The 401k Problem

I read an interesting point in Tom Woods’ book, Meltdown, last night regarding our retirement savings.  His basic premise was that we should not have to worry about 401k’s and other retirement plans.  We should be able to put our cash in a savings account or put our money in gold coins, and be able to rely on that money when we are ready to retire.

However, this is impossible because of our inflationary monitary policy.  You have to invest in the stock market and risky instruments because you have to try and stay ahead of inflation.  You need to build a bigger nest egg because every dollar you save loses tremendous value over time.

The government only helps feed the need to risk our retirement money by giving us a tax break when we invest in a 401k.  If we did not have this incentive, most people would put their money in accounts where they would have more control of their money.

I hate the fact that I need to put money in mutual funds.  The managers of these funds are looking for short term returns, not sustainable gains over 30 years.  I’d rather have an account that had no gains for 29 years and then went up 10 times in one year, rather than riding the rollercoaster of big gains and even bigger losses.

But back to inflation and our need to invest to outpace it.  You would think that in this day and age, prices of everything would be dropping.  We have so much technology in every single sector that we should be able to pay less for everything we buy.  If prices were allowed to fall like they should, we could just sit on our money and not have to worry about higher prices in the future.

Everyone is outraged that Wall Street greed stole their 401ks.  They have the right to be mad, but they should be mad out our inflationary monetary policy and the government’s encouragement to invest in 401ks.  If greed was the problem, we’d have been dust years ago.  The problem is the government’s central economic planning and encouragement for malinvestment.

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