Disentangling

Blogging is likely to remain light, at least for a while.  While I continue to soak in information about various shenanigans playing out around us, I find myself less than motivated to comment about them.  By this point, there are three groups.  The first continues to believe that, despite some rough waters in recent years, the ship will right itself... because in their experience, it appears it always has.  The second senses this storm isn't like others they've encountered, but... well, what can you do?  The third, like the second, sees the increasingly visible signs of accumulated corruption and rot, and is weighing what prudent options may exist to weather however the endgame plays out.

One thing should be clear: the foundations of trust that enabled much of how our society is used to functioning can no longer be taken for granted.  As the giant game of debt/leverage hot potato plays out, the average law-abiding citizen is at a distinct disadvantage.  To the extent you entrust your assets to others, you are exposing yourself to the very real risk of forfeiting them when the music stops and the bankers are sitting in all the chairs.

The idea of stuffing one's mattress with their life savings seems a quaint relic of the 1930s.  But ask yourself: in an era where unelected bureaucrats can decide to balance their pet banks' books by simply grabbing a percentage of your savings account, what purpose is served by leaving money in that account?  It's certainly not drawing interest for you, thanks to the Fed's determination to keep the financial market from handing Uncle Sam the bill that should be due on all his debt.

And the stock market?  It's not generating wealth, either, except for those with assets to high-speed algorithms that game the system to skim dollars in bulk on quick in/out moves.  That system long ago stopped being an effective means for allocating capital and instead became a casino where the insiders rig the winnings while the regulators look elsewhere.

Those who continue to play by the financial rules they've been taught are making all the wrong moves.  They are simultaneously:
- Holding reserves in savings accounts with a net negative interest rate (factoring in inflation)
- Drawing mortgages (either primary or line-of-credit) or student loans, because interest is "so low"
- Continuing to invest in retirement accounts, which are rapidly becoming the last remaining untapped pool of wealth for organized crime syndicates governments to target in their various schemes.

The result is leaving the bulk of household wealth with institutions that return little to nothing on the investment, while leaving the assets themselves at risk... just ask Cypriots who can't access their bank accounts this week.  Meanwhile, by maintaining debt--mortgages, student loans and credit cards--the public continues to swell the coffers of the very institutions that have so twisted our financial systems.

It's time to abjure the realm.

I believe in this new environment, it's more prudent to be debt free than to have an IRA; to have tangible assets within one's possession than to have a savings account.  It's possible my family may buy a home in the near future... and that if we do so, we will cash out our entire IRA (since there is no tax penalty for doing so with a home purchase), in order to all-but-pay cash for the home.  I'd rather have my "savings" literally under my own roof than at the mercy of Wall Street and Washington. 

"Freedom" today may well be defined by minimizing one's connection to the systems that are collapsing all around us.  Build your firebreaks now... time is not on our side.  And yes... it can happen here.