Ever since the Federal Reserve ended Quantitative Easing in 2014, the central bank has made promise after promise of finally raising interest rates from their historic near zero lows. However, we are quickly coming up on the one year anniversary of the Fed proclaiming they were ready to raise rates, and the fact of the matter is, should the central bank actually follow through with their promises then the fate of America's current retirement system will be altered forever.
I know the first question that one would ask here is just how would raising rates effect retirement accounts like pension funds, 401K's, IRA's, and the like? The answer lies in two fundamental truths about the financial system today, and what has transpired to bring us to this precipice seven years after the 2008 credit crisis.
Many retirees remember what happened within a year of the initial stock market crash on that fateful day in October of 2008. The markets, which had reached an all-time high on the DOW less than a year before, would over the next 14 months drop by more than 50% and rest in the 6800's before the central bank intervened and began a new policy of zero interest rates, and massive money printing to fuel what would be known as the 'recovery'.
Since that time, and especially since 2012, the stock markets have not only shot through the old 2007 high of 14,600, but are now well above 18,000, with many individual stocks at their own all-time highs. But the sad truth is, more than half of the entire stock market is owned not by mutual funds or retail investors, but by these same central banks who use the positive market to mask how bad the rest of the economy is, and prop up equities despite the fact that these companies are earning much less than they did before 2007.
So just how exactly would raising interest rates affect retirement and pension accounts? First off, since the Fed has been the primary engine that has helped raise stock prices to begin with, the cost of money would increase to unsustainable levels for banks and investment brokers to borrow it. Secondly, it is a given fact that if rates were raised, the markets would decline and even drop well into bear market levels, thus causing the returns and balances of pension funds in the market to drop dangerously.
At the local level, raising interest rates would cause municipal bonds, which are another key asset for state and local pension fund growth, to cost cities and states much more money than they can afford to service them, and at a time when not only are pension accounts way underfunded ($3 trillion combined for all 50 states), but since the general economy is bringing in less revenue, state and local budgets couldn't pay for the increased cost of new bonds at higher interest levels.
Stock market turmoil has wiped out roughly $2 trillion of Americans' retirement savings over the past 15 months, according to the Congressional Budget Office.
The value of pension funds and retirement accounts dropped by roughly $1 trillion, or almost 10 percent, in the year ending June 30, the CBO told the House Education and Labor Committee Tuesday, citing Federal Reserve data. Since then, asset prices have dropped even further. The CBO says that retirement assets may have declined by as much as $2 trillion over the past 15 months.
Individual 401(k) participants' average losses ranged from 7.2 percent to 11.2 percent in the first nine months of 2008, according to an Employee Benefit Research Institute analysis of 2.2 million participants. Over two thirds of the assets in 401(k)-style defined-contribution plans are invested in equities, either directly or through mutual funds. During the first nine months of 2008, stocks were down, with the S&P 500 index losing more than 19 percent. Fixed-income investments fared better, with the Lehman Aggregate index gaining 0.63 percent and three-month treasury bills gaining 1.54 percent. - Money.US News
With so many baby boomers retiring each year now, and so many millennials coming out of college who can't find jobs and contribute to the system, does anyone really think that the government, the Fed, or the economy itself would be able to handle the next financial crisis, which many analysts say will begin or occur in September/October of this year?
And with 2008 less than a decade ago, can we really think it will not happen again... especially with what is going on right now in Greece, China, and around the world?
So what is a viable solution to compliment your retirement savings that is dependent upon a system you cannot control, and is insolvent at so many levels?
The answer lies in Karatbars.
Buying gold through Karatbars is one of the easiest things on the net. In fact, the business model of Karatbars is to sell gold in affordable quantities, such as 1, 2.5, and 5 gram increments, and allow customers to get into the metal without having to shell out $1200+ for a single ounce coin.
And as added perks to signing up with Karatbars, as a customer or affiliate, you can have the power to move your money into a free e-wallet that functions just like an offshore bank account, and is outside the authority of the banking system. From there, you can take your fiat currency in any denomination... dollars, euros, yen, etc... and purchase physical gold which can either be delivered directly to you, or stored for free at one of Karatbar's vaults.
Additionally, any gold that you buy can easily be sold back to Karatbars, or any metals dealer, and if with Karatbars it is then exchanged for currency that is uploaded to you through a pre-loaded debit Mastercard which is connected directly to your e-wallet. And as we know, MasterCard is recognized in nearly every country around the world, and usable in any currency that accepts it.
But perhaps the best feature with Karatbars is their affiliate program, where you can earn money off commissions from getting others to sign up and become a customer or affiliate. Not only do you receive commissions from their purchasing of physical gold, but you also earn commissions from anyone who buys a commission package, with that money going directly into your debit MasterCard when you have enough units to cycle.
Imagine the ability to earn the money in which to buy your gold savings simply by purchasing a commission affiliate package one time, and then getting others to sign up and do the same thing.
How many businesses or entrepreneurs can build an infinite business with spending less than $400 of their own money? And there is never a mandatory requirement to buy beyond what you desire, on your own schedule. And there is nothing to lose, because you're using money (paper dollars) to buy gold (physical money) and in the end you don't lose a thing.
How to make money in both the Dual and Uni-level systems of Karatbars
How to make a six figure income using Karatbars in just 7 weeks.
The global financial system, along with dozens of respected economists, are telling us that now is the time for the end of our current form of money, and the beginning of the transition into a new monetary system that is expected to be backed by gold. And with banks, governments, and even Harvard professors mandating that central banks have no choice but to eliminate cash from usage by the people to stave off collapse, will you wait until it is too late to make a decision on how you will protect your wealth, and be able to function within the coming new monetary system?
To learn more about Karatbars, you can contact the individual who sent you this article, and click on their referral link to open a free account and begin buying, or building your own gold savings or business with the company of the future.