat debt currency.

  5. When you look to the HUI you see very clearly, they will smash the PM price once again!
    Silver maybe to the 16$ range?

    • DisappearingCulture | March 29, 2017 at 4:57 pm | Reply

      I don’t know about what the HUI predicts. The commercials COT short positions is a bet the COMEX price will go down. Ans surprise the price gets smashed so they don’t lose billions on their short positions.
      Wash, rinse, repeat.

  6. One factor to keep in mind is the number of people who anticipate dystopia. There are many individuals with no assets to fall back on that will simply try to “take” what they need.
    Some people I spoke with who watch shows like The Walking Dead actually
    discuss tactics for obtaining what they
    need when 911 breaks down. Hopefully we won’t see something like FERFAL describes in his book. On the plus side, precious metals can still buy the things you need. Ann Barnhardt once stated if you can’t put your hands on it you don’t own it. Diversify your portfolio wisely. 🙂

    • “Hopefully we won’t see something like FERFAL describes in his book.”

      actually we’ll see considerably worse. argentina had an outside world to provide some help, the united states has … well, mostly enemies.

      “There are many individuals with no assets to fall back on that will simply try to “take” what they need.”

      two kinds. 1) the welfare types. they number in the millions, but won’t last long. 2) the prepper militants. these are preparing right now, not to survive by productive labor, but by taking everything they can. they are forming now, surveying resources now, infiltrating organizations now. they will be weapons-heavy and baggage/infrastructure-lite – no farms or bug-out locations for them, they’ll just move in wherever they want. really, it’s the most intelligent and efficient and survivable response action to take.

      • It depends on the level of collapse. We could visit your scenario or something less destructive. One of the websites that first made me think something was wrong was http://www.deagel.com/. Its a military aviation website. They suggest the U.S. population will drop from 321 million to 61 million by 2025. http://www.deagel.com/country/United-States-of-America_c0001.aspx

        The Deagel guys know something is up and these guys are very much connected. If you are not deeply concerned you don’t understand the situation.

      • The government in power during a crisis will take the “prepper militant” role also, using law enforcement and the military to maintain order and acquire resources. In short, Martial Law would not be pretty either.

        • at first yes, but not in any protracted crisis. remember, during the rodney king riots the police withdrew from any confrontation, and during the waco siege the fbi justified their attack on the compound by saying they were overextended and had no replacements and were tired.

          police typically are 1% of any given population and are oriented towards isolated criminal acts, not sustained civil unrest. in a major disruption they will be unable to act effectively, and may decide not to act at all.

          military are two kinds: citizens, who will not act against fellow citizens, and non-citizens, who will be unable to cohere or organize sufficiently to function for any useful length of time (and who will be more likely to sell equipment to the highest bidder than use it against anyone). the only exception will be the large number of illegal immigrants now permitted to “serve” in the army – they may be more cohesive against the citizens, but not much more.

          what you may see are unofficial government actions, such as a swat team or national guard unit going rogue. “hey boys, I been thinking, we ought to make plans about what we’d do in this or that situation ….”

          • gman,
            Argentina’s financial crisis in 2001 is a very good example of how a government and society
            will respond. Simply put,
            you have the very rich and
            the very poor, and a
            middleclass that no longer
            exists. Over the past 16
            years that country has
            seen a lot of disease,
            starvation, and death.
            Again, take the time to
            read FERFAL’s book and
            blog. We can speculate
            how the U.S. might spiral
            downwards after an
            economic crisis all night. We can hope something resembling a civilized society emerges from the ashes or throw in the towel. I choose to hope for the best. Good luck to your investment endeavors. 🙂

          • “Again, take the time to read FERFAL’s book and blog. We can speculate how the U.S. might spiral downwards”

            well one difference would be that after the united states spirals downwards no-one will be able to blog about it ….

      • If you live in welfare state like Oregon get out of the cities if there is collapse … 63% of Americans do not have $500. extra to cover an emergency cost. They would have to put it on credit card. I read the majority are three paychecks away from being homeless. This has always struck me as odd.

        When I worked I paid myself first, by putting 35% towards retirement and savings.. Before I was married I put 50% away .That was the consciousness I grew up with. Saving for a rainy day. I see people with that live for today mentality and that does not work in the reality it is just an immature way of dealing with life.

  7. “Americans who have invested their hard-earned money into a 401K, had no idea that it was the Greatest Ponzi Scheme in history.”

    yes they did. I was pointing out in the 1980’s that the white women weren’t having any babies and that no-one was going to get a retirement. and I wasn’t the only one saying that. but everyone just said “sexist” and “racist” and walked away. well, now there’s nowhere left for them to walk.

    “On the other hand, Americans who were wise enough to purchase physical precious metals will protect their wealth as the U.S. Paper Retirement Market collapses.”

    nope. when the fiat debt market collapses it will take the economy with it, and there will be nothing for the gold/silver to buy. “if you do not work you will die”, and boy all these gold-holding non-workers are in for a big surprise.

    • I’m not planning to get rich. But every month i exchange some of my fiatskies for hard assets. Prep stuff, and phyz. No one knows how it will turn out, in times of uncertainty its good to have some insurance. But hey, we’ll see who gets through.

    • For every warning there were 10 financial planners, the government, your accountant, your company telling us how great 401Ks were. When a lot of 401Ks were started the internet wasn’t around to amplify the message. Unfortunately, for Americans invested in 401Ks ignorance doesn’t pay the bills.

      • “For every warning there were 10 financial planners, the government, your accountant, your company telling us how great 401Ks were.”

        all they had to do was use their eyes. “the retirement funds are spent. they’ll have to pay you out of taxes. look around. who is going to pay the taxes to fund your retirement?”

        “racist!” “sexist!”

        and here we are.

    • Hey GMAN,I think you are on to something, “When the fiat debt market collapses it will take the economy with it, and there will be nothing for the gold/silver to buy. “if you do not work you will die”, I alternate between slow and fast collapse, a gradual decline lasting decades is the scenario I deem most likely but with so much anger in America things could become very bad quickly. I believe in the sanctity PM but if the economy really does plunge badly and there is a near breakdown in government enforced security it will be food, fuel fire arms etc. that are currency not physical PM.

      • “I alternate between slow and fast collapse”

        (shrug) I really don’t understand why it’s all still up and running, but here we are. I guess china had more wealth to be looted, and was more willing to let it be looted, than first appeared.

        well, you know what they say about bankruptcy – it happens slowly at first, then all at once. but the biggest dynamic any one individual will experience is the fact that, like what alias rosenbaum describes in her novels, the news media simply will not report on any collapse or failure. the cores of our once great cities are third-world-occupied territories, but the news media still talks about them as “american cities” and the fauna within as being “americans”. I think most of us won’t really know what’s going on until it’s marching up our streets looking for food.

    • gman,

      IMHO I look at phys PMs more as a generational wealth place holder for eventual transfer of wealth, not for one’s short term preservation in a sudden crisis. It is interesting to hear Karl Denninger’s remark about gold on Greg Hunter’s USA watchdog.com. He claims he does not own any. He who has the chickens has the wealth or the bargaining power if there is no food. (this is an oblique refence to the time worn argument “you can’t eat gold.”

      Then there is Bill Holter, who focuses on the aspect of sudden collapse of CREDIT which in a way ties in intimately with Steve’s focus on energy. It’s the trucks. They are the lifeblood of this country. If they can not get fuel, if they can not get access to CREDIT to pay for the fuel for their rigs, the country is toast, almost overnight.

      I really like Steve’s blog as he has chosen to focus on the energy situation and hope he continues to do so. In contrast, mainstream preppers think they are going to shoot their way to get the supplies they need. I chuckle about these people who figure since they have guns and ammo, some tens of thousands of rounds, they are all set. The reality is, the society in US is so heavily armed that such a strategy is doomed to failure. One would not expend 20 rounds before he himself is shot, even if part of a coalescing gang that emerges in later stages of a collapse. We are not talking about walking dead zombies who don’t shoot back.

      • “The reality is, the society in US is so heavily armed that such a strategy is doomed to failure.”

        it is. but what you’re missing is that they’ll take the guy with the chickens with them. the chicken guys will be facing not merely 100/1 zombie/chickenmen, but also 1/1 preppermilitants/chickenmen – prepper militants being those who are preparing now, organizing now, surveying now, training now, infiltrating now, to act in exactly that manner. chickenman may have his .338 lapua and a team of family to defend the family farm, but the prepper militants will have .50cal and mortars and perhaps several platoons of trained raiders.

  8. Diogenes Shrugged | March 29, 2017 at 6:37 pm | Reply

    Steve:
    This would have been a better question after your earlier articles, but better late than never.
    When you write about “the falling value of oil,” which are you referring to?
    A. To the falling price of oil
    B. To the general deterioration of BTUs per barrel as the world pumps heavier crude
    C. To the notion that energy won’t be in demand when everything grinds to a halt
    D. To some other cause of falling value
    Thanks.

  9. Wait for next market crash to load up on commodities like silver, is always a good time to buy some gold, it’s not until inflation folks really appreciate the gold. If you didn’t have access to banks and ponzi where would you put it?

  10. John Pallyswine | March 30, 2017 at 7:29 am | Reply

    AT THE END OF THE DAY, AMERICANS ARE PIGS IN GENERAL AND DO NOT CARE IF THEIR GOVT IS IN DEBT BY 250,000,000,000,000,000,000,0000,,,, When the Govt can no longer sell US bonds , Americans will invade the world to steal metals and food and water. Their world is their oyster.

    The world must develop weapons to protect themselves from the American and European stomachs.

  11. Hi Steve, Nice to you add retirement funding to you blog. I agree that we are probably in the midst of a crisis where we can no longer fund the retirement of the boomer generation. However, every trick in the book will be used to keep it going for a few more years. Don’t be surprised if a few more years turns into a decade or longer. TPTB have done an incredible job of sustaining the unsustainable. Anything is possible in this day and age.

  12. What a crock of S *** this article is !!!

    http://www.commoditytrademantra.com/silver-trading-news/a-massive-new-rally-in-silver-prices-could-take-the-gold/

    To a VERY large extent this is the problem with the financial strength that runs through our world today. This article is supposed to represent real value !!!????? If more Americans would invest in real physical silver instead of the hype , the thieves who are robbing the world blind today would cease to exist in very short order. There are only 2% of Americans invested in physical silver. Pathetic !!

    • “There are only 2% of Americans invested in physical silver. Pathetic !!”

      no, efficient and sensible at their level of agency. silver doesn’t work as money today – you can’t pay a mortgage with it or buy a gallon of gasoline with it. and in any situation where it could work as money again the entire economic system will be seizing up and shutting down, so you STILL won’t be able to pay a mortgage with it or buy a gallon of gasoline with it. heh – nor will you be able to buy land or guns with it, as there will be plenty of empty housing and plenty of free land and plenty of guns and ammunition and $4000 NVG’s laying on the ground free for the taking.

      • “nor will you be able to buy land or guns with it, as there will be plenty of empty housing and plenty of free land and plenty of guns and ammunition and $4000 NVG’s laying on the ground free for the taking.” not to mention everything else that you’ve stated as a done deal. I’d like to see your crystal ball. I never knew anyone to get it 100 % right , and you’re up against some big guns!

        • yeah ‘big guns’ that are wrong year after year… I think those guns must be like those kids toys that say ‘bang’ on a piece of paper.

        • “you’re up against some big guns!”

          (laugh) the big guns are pointed the wrong way, deliberately. “hey everybody, the enemy is over there!” nope ….

          “I’d like to see your crystal ball.”

          no crystal ball. money is a medium of exchange. the federal reserve fiat debt dollar is a pyramid scheme nearing its peak. and the average white taxpaying citizen is age 58. that’s it. that’s all there is.

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