What should we do with funds set aside for retirement?

A lot of us have funds that we have set aside for retirement, perhaps with some matching from employers. Some of these are pre-tax funds that are hard to get to--our employer gives us some investment choices and that is about it. Other funds are ones we have set aside ourselves. The question arises, what should we be doing with these funds?

Within the options available, how should we be investing it? Or should we be taking money out?

Some of us have self-directed Individual Retirement Account (IRA)s, or have saved money outside of IRAs. This gives a little more flexibility.

I am not an expert on this, and would not give advice if I could.

I am sure the rules vary from country to country, so anything that is true in the USA might be different elsewhere. One question that might come up is what are the rules for taking money out of an IRA. This is a short summary I found in that regard.

You can take money out of an IRA whenever you want, but be warned: if you're under age 59 ½, it could cost you. That's because the government wants to discourage you from raiding your IRA until you're retired. (It's a retirement account, after all.)

If you are under 59 ½: If you withdraw any money from a traditional IRA, you'll be slapped with a 10% penalty on the amount you withdraw. That's in addition to the regular income tax you'll owe on your withdrawal. Bad idea.

Roth IRAs offer a bit more flexibility. Generally, you may withdraw your contributions to a Roth penalty-free at any time for any reason, as long as you don't withdraw any earnings on your investments (as opposed to the amount you put in) or dollars converted from a traditional IRA before age 59 ½. In that case, you'll get hit with that same 10% penalty. Not sure which money is considered a contribution and which is considered earnings? The IRS views withdrawals from a Roth IRA in the following order: your contributions, money converted from traditional IRAs and then earnings. So if you take out more than you've contributed in total, then you're starting to dip into conversion dollars or earnings, and will be penalized and taxed accordingly.

If you're 59 ½ or older: You can usually make penalty-free withdrawals (known as "qualified distributions") from any IRA. But you'll still owe the income tax if it's a traditional IRA. To make qualified distributions from a Roth IRA, you must be at least 59½ and it must be at least five years since you first began contributing. And if you converted a regular IRA to a Roth IRA, you can't take out the money penalty-free until at least five years after the conversion.

There are several exceptions to these rules. You can withdraw funds for certain specified purposes without penalty (college expenses, first time home purchase, disability, certain medical expense). According to the same site:

You can also withdraw money from a traditional IRA and avoid paying the 10% penalty if you roll the money over into another qualified retirement account (such as a Roth IRA) within 60 days. But then you wouldn't actually be able to spend it.

Are you really that desperate for cash? Well, if so, it is possible to take money out of your traditional IRA in what's called "substantially equal periodic payments." Here's how it works: The IRS will determine what amount you can receive each year based on your life expectancy. That's the amount you must withdraw each year.

So what are your thoughts on retirement funds?

Thanks for this topic. I will be interested to see what others have to say.

I certainly don't trust any of the usual investment 'instruments,' I don't much like what they invest in, and the whole thing seems to be rigged to fail before most of us can use any of our "savings."

One problem for those still at the job where they and/or their company have been contributing to an IRA, it is my understanding and experience that you can't take it out while you are still employed at that company (perhaps except under the circumstances noted above).

I plan to take the portion that is accessible to me out and pay down my mortgage and other bills, then maybe lend the rest to my local coop till my daughter goes to college. It isn't making much now, anyway. And even with the 10% hit, if I can make 5-8% from it at the coop, that will more than off set the flat rate that it is at right now.

I think just about anything in stocks, bonds or even money market is going to be either worthless or inaccessible soon (certainly within the next ten years).

I had a fair amount of funds locked up in an IRA in a consulting firm I worked for. What I did was form my own consulting firm, and became a subcontractor to the larger consulting firm I worked for previously. In my new company, I set up a retirement plan, then rolled the funds from the IRA set up by my prior employer over to my new plan. From there, I was at least able to invest the funds as I saw fit, within the general rules for IRAs. (I couldn't have physical possession, for example.) For example, my investments include some gold coins, but I can't hold them myself. I at one time my investments included TIPS bonds (which have recently matured.)

Most people would have trouble doing this, although there might be a few people who are now working for themselves, but have money with a prior employer for which this would work.

IRA-schmIRA. You need precious metals, fertile land, and the knowledge to grow your own food. With these basics, anyone can make it through to advanced old age in comfort.

I don't really know why anyone would need precious metals, but I agree with the other two.

I took my money out of a pension fund as soon as I could. Luckily, I managed it before the various investment areas bombed during the early part of the recession. I bought a small piece of land, put a house on it and am now trying to get the soil fertile through growing stuff on it.

To me, the idea of saving for retirement seems ridiculous now.

If you don't own or can't buy any fertile land..., the next best thing is to have precious metal. They have value now, and after a potential crash, and they are somewhat transportable.

Yeah, but they are only of value to you if someone else is willing to accept them in exchange for something that is useful (like food). Spending the money, instead, on anything that will make you more self-sufficient seems like a better course of action.

This is horseradish, and that is being nice about it. For boomers (especially, but not solely) how to manage your retirement funds is an incredibly important discussion. Now if you want to run off and buy gold and seeds and ammo - and have 40 acres plus a mule - then go right ahead - but for 90% of the retiring populous it is not an option. We need to choose between (basically) shares, property, and bonds (fixed interest cash) - those are the three choices. How to make the right choice is very tricky.

If you have say $800,000 tied up in IRA, 401(k), or superannuation accounts, and you want to draw 6% per annum forever (ie $48,000 income), then your investment needs to make a few percent real profit each year (ie, above the inflation rate). In the current climate, this is very tricky stuff.

For all us boomers who have salted away a few bucks - where to lodge them for maximum security (but also some modest return on capital) over the next 20-30 years (or however long we might live) is a really big question. In Australia it is a difficult question, and we are doing REALLY well on all levels, compared to the USA (and the OECD) - what you do there - goodness knows.

You are "talking your position".
Everything in your post assumes that system will stay together.
Maybe it will in Australia, I don't know.
Here in the US it is clear to me that we are running a giant ponzi scheme and the operators(government) is just making up new figures to keep people from pulling out of the scheme.
20-30 years (LOL) good luck with that!!

I am going to continue becoming more self-sufficient and minimize how exposed I am to the "system" which means guns, ammo, seeds, 40 acres and a mule etc.
All those paper promises that you are relying on are going to go up in smoke way before I am 65 (your time horizon).

Now if there is a breakthrough technology energy wise then I am wrong.........I just don't want to trust that bet.

You mis-underestimate me. I think it is a very risky future ahead ... and we spend a lot of time worrying about these things, with a 20-30 year time horizon, as we are both now retiring from the work-force with solid paper wealth. I also agree that property, shares, and cash all face a range of very untidy scenarios indeed (caused by energy crises, conflict, financial system failure, bubble-bursting, share market falls, and either inflation or deflation).

However it is not possible for most people to spend all their post-career assets on physical structure (40 acres, etc) - firstly, the price of decent 40 acre lots will increase enormously, and secondly, you still need a reasonable cash-flow to maintain the physical assets you surround yourself with, even with a high level of self-sufficiency.

And I concede that the US looks to be in very poor financial shape indeed, at national, state, and local levels. Australia does not have those sorts of problems, so far, so retirees have a somewhat wider range of options. Having a home owned free, in a location that is served by public transport, and within easy car-free reach of daily services (shopping, farmers' markets, medical centres, aged care, parks, etc) would seem to be the bottom-line requirement, it seems to me. In such circumstances you can weather a dramatic drop in annual household income, but still have a very reasonable lifestyle, without having to head for the hills.

Cargill, some pointers:

  1. I am Australian, like you, and I am convinced that some fertile land, even a hectare, is infinitely preferable to the tiny postage-stamp sized blocks owned by most Australians. You can buy a few acres around most Australian cities for about the same price as a more centrally located house.
  2. Your complacency about Australia's sheltered status is ill-conceived. We are an economic colony of China now and our stability is fragile, despite appearances.

And just a note: your argument is undermined by your poor grammar (e.g. "populous" instead of "populace", and "mis-underestimate").


Mamba, you're also "mis-underestimating" Cargill, as "mis-underestimating" is a well known GW Bush quote. . .

Just thought I'd point that out.

Cargill's an Aussie, unlikely to be making ironic references to Bush.

Indeed an Aussie ... but indeed it was a reference to GWB ...

LOL indeed ... and "populous" is a terrible howler, but not an error of grammar. I agree that Australia remains a quarry - and that we prosper while China and other Asia prospers - and that we do have some financial dramas ahead - and that is precisely why we are considering all these retirement-funding issues, almost on a daily basis. But we are not in the parlous state that the US appears to be.

And finding a few hectares of fertile land to set up a farm in a place you might want to live is actually quite tricky. Firstly, small lots are often very expensive on a per hectare basis - sometimes outrageously so - we looked in West Gippsland for a while. Secondly, there are still some very tough land zoning laws in place, making subdivision down to a useful small size quite hard, if not impossible. Then there is the expense of actually establishing the farm up to a standard that makes it worthwhile, and then there is the weather.

But my main objections are (a) reliance on vehicles to do anything at all - just to go to town to do some shopping, let alone all the farm-work, (b) the isolation, and the limiting of all sorts of other options, like part-time work, etc, and (c) it is just such a hard slog. I would rather be somewhere urban, use my skills usefully, and pay someone else to provide me with food, etc.

And did I mention the weather - it is hot and dry and getting more so ... if I really wanted to head off and be a farmer, I would definitely do it in New Zealand. Or go to Northern NSW and join a farming community - there are MO (multiple occupancy) zoning laws there, the weather is usually wet and mild, and you could surround yourself with like-minded hippie boomer cashed-up retirees!

Cargill, I think you're thinking clearly. I'm younger than you by some measure and have lived the life of a boat bum/educator and now farmer/educator in Hawaii but wouldn't have a pot to pee in if I hadn't been keenly involved in the markets from 2001 to 2008. And a recent dalliance last year was helpful too. Mostly my capital is in land and plants at this point, and skills and machinery. But what you state is clearly true and I agree 100%. None the less it's been a huge struggle my entire life--starting with a college degree at 4.50 an hour and then on up. In 1997.

The next big thing? Well, let me tell you that's obvious. If you want a good rate of return you invest money in guys like me, who are younger, but without capital, and have the skills to pull things off, have demonstrated viable projects that embrace the reality of the future, but are not capable of finding funding in the conventional business as usual markets.

Here's an example: Taro in Hawaii, as it's what I do. 10 tons an acre. .95 a lb farmgate. Unmet market, at there's not near enough production to meet the demand for taro products. Frito Lay would buy every bit of taro they could. . .the problem is the supply is too small for them to commit to the market scale they anticipate. Viable taro production land at this point at less that 5000 dollars an acre. . . Whet anyone's whistle? Taro is the lowest glycemic index carbohydrate known with similar levels of nutrition. Let Oprah get a hold of the "taro diet." The rest of the details privately.

Yes, the stuff tastes great. That's dinner tonight.

There you go. That's the next big thing. That's how it used to work, you invested in people, not companies, if you wanted a hot rate of return. Often that was your kids, but sometimes your kids ended up stupid and you had to look elsewhere. There's unbelievable opportunity out there for someone with a little vision and can think outside the box. If you invest in companies at this point there so much built in obsolescence that there's no place left for revenue--at least in a world where you can't finance your screw-ups and call them assets. . .

So who wants to be the J.R. Simplot of Taro? LOL. Me, actually. I met that old cat as a kid in Idaho. . .


I could name another dozen opportunities off the cuff.

Taro leaf soup... yum.

Indeed. No one who ever has tasted it well prepared dislikes it.

There's 300 or more cultivars on this island: I personally have about 30 suited to my elevation. They all have distinctively different palates for sure, but, the key is of course the longer in the ground the better the flavor and nutrition.
It takes 12 to 14 or even 18 months at my elevation to harvest, depending on your target.

For chips, it doesn't matter. You plant Chinese taro "bun long" and it's fast. For table use, the Hawaiian types have a lot to offer.

Cargill wrote

I would rather be somewhere urban, use my skills usefully, and pay someone else to provide me with food, etc.

You and 99% of other Australians feel that way. And that's where the problem lies. We need a large percentage of the populace, especially those in populous regions, to get involved in food production (source: Colin Campbell et al).

Colin Campbell hasn't farmed in Australia, I expect.

But I agree totally and utterly that BAU in Australia is ecologically disastrous and long-term counter-productive (and ecology is a bigger issue for us than for most of the Americans on this board, because they live in relatively lush environments, mostly).

I think it is the case that many more Australians could be encouraged (via government land-use policy and tax breaks, etc) to head out there and become farmers, food producers, and happy people. There is no doubt about that. But it is hardly the point - given that this back-to-the-farm tax and funding policy is NOT going to happen, then I can't say it's realistic at all.

We have bought an apartment on the Gold Coast (for a whole lots of reasons I could easily defend) - and we will be productive retirees hopefully (I as a printer, my wife as a teacher). Producing our own food however - is not part of the mix ... others can do that. It does not take a big percentage of us to produce enough food - many of us can do other things. This back to peasantville movement for a lot of us - is a lot of BS, I think, frankly. The world is unlikely to end in our life-times, and those who think it will have the onus on them to show how and where.

I'll let Richard Heinberg respond to your ignorant claim that not many people are required to produce food in the coming changed world:

"- what you do there - goodness knows."

Mamba knows.

Cargill, I think we each need to ask ourselves where is our society headed. There is little to no evidence that governments or populations give any serious thought to limits or have any compulsion to do anything about those limits other than keeping their fingers crossed. As resources decline and the environment deteriorates, do you really expect your society to remain coherent? If not, then investing your money in the things you list doesn't seem particularly sensible, to me.

If you really believe that your society will remain in place, more or less as is, for 20-30 years, and that's the only time span you need worry about, then, by all means, invest in shares, property and bonds.

Civilization is not going to implode before times get real hard for a while, if at all. The most likely outcome is hard times, not urban warfare. How can you guarantee yourself an income stream?
Most assets ( like gold and also bonds and equities ) are quite liquid, so there's no need to worry about holding them for short periods whatever they are liable to do long term. They aren't likely to drop in value by half suddenly. Skim the news once a week and you'll be hip to anything that's going to clean you out.
Also if retirement contributions are being matched, you have to take advantage of that before any other investments because you're not going to beat the match with returns no matter what happens. If it's for retirement and you can defer the taxes, then that is going to weigh heavily on decisions about where to put it.
I don't think there's any reason to have physical possession of gold. Is there any foreseeable disaster that would mean you couldn't wait for the disbursement check to be mailed to you from selling shares in a gold SPDR? If so, maybe you should have invested in guns and ammo. More likely ( than such a disaster ) would be burglers breaking into your house and stealing either the gold coins or the guns and ammo.
Suppose you think the economy is going to crap, and you want to store wealth. If you are wrong, then investing in equities means you will be pleasantly surprised. If you are right, then by investing in well diversified equities, your wealth is still relative to the stock market, the same as it was before the crash ( although it has decreased ). What do you want to bet your wealth has retained purchasing power parity with what it had prior to disaster X. If not, then the downturn is probably temporary, and by keeping your money in stocks, your wealth will soon be restored along with the rest of the value of the stock market to at least what it is reasonably worth.
Guns and ammo btw isn't going to let you keep your farm if there's a food crisis and the surrounding town decides to communize it. Better parlez your property and guns into advantage within the community while they're still nominatively yours. Maybe you can be the mayor of Bartertown or a high ranking official. If everyone's equal, your property may no longer be yours, but if you've thought ahead you can be one of the ones who is more equal than the others.
That being said, things can get absolutely awful before a community decides to abolish property rights. They may never do so. With property rights goes much of the rule of law. Having the means to grow your own veggies and maybe even some livestock ( which would become astronomically expensive in the event they made economic sense to have ).
Maintain purchasing power parity. Equities for most of us. Some real estate if it makes sense. A little gold. Your wealth's dollar value may go up or down. It's worth to you will be about the same. Real estate and equities may go up or down. PPP wise they will tend to either rise or remain the same for a long time yet.

Gail, not having the coins yourself is a lot like not owning them at all. It sorta defeats the whole purpose of owning them. I guess if you really trusted the person(s) holding them for you, it might be OK. If you don't trust the markets, then it is not a serious step away to not trust a fund or person(s) supposedly holding precious metals for you.

Overall, I like this information on personal management of IRAs, though. Thank you for sharing it.

Gail, I looked into those options and it all seemed like a lot of work to try to hold real assets within an IRA, and then still be trapped into financial traps. Three weeks ago I bit the bullet and cashed out my IRA, paying the taxes and paying the 10% underage penalty. I figure taxes will be higher later, and the 10% can be made up easily with investments not as vulnerable to inflation within sheeple pens. My goal this year is to continue to divest myself of paper assets. I like Schoff's idea of investing in a local CSA.

I am close enough retirement that I will use funds for that. But what are folks 20 years younger thinking? A 40 something I know has reduced what he is putting aside for retirement and using money to make his life more sustainable now, such as the 10 x 20 green house he put up in the last year or two that allows him to have fresh greens by the first week in May and until early Dec. in a northern location.

"What should we do with funds set aside for retirement?"

Give it all to the next generation by Spending it ALL on transitioning/relocalizing your community. ALL of it.

I have no funds set aside, though I once had them twice in a 401(k). Both times I was forced to use those funds as living expenses.

Now I am technically retired, living on $715 a month. But the future is not set in stone and the money might not be there in the future. That is one issue that retirement might mean for a lot of people, once you don't have a job outside the home, or can't work even there, what can you do then?

I would advise people to have a backup plan to getting funds from the Gov't or from Investments like the 401(k), IRA's which though they seem secure, aren't really as secure as you think they are.

I have gloomy thoughts about someone telling me that the Gov't failed and You have to live on the streets because we can't provide what we promised you in the past. So I buy books, tools, seeds and plants, and hope that they also won't come here and tell me they are going to take my parent's house for some Gov't use without giving me fair trade value for it.

When My parents die, I hope to be able to keep this house and all the work on the yard that I have done, but I can't know if that will be possible because the future is not set in stone, and things might get really rough later on. So I am learning as much as I can about how to live as a nomad, even though I'd have a tough time of it, there are a lot of homeless nomads in the US these days. I know I meet a few every week.

So all you folks thinking about Retirement being a soft place, be warned, it might not be, unless you can buy an island off shore, and pary the sea level does not rise up and swamp it.

Maybe I'll have helped enough people by the time the world as we know it ends, that someone who has land will let me stay there, for all the skills I have, if I ever loose this place.

A goal if I can swing it, is buying land away from folks that I can forest garden as a safety net, but I might not have time or funds for it.

BioWebScape designs for a better fed future, and skills to back it up.

I'm 37 and have been wondering about this myself. Short term, I've stopped contributing even though my employer matches 125%. I can move out of our basic 10 funds into mutuals if I want, but I'm not sure where I'd go. Energy? I hate to support oil and coal and I'm not sure that they'll do well anyway as much as its going to cost them to produce. I did take a loan out from myself to protect my principal - I figure that I can always benefit from a crash by paying myself back in inflation adjusted dollars (assuming we go inflation instead of deflation). I just don't know.

Short term, I've stopped contributing even though my employer matches 125%.


also, a depression won't be inflationary. A depression strategy is no debt. An inflation strategy is debt.

You certainly can have an inflationary depression. I would say diversify between being a debtor and lender both.

Just be sure to diversify. You don't want to bet everything on one type of future. I looked up what economist Krugman said about PO:

Suppose that we really are running up against global limits. What does it mean?
Even if it turns out that we’re really at or near peak world oil production, that doesn’t mean that one day we’ll say, “Oh my God! We just ran out of oil!” and watch civilization collapse into “Mad Max” anarchy.
But rich countries will face steady pressure on their economies from rising resource prices, making it harder to raise their standard of living. And some poor countries will find themselves living dangerously close to the edge — or over it.
Don’t look now, but the good times may have just stopped rolling.

I agree diversification is key. I would add: take the time to really think about what real diversification would look like--it's going look different for everyone, but I sure don't think it is what your average financial planner will tell you it is. Beware dogmas of any kind they'll lead you directly away from diversity.

I disagree about diversification. If one puts everything into having the capability and knowledge to take care of oneself, then one is pretty much covered for whatever happens.

Even the Amish can't take care of themselves.
They must do business with us "English" for money.
They rely on charity for major medical problems.
But I do think, to a large extent, being substantially self sufficient is a type of diversification. Especially if it involves community as opposed to a bunker in montana mentality.

The IRA et al was supposed to be invested in a financial productive asset for retirement, so I'd put it into a productive asset. As the other poster said,
it is difficult to trust the financial assets which we used to believe in carrying us in retirement any more. I know of a group of 11 families that are about to buy a medium sized farm that they view as a productive asset even though they have no immediate actionable plan. Immediately it is a "store of value", and put into production to grow food under certain circumstances that food (in Aristotle's model) that food could become a medium of exchange and a store of value. I have a friend already doing this in Virginia with wine, he buys his meat and vegetables with his wine (a special food, and it does store!).

At this juncture in time after taking up the Costco duty for a year watching the escalation in prices, and thinking about the future, I would consider
buying a lifetime interest in a CSA that delivered to me say 5% of the produce for say some 10's of thousands of dollars. There are various ways to
organize that legally which we don't need to go into. An ambitious individual something with agricultural experience could probably find 40 of my friends and
buy 150 acres in Pennsylvania to do this. Similiarly, and even easier would be the ambitious individual that would pay say 300 acres of "mountain land" in the area (that means forest), and for my 5% interest for say $20,000 have a lifetime interest minimally deliver me 10 cords of split firewood.

Here are productive investments in food and energy that seem to me "wiser" than the $40k I might have in an IRA.

I had a number of groups pitch me on "turnkey storage sites", which boiled down to buying land 10-20 years beyond current development (wonder
how that works for negative growth), which paid for itself and a little cash flow, but with a big win on capital gains in the future when the
land became much more valuable when development got there. I never invested thankfully, their model now of course is DOA.

One could take the same view here, if my 5% interest bought me say a 2.5% in the land itself, with the excess food/wood paying operating expenses,
one might predict that this productive land would at lest hold its value if not grow in the next 10 years. My heirs might be able to make some
nice coin on that 5% interest.

One question I would have on buying 5% interest or 2.5% interest in some group plan is how well the group plan is going to hold together 10 or 20 years from now. I suppose another question is whether you could really sell if you needed to later.

Of course, there are risks in everything, and diversification is one way of managing those risks.


I completely agree with you. I'm currently the US GP of 4 limited partnerships, and a limited in six. I've been a MP in both
British and Japanese investment vechiles in the past. All of them have different dynamics, and outcomes based on the GP's
and what was invested in. Now I own a farm and talk to the Amish. My first advice would be "go join a community" whether it is
secular co-housing, secular/sacred communal, etc. But given the US cultural biases I'm wondering if you could extend that investment GP/LP contract model which is more comfortable to people into food and fuel.

I belong to an "oganic meat CSA" because all I raise is chickens for eggs, and have belonged to organic produce CSA's back to 1991, great program, but insufficient for people looking for "ownership" security. It is time for an equity-CSA model, and an equity-CSFW (community sponsored firewood) model discussion and experimentation.


I'm 29 and I've stopped contributing to my work 401k and just cashed out of my variable life insurance. I've figured for a while that we have about 5yrs till Peak Oil starts to really hurt well before the IEA released their report: http://news.yahoo.com/s/livescience/oilproductiontopeakin2014scientistsp... so I've been converting my cash into tangible assets. I've relocated to more sustainable town and have been using my extra cash to make my house more durable in the long run (metal roof, new insulated siding, etc). I also have plans to put in a frost free well and collect the rain run-off from the barn into a silo-turned-ferocement tank.

I would have pulled my 401k too but my work won't let me till I leave the company so I think of my 401k as hardship money. Canceling/not contributing wasn't a problem for me. I've never been into financial stuff but my gf is having a harder time with it. I figure even Peak Oil doesn't hit for 10 more years it would still be another 20 from that point that I'd retire so really there was no point any more. On top of that the U.S will be bankrupt before that so whatever.

I think investments in land, etc are a good idea. Though if you want to go that way I'd make sure to start planting it asap, especially if you want fruit/nut trees. Those take atleast 2-5 years to start producing any yield and that's just with dwarf trees. Full scale trees can take 10-12. I'm not looking to get into a horticultural argument but the point I'm trying to make is that land is nothing without anything on it and if seeds become scarce in the future it's good to have something producing.

That's my two cents. Good luck everyone.

I agree with your take on the situation. I'm about 25 years out from "retirement age" myself. Considering that retirement seems to be a concept invented during the era of abundant energy, I figured that I can pretty much forget about it, as we'll be well past peak everything by then.

In order for me to retire via the usual investment route, I'm reliant upon 1) continuity of the US Dollar, 2) A healthy economy 3) an intact biosphere, and 4) a stable banking/investment system. If any one of these fail, so will my retirement prospects. I figured the odds were not in my favor, and nuked the IRA/401k assets I had accesss to and used them to pay off our mortgage, which happens to be on a small farm in the midwest.

I figure that money spent planting trees and building essential skills is my best bet at the moment, both for myself and my family.

"I'm about 25 years out from "retirement age" myself."

over the last 25 years a 50/50 stocks and bond portfolio has returned about 10%. $10,000 has returned about $130,000. if you're wrong that's a lot of money to leave on the table.


paying down debt is a good idea, but why is your retirement dependent on the dollar? you can't purchase foreign currencies or stocks for some reason?

I clearly don't think that the next 25 years will look anything like the last 25, economically or otherwise. Sure -- I can invest in foreign currencies, but I don't know of any that I would trust more than the dollar (and that's not to say I have much trust in the dollar either), nor do I trust my ability to access the assets in a crisis scenario. I may be a "chicken little", but I've had a pretty good track record thus far, having pulled out of the market in November of '07 before most of the recent drops.

"I may be a "chicken little", but I've had a pretty good track record thus far, having pulled out of the market in November of '07 before most of the recent drops."

so I guess you bought in a year ago?

my only wish is that people not be so certain about the future. people were certain about 100% stocks. people were certain about housing. people on here were certain about energy stocks, the oil price and fertilizer stocks during the summer of 2008. we all know how that worked out. maybe a farm and some apple trees are the best use of our money right now. but if you're wrong you could be left with a bunch of apple cider and no retirement.

maybe a farm and some apple trees are the best use of our money right now. but if you're wrong you could be left with a bunch of apple cider and no retirement.

... which might be bad but probably not as bad as having a fistful of useless paper and neither food to eat, nor a place to lay your head.

"... which might be bad but probably not as bad as having a fistful of useless paper and neither food to eat, nor a place to lay your head."

in the remote chance that that happens.

Hey, I'm still smarting from having 35% skimmed from my retirement accounts. The chances may be remote that I end up with a fistful of useless paper but they are greater than they used to be. Which, I think, is why we are having this discussion, non?


my only wish is that people not be so certain about the future

Do you mean, "what if nothing happens?"

That societies across the world are living unsustainably is, surely, beyond question. What happens to societies that aren't sustainable?

How collapse happens and where it leads is certainly open to doubt but there is no doubt that life will not go on as normal. Whether that life becomes untenable in one year or 20 years is largely immaterial. If you can get a head start whilst things are fairly "normal", you're going to be in a much better position (even if it is just knowledge), than most others.

But let's suppose a miracle happens. If you have a farm and some apple trees, why would that not support you in your retirement? At the very least, you could sell it.

"That societies across the world are living unsustainably is, surely, beyond question."

around here that's taken as a given, but I see few evidence given.

"But let's suppose a miracle happens."

I think that pretty much sums up the one-way thinking this is standard here. you guys are smart and you guys aren't smart. we don't know right now. you're just making a giant one-way bet on an event that may or may not happen. legions have made the same one-way bets in stocks, bonds, gold and housing throughout history. some were right and made piles of money and some went broke. my only thing is you guys should at least be cognizant of the consequences of a gigantic one-way bet if you are wrong. that's all. also, don't talk with such certainty. in the end we don't know. don't be so certain.

"If you have a farm and some apple trees, why would that not support you in your retirement? At the very least, you could sell it."

supposed you sell it for less than you paid for? suppose people were too poor to buy or trade for your ag goods? just know the consequences.

John 15,

I don't really understand why you're pushing so hard on the "you never know option". My gf makes the same argument. "What if nothing happens". I would have to say that in some form if you're reading TOD you tend to lean towards the fact that "biz as usuall" isn't going to continue for too much longer.

I will say it now: I can't predict the future. Maybe someone in the next 5 years someone will invent a perpetual motion machine or develop a process to turn oil shale into usuable oil using a pint of water or some other deus ex machina will happen. This still doesn't fix the problems of global warming or the massive debt that chokes the U.S. dollar. Let's say global warming is a hoax and farmers continue to produce massive yields and there's a debt jubilee and we switch out entire auto fleet to a newly invented hydrogen cell car then, yes, not having fiat currency would be bad. On the flip side my property would go up in value with all the nice fruit/nut trees, etc and if I chose to I could cash out. (Luckly I don't have much of a mortgage so I would have it paid off and could make up my retirement on the backend)

I just don't see any of those things happening. I would say there's a better chance of a nuclear engagement between China/U.S. than some new technology being invented that renders oil-powered machinery obsolete. (I even assume a technology that will convert poeples existing cars into whatever is made again assuming that the technology doesn't use one of our decling rare metals like lithium or the like)

Another thing that will very is how fast it breaks down. That will play a lot into what is valuable along the way. If it's slow than gold and silver may play a part. It would also mean that the dollar is not worth anything and the people that have food stuffs (I'm considering food stuffs to be a priority since I really don't know anyone who gets even half their winter food from their own stores, even by using a freezer than runs on electricity) Growing food is one thing. Keeping it through when you can't grow it is another challenge.

If things go fast I won't give a lick what gold or silver you have because outside of maybe bullets what would I buy? Lumber and nails? There's no steel mill in my vicinity so even there were blacksmiths would they make nails with. Who's going to milling lumber w/o an electric saw? The mill ponds no longer have the mills for which they were built. There's other things to but you need to consider the whole process. Besides, without the extensive medical system we have know there will probably be enough laying around. I don't plan on selling my goods but instead will be using them to barter for things I absolutely need and learn to live w/o the other stuff.

Is this doomer? I don't think so. I propose all this in hopes someone will come in and provide clear enough evidence of why my logic is wrong and how we will be saved from the predicament I fear we'll be in soon (if not already). I consider planning for BAU is like taking out loans because you're planning to win the lottery. I just don't see it happening. But as Bud says in Kill Bill 2, " I guess we'll just see won't we."

Syd O, you say your girlfriend makes the same argument, "What if nothing happens".

That of course is an existential impossibility...something will happen. Something always happens. The discussion is about whether it will be good or bad, good or bad for whom (because there are always winners and losers), good or bad where (because just as with real estate, location is everything), how fast something will happen (because being wrong in timing when it comes to investments and money is to be essentially wrong in fact).

The devil is in the details, and so are the returns. This is a game of nuances. Taking any position to absurdity ad infinitum will be deadly, whether your a doomer or a cornucopian. That's what makes this whole thing so fascinating, like chess or physics...damn this is fun. :-)


I agree with what you say. She mostly means that the idea of investing now for a windfall in old age will still be a reality in 30 years. I don't share the sentiments. Either could be right or we could both be wrong.

I try to stay out of the philosphical side of things in regards to the collapse paradigm. I find when I go down that route I end up with paralysis by analysis. Nothing is for certain so who knows if where I chose to be will be any good. The path I've chosen is the best I could do with the resources and will power I have available.

You're right in that "something" will happen whether it's good or bad. I could die in a car accident today or my house could burn to the ground. Who knows. The only thing I know I can't do is "nothing".

around here that's taken as a given, but I see few evidence given

Then I guess you haven't read much here. Are we consuming non-renewable resources? If so, we're unsustainable, and we certainly are consuming non-renewable resources. Are we consuming renewable resources beyond their renewal rates? If so, then we are unsustainable and there are plenty of studies, for example, showing that top soil is diminishing. Are we degrading our habitat? If so, we're unsustainable and there is certainly plenty of evidence that we're doing just that. So what evidence would you like?

supposed you sell it for less than you paid for?

Then you're not in a BAU situation and you shouldn't sell.

davidveale says,
"I clearly don't think that the next 25 years will look anything like the last 25, economically or otherwise"

That is a common sentiment here and it may be true....but BE CAREFUL. "This time, it's different" is the single most deadly piece of investment advice throughout history...through civil wars, world wars, depressions, booms, religious reformations, plagues, fire bombings of cities and blitzes of every kind, two critters have always come out the other side and went right back to work...bond traders and cockroaches...they are the closest approximation we have of immortality. BE CAREFUL.


A failed marriage due to health problems with my wife left me with virtually nothing in the way of savings some 20 years before I "officially" retire, and taking stock of my life at this point, I'm taking the following strategies:

1. Short term I'm going after high paying consulting contracts rather than long term employment, and managing my own health care and retiring investment rather than having them tied up in employee owned 401Ks (after having three different employers go belly up over the course of a decade and seeing much of that money either disappearing or getting seized by creditors, I'm already leery of employee pensions and similar vehicles). Additionally, I suspect that most pension systems in this country may already be bankrupt, but until the banks are forced into a mark-to-market approach they will continue to work on a business as usual basis until the day that they padlock the doors.

2. Getting out of debt. There are two scenarios that could play out - deflationary or hyperinflation. The first is a continued grinding recession with periodic fits and starts as the oil economy winds down. In a deflationary scenario, holding debt can be disastrous, and while I strongly believe that we've actually peaked on the oil front back in 2008, the collapse of the economy in late 2009 has pushed the real impact of that from 2011 to perhaps 2013. This means that the ideal position to be in is one where no one has a lien on you. Hyperinflation is a possibility, but right now, most of the trillions put into the banks is staying with the banks; in that respect the excess liquidity could be mopped up very quickly simply by pushing up the interest rates to nose bleed levels. Watch England - if England enters a hyperinflationary spiral, then there is perhaps six months before you see it here and adjust accordingly, but until then assume that debt is only going to get dearer over time (and if England does enter a hyperinflationary spiral, it basically means that Germany is doing the same).

3. Learn new skills. I'm taking a different approach than many on this board. I work to help archival systems automate their holdings (just recently took on the US National Archives), but also have been learning about book production from the ground up, and am looking at getting myself a small non-electronic press - one that would still need electricity, but that wouldn't necessarily be sensitive to to the myriad issues involved in keeping most electronic presses up to date. As I see it, the devolution of the electrical grid will mean that the Internet will be very susceptible to such disruptions (though I don't think it will collapse completely), and we'll be in a position where books - good old physical books - will be needed again. Modern electronic systems are highly sensitive to supply chain disruptions (specially formulated inks - most oil based, electronic parts made in China, special grades of paper that require extensive processing (and the chemicals to process them, and so forth). This means that should the electric infrastructure collapse, books, newspapers, and so forth, especially on critical issues such as agriculture and the like, will be in much bigger demand.

4. On a similar front, I'm talking with curators and archivists precisely about these issues and laying out the questions of what archives can do to not only be relevant but to be secure. Archivists, librarians, and information science professionals may very well end up being like their monkish counterparts in the years following the collapse of the Roman empire - zealously copying anything and everything of importance that they can to more permanent media, while at the same time providing protection from both the elements and roving marauders (and before people don't believe it will come to that, consider that one of the first thing that many despotic dictators do as they are consolidating their power is to burn down the libraries and round up the academics to have them deported or shot, because they can challenge the legitimacy of those in power.

5. Keep mobile. Keep passports up to date, insure that your car is in good repair, if you can move to a hybrid do so; I don't see the gas economy completely collapsing for some time, but I do see an aging electrical infrastructure not being repaired fast enough to keep up with the problems. A few people are quietly moving back to the country and setting up energy systems (solar, wind, et al) to support themselves, but there will still be a need for communication, and I suspect that a significant percentage of the population will likely become mobile in response to the changing conditions. Invest in a good quality back-pack, sleeping bag, parka, and mess kit.

6. Renfaires and re-creation groups. This one sounds silly, but I try to keep tabs on the various re-enactment groups in the region. In most cases these are people that have become specialists in pre-oil technologies, from weaving and sewing to blacksmithry, animal husbandry, book making, low-tech weaponry and their uses, food production, cooking and waste management, not just from an academic standpoint but at a day-to-day working knowledge. Learn how to use a sword - a gun is more effective for six shots, then becomes simply an awkward club, and the same distribution issues that will become a problem for food distribution will be just as much of a problem for ammunition.

I realize I've strayed from the initial premise of the topic (mea culpa), but the topic got me to thinking. Most of the collapse scenarios I've seen have people taking a hunker down and wait it out attitude ... a vegetable garden, chickens, stored rations and ammunition, perhaps a return to a 1940s type of semi-agrarian existence. I think that's going to be about 180 degrees away from reality. You can't easily turn industrial parks and strip malls back into productive agricultural land; it can be done, but as they're finding in the deconstruction of Detroit and Flint, it's a long, slow process, one likely measured in years or even decades - and this is when we have plenty of oil to push around the bulldozers. Most people don't have the skills to live in a pre-oil environment, there are few teachers, and even with plenty of books those skills are going to take years to acquire as well. Most communities are assuming that peak oil is not even on the horizon, let alone are preparing for the possibility that disruptions may occur.

Oh, and those retirement vehicles? How many will survive a faltering electrical grid? Most people's savings are little more than bits in the core of a Linux server, and in many cases exist already only as an obligation by the banks to pay these off at some future point. As people always find when a disaster shuts down the grid, that money effectively ceases to exist while the power is off. The only reason why people trust banks is because the belief in the Rule of Law is still strong, and one consequence of that is that should a banker fail to provide moneys kept in deposit when requested (or within a reasonable time) that banker will be arrested and prosecuted. Should the Rule of Law fail (especially during a period of irregular power), there's nothing keeping that banker from invoking a few functions within the relevant computers to wipe all accounts the next time the power goes out and comes back up. As most people keep comparatively minimal audit trails of their own accounts, the resulting confusion will take years to unravel, and while the banker may have to live elsewhere for a while, it's still better than rotting in prison for fraud.

Needless to say, I don't have a lot of trust in the integrity of banks given that.

My first assumption is that the FedGov will not be able to fully honor its SocSec & Medicare obligations, not for my entire lifetime, but that these are not just going to suddenly go away one day either. Most likely, there will be an erosion of real purchasing value on SocSec benefits, partly through inflation, and partly through actual reductions in benefits; the first will be fairly smooth and gradual, the second will occur in occasional episodes. Medicare will mostly be a matter of increasing premiums plus benefit cuts. My plan is therefore to dedicate whatever SocSec benefits we do receive just to covering Medicare, Medigap, any other health care related outlays, and any taxes they impose on our SocSec benefits, and to save anything left over in "inflation-proofed" investments. I am assuming that in the early years, we actually will have some left over, and this will accumulate so that we'll have something to cover our health care costs when SocSec is no longer adequate to do it. This is not a foolproof plan, but it will assure that we'll be in a better position for longer than most other retirees. It also assumes that you can't just do away with SocSec & Medicare and the health care industry continue on its merry way; there are too many Medicare patients in their waiting rooms, and if they go away, health care providers are going to have to either change their business model or go out of business.

The second piece of my plan is to assure that my wife and I can live on no more than $1000 per person per month, for all expenses other than health care. This will mean the home mortgage is paid off, we've maximized our energy efficiency, installed solar water and space heating, are set up to heat with wood, have maxed out our home production of food, and can get around town by bicycle or NEV. That $1K/person figure is assuming that things don't go too badly. We'll have some possibility of cutting that figure down even lower if need be.

The thrid piece is that I am due to receive a total of about $1K per month from two separate defined benefit plans (both in pretty good shape as far as their funding goes), which means that we have a goal to accumulate 401K/IRA savings in excess of $300K before we retire. Presuming these are conservatively invested and we draw only 4% per year, that will provide us with the other $1K per month. We are actually on track to end up a little better than that, which is good because I'm going to need to manage the 401K/IRA money to try to inflation proof it as best as I can.

The fourth piece is to try and diversity and provide ourselves with additional income streams as a backup plan. My wife and I both have possibilities that we can work on to develop some part-time self-employment income once we are no longer working at our full-time jobs. We also plan to do a simple remodel to our house that will create an accessory apartment that we can rent out. I don't know if that would be enough to totally make up for a total wipe out of everything above, but on the other hand, I can't imagine that happening without huge problems for everyone across the board. We'll be slightly better positioned than most people, and that may be all we reasonably can hope for or expect of ourselves.

Of course, if civilization collapses tomorrow in the big die-off, then all of the above becomes moot, doesn't it?

"I think just about anything in stocks, bonds or even money market is going to be either worthless or inaccessible soon (certainly within the next ten years)."

you don't know that. how could you possibly? can you tell me who will win the world series in ten years?

That's an easy one -- there won't be a world series in ten years, 'cause we all know the world will end before that 8^).

Nah ... it'll be won by the Montana Doomers, 4-3 over the Idaho Organics.

"Nah ... it'll be won by the Montana Doomers, 4-3 over the Idaho Organics."

I love it...and the teams would have gotten to the game by wood powered steam train! :-)


You environmental vandal you ... they'll get there by sail-power - on the all-new Denver-Billings Rocky Mountains Canal. I'm selling shares in the company as we speak!

How many shares can I get for $10...let's see, that should about $1000 in pre-deflation money shouldn't it...I always wanted to be a speculator! :-)


The problem is that our monetary system is based on debt. Because of this, it has to compound indefinitely, adding interest each time. In a finite world, this continued growth is not possible. As long as the amount of oil extracted each year and the amount of other resources extracted kept growing, it was able to keep up the economic growth that our financial system required. Now that oil production has leveled off and looks to be about to decline, such economic growth does not seem to be possible any more. As a result, our financial system looks like it is headed for huge problems--perhaps including some kind of crash.

How the whole mess will unwind is unclear, but it doesn't take a crystal ball to predict that within the next 10 years, a lot of what were considered good investments may no longer be good investments. That is a reason for asking the question about retirement funds.

You are right, though. We don't know for sure this will be the case.

The problem is that our monetary system is based on debt. Because of this, it has to compound indefinitely, adding interest each time.

Not sure what you mean by this. Afterall, if the interest is paid out, it is not componded. Think of classic corporate loans - just simple interest paid out on a regular schedule.

If the economy isn't growing, it is very difficult for borrowers (including the US government) to pay interest at the expected level, and still have funds left for other needed functions.

The needed growth in the economy comes because money is loaned into existence. It needs to be paid back with interest. The compounding comes because of our fractional reserve lending system. Money that is deposited can be lent out 10 times over. If the funds from those loans are deposited in the same or different banks, the lending process can be started all over again.

This a link to a video Money as Debt. There is also Money as Debt II: Promises Unleashed for sale.

"If the economy isn't growing, it is very difficult for borrowers (including the US government) to pay interest at the expected level, and still have funds left for other needed functions."'

even during the great recession that we just had a majority of people paid their bills just like always. so I guess the economy doesnt have to grow?

As long as the real unemployment rate is less than 50%, a majority of people will be able to pay off loans, but you probably won't be living in a very nice society.

As money is loaned into existence, even the money to pay the interest on a loan has a loan somewhere back down the line backing it up and needing to be paid back with interest. If the average interest rate is 3%, then the economy has to grow by 3% to be able to pay off the loans and interest, because we have to end up with 3% more money at the end of the year.

Obviously when the economy is contracting, there is still an economy, for a while. But why do you think so many governments are borrowing from future tax payers to get the economy back on a growth path? It's because our current economic system requires it. To abandong the growth path requires a different economic system.

As money is loaned into existence, even the money to pay the interest on a loan has a loan somewhere back down the line backing it up and needing to be paid back with interest. If the average interest rate is 3%, then the economy has to grow by 3% to be able to pay off the loans and interest, because we have to end up with 3% more money at the end of the year.

From an accounting perspective, I think this is not correct. If A owes B some money, then A can provide some goods and/or services to B and charge B enough in return to be able to pay B what is owed. The whole pyramid of debt can be unwound this way.

From a social/political perspective, it is much messier. If money is tight, and B is holding the limited cash, then it's a buyer's market and B can put the squeeze on the folks in debt. B can drive people to provide goods and services for very low prices, and then in the end just bankrupt them.

My thinking is that the real problem is not so much the fractional reserve banking system itself but the highly asymmetrical relationship represented by the loan. The deck is really stacked in favor of the lender.

I confess, economics just boggles my mind. In an inflationary environment, it's the debtor that has the upper hand. Inflation is strange. It seems not so much a matter of money supply, but instead of money velocity. If somebody has a huge pile of cash locked up, that doesn't contribute to inflation. But if a single dollar can fly fast enough through everybody's hands, prices can still stay low.

Gail is right, there has to be more money created in the future. Warning, the following is my total hack at economics!

FV future value
PV present value
i interest
t time
p profit
J work
c capital
K a constant

The future value equation;

(1) FV = PV(1+i)^t

note that:
FV > PV for all i > 0; and who's go'na lend at negative interest?

So to pay the future value at time t we need something else
(2) FV <= PV + profit

While the PV is turned into capital needed for your business process.

Now Marx said profit is the excess value created when labor acts on resources, but I don't think he accounted for capital and energy properly so I propose that value is work acting on capital over time;

(3) value = d/dt J c K;

K represents some market value to your process as some products are more valuable than others, J is work and c is your capital both material and equipment as well as working. I'm saying that value isn't instant, there is a time factor involved dt^-1 so that value accumulates over time. This also mean that the work isn't instant either there is J t^-1 in here too, that's work over time, by definition energy.

Value and energy have a direct collation in (3), so, notwithstanding any change in K as your product may be more, or less, valuable as available energy changes, the effect is for value to decrease as energy decreases.

(4) profit = value - c

and hopefully there is enough to satisfy equation two
(2) FV <= PV + profit

What I'm saying is Gail's right, energy is very necessary to create the value needed to pay back loans and their interest in the future. We use a debt-based money system, all money is loaned into existence, this system will become unworkable if there is not enough surplus value created to satisfy equation two.

The converse of "money is debt" is: "debt is money". The increase in debt is exactly the same as the increase in money. Of course one can manipulate the accounting to break this relationship. But the way our financial system generally works, the two are mirror images.

It is not the banks that create money, it is the folks that borrow from the bank. And it doesn't require banks at all. Suppose Sam and Pete have a bright idea to get the economy moving. Sam gives Pete an IOU for $20, and Pete gives Sam an IOU for $20. It's a fair exchange - they have traded items of identical value. But now they can go out into the marketplace and use that IOU as a thing of value to exchange for whatever goods they might want. In a happy world, maybe those IOUs finally end up back in the hands of Sam and Pete and they can give them back to each other and POOF that money = debt vanishes as mysteriously as it was created.

That's basically what happens with interest. At a certain clock tick, the borrower's net worth drops by X amount, but the lender's net worth increases by that same X. The total net worth of the whole society just stays at zero.

The essential point of a loan, it seems to me, is that many processes can be made more efficient or productive if there are more assets available. A shoemaker might not be able to afford to buy leather. If somebody buys some leather for the shoemaker, then the shoemaker can make and sell some nice shoes.

At the foundation, this is intergenerational. Young folks start out with great capabilities but few assets. Old folks may well have accumulated lots of assets, but have diminishing capabilities. So it makes perfect sense for the young folks use the tools and materials that the old folks have accumulated over their long lives, and in return the young folks can share some of their output with the old folks - maybe the potatoes they grew using the old person's field, or a pair of shoes they made, or some money they got in trade for potatoes or shoes.

The big problems, I think, with borrowing and lending have more to do with the common ways they are structured. A typical tenant farmer relationship involves a split of the harvest between the person tilling the field and the person owning the field. That seems healthy. They share in the risks from potato blights and potato prices. But if instead the person tilling borrow the money from the bank to buy the field, then a certain amount of money is owed to the bank, regardless of blights and prices. That asymmetry is evil.

Totally agree.
I have stated here many, many times that he proper relationship is shared equity and shared risk. Nothing should be paid to the "lender" unless there is a successful production of new wealth.
The financial/banking system and the "legal" system that enforces them are criminal scams that were developed by the people with the money to keep and increase their share while exploiting and oppressing the masses.

We will make no progress until the current system is destroyed and replaced with a fair and equitable social arrangement.
Very few people understand this problem that has been hidden during the fossil fuel extravaganza.

"When plunder becomes a way of life for a group of
men living together in society, they create for
themselves in the course of time a legal system that
authorizes it and a moral code that glorifies it"

Frederic Bastiat - The Law

While my operating assumption is that we will not have or should not have any more long term growth, I am not sure I understand the implication that returns on invested capital will go away. Are you saying that return on investment will approach zero unless the economy grows?

Let us say I borrow money to buy a building and then I rent out that building. In the future, should I expect that I will not be able to pay off my loan and also make a profit? If so, looks like we could see a downward spiral.

Gail, I agree with the essentials of what your saying, but I have to ask again, why are we surprised by this? Fractional reserve lending is not a new or even an American invention.

Growth into infinity is indeed impossible, unsustainable, etc, but again this should not be new news. It is like a baby who is doubling in weight every few weeks (and indeed they do)...if I were to look at this doubling and say "Oh my heaven, if this continues, this baby will soon weigh 1000 pounds...and then 10,000...and then (!!) All history tells us that is not going to happen, so why would I be surprised that it indeed did not happen?

Let us look at a pictorial representation....here is a graph of world oil production, past and conjectured, just one of what has become thousands of these types of charts on the web...

Now, if you look at the growth slope from say 1960 to 1973, you see an almost vertical ramp upward of oil production/consumption with no interruption. Why would a person not assume that would continue on into infinity? Many folks at the time did assume that and were absolutely beside themselves with horrific thoughts of the near future...we should have been over 110 million barrels of oil produced and consumed per day before 1980 (!) and probably 150 million barrels per day by now...IF, and this was the big IF that growth slope from 1960 to 1973 had held....but lo and behold, surprise, surprise, it did not. And that's the fly in ointment, because real life never looks like an Excel graph (which by the way I would argue Excel graphing has done more to kill real thought than any development since television).

You can do the same thing with any historical graph...and people(who are like chickens, born into a new world every day) are surprised every damn time! It's astounding...like watching an instant reply of a baseball player striking out for the 10th time, and expecting him THIS TIME to hit the ball! "Infinite linear compound growth" is as mythical as the unicorn, and while it can be created in an Excel graph, it certainly has NEVER EXISTED in the real world, at least not on this earth...and yet people are astounded when it doesn't happen!

House prices...look at the slope from 1999 to 2006...gee, what could possibly go wrong?

House prices collapsed...oh my God, it must be PEAK OIL!...or maybe GEE DUB or OBAMA caused it!! What could have possibly gone wrong?

I mean it, as I am writing this I am laughing out loud, because it is just so DAMM FUNNY!

Do you think people will be just as astounded when they see a chart of gold prices...

Gee, no where to go but up, right? As the computer said when it was put in control of the nuclear missiles..."Don't worry, I am now in control and the program is set and assured, nothing can go wrong...noting can go wrong (click, static)...nothing can go wrong..."

Of course, people still continue to argue against the strawman of "Infinite linear compound growth" because it is easy prey...since it cannot exist and has never existed in human experience, it can't defend itself. But when planning your own money, ignore the whole discussion. What you are looking for is the opposite of "Infinite linear compound growth". Your looking for irregularities, for opportunities that are like your life...temporary, but often very lucrative. Don't look for logical purity. If logic would make you rich, philosophers would be the ruling class.


"As long as the amount of oil extracted each year and the amount of other resources extracted kept growing, it was able to keep up the economic growth that our financial system required. Now that oil production has leveled off and looks to be about to decline, such economic growth does not seem to be possible any more. As a result, our financial system looks like it is headed for huge problems--perhaps including some kind of crash."

the amount of oil does not have to keep increasing. oil is not the only energy source and there is also conservation. the economy can grow w/o increasing oil consumption. it's done so before. we can grow, we just have to use less oil per unit of gdp, which is possible. that's what the oil drum is about!

wal-mart increased it's fleet mpg and that didn't seem to hurt the company.

also, didn't we just have a crash?

Yes and no. Oil is the foundation of the current credit economy. Much of the wealth of the US is due to four factors - expansion into new territories that provided ample food and resources for a small but growing population, a large population of slave and indigenous laborers that drastically reduced labor costs during that period, the presence of a large amount of oil, coal and later natural gas, and control over the breadth of a continent protected by oceans on both sides, with two comparatively friendly neighbors, while both Europe went through devastating wars, leaving the US in a position to be the primary exporter and banker to the world (and able to dictate that the dollar would become the reserve currency).

The US has expanded about as far as it can, with each colonial acquisition costing more and yielding less than the last. It can (and should) be argued that the Iraq War was an attempt to annex the country as an American colony, one which may or may not have actually taken place (watch the results of the Iraqi election for the next few months to get a clearer idea of how successful that strategy was). NAFTA was an attempt to create a single integrated governmental unit throughout North America, though in practice it only really worked with Canada, and even there, it was not complete (I think the likelihood of an Amero (the analog to the Euro) actually coming to pass now is close to nil). The conquests are becoming to prohibitive in terms of cost compared to the energy value they return.

Slavery and indenture still exists, but its not terribly efficient except in certain criminal enterprises such as prostitution. Automation has largely replaced slavery. Automation, however, is incredibly reliant upon both a reliable electrical system and the importation of inexpensive to manufacture electronic parts from elsewhere (largely China now, Japan earlier). Most of the oil in use today is used for distribution - transport ships, aircraft, trains and trucks. Electrical systems work well for small transport or systems that can employ constant energy inputs (such as bullet trains with maglev or electrified third rails) but electrical transportation systems suffer from the fact that you can't build batteries that are able to deliver a sufficient load to power trucks or ships, and we even the latest generation hypercapacitors are still woefully under-powered for those types of needs. This means that as oil becomes more expensive and distribution channels more unreliable, the shipping infrastructure that supports all that automation (not to mention agriculture, the other major oil consumer) fails. Without that, you end up needing more people to do both more physical work and more processing, relying on skills that in many cases are fading quickly. (Think about the energy required for you to push a car twenty five miles - that's how much energy you need to replace the power of a gallon of oil when that oil goes away).

The US hit its oil peak in 1970, even though its population was still growing (it was at 210 million people). In 2100, the US estimated population is 315 million. By 1971, the US was forced to import more oil from the rest of the world than it was producing - it had become a net oil importer. This meant that after 1971, oil revenues that had gone towards military expansion, costly social programs such as social security and medicare, and technological investments were no longer available, and instead, the US was forced to spend larger and large amounts of its GDP towards energy payments. However, the US at that point still had a comparatively large account surplus overall, so the real effects took a while to manifest themselves. Part of this was disguised by an inflation rate that was upwards of 12% at one point, so that there was an effective invisible devaluation of the dollar. Part of it was ameliorated with the discovery of large (and still accessible) oil deposits in the North Sea and Canterall oil fields in the late 1970s and early 1980s, and a small part of this was due to a somewhat putative draw-down in the military after a failed attempt by the Soviet Union to take control of the oil market from Saudi Arabia caused the widespread collapse of the economy, and ultimately the dissolution of the USSR into a dozen sovereign states (Reagan's so-called Peace Dividend was good theatre to take advantage of this, but the role of the US in this was only in forcing the USSR into an arms race at a time when it didn't have the money to compete).

Finally, the US advantages after World War II were breathtaking - Europe and Japan were both devastated, and the US was able to effectively force the other major world powers to submit to a common currency for oil transactions - the dollar, making it the Global Reserve Currency. This meant that the US was able to loan out a great deal of money to all of these recovering nations, getting this back with interest, and because all oil transactions were committed in dollars, it also meant that in order for countries to gain the oil necessary to rebuild, they had to purchase US assets, either directly (via T-Bills) or indirectly (stocks, bonds, real estate). This worked for a while, but by the mid-1960s, the broad governmental development plans (such as the creation of the Interstate System) and the building up of the electrical system) were finding it harder to keep up with the growing population, and so Kennedy devalued the currency by changing the price of gold (which was also set to a fixed number of dollars) twice, Johnson did it once, and Nixon did it three times, before finally anouncing that the gold window was closed and letting gold float to a market level (or put another way, letting the dollar devaluate).

This, in turn caused the first oil crisis as oil producing countries, angry that the US was attempting to fulfill their contracts with inflated currency, protested by initiating a strike against the US. This caused the first major expansion of oil prices by a factor of three, from 28 cents a gallon to just around $1. The strike didn't hold for long, however, and the ensuing glut as OPEC producers struggled to release enough oil into the markets caused prices to crash (along with the results of exploration oceanic wwaters, done because of previous high prices). However, one side effect of this was that the oil companies went from holding nearly 80% of the market compared to nations to around 22% now, which in turn meant that many reasonably efficient corporate oil operations were replaced by corrupt, nepotistic state controls.

Global Peak Oil means that the world is now entering (has entered) a similar state of affairs, but in many ways in a much worse way. The US economy was badly hit by becoming an oil importer and survived, but that's because there were still many oil exporters out there. Now, total global production has peaked at what appears to be a hard upper limit of 85 billion barrels, there have been few new significant finds and none the size of the North Sea deposits (with much, much better technology to search), and the cost of retrieving that oil continues to climb, to the extent that it ceases being profitable to drill until prices reach a level where they do major damage to the global economy. This means that there aren't any oil exporters to take up the slack, at a time when global populations are roughly 35% higher than they were in 1971.

That's a big factor in the Crash of 2008, and is a big reason why 2008 was just a side show. We can't effectively replace the 60% of the oil used for transportation and agriculture fast enough to stave off massive economic disruptions. We don't have the infrastructure changes in place yet for a new generation of electrical grid (both grid and vehicles on the grid), and the cost of such vehicles is still so high as to be prohibitive for most potential buyers, and we have a financial oligarchy in charge that were successful because they wove the inbound energy wave and still refuse to even recognize, let alone react to, a situation where energy is now receding from the system.

How long this process will take is anyone's guess, but the dynamics are being set up for a catastrophic crash rather than a gentle manageable downward slope. We may have 10-15 years before it becomes acute, but I think we're closer to about 3 or 4, and the continued erosion in Europe is the first signs of this.

So, most of your assertions were in error. The economy has never grown consistently when oil prices were rising, Conservation will help, but first it has to be done, and second, it's only a stopgap - giving us a few years maybe, assuming that the savings from conservation isn't just ratcheting up general us. Walmart upgrading its fleet by 3% will save them a few million dollars, but won't alter the final calculus much. The 2008 crash was severe, but it's only halfway through - we've yet to make our way through ARMs and subprime loans as well as a boatload of commercial real estate MBS, and that assumes that a likely default of Greece doesn't cascade through Italy, Spain, Ireland and the Baltics, possibly taking the United Kindgdom out as a side swipe.


"The 2008 crash was severe, but it's only halfway through -"

If we could know that it was "halfway through" that would be cause for celebration, that would make it a cakewalk...but we can't know that it is halfway through...

"We may have 10-15 years before it becomes acute, but I think we're closer to about 3 or 4, and the continued erosion in Europe is the first signs of this."

Again, we cannot possibly have a timetable like this, and if we could, it would be useless for most people in their planning. If it may be "10-15 years before it becomes acute" then what of the 10-15 years before it becomes "acute" (depending on how you define "acute")?

Europe is an interesting situation, but of course the Greek situation should already be priced in (Greece is a relatively small nation, so even if you write off the country as totally worthless you could pretty much assign a maximum possible loss. So are we assuming that the currency that walks on water (i.e., the Euro) may actually be subject to normal economic laws? Gee, and I thought it was the dollar that was the pretense 'fiat currency' in the world.

Once again, I am simply saying to be VERY CAREFUL in betting your money based on the prospect of absolutely assured outcomes. Hedge and diversify, and picture the possibility that things may not happen as many folks here (or for that matter anywhere) assume they will.


This is a common misconception based on neglecting the fact that interest is in turn paid out as bank salaries and profits. There is always, due to the hard laws of double entry bookkeeping, enough money to pay back all loans outstanding.

No, no there is not.

The future value equation is:

FV = PV(1+i)^t

which means that:

FV > PV for all i > 0

FV - PV > 0

The present value is not enough to pay back the future value; new money must be created in order to pay the interest.

You are looking at individual loans in isolation, without taking into account the sum total of all money in circulation.

Let's say we have an economy with 2 entities: a banker and a farmer. The banker lends money to the farmer, who uses it to grow food. The farmer then sells food to the banker so he can eat.

So we start off with B having, say, $1000. He lends $500 to F at 10% interest for ten years. Let's say this is a nonamortizing loan to keep things simple. Every year, F pays B $50 in interest. In a separate transaction, B buys food from F, for which F demands $50. At the end of 10 years, F has paid back his loan, plus interest, in the amount of $1000. All interest was paid, no loans were written off - but there is still the same amount of money in the system as there was at the start.

"you don't know that. how could you possibly? can you tell me who will win the world series in ten years?"

EXACTLY CORRECT, your playing the game exactly right. Now after making your first assumption, you then have to start narrowing down to probables...will it be a team that currently exists? Remember that the Marlins and the Rockies, etc., didn't exist a few years ago.

So if you had to bet your money, you would then give higher probability to teams that exist now...because even if a new team were born, it almost certainly would take a bit of time to develop (although the Marlins won a world series in their first 10 years!).

So the best bet would be the Yankees based on history, then the St. Louis Cardinals, and then on down the line...so how can you lose?

Well, of course, you can lose, so you would do the normal thing, bet heavier on the assured winners, and then do some cover bets not only on other teams, but in the unlikely event that baseball as a sport was wiped out, you would bet on other sports, and on the unlikely event that sports in general were to be wiped, you would then bet away from sports...in fact you would probably bet away sports anyway because the returns would possibly be greater in other areas. And you may bet away from the dollar in case the dollar were wiped out, etc, etc.

Now why did I go through this whole potentially boring little exercise? Simply this...because this is how common sense works. We did not make the assumption anywhere in the above that people would stop investing in EVERYTHING. People will coninue to be greedy and continue to make bets, on something. And some will win and some will lose, in whatever is used as currency at the time. And there will still be ways to play the odds and profit (and lose).

Remember, economics is a social science...as long as there are people there will be economics. And your point, if I am understanding it correctly john15, that some folks here have passed from trying to use some measure of logical common sense decision making and are now engaged in what is essentially messianic prophecy is well taken. Most folks are pretty sensical, but sometimes the discussion starts to take on overtones of cultism, I am sorry to have to say that, but it's just the way I see it and hear it. For the 2020 World Series, GO REDS, you'll be overdue for a pennant by then! :-)


I am retired, living on Social Security and IRA distributions. The IRA's have been diversified - both conservative and speculative. Thus far precious metals have been the best performers. Energy and TIPS have done OK. TAE seems to favor cash equivalent, at least for the moment. I am reminded of a line from a Ferlinghetti poem: "The future is an unspent dime"

Return of capital is probably more important than investment return, at this point.

Gail, you make me LAFF!

I keep telling this to my brother over and over. That 5% CD is a warning flag, not easy street.

Denninger had this to say earlier this morning:

How long will it be before the next large financial institution goes to post a repo and has no good collateral?

I have no idea.

But this I do know: If it happens again "they" won't be able to stop the crash with promises and BS. In fact, they won't be able to stop it at all.

Washington should step in here right now and demand honest marks. If this means taking the big banks into receivership then it does.

I know nobody wants to talk about it any more, but we have to. If it's done now, in a controlled fashion, it will be expensive.

If we have another Lehman, we won't be able to cover it. The cost of a disorderly event will easily exceed $1.5 trillion for depositor claims alone, and we simply don't have the money and won't be able to raise it.

Finance is basically insolvent so the multiple claims against your funds are a hazard under stressful circumstances. In practical terms, under panic circumstances, your bank will simply close its doors. When (if) it reopens, you may be allowed to use your ATM card to remove $50 per day. Hardly reassuring or useful if you have the FDIC maximum of $250,000 in an account. Meanwhile, the same bank will seize your collateral as you default because the $50 does not allow you cash flow to service your debts. This happened during the 1930's and has happened during other countries' money panics. There is no reason why 'it can't happen here!' You have to add this 'structural' constraint on borrowing to the interest service constraints that Gail mentions.

Here's another take:

Who would've thought we'd have come so far, so fast.

As described in this Bloomberg article, the U.S. Department of the Treasury is now officially looking at ways to force a portion of every 401k/IRA account---or some other as-yet-nonexistent, government-mandated employee benefit account---into "fixed payment annuities", which in plain English, means that most of the money would be channeled into long-term Treasury bonds.

Officially this is all about "retirement security" (sounds nice), but it would also constitute a de facto seizure of private assets in order to fund government deficits at negligible interest rates---a stealthier version of what recently happened in Argentina.

The two challenges of the immediate future are (a) getting your hands on cash and (b) keeping your hands on it!

The Bloomberg article says nothing about forcing people into a government sponsored annuity based upon life expectancy, like the seeking alpha interpretation indicates.

Based upon the dismal performance of most self directed IRA and retirement plan accounts, perhaps giving most ordinary investors some direction in their retirement years is not the worst idea around.

Readers here are very well informed about the energy industry and investment choices - but the average person is not. Based upon my experience of reviewing the financial status of many persons in various income levels, most are woefully unprepared for retirement. Adding that to the effect of the post peak oil world, many persons of retirement age will now seek instead government handouts to get through their retirement years. Anything that can be done to more efficiently allocate available resources towards the future we face will benefit all society. Just hope ther is still some time for that.

The two challenges of the immediate future are (a) getting your hands on cash and (b) keeping your hands on it!

Not a problem with precious metals. Now are you finally starting to see my logic? ;¬)

"Washington should step in here right now and demand honest marks. If this means taking the big banks into receivership then it does."

That is the way it should have been played from the start. The big bailout and semi-socialism program was a huge error, totally pointless,and it destroyed any capitalist jeopardy on the part of the banks...it truly became a game of "heads I win, tails you lose" for them and incentivised and insured for them that risky, even idiotic behavior would be insured by the taxpayer and the culture at large. The conservative columnist George Will once said that "everyone is half capitalist in that they want to keep the profits." He went on to point out that the U.S. had become a nation that privatized profits and socialized losses, so that it was impossible for a politically well connected "too big to fail" business to have to suffer any consequences for poor decisions, even for incompetent liability. This is the very heart of this crisis since the destruction of Glass-Steagall.


The New Investment in use now are Master Limited Partnerships MLR's. I suggest you consult with a financial advisor at Edward Jones or any reputable borkerage firm and inquire about MLR's.

what funds? My mother in law is super hot, so that helps.

Any advice from any one will probably be wrong. Invest in yourself first. Buy land, if you or your close ones can utilize it. Learn a trade, learn to make shoes, repair pots and pans. For women (mainly) learn food preservation learn basic cooking, learn animal husbandry. Be prepared to teach. Most of the younger people I have met have a limited familarity with tools cooking or anything not done electronically. As far as money invested with a view towards future use. Don't count on it. Stock up on books. Join with others in groups for singing and recreation. So my advice is to save if you can, but realize that the money will not be there when you need it. Prepare for that possibility and good luck.

I would have to seriously disagree with the "invest in yourself" or "invest in skills and knowledge" camps. Isn't a radical undervaluation of natural and built capital and overvaluation of human capital one of the many things that led to the current state? As in, I work for two hours doing basically nothing and in return I can buy a barrel of oil with how many thousands of man hours of work capacity. It would seem to me that labor (of any kind) will be the sector of the economy to lose the absolute MOST value because it won't be being subsidized by cheap energy any longer. Plus if pessimistic scenarios win out we'll have excess population that we can't feed which would bid labor prices down to the utter minimum of subsistence.

So I would say invest in yourself if you want to be at best a peasant sharecropper. If you have land/farm/own business great, but I wouldn't expect your own personal labor to be of great value. As boring as it may sound I think the most efficient thing would be to hoard what you can while you still have the luxury of being drastically overpaid:)

And this is from someone who loves self sufficiency and learning as many new skills as I can--I just view it as a luxury not a good investment. Cheers.

"I think the most efficient thing would be to hoard what you can while you still have the luxury of being drastically overpaid:)"

ha ha. that is actually probably the best we can ever do! get paid while we still have the skills.

This is an important topic for me.

I used to follow Bogleheads forum to help plan my investments (essentially diversify, buy & hold). Unfortunately, they all believe in BAU - and will delete posts that even talk about AGW or Peak oil - apparently since they are "controversial". Talk about burying the head in sand.

My idea is to make use of peak oil knowledge to
- Be long on Oil (ETF)
- Long on renewables (TAN, FAN and other ETFs)
- Short on S&P on signs of downturn (ETF SDS)

Ofcourse timing the trades, as always, remains a problem.

ps : I'm not a doomer.

Hi evnow,

As this is not a stock forum, I'll just try to generalize on the principles behind your choices (and mine also):

Be long on Oil (ETF)

DBO is as basic an ETF for oil as you can find (compare USO and USL). DBO was double today's price when oil hit $140 and half of DBO's current price when oil tanked earlier this year. This is a lot of volatility. Oil today is around $81-82 and DBO is $27.53 today.

So, if you believe that oil will rise significantly over $100 - put all you money in DBO today as it is at an exact mid point of where it has been over the last year and a half. If you think the economy will tank and take oil back down to $40 then short DBO or use an ETF like DTO.

The problem is that this really is a gamble as it is so hard to predict the future. A black swan event could double the price of oil overnight and shorts would be crushed. A failure of the PIGS could grind down the price of oil and cut longs off at the knees.

- Long on renew-ables (TAN, FAN and other ETFs)

Compare TAN and FAN to DBO for the past year and a half and notice that they follow somewhat the same pattern except for one big difference: they are only about 1/3 of what they were when oil peaked.

Maybe this is a good time to buy these stocks, but the general market does not seem to be exhibiting much faith in them. I suspect it will take some real success stories to move these ETFs. They could languish for years - folks like Gail keep questioning their real potential to deliver actual value.

Short on S&P on signs of downturn (ETF SDS)

SDS is kind of like juggling with very sharp knives - very impressive if you don't severely injure yourself. Currently it is at $32.16 and it was almost $133 a year and a half ago. If you really believe the general market is going to crash then put all your dollars into this - it has seldom been lower. But, any "cheap" stock can always be cut in half again.

If you do some research on this ETF you will find that it has the greatest value if held for very short time frames at exactly the right time - it is not good for long term holding (complicated explanation)

I think your basic list is excellent - the question is can you be nimble enough to play these without getting whipsawed and killed with transaction fees?

Personally, I have not been able to play these very well as timing is critical and I don't want to spend my life glued to stock trading sites.

I think your basic list is excellent - the question is can you be nimble enough to play these without getting whipsawed and killed with transaction fees?

Personally, I have not been able to play these very well as timing is critical and I don't want to spend my life glued to stock trading sites.

Yes, this is the crux of the matter.

My 401k plan allows me to take up to a $50k loan, which is paid back with after tax payroll deductions plus interest.

Since my investment options are pretty much limited to the Ponzi fraud Wall St through my employer, I took a loan for the max and purchased phsysical precious metals. If TSHTF tomorrow, at least I will have that. The rest I put into the most heavily weighted foreign mutual fund I could find within my plan. I do write the board once a quarter begging them to offer an investment option that is geared towards commodities, precious metals or forgein currencies.

I have my IRA completely invested in foreign stocks, bonds and currencies.

I don't really think this will protect me, though. At some point, the government is just going to sieze everyones retirement money and trade it out with freshly printed toilet paper promises anyway.

I think farmland and cashflow positive residential real estate is going to be our next investment.

You really should own some domestic stock as well. Your foreign mutual fund is probably composed almost entirely of Europe and Japan, two areas low on natural resources like farmland, minerals, coal and oil. In the next two decades, the US has plenty of potential for Coal-to-Liquids conversion (for as much oil as we use today); can't say the same for the others. Diversification reduces risk and increases return.

I have looked at it. 3 out of 10 of the top ten holdings in this particular fund are natural resouce plays. I just cannot bring myself to 'invest' anywhere near wall street until people are in prison.

Who truly knows what the future shall hold? Indeed, if you are in "the system" continue to invest and follow the advice of a qualified investment professional. As long as the "system" continues to operate, you shall do ok. For those of us, like myself, who find ourselves "outside" the system, plan on the old form of retirement, the classic and true way, DEATH. For my old age, since I have no substantial financial resources I have stockpiled weapons and ammo. (Lead delivery systems) An old friend told me that the way for a true survivalist to live was with a Handgun (Large Caliber) and a list of Mormons.

Mormons are suppoused to store 7 years of supply away. (for hard times... that's how survivalists know where to go for a sure supply of items needed after a world wide colapse)

So, basically after the "crash" that the place to rob first. Historical examples (and even contemporary ones like Argetina etc) shows that, that is what happens first - people who have a substantial cache of essential items are killed first.

"people who have a substantial cache of essential items are killed first."

If one assumes a complete collapse of civil disorder, that to me is the elephant in the room...being well prepared could be a death warrent unless you have some arrangement with local "enforcement" of some kind to protect it.

I am always amazed at how the wealthy currently live, it looks something like "Southfork" in the old TV series "Dallas" in many cases, with a gigantic mansion setting out in the middle of an oceanic sized lawn! No way to defend it or even to easily observe the property, even a small band of thugs could come right into the place.

Most wealthy folks are living in an architecture totally dependent on civil order, the idea that the citizenry around them have respect for the law, for the wealthy class and for the property of the rich. There have sadly been some recent cases of "home invasion" murders that are bringing this into question.

Throughout history most architecture has been "fortress architecture", from the beehive communities packed tightly in ancient Jericho to the Medieval French garden/fortress and moat architecture.

The above described French garden/fortress architecture of the Medieval and Renaissance period is well worth study. In a post peak world of reduced security, something like a Neo-fortress/garden architecture could provide much that is needed...defensible perameters, garden and greenhouse space for growing food, community (becaused I am looking at community sized defensible structures, not individual fortress homes...community and assistance will be imperative in an aging population, and beauty (because when it is well done, the fortress garden structured communities can be very beautiful)

Note the illustration linked below:

The structure does not look overwhelmingly military, but note the tight organization of structures all within easy sight of one another, the walls and towers linking the buildings and also retaining control of the garden spaces (with gates closed, no one can easily be near or in the garden community without being observed) but the overall effect is not oppressive (there are palaces in Austria that elevate the aesthetic to high levels of beauty in fact).

You folks here know that I am not prone to being a doomer, so when I say I am sometimes scared for the wealthy families of this country who seem to pay so little attention to security (the Hollywood young wealthy starlets are to me almost dysfunctional in this regard) you can assume that I see this as a concern NOW, even before any major stuff hits the fan. Money spent on security (not paranoid delusion, but on common sense security) is not a bad thought...


I'm too young to think about retirement..., and I'm a doomer.

Having said that...,

I think people should be allowed to live decent, middle class lives, if at all possible.


There are too many people in the world for us to live much above that. I'm not a communist. I think it's natural for societies to have a head and a tail. But, too much distance between the head and tail leads to instability.

I'm egalitarian. and, I'm not very materialistic.

So everyone on TOD and the rest of America, who is rich, should donate all there excess wad to a charity of MY choice.


I figure if the US economy becomes worthless, my life will be so too. So I put all my money in a low expense mutual fund that tracks the US stock market. No matter what the inflation becomes, I'll have a fixed share of all of American business. I put my money in the Vanguard 500 mutual fund with about 1/5 of one percent management fee per year. Of course it's going to fluctuate, but I can live with that.

Everyone will eventually become a doomer. As age and disabilities stare you down a person becomes aware of how fragile they are. Then you see death around the corner. What a distraction to the pleasures of life. I live to see my grandchildren laughing and playing. That is my true wealth. Money is a necessity but it will never give you the happiness of your grandchild’s laughter. I felt the same way about my children when they were young. Family can be a great source of wealth even if you are poor.

I am by no means an expert but here I my thoughts

-Just as pensions are disappearing, expect employer match for retirement plans to end as well...which seems to suggest that you should take advantage of that now while you can; one possibility is keeping your money in a money market fund, which will avoid the excessive fees and variable performance of mutual funds, most of which are a scam, anyway...you won't earn much money in a money market, but at least you won't lose it, and I think most of us here can agree the whole paradigm of "buy and hold, you will earn 7% year on year on average" is dead and gone
-Consider withdrawing early every now and then (or fully) and just taking the penalty that this will entail...at the very least, you will increase your liquidity and can then do you want with your money right now - savings account, cash, metals, durable goods, whatever. Liquidity will be important in the years to come
-The federal government may have all sorts of tricks up its sleeve - if you have a retirement account, they can easily set up rules that force you to invest a certain percentage in treasury bonds, they can easily move up the retirement age, etc. - if you, like me, don't trust the federal government, then moving your money out of a retirement account makes sense

All of the above is perhaps irrelevant for many people in their 20's, 30's, and maybe even 40's, as unless they're wealthy, they are not going to have very much savings at all, let alone for "retirement."

Personally, I'm in my late 20's and have recently liquidated my Roth IRA, am currently in cash and will soon be buying gold/silver/platinum. I'm only working temp. jobs right now, but if I get a full time job I will see if its possible negotiating out of a retirement plan altogether in exchange for a slightly higher income. I don't know if this is possible.

I don't trust the IRA system any longer.

I personally wouldn't abandon Roth accounts. Part of the U.S. govt. has recently threatened/put up for consideration to force people to invest IRA's and pensions in U.S. Treasury Bonds but like so many plans by ultra-leftists this one would never fly. Seniors are a major voting block and the very great majority have IRA's or pensions. They would be Very upset by this.

You are right that the govt. may go after IRA's with tricks up their sleeve but that will more likely look like a cap on the amount that can be in a Roth IRA (ie. 1 million) or stopping future contributions, not withdrawing the privelage for most existing accounts. They might also force corporate pensions to put some of the money in Treasuries for "safety".

I do like gold, platinum and especially silver as an investment but consider that many of the vehicles will be legally taxable later (ie. capital gains) and some even generate current income.

It should be a great opportunity - most people remain in denial or ignorance, so we should be able to position ourselves to some advantage, but it's sill hard to predict how it will shake out. What to do troubled me for a while, and it actually led me to learn something about economics; concepts like money supply, why the US dollar used to be backed by gold, what inflation actually is, etc.

Best I've found is Stephen Leeb, he's an economist who's written a couple of books on how to invest taking peak oil into account. He uses the 70's as a parallel, which is probably not a bad model. The traditionally 'safe' things like money markets and bonds will be eroded by inflation, as will buying the indices. You need to pick specific sectors that will skyrocket, such as oil services companies. If deflation strikes instead, you want to roll into zero coupon bonds.

I also like to read Doug Noland each week at http://www.safehaven.com/article-16016.htm (scroll to the bottom past all the stats for his actual article.) The recession has knocked down stock prices, so it's not a bad time to get in, though several months ago at the lows would have been ideal.

If the only person you followed was Stephen Leeb, you will probably be doing better than most. While Doug Noland is a financial genius, he doesn't seem to offer enough specific advice that would be practical for every day investing - not that it would be easy to do in the post peak world.

I have mentioned many times before that I don't believe in the possibility of generalized deflation occurring over long periods with our present Federal Reserve system. Many seem to overlook that fact that deflation in the 1930s mostly occurred early on during the banking collapse. After the banking collapse was over, wholesale price rose sharply and even retail prices rose very fast.

So unless we have a banking system failure, I don't see much consumer price index deflation in our future.

"So unless we have a banking system failure, I don't see much consumer price index deflation in our future."

maybe and maybe not.


Your link says this:

Today, we face another devastating wave of inflation

I don't consider that supporting deflation. Other historical periods mentioned had extremely high rates of inflation.

"I don't consider that supporting deflation. Other historical periods mentioned had extremely high rates of inflation."

if you read the book you'll see we've had alternating waves of inflation and deflation lasting decades. our current bout of inflation seems to be nearing it's end.

I also like Stephen Leeb. But he is far more optimistic about China & India, etc. then I am. So far he seems to have been more right than I am about them, but I just can't get too excited about investing in foreign countries with governments that might be even more repressive and less democratic than our own. And countries with even more environmental pressures. Seems like a recipe for volatility and risk. While the upside of volatility there has been very good I don't want to experience the downside.

Right on. Take him with a grain of salt. It's been a few years since Leeb wrote, so I went back and looked at his picks recently. Some not so great - worst was real estate, which he didn't think the gov't would dare let crumble. Oil services companies are pretty cheap right now (P/E < 10) so I dumped a few more bucks in that. I'd been meaning to open a brokerage account for years, but finally got the nerve just a couple weeks back. Now I can harness the power of "Drill baby drill!" when things heat up again. Too bad I didn't do this just after the crash.

Also, I forgot there's also economist Jeff Rubin of course, but he shies away from direct investor advice, so you have to read between his lines for nuggets.

The system should creak along for some time yet, so I hope to preserve or even build up whatever wealth I can. Without getting burned in the end, of course!

Well I won't go into my educational and practical financial advisory qualifications except to say that I am more qualified than most that are formally giving advice - even to the very rich. As I mentioned before I did work within a trading room of a major Wall Street firm for many years.

Having said that, the future will be very unpredictable from a traditional US investor's point of view, and no one will be able to see too far into the future. In the short run, less than two years, I see no need to panic. Although I don't believe that the market in general will deflate or collapse, many specific industries will. So it would not be wise to concentrate in those industries that will be selling less units in the future - which would be most industries.

The natural resource sector, farming, and industries supporting them will remain profitable - even if less units are mined, extracted, or produced.

More specifically buy a natural resource stock or energy equipment stock. Maintain at least some money in cash (about 1/3), which would mean for most a money market fund investing in US treasury bills.

I don't think it was mentioned that ownership of physical precious metals is allowed within an IRA, however not all brokers offer this option. You will also be charged some type of storage fee if you choose that route.

It may be premature to exit an IRA and pay extra tax, but there is some merit to borrowing from a company retirement plan and investing in precious metals or other natural resources. However loans must be repaid and if they are not repaid when you leave the company, the loans are considered taxable distributions.

Later on IRAs may become too risky in a systemic type of collapse. I have not advised anyone yet to close an IRA and pay a penalty rate of tax, although that may be a consideration one day when the US dollar is rapidly losing its value.

I don't claim to be an investment expert. Still, a little historical perspective may be useful here.

Retirement is a relatively new thing. Most people even in the industrial world did not have that option until fairly recently; before then, you worked as long as you could, and then hoped you had family who could take you in and find an economically useful role for you -- providing childcare, helping with cooking and housework, or what have you. Retirement only became widespread in the 20th century, when the economy of abundance made possible by breakneck petroleum production made taking millions of elderly people out of the domestic work force an option.

With the end of the age of oil, that's pretty much going to have to go away, and one of the ways it will likely go away is the long-term failure of investment -- any investment -- as a way of making wealth. For the last few centuries, it's generally been true that wealth expands over time, because the economies of the world's industrial nations have expanded over time; thus most investments have by and large made money. The problem, of course, is that this only works when economies are growing. Most people nowadays think of that as natural, even inevitable; my guess is that it's purely an artifact of the economic expansion made possible by fossil fuels, and will go into reverse as we start slipping down the far slopes of Hubbert's Peak.

if this is how things work out, expect most investment classes to lose money in constant dollars most of the time in the years to come. That makes the question of setting aside funds for retirement a bit more challenging! My sense, for what it's worth, is that the best use for such funds is in real goods -- for example, a home with the mortgage paid off, good insulation and weatherstripping, and a garden out back that will provide you with vitamins and minerals to improve the diet of rice and beans you'll be eating a lot of in the future, will likely do you a great deal more good than any amount of paper wealth. That's the strategy I'm following; we'll see how well it works.

JMG - thanks for your input (as an avid reader of all your recent books).

Your analysis explains our long term predicament extremely well, but as you said, investment planning has been made more complex by a changing value of the dollar. I believe investing in those companies that survive will be successful in terms of depreciating dollars. However in general, most investments - including money in the bank - will lose value in constant dollars.

Therefore any practical use of funds for your residence, garden, farm, etc., will have a higher real return than traditional investments. Unfortunately the money left over in most stock market investments and cash won't keep up with the future rate of inflation - a higher rate of inflation not just due to the printing of money by the Federal Reserve, but higher real costs for natural resources and food.

If there was only some way to store oil, diesel, or gasoline in my back yard, that would be my first investment choice once the food necessities are provided for.

One of the stranger points in the recent NatGeoTV 'Aftermath: World Without Oil' was the claim that gasoline has additives that will spoil it in a year. (They used the dramatic enactment of a family that has hoarded gasoline to get a sick child to the hospital, but 1 year post-oil, their car will not run it. They carry the child.) I haven't heard this from anywhere else. Perhaps storing gasoline in your backyard isn't such a great idea?

Gasoline forms sludge over time, which is why it's best do drain the fuel tank, lines and carburetors of your lawn equipment when stored for a long period, such as over winter.

Use a fuel stabilizer like Sta Bil in your gas can every time you buy gasoline for your lawn mower.


BP has a paper on storing diesel:


One of the stranger points in the recent NatGeoTV 'Aftermath: World Without Oil' was the claim that gasoline has additives that will spoil it in a year.

Gasoline degrades fairly quickly, but it's not because of the additives. The additives actually extend the lifespan. It's because 1) the lighter fractions evaporate off and 2) unbeknownst to most people, gasoline is biodgradable. There are bacteria floating around that will destroy it if they get into it.

Yes it will spoil in about a year, give or take six months. That's the problem I have with the Mad Max type of movies where demented people drive around the landscape looking for ancient supplies of gasoline.

Gasoline will be one of the first things to disappear in a disaster. What Mad Max really needed to find was a horse.

i can't say much about storing gasoline in climates where it goes over the mid nineties F as I have no experience except locally-but if you store it in a GOOD COOL SHADY LOCATION in a closed drum or the tank of a car it will still run after four or five years, although it may be hard to get an engine started on it cold_a whiff of ether into the intake manifold will take care of that problem.

Verified by personal experience.The trick is to keep the air out to the extent possible, and to maintain a sligth positive pressure iin the container.

Gasoline left exposed to the air for a few months will burn well enough to start a fire with it, but it won't run in an engine unless mixed with fresh gas and diluted by half or more.

Hi Mac,

"maintain a sligth positive pressure in the container" could this be done by opening and closing the container when it's at it's coolest temp?


buy it & seal it when it is cold; leave a little air space is what i'm going to do when possible. cold weather gas stores better than summer too. pressure & heat makes it more volatile!

aviation gas [LL100 i believe] is leaded but is the best for storage. but i'd use it for older tractors etc. or engines like chainsaws. lead kills catalytic converters.

Charles, if you stored petroleum products in your backyard, how many other people would be interested in extracting it from your backyard -- at gunpoint, if necessary?

This is the problem I foresee with very highly concentrated and portable forms of wealth -- they're far too great a temptation for thieves, some of which may be wearing official uniforms of one sort or another. A home that's paid off, a garden that can supplement your food supply, and -- crucially -- skills you can share with your neighbors and community, giving everyone an incentive to keep you alive and happy, seem like better bets to me.

Official thieves will be very hard to deal with;probably the only way most of us will be able to deal with them is try to get a family member onto the official thieves payroll.

If ts is in the fan,life will be very risky indeed for the unofficial kind in many parts of the backwoods.If it comes down to such a situation, I think it is rather probable that once a couple of farmers and householders have been murdered in the local area, the locals will just start shooting strangers on sight.

Such a strategy won't work in a city or suburb, but out in the deep country it might suffice.There are a lot of old soldiers in my part of the world who are still essentially Scots Irish clansmen at heart and some of them have made it clear to anyone who wants to know that in the event civil authority collapses they will consider thier property and the local community a combat zone, and strangers as enemy combatants.I have little doubt that they will find plenty of support after one or two acquaintances are robbed or killed and the response from the local sheriff or state police is less than swift.

But I agree that any concentrated form of easily portable wealth will in and of itself put the holder of it at high risk.The obvious solution is to conceal the fact that one possesses wealth of this sort-there is no need to advertise the fact that you have a stash of gold or other similarly valuable items , other than a childish urge to show off.



You'll have to look that one up, I'm afraid. But the sentiment runs in my blood, no doubt.

LOL in your case, Jay, that would be "FERN FOREST A BOO!"

"Retirement is a relatively new thing. Most people even in the industrial world did not have that option until fairly recently; before then, you worked as long as you could, and then hoped you had family who could take you in and find an economically useful role for you"

But isn't having a family that will take care of you when your old just another form of investing for your retirement? Granted retirement was much shorter, but I don't think that the "new" retirement is qualitatively different.

Is there a way other than investing that creates wealth? I don't follow. Even hunter-gatherers had to invest current resources in order to realize future gains. I don't think bumping up against PO or any other limits to growth negates the concept of investing.

I ask with an open mind: does investing in one's personal garden have less risk or more reward than investing in an agriculture fund? It doesn't seem apparent to me.

I think it is important to remember that not all investments are diabolically conjured financial services products.

But isn't having a family that will take care of you when your old just another form of investing for your retirement?

Zanzibar, good point. I think about this in terms of extended family.

I remember growing up in America that the goal, once you were an adult with a career job, was to buy your own home, start your own nuclear family, and become self-sufficient.

So now, my surviving parent lives 1000 miles away, alone. My sister even farther away, married with her own nuclear family, and we are all a bit 'alone' and separated as families. We cannot seem to support each other in our current BAU.

I envy those extended families that are able to stay geographically close enough together to mutually support each other. I can only hope my own extended family can get geographically closer together over time, before it is not easy to do so, if things go that route.

I think historically, people worked as long as they were able. Even when they were old, women knitted or helped in the kitchen.

I don't think investment (in paper investments) is going to work well any more. I agree, investing in a garden or farm may be helpful, but you sill have to deal with issues like poor health or bad weather or limited water for irrigation in some areas. Not everyone has children, or children who are in a financial position to help them. If families have fewer children, I think this will get to be more of an issue.

people worked as long as they were able

that was the one big adjustment to my thinking - I don't expect to ever really retire, and I will probably always have to work.

With that in mind, I take good care of my health, as there's no likely safety net if that goes. I also expect to have my house paid off and a good garden, which would take some of the edge off income requirements.

The one other thing is I don't expect things to be any easier for my kids, so I am open to the idea of them not leaving home. Which means a little extra effort to not burn bridges, relaxing expectations while guiding things in a workable direction and so forth.

It means people will have more children in order to support them when they realize Social Security isn't going to work.

We don't have kids and a lot of people that we know who are in a similar situation are talking to each other. It's not desperate enough (yet) to get serious about intentional communities, but this is an idea that has occurred to more than one person. The monastic communities provide one historical example of people without kids whose community provided for their future.

Inflation, deflation . . . green companies, strategic metals, farm land . . . zero coupon bonds . . . it all sort of runs together in your brain after a while. But if the community totally fails, and law and order breaks down, then even if you've got a hoard of gold (or farm implements, or farm land, or whatever), it doesn't do any good.

Therefore, the basic investment has to be the community. Once you've got your community, then you can speculate as to what form this community will take. It's basically a guessing game: maybe baking cakes will be a skill that no one thought about, or repairing used computers. The one constant is your personal community. The moral: live simply and be nice. That's your basic investment.

Zanzibar, if you expand the concept of investment broadly enough, of course anything you do for old age can be fitted into it. I'd point out, though, that for most people, the concept of investment might as well be defined as putting N amount of paper wealth into a different kind of paper wealth, so that you get N + X amount of paper wealth back. That's the kind of investment that no longer works in a contracting economy.

More broadly, it seems very likely to me that the end of the age of abundance will also mean the end of an economy dominated by money. In most human societies in the preindustrial world, even if they used money (and of course many did not), it was a specialized tool with very limited applications -- in medieval Europe, for example, most people living in the countryside (which meant, at that time, most people) might go from one year to the next and never see a coin. Economies of customary exchange, gift, barter, and domestic production managed the movement of goods and services.

Now of course you can "invest" in those economies, but there are important qualitative differences between those forms of investment and the kind that amount to cutting a check and waiting for the returns to come in. In particular, in those other kinds of "investments," don't ever count on getting more out of them than you put in: what is normal behavior in a money economy is parasitism in nonmoney economies.

I guess that is how I understand the concept. When a person makes goods or money they can either consume it right then or save it (for old age or an hour later). What they do with those savings until they want to consume it is investing. I suppose I was splitting straws. And now that I think about it now most of the retired folks I know today are still supporting their children not the other way around:)

If someone thinks of investing as N paper now and getting back N+X paper later then they certainly should not invest, because one of the prime rules of investing is don't invest in something you don't understand, and if that is what someone thinks they clearly don't understand. I don't understand what feels to me like an insistence that all modern investing is worthless "paper" that will go up in a puff of smoke. Why? Just because the factories, fields, commodities, technology, ect aren't in my own personal backyard? I mean we all learn about object permanence by the time we are 2 right? It seems to me that paper is a very appropriate medium for recording ownership. Didn't cuneiform develop from marks on clay tablets that were used to keep track of who owed who what commodities?

That using accounting to record ownership is a tool that will vanish with the end of the age of abundance doesn't seem reasonable to me. Nor do I see why a post-industrial world need look exactly like a pre-industrial one. I don't know what it might look like and that is why I wouldn't recommend that people sell all their retirement accounts and buy farms like seems to be such a common notion here. Apart from the fact that if everyone did that there would be zero mortgage loans to buy farms, zero loans to buy equipment, seeds, animals, zero equipment for that matter because the tractor company just had all it's funding pulled, etc. Are there risks associated with owning things like equities and bonds? Sure. But there are equal risks in owning your own farm. So diversify...buy a smaller farm and own other investments as well.

I do think it is a great point that many people may indeed have the N=N+X mindset about investing and maybe security investing isn't for them. Not all investments are equal. If the company Yahoo is valued at the same price as the entire New Zealand stock exchange--as I've heard it was during the dot com boom--and PO strikes, which one will evaporate the most?

"Most people even in the industrial world did not have that option until fairly recently; before then, you worked as long as you could... "

Exactly, most people in the rich world know how to do only one or two things and they do those one or two things for wages in order to hire others to do everything else for them - retirement is just betting you live long enough to do nothing.

Unfortunately, most people's job nowadays is to oversee work done by energy slaves and most of the slaves, and so the slave-driving jobs, will go away sooner or later.

My advice for what it's worth is spend at least part of your retirement money on not needing retirement money; learn to live on less, eliminate debt, diversify your income, raise a little food and lower your energy profile.

We went 40 acres and a tractor, I do graphics from home, I work outside at the neighboring dairy, we raise bottle calves and (coming soon) homestead milk/beef cattle , we work a greenhouse and small market garden, no mortgage/loan payments, around $500 monthly expenses excluding food.

And keep up good relations with your relations - our daughter and SIL own the property next door...


I think you state a very important distinction missing in the debate. If you do not carry a lot of debt into your retirement, and own your dwelling, you require a lot less money.

My understanding is that was the typical life scenario 2 or more generations ago. Not that people didn't use debt. Only that debt was an infrequent state during life that was not taken on lightly or with little thought. The path to do that has gotten corrupted by easy lending.

Today I see that most U.S. citizens stay in a permanent state of debt from early adult hood until well after retirement. That should never have been considered a sustainable approach in the past and it definately isn't one going forward. Personal diversification of money should not be into investments until debt is reduced or eliminated

NC, exactly! It's possible to get by on very little money indeed if you have no debts and own your own home free and clear, especially if that home uses as little energy as possible because it has all the standard heat-saving tricks in place, and heats its hot water with sunlight. It fascinates me how many people have lost track of the fact that the easiest way to get financially comfortable is to cut your expenses, so you can count on spending less than you earn.

Unfortunately, the issue many face is that cutting expenses is increasingly being called "illegal."


There's something you didn't mention, and that's longevity.

In order for there to be a "comfortable retirement" there also needs to be access to a certain standard of medical care. It's a pretty recent development that people live for 30 years after retiring.

I don't think one can make the assumption that the drugs, triple bypasses, hip replacements et al, will still be affordable or readily accessible twenty or thirty years down the road.

With reduced access to medical care, it is likely that fewer and fewer people will have a long retirement - we'll likely go back to the scenario of retirees only living for a few years after ceasing to work, if they stop working at all.

Spring_tides, that's an issue, but it's a more complex one than I think you realize. Right now -- if you count iatrogenic diseases, drug side effects and interactions, nosocomial infections (those endemic to health care facilities), and all the rest of it -- the American health care system is quite literally this nation's leading cause of death: more people die from health care than from cancer, heart disease, accidents, or anything else.

Most of the increased longevity in the industrial world over the last century -- in fact, most of the drastic improvements in public health generally during that time -- are the product of improved nutrition and basic public health procedures such as water purification, not of high-end procedures such as triple bypasses and hip replacements. Now it's quite true that many of those public health procedures are now breaking down due to decades of malign neglect -- it's not accidental that the rate of infant mortality in the US is on a par with that of Indonesia -- and the improved nutrition is likely to become increasingly problematic as well. Still, things being as they are, I'm not at all sure that the shuttering of the abysmal American health care system will cause any noticeable drop in life expectancy.

Something nobody seems to want to accept is that we'll all probably start dying a little younger, and many will be pleased to do so. It is highly unlikely that the "Roll Royce" medical systems that support GOMERS into advanced decrepitude will persist much longer.

I would like to see everyone equipped with a small vial of crystalline sodium pentobarbital (Nembutal). I say "crystalline" because in this form it does not degrade, and will remain potent for decades. All you'll need to do is crush it with a mortar and pestle, when the time comes, and then mix up with a liquid, before imbibing, the result being a painless, peaceful and convenient death.

Ya' get the childproof lid with that, right?


While it is true that many people die while under medical care (and too many die from actual mistakes made by medical personnel), it does not follow that the disappearance of the American medical system would not have an impact on American life expectancy.

The simplest way to show this is indeed the example of infant mortality. American babies do not die of the same diseases as Indonesian babies. In fact, all recent improvement in the American infant mortality rate has occurred because of medical advances. The problem is the outrageous and quickly worsening premature birth rate in this country (and its causes).

Things might be similar for the rest of the health care situation. A couple of years back, British researchers showed that Americans got more "bad outomes" from any given "risk factor" than the British people did. For example, a one-pack a day smoker was more likely to get lung cancer if he lived in the US, than if he lived in Britain. My guess is that the American health care system would be sorely missed, at least until all the people now kept alive are no longer with us (or with you, as the case may be).

Interesting sites:
I think we are on a par with Greece, not Indonesia.

I look at retirement as either passive or active.

If you plan to accumulate wealth and then have others pay you some return on that wealth so that you can live after retirement, then I consider that as a passive approach. It is an approach that assumes that the energy of others will be willing and able to provide for you.

If you plan to accumulate wealth and then acquire land, tools, and use your own labor and knowledge to create wealth to sustain yourself after you leave your official job, then I consider this as an active approach.

The first depends on others; the second depends upon you. The first keeps you dependent while the second makes you independent. And when the system collapses, independence improves your chance of survival.

Retirement obligations of employers, government, and insurance companies are liabilities which can be defaulted upon. During times of economic collapse these liabilities can be swept away. If you have concentrated your wealth in these paper promises to pay you, then you can easily be wiped out.

I feel the same drive toward independence myself, but "independence improves your chance of survival"? Only if YOU don't get sick, injured, have a local drought, etc. I also agree to keep counterparty risk to a minimum, but you can also easily loose your own tangible assets to things like theft and fire. I would guess that is why banks evolved to begin with. Again I would say diversify.

Zanzibar poses a good question...if independence improves your chance of survival, then why did humans ever band together to begin with? And why was being exiled or ostracized from the community considered such harsh punishment throughout history? Of course complete and total independence insures not only death but extinction, because it makes breeding very difficult!

No, we're stuck with each other, like it or not...and most folks like it more than they are willing to admit...thank God.


"The first depends on others; the second depends upon you."

I totally disagree along the lines of zanzibar. no matter how self-sufficient we think we are we are all part of society. someone is retired right now on shoes you bought, the clothes you are wearing, the power you are using to post on the computer that you bought. we are all interdependent. some hosting company is making money on this site most likely.

whatever you buy this next year someone will receive dividends from owning the stocks of the companies whose products you bought. if you put your money in a bank you earn interest. someone is making money off of the farm implements and seeds that are all the rage here.

I disagree with the active-passive binary as well.

My parents (both in their late 80s) have been "retired" for nearly 25 years, with their income based on a government superannuation pension, and a number of other investments. They have been incredibly active, and only lately have increasing mobility problems slowed them down. Their engagement with the community from their suburban home has been very strong. My father is also very skilled as a carpenter, gardener, and motor mechanic - but even these useful arts have been slowed by his age.

Investing accumulated savings in whatever - and using the returns as base income - is no less "active" than having a farm, and then trading your hard-won produce for something else - and to me it is not a marker of greater dependence either. Running a farm is a very dependent activity, in all sorts of ways - and I think the dream of a retirement (or post-work) farm in these troubled times is a peculiarly American meme (certainly on this forum), perhaps caused by watching too much Davy Crockett as kids.

There are lots of other sensible, sound, and satisfying retirement strategies, and they do not mean being "dependent" - but as I and others have said, having a mortgage-free home in a good spot (with services and transport), and no other debt, and perhaps a modest range of practical skills so as to be minimally obliged to call in expensive trades all the time - all good, and not requiring you to enter the hard slog of farming in late middle age.

This is not actually a comment on 'how' to invest our hard earned $$$, more an excellent backgrounder to how to invest in the future.
The Roosevelt Institute just finished up a conference a week ago titled 'Make Markets Be Markets'; here's a link to the procedings: http://www.makemarketsbemarkets.org/
I think you folks around the campfire are really on to something. You have some real intelligent people with some real smart ideas here. It gives me some hope. I think what's missing is just critical mass.
I think these kind of changes, as proposed by some also very smart people might resonate with you folks here. After all, the PO and BAU discussions that are held here are all of one piece. Our collective way of life in the 21rst century is rotten. Everything HAS to change or nothing CAN change. And that includes our governance models and our way of thinking about money and the assumptions we have that support our way of thinking about money have to change too.
Anyhow watch the speakers videos; they're only about 8 minutes each or read the report. If we can, somehow, make some changes in the regulation of the financial services business then a great deal of the angst and anger and confusion will just no exist. You should be able to just work hard, stay sober and save money to be able to take care of yourself and your family. You should not have to have a degree in contract law and another in economics just to make it through retirement.

I listened to the three videos earlier this afternoon. I agree--they are excellent. I sent a link to other Oil Drum staff members.

Besides peak oil, it seems like we have a lot of problems to fix!

"Besides peak oil, it seems like we have a lot of problems to fix!"



My advice is to cash in your retirement savings ASAP and build yourself a countryside retreat where you can be self sufficient and survive Peak Oil. Surely that is the logical conclusion for anyone subscribing to The Oil Drum? The other reason to do this is because financial instablility may well wipe out your savings in a heartbeat, so better get what you can while the system still functions.

I had a retirement fund in a rock solid British life insurance fund, Equitable Life, which was like a cooperative fund 300 years old, i.e. not run by speculators, but it went bust even before the financial crisis hit. I had paid in about 20,000 USD and felt very lucky to have been able to salvage about 7000 USD from the wreckage (about 5 years after it failed). My brother has cashed-in and bought a nice piece of land in Portugal where he is making himself future proof with permaculture and mini hydro power, but he will need at least 5 years to set himself up. So get cracking, there is no time to be lost.

Follow me on Twitter: http://twitter.com/wolfemurray

My advice is to cash in your retirement savings ASAP and build yourself a countryside retreat where you can be self sufficient and survive Peak Oil. Surely that is the logical conclusion for anyone subscribing to The Oil Drum?

IMO...no, not necessarily.

If you have to borrow to buy that doomstead, then it could be a big mistake. And even if you can buy it free and clear, it can still be a mistake. You'll still have to pay taxes, and it's possible that taxes will skyrocket as state and local governments struggle to balance their budgets. Never mind that good farmland might well be as attractive to thieves (some wearing uniforms) as gold or gasoline.

I am also hesitant to tie myself down to any one place. It might be different if I had deep roots somewhere, but my family has always been wanderers. To me, safety is being able to move easily, not to hunker down. Bad neighbors, a bad local government, catastrophic climate change or some other natural disaster - you may need to get out of Dodge. Not to mention more mundane possibilities, like moving to get a job or be with family who needs you.

I kind of like what this guy is doing. A friend of mine is doing something similar. He started with an Econoline van, and has converted it to run on french fry oil. It also has a composting toilet.

LOL! Only an American would see a nomadic life in a modified truck as a sane response to peak oil. Thanks for the laugh, mate.

"Only an American would see a nomadic life in a modified truck as a sane response to peak oil."

Hey, it was an Aussie who visualized post oil apocalypse as a fast moving hot rod road game...remember "Mad Max"?
"On The Road Again", we can weather anything if we can get out on the ole' interstate..."out with the truckers and the kickers and the cowboy angels...a good saloon in every single town." Gram Parsons, "Return of the Grievous Angel"


My advice is to cash in your retirement savings ASAP and build yourself a countryside retreat where you can be self sufficient and survive Peak Oil. Surely that is the logical conclusion for anyone subscribing to The Oil Drum?

No, not necessarily at all. Firstly, there are no clear indicators yet of when peak oil will have such an impact that retirement savings will not earn a return in constant dollars, or worse, that the capital itself will vanish. If the capital vanishes ... then basically everyone is stuffed - including the 40-acre farmers.

Countryside retreats do come with a lot of downsides, including the process of moving to often quite conservative communities (if you haven't lived there since at least the Civil War, then you're a blow-in, etc). There are some chic parts of most Western countries where lots of new-agers, hippies, and other escapees from cities, have concentrated in some numbers, but they're generally not cheap, and not necessarily great farm-land.

And by definition, a countryside retreat means you are far from services, stores, schools, work, and lots of other things that city and town living provide you at lower cost, and lower hassle. And you can be far from friends and family as well. I think anyone reaching retirement needs to think really hard about heading for the hills - personally I think there are better strategies, such as closeness to the sea, a warm-temperate climate (cold weather is really felt by the aged), and the availability of services. Even if BAU is severely disrupted in the next 10-20 years (by financial meltdowns and peak oil), life will still go on, and owning a modest home in a modest urban location (but not the car-based suburbs) where there is community - might well be a better option for those aged 55 or more, and post-career.

All this negativity makes me quite bullish.
Most people still have jobs and the world needs lots of capital.
Today, cash is king.
The government is printing money and giving it to the banks, trying to slowly inflate the world.
This will probably take a decade assuming that the government, business and the consumer in the main are able to show their willingness to pay their debt.
It is also unlikely that the government will raise interest rates to reward savers in the near term.

It's important that the government re-regulate the economy to remove the phony gimmickry and get-rich-quick attitude but given the power of Wall Street that may not happen.
For the US government it means cutting the budget and raising taxes to pay the additional interest due to the wars, tarp and stimulus.
Only the rich should be taxed because they pay most of the tax anyways and the object is to raise money--also many people will become quite poor.
The financial industry is the most profitable part of the US economy so I expect the stock market to continue rising.
As for Peak Oil, it's a no-brainer; the price of oil will
rise, depression or no, so energy stocks will over time will rebound.
I expect a strong stock market just as they had during the Great Depression despite the 'socialist' FDR and a 90% top income tax rate.
The 1974-5 bear market was characterized by severe gloom
but it quickly ended.

For individuals who have equities, they are back to 90% pre-cash levels.
The US dollar is strengthening this year.

If you have money, put it in defensive, cyclical stocks and prepare for a slow rise.

The real economy/reality is another story.

To some extent I feel sorry for you, majorian. You are so invested in business as usual that you cannot conceive of any reason why it shouldn't continue.

You can have your stocks. I'll take my gold. Best of luck and see you at the finish line if we survive.

The odds that tomorrow will be doomsday are infintesimal
as calculated by Pierre-Simon Laplace.

Laplace used the rule of succession to calculate the probability that the sun will rise tomorrow, given that it has risen every day for the past 5000 years. One obtains a very large factor of approximately 5000 × 365.25, which gives odds of 1826250:1 in favour of the sun rising tomorrow.
Laplace knew this well, and himself wrote to conclude the sunrise example: “But this number is far greater for him who, seeing in the totality of phenomena the principle regulating the days and seasons, realises that nothing at the present moment can arrest the course of it.”


This will probably take a decade assuming that the government, business and the consumer in the main are able to show their willingness to pay their debt.

Majorian, I always enjoy your posts but I think you need a reality check. Most peoples' debt default has nothing to do with their "willingness" to repay. They are defaulting because they can't pay their debts. 2-3 years ago they had great credit ratings. Now, if they can find a job, it's part time and pays a fraction of their former income. They have no choice because they are at/below subsistance levels. Many "inbetweeners" are surviving on credit and will be in default soon. So I agree with what you said:

"The real economy/reality is another story."

The banks continue to forclose and seize assets as if this will help them stay solvent. Until there is some form of debt relief/forgiveness I recommend hard assets.

Cash out, taking whatever penalties, and take physical possession of actual durable goods, land, supplies, and skills you will need.

yep 710.

i've walked the talk. got a little to get out of the last IRA this year. i took penalty & all & even though i've been early in predictions of problems but no regrets, & a sense of peace. if timelines are longer then my SS, gardening, etc. probably enough; but back to work if necessary. paid off our place & bought a cheap -$3000- backup place. may buy another if we get wife's ira we can't for now.

i don't understand unnecessarily staying in financial assets, given the risks we know exist.

godspeed to everyone with their choices.

Doomers, Gloomers or Boomers. Financial Investments... to realize these instruments and discussions are so far removed from the reality of aboriginal life. The discussion really makes me realize how much we live in a make believe, illusion filled world of so-called smart money making men. What ever happened to doing what needed to be done, damn the cost, just get it done. Now I know why I hate places like this, Gail the Actuary, while being a basically good kind hearted person still sees every moment as a $ actuated moment. My Mother had to learn that lesson. INDEED! THE AGE OF AQUARIUS! The Children of the 60's should be embarassed. Nothing but WAR and DEDT SLAVAERY! Oh. How I mourn!WEALTH WITHOUT WORK! HARD WORK REWARDED TO INVESTORS! Please, it is time for humanity to pass into extinction. EXTINCTION! EXCINCTION! Nothing worth left to save. Your comments prove it.

Mourn Mourn Mourn! How it should have been. IMAGINARY FINANCIAL INSTRUMENTS? WEALTH WITHOUT WORK. Let all the "COLLEGE EDUCATED" try to live without Farmers. An "Actuary" NO>>> A Thiefin a suit and tie, supported by a system so corrupt and lazy, that when it collapses, will strip its infracstructure to trade a day of life versus a lifetime. Such a system needs to destruct and fall. Doomer, gloomer? I will strip your bones of rotting flesh to survive.

Please, it is time for humanity to pass into extinction.

All True.

And We are that which will replace you.

What ever happened to doing what needed to be done, damn the cost, just get it done.

Isn't that really what we are talking about here? Many people are talking about taking what money they can get their hands on, and investing it in fertile land or other ways that will benefit them long term.

"Gail the Actuary, while being a basically good kind hearted person still sees every moment as a $ actuated moment."

Hey, you can get by with a lot, but don't pick on our Gail..I have had my good natured disagreements with her on occasion, but she is sharp, thoughtful, tolerant to a fault, and has provided me with many thought provoking discussions (and be fair, she is an actuary, you would be surprised that she discusses dollars? :-)

I have learned, and in many ways learned it a bit too late in life, that life on earth is very much abour MONEY. Sorry, that's just the way it is. In a perfect world poets would be honored and bankers would be tolerated, but in reality it seems to be the other way around.

I can scheme, I can plan, I can be artistic and creative and profound with the best of them, but if I don't have the resources to actually sign the check, it is all just mental exercise...sorry, that's just the way it is.

Wealth is discussed in The Epic of Gilgamesh, it is given a place of honor in the Bible and in Beowulf, it funded the Gothic Cathedrals and the Renaissance masterpieces, it was as sexy to the young ladies of Jane Austin as it is to the Ferrari driving bimbos of Hollywood and the aspiring chic hookers in Odessa. Sorry, that's just the way it is. From Babylon to Broadway, from the collection plates on Sunday to the Wall Street closing bell on Friday and the posh hotels and casinos of the weekend, money is the price of admission. Sorry, that's the way it is. So go ahead and mourn all you must.

I never missed money until I got old enough to realize what you could buy if you had it. Answer: Short of immortality, just about everything. And so it has always been.


My retirement plan is to work until I drop, then you can throw me in the compost heap. Check the boots though they might still have some wear in them.

Why not borrow an idea from Lockheed-Martin? They rent their facilities from the employee retirement fund. Have your IRA own a subchapter S corporation, and let it finance your working tools and land. I wonder-- if you're a business, could you charge yourself the same hideous rate the local bank charges you and deduct it as a business expense?

This advice is for economic conservatives and moderates only. Economic liberals and socialists please stop reading here as you should not want to earn that evil thing called capital. It is sooo unfair for you to have more than the BILLIONS of people around the world who are in Real poverty. Why should you have a car when so many can not afford it at all or four people have to share a car? Why should the average poor person in America have more square feet of living space than the average resident of Europe? Not to mention your oppulent living style as compared to so many.

...but don't worry, the rest of the world is catching up quickly and the American lifestyle predictibly and almost certainly is in rapid decline (thanks in very large part to your belief system helping influence the country)(although admittedly not wholly due to that as there have been gross flaws in leadership on every side).

I earned the right for the above and anyone who followed my former financial recommendations on this site would know that (ie PWE was one of my two key recommendations up 247% in one year, search yahoo.finance quotes) and also see very large increase in ARC energy (aetuf).

That said, here we go.

Any financial advice I offer is simply my own opinion (and so is everyone elses). I make absolutely no guarantees because all investing has risks (even CD's have risk of being eaten by inflation). Do not blame me if I am wrong, you must make your own decisions.

1. I would not generally invest in the stock market and especially U.S. stocks. The only U.S. stocks I have are Pepsi and Johnson and Johnson (2% total, 3/4 in Pepsi) because they are international companies. I pulled my general stock market investments 10 years ago when I read that 1500 years of combined history in three countries (US, England and Japan)show that when the population over 50 is increasing relative to the population under 50, the stock market goes down. There is a similar study in Barons this week that recommends staying out of the U.S. stock market until 2026. In fact, the market has been flat for 10 years and lost against inflation. Dividends and international presence would be important in any stock if you believe these studies.

(economic liberals I hope you are still not reading...go to above at top and stop being soo greedy).

2. Where you do invest depends on your perspectives on what will happen in the future. If you believe in peak oil than you would certainly do want to invest in energy. I have taken a very aggressive approach of 50% in energy. On the other side, many brokers will tell you not to put more than 25% in one sector. I generally do not invest in U.S. companies and especially the majors (ie Exxon)as I believe that the majors will possibly do well but not as well as others because they will have trouble replacing their oil assets at a reasonable cost as they are used up and as there is a worldwide battle to control resources. I do believe in many Canadian oil companies because they already own and control the assets, are in a generally politically safe area, Canada has it's retirement system financed for 75 years, they are moving toward capitalism and have a "conservative" government (at least directionally) while the U.S. has a real mess...

3. Last time liberals (Have some integrity and stop reading and focusing on evil thoughts of owning more than any others)

I still own and like Penn West Energy PWE and ARC energy as my oil investments as core investments. PWE owns 7 million acres of land in Canada, is 60% oil and 40% natural gas and has a nice dividend and great potential growth. ARC Energy aetuf.pk also has huge tracts of land, is 50% oil and 50% nat gas and also has a nice dividend and huge potential growth. I have a small allocation 2% to Crescent Point Energy, a smaller company with a nice dividend and perhaps the largest potential growth relative to its size. All of the above have very competent management teams.

2. I like Canadian and Australian bonds for safety because these are resource based economies.

I have about 1%-2% in precious metals mostly silver and a bit of gold as an inflation hedge and have been increasing silver recently. Silver is a vital resource that could be in very short supply soon as there is likely increasing demand for both industrial uses and investment. Stephen Leeb who I follow (although I don't think he is that good at picking stocks) says there is only a 9 year worldwide supply of silver. I invest via SLV and personally use options which are more risky.

I keep 10% in two real estate investment trusts RIOCAN real estate investment trust, Canadian shopping centers with anchor stores like Walmart and Groceries, and ING real estate trust (IGR) (US and worldwide real estate) in a non-leveraged reit. These generate dividends and may do well in a peak oil environment because they are real assets with good income but also might be hammered if peak oil gets too bad (but then the oil allocation will likely offset that anyway).

If you have a peak oil investment strategy you must always monitor technological developments because if there is a game changer (which I lean against) in energy technology that could require a total change in investment philosophy. If oil were no longer a large problem than I would focus on income bearing investments and have more focus on natural resources such as silver which will even more likely be in short supply as the world expands .

Best luck.

Everything you are doing can work but it has to be timed perfectly now. If you can do it, I don't begrudge your success. If you can't, don't cry for the taxpayer's tit.

At some point, the world runs out of either fools or money. And that's when the game is up.

I wouldn't ever depend fully on the taxpayer or the government and since I believe in diversification, I doubt I will ever need to.

I even more doubt that the world will ever run out of fools OR money. History points to the first and governments (especially the U.S., England, and a few others) can and will keep on printing money (it's just a question of what it will be worth).

If you are predicting a total collapse of society I do doubt that as a very high probability. There is a lot people can give up (large SUV's, long vacations, large homes) before they have to give up food and safety. If there is any serious collapse, it would not necessarily be worldwide.

Good post wallstreet. I'm kinda over the 'buy land and seed and head for the hills' horseradish these campfire topics often generate. Amusing to read but really, if you think PO is going to totally wipe out the world economy, you are better off just kissing you're a..e goodbye. You're not going to be able to escape no matter what you think you can do, we all live in a deeply interconnected world. There is a lot the USA in particular can do before collapse - for god's sake it's using 25% of the world's energy resources !!

As for retirement investment, I believe I'm fortunate to be living in Australia, we are still resource rich (sometimes I think we treat our land like one big quarry), and have potenial to be a major LNG exporter next decade. Our retirement contributions are compulsory (10% of income - called Superannuation), you have the choice of what company put your money with, if your a rich enough you can DIY. So I've chosen a company that lets me invest 50% of my savings into the ASX. That allows me to invest in listed energy companies. Like you I don't see a great future for the majors, I look for good companies holding significant oil and gas reserves relative to their size (I see PO being a significant issue by the end of the decade).


You are right to believe you probably are financially fortunate to be living in Australia. It is the fact you mentioned above, that the U.S. is using 25% of the worlds energy, that is just one of the major problems here. We will need to adjust an economic structure that for a long time thrived and was designed around cheap energy. Once a person gets used to driving a Cadillac it is also very hard for them to accept driving a Prius.

The U.S. also has a huge class of non-taxpayers (36% of U.S. tax filers don't pay any income tax at all and many more don't work and live off the Government). The Government employs about 1/2 of all U.S. workers and Federal workers now earn twice what the private sector workers earn. The Federal Govt. and the States provide unafforable lifetime government pensions based on 20 or 30 years of work (often inflated by a formula that allow the last three or so years to be the calculation factor, so the Govt. employees work overtime to inflate their pensions).

This is creating an "entitlement" mentality in the U.S. that can not be financially sustainable in light of peak oil and unsustainable future Government promises. The U.S. debt is (at this moment) $12 trillion 587 billion but that doesn't count the real financial shinanigans. The U.S. Government borrows from the trust fund for Social Security and Medicare and then promises to pay that back but that is "off the books". The Government also has other huge "off balance sheet" budget items (such as wars- whether justified or not I am talking finance) that don't "count". Any business or individual that did accounting like this would be jailed.

During the past year the U.S. Federal Reserve began "quantitative easing" which means they print money to buy U.S. bonds. Printing money to pay back their own debt.

I'll take my U.S. dollars and trade them for Australian or Canadian any day and I did when I bought some foreign bonds. The U.S. has relatively larger real problems because of our mentality and direction.

Finally, an economic liberal in Australia might well look like an economic conservative in the U.S. and especially on this website where some lean toward Marx and even Castro.

I would also mention that I see peak oil as a creeping issue but much sooner than the end of the decade. The real crunch begins probably in 2012-2014 but could be sooner or a year or two later.

Best to you.

Yeah, one of my worries about the US is the true level of debt. The future cost of health is a time bomb for sure - Obama has just shortened his planned trip to Oz because he is worried about getting his health reforms through. If debt is really around 12 trillion, then that's still below one year's GDP and manageable, start getting over say 15 trillion and it's gonna be a lot harder to pull back.

From what I've read on TOD, there's is indeed a likely peak oil 'crunch' by mid-decade. I'm hopeful new projects coming on-stream later in the decade, that were delayed by the GFC, will give us some breathing space, and (being optimistic) finally raise PO awareness at a political level.

"Economic liberals and socialists please stop reading here as you should not want to earn that evil thing called capital."

you're a moron.

best luck!

no you're not wallstreet. Like I said I like your post, but from the viewpoint of the US political system I'd probably rate as a socialist .. so beware applying labels and putting all us 'lefty softies' into one bucket !

Such a pithy comment and wonderful analysis. What exactly is incorrect about what I said? Do you not live better than most people around the world? Isn't that inherently very unfair? Do you have a car or more than basic sustenance (or a tv or iphone?). Wouldn't it be much fairer to have the Government take much of what you earn and have and redistribute it to create real equality? Or is what you have the right amount of wealth You are entitled to but nobody is entitled to more but should have no less. You probably have not fully thought out what you have been indoctrinated to believe (by schools, mainstream media), while I, a child of the 60's (and even a former ultra-liberal) take the instinctive approach to question everything.

go long straw and sell it to wallstreetexpress.

Cann't tell if you are a straw trader but let me know the price and I'll look into peak straw. It is hard to be with certain facts that go against a person's own boxed in view but an enquiring mind wants to know and doesn't always come from "I'm right". And what if I'm right and you have just been fed a lot of tripe all your life.

wallstreetexpress advised

If you believe in peak oil than you would certainly do want to invest in energy

Nope. I am 100% certain there will be gasoline rationing and other government meddling that will make oil investments very risky.

This is something I've been thinking about for awhile, and I think everyone needs to think about it. It's not a matter of wanting to spend the last 30 years of your life golfing and lounging by a pool somewhere. It's that as you grow older, you may no longer be able to work. What happens then? Social security, disability insurance, pensions, sponging off your kids - I don't think we can rely on any of those.

A Roth IRA has some advantages over a regular IRA, in that it's easier to withdraw your money without penalty if you need to. But the problem with IRAs is that the rules could change at any time. And I imagine the government is going to find all that retirement money awfully tempting as the budget gets worse.

Deferred compensation is another minefield. It's not just for high-paid fat cats; a lot of state and local governments use it, because they aren't allowed to offer 401(k)s. I remember hearing that if your employer goes bankrupt, you lose your deferred compensation account. That did happen to some GM employees, and I can imagine it happening to a bunch of state and city workers as governments scramble for funding.

Right now, I am more or less following Stoneleigh's How to build a lifeboat advice. With a bit of hedging, partly because it's not easy to get out of some investments, and partly because I think it is possible that BAU will go on for the rest of my life.

Well, no matter what folks do with their investments you can bet the farm that when several hundreds of millions of them do it all at the same time that it will be a game changer. When the herd moves suddenly in any direction the earth shakes (also known as a stampede.)

In developing a viable strategy envision a Gary Larsen cartoon wherein all of the cows are 'tippy toeing' in one direction while simultaneously doing an 'en masse' head fake in the other direction. Sort of like what Obama is doing with Health Care reform (posturing as though it is YOUR health he's concerned with... when in reality it is the financial health of the INDUSTRY that is being cared for.) But I digress.

The banks and similar institutions have your money (ha ha) but not really. The only reason you even think that all of that 'money' still exists is because no one has asked to have it back. It is the ultimate Catch 22, "Yes, you have half a zillion dollars... unless you try to lay your hands on it, in which you have bus fare... maybe."

That's what the "Bailouts" were all about folks! When some sleazy idiot fat cats asked to get their 'money' back from some even sleazier fatter cats the money stopped existing because there wasn't any "real" money there in the first place... just an infinitely long and convoluted chain of false promises.

Their solution, of course, was to invent a giga bucket of fake money based on yet another false and even twistier promise (the promise that taxpayers would pay it all back with future taxes on future income from future production of .........jeez, what is it we're actually producing again?)

Everybody knows WHAT'S coming. They just don't know WHEN, right?


The 'what' is all around you and across the globe, and the 'when' is right now.

The collapse has been in progress since 2007 or if you insist upon drama, the Autumn of 2008.

The casualties are stacking up like cordwood, to those with the nerve to notice, in the form of those who have already lost their job to the recession, their home to the over-leveraged bank, or their life to a dysfunctional health care system.

Don't be distracted by the pace of it. Rome did not fall in a day.

I highly recommend making for the exit starting now.

And don't worry about yelling fire in a crowded theater. The crowd is deaf as a post

Successful investing is one of the most difficult and least understood skills. It is possible to correctly predict the future direction of the economy and still loose money. It is possible to be smarter or better informed than the other traders and still loose money because the heard makes the direction of the move and not what “should” happen.

People have bought some of the greatest growth stocks, which did in fact continue to grow, but did not make much money because they paid too much.

In 1998-99 when tech stocks were the only game in town, the smart investor was buying gold, silver and natural resources.

In the 1980’s when US Treasuries were yielding double digit amounts, you could have bought 30 year zero coupon bonds for 2 cents on the dollar. Holding until today would have given you a fifty fold return on investment.

About 10 years ago an excellent article was written about finding “The Next Big Thing” in investing. It reviewed history of things like the more than 10 fold increase in the US stock market from 1982 to 2000, the 1970’s gold spike and other past manias. It also predicted the super bull market in commodities.

The real big money will be made investing in “The Next Big Thing” and the big losses will be in the Last Big Thing.

Some who had courage to buy beaten down stocks in late 2008 and early 2009 were well rewarded, espcially if they bought the most beaten down stock stocks like Teck Cominco (TCK), Freeport McMoran (FCX), International Paper (IP) and Thompson Creek (TC). All of these had returns in the last year of 500% to 1200%. How long will it take you to make that in a CD or US Treasury bond?

One guy I know (retired, late 60s) lost his wife a few years ago (no kids). They had a small farm (40+ acres). He took his wife's life insurance, bought the adjacent 100+ acres (cheap fire sale) and put 3 nice "manufactured" homes on it, built a pond and put the rest into pasture and growing things. He rents the homes for a multiple of the tax liability to young families that are employed yet willing to put time in on the farm. This allows this younger generation to save some money and he is passing his skills on to them. Since he has no heirs I assume that he will leave his properties to this little group he has assembled. I noticed one of the homes is not occupied now so my guess is that the couple living there didn't work out. The little Mexican family that he adopted is working hard on the place and are, IMO, there to stay. I am trying to get them interested in RE, as they have a nice mico-hydro site.

This guy has manufactured his own family and I have no doubt that he will be cared for as he ages. He has invested in people.


That is an interesting story, and I think indicative of some of the social restructuring we will see in the future.

In a post above, I cited the possibility a return to a neo-fortress/garden architecture...groupings of structures in a semi-connected, possibly walled or even moated community, with the gardens and moats being justified for food and fish and the community providing security and community and assistance...combined with the social structure you cite and you can see it could be a very locally sustainable situation.

Of course, it presents the possibility of downside...if the "patron" of a situation like this were to be a tyrant or a bit unbalanced, life could be hard for those sucked into the situation but they would find it hard to leave if the larger economy were to be in decline. In a way, it becomes somethoing of a serf arrangement for the citizens, with the dwellers bound to their now feudal lord. This is why the structure of the larger state/nation would still be of importance (I have seen this problem in trailer parks that were essentially "ruled" by the owner, and of course every southerner should be familiar with the abuses common in the "sharecropper" system so familiar in the U.S. south).

But the times they are a changin'.


Although peak oil is a new phase of human history, traditional wisdom has seen human beings through incredible trials and tribulations.

The old adage "Don't put all your eggs in one basket" still rings true to me. As an aging baby boomer, I know plenty of people who went back to the land decades ago, because they were "sure" that industrial civilization would collapse. Some of them are happy peasants today, and some of them are bitter and disappointed. Indeed, I also am confident that industrial civilization will eventually collapse, but I believe that the collapse schedule is beyond the predictive capabilities of any mortal.

Following the investment advice prevalent on this forum would have had me cashing our my SEP (Self-employment Plan, formerly IRA, formerly 401K) at the bottom of the 2008 market bust. At age 52, I don't have any immediate need for those funds, and indeed I add about 25% of my income to the SEP each year. Following the diversity principle, my SEP has a mix of US and international equities, corporate and government bonds, with a focus on renewable/efficiency technologies and basic industries like railroads and utilities. I don't pretend to know how these different investments will perform, but the mix just makes it more likely that at least some portion will hold value in the future.

Outside my SEP, we own several properties outright (including half a farm in Costa Rica), with no mortgage, plus bonds, cash, and stocks. As a software engineer developing energy-efficiency modeling tools, I have no interest in the peasant lifestyle, although our homes in Colorado and Costa Rica have plenty of edible landscaping which we enjoy. From my work in building energy efficiency, I am confident that there is huge potential for reduction in energy consumption without collapse, and we have lived in a passive solar house for the last 25 years, investing the money we would have spent on energy, traveling by bike and bus and investing the money we would have spent on cars also.

My guess (recognizing my inability to predict the future also) is that many who cash out their 401Ks and drop out of the "system" to a small farm will end up regretting their choices, and will find that "dropping back in" is harder than they imagined.

Honestly, financially I could stop working today, but I enjoy my work and find it meaningful too, so there is no motivation. At some age, my cognitive powers will probably degrade to the point that writing software is impractical, but as long as I live I hope to do useful work. So for me, "retirement" saving is really about having enough assets to work as I choose, and not as I must.

"So for me, "retirement" saving is really about having enough assets to work as I choose, and not as I must."

YES, YES, YES! I think he's bloody well got it!

Most people do not mind constructive work, it's who you have to work for and the conditions of the work that are the pain in the backside...I have seen too many guys take the "do nothing, play golf" retirement path and they felt lost and useless for the rest of their life...it really is not the paradise it is made out to be, and seems more a method of peacefully getting the old guys and gals out of the way instead of a real path to meaningful and rewarding later years for the retiree...


A Retiree's View...

Ok, we've heard from those who plan to retire but what is it like to be retired? I'm 71 and retired a little over 11 years ago.

First some basics:

Income streams - Social Security (2), small state pension, rental income, IRAs and additional income from part time work (wife) doing agricultural surveys.

Health - good to excellent

Debt - None

Standard of living - we've lived low on the hog for 30 years so there was no change.

Our philosophy has always to put capital preservation ahead of capital appreciation. This comes from our observations as to how the Depression impacted our families. Secondly, we never anticipated doing "all those things we've wanted to do." So, no travel, fancy toys like boats, trips, etc. Thirdly, money was put into hard assets such as our PV system to increase our self-reliance/sustainability.

We do spend a large amount of money on various nutritional supplements based on research, not hype. Health is vital and far more important than money! We've had a number of people we knew die and all the funds they saved didn't mean a thing in the end.

I agree that it is impossible to "know" the future. We certainly never expected the financial chaos we see today much less stagering government debt. The best you can do is try to read the tea leaves and hope for the best.


It is different in Canada, of course. A few years ago I talked to my financial advisor and pulled all funds out of US investments and switched them to conservative Canadian funds. I still lost in the crash, but not as much as I would have. Then, a few months ago I did a lateral transfer to short term stuff...zip return but flexible. I am worried about inflation, or at least I was at the time. I wanted flexibility. When the penalty phase of totally getting out is over, approx 1 year, I will move to GICs in Canadian banking. No offense to my US compadres.

I am pretty sure I will pull the pin on my job and try and make it on a small pension. If we withdraw 4,999.00, or less, we Canucks pay a ten% penalty on RRSPs, but if income is low it will wash about even. My wife still works part-time so we won't be totally broke. I will probably still work doing small cash/barter jobs in construction.

Five years ago we bought a small place on a great river which I am almost done renovating. (The house, not the river). We also bought another 16 acres across the road. We have about 7 acres in Christmas trees and pasture, a one acre garden, and the rest will be woodlot. We will run sheep on the treed pasture to stop the mowing between rows. If no one can afford Christmas tress in the future, they will always make great firewood and are satisfying to look at. We heat with wood. Our tractor is a 13 hp walk-behind with attachments...roto-tiller, chipper, mowers, which run off a PTO. It works great. No real bills, or mortgage. Our vehicle is a 24 year old Toyota pick-up, and a Yaris.

I am a carpenter with metal skills, etc. and feel pretty good about working and plan to never actually retire, but will family farm, build for others, and remain in a hidden economy if at all possible. Son lives 1/4 mile up river on his three acres. He works in the oil patch to pay for it.

One thing I would like to say to the young posters who seem to be mad towards the 50+ folks. I worked damn hard for whatever I have and certainly did not live a foolish and wasteful life. I helped my kids through their education, (one through university and one is a tradesman), and had very few vacations along the way other than family camping trips, fishing, etc. Please don't think it was an orgiastic cakewalk for the older people on the edge or retirement. While some spoons contained more silver than others, most people I know have had their trials and tribulations along the way. Everyone is pretty well doing the best that they can and most of the people I know gave lots to charities along the way, gave freely of their time, plus paid their fair share of taxes. Lots and lots of taxes, with little or no say where the funds got squandered. When the retired were born, they had no idea that what is happening now was on the horizon. No idea. They have done the best that they could, and have done what they thought was right at the time. I believe that our elders deserve respect, for the simple reason they made it through life, and will continue to point the way as time unfolds. I know very few older people who whine. Mistakes and wrong turns, you bet. It is called, life.

Who did you vote for?

In Canada, your first 10,000 of income is tax free, whether it comes from an RRSP, a job, or whatever. They do withhold some when you take it out of your RRSP, but the tax rate is determined by your total yearly income, not how much you take from an RRSP.

If you move to some place where the cost of living is less than 10,000 per person per year, you won't pay any income tax on your retirement income and you'll get back the bit they withheld from your RRSP/RRIF withdrawal.

If you have enough income now to invest in anything thank God Almighty for a blessing that only one in a thousand in this world has received.
First invest in a homestead that is debt free. Next buy durable goods as soon as possible before inflation hits. Buy a lathe, drill press, and band saw and stock up on bits and blades. Build a forge. By all means start practicing how to use these tools so you can have a skill that will be in demand. Buy a copy of every book in the Lindsay catalog. Buy not just a new pickup (diesel powered) but buy a second and store it. Do the same with small tractors. Learn how to operate them on home made biodiesel. Buy two refrigerators but only use one. Do likewise with other appliances. Buy several wood burning stoves. Buy more PV panels than you can now use. The idea is that in the future you have things other people will pay dearly for. The stored items could be sold or bartered for what ever reason you seem fit. At the very least you will be able to replace these things as needed many years from now.
We are currently in the rare situation of price deflation which will in a few years return to the more common inflationary state. Financial instruments will lose real value while useful durable goods will become more valuable. Gold is essentially useless while it sits in your safe. Tools, land, and skills are useful as long as you still have them and can be used again and again in creative ways to barter for what you can not make or grow yourself. Forget Wall St and invest in what you can get from Main St.

Boy, and I thought I was a doomer!

IMO liquidity and flexibility are the keys, at least on the immediate horizon. Impossible to even begin to see what happens after that. Why tie yourself down to a homestead, when who knows what the effects of peak oil and/or acc will be on your area? And if there's inflation - sure it might be painful, but it never lasts - it's always followed by either deflation or issuance of a new currency.

Moreover, there's the million dollar question: In a world in which you have to do the things you have mentioned - is this a world worth living in?

I agree about forgetting Wall St., but I'll take my chances in metals which have retained value for thousands of years, are portable, and will always have value relative to cash and goods. Barter is for the stone age; not even for the dark ages, which we seem destined to repeat.

Which is not to say that's the only thing I'll do - but buying two of everything? Come on. People will be so poor they will hardly pay you anything for the stuff you mention.

I think Gail's post was too narrow: it should definitely include long-term unemployment. Many of us see long-term unemployment, separated by occasional jobs, as something which will happen to a a great many people in the future.

Did anyone notice the following New York Times Article,"Time It Turns Out, Isn't on Their Side":

Is everyone here prepared if that happens to you?

If you think a financial system will still exist then investing in some winner countries might be a good bet. Brazil anyone? Canada?

Brazil looks good with the new deep sea oil discoveries and also sugar to ethanol biofuel. If I could be bothered to learn yet another langauge I might even thought of moving there. They might be suseptible to a sudden climate shift if Amazonian forest reaches a tipping point though.

Wait for the next crash. Then buy.

A year ago I did not have any ready cash. Now I do. I am not going to try to guess what will happen next, but I am ready for whatever may happen. I am assuming that we will not have a permanent total collapse of the economic system. If that happens, money becomes irrelevant, so I don't care what happens to the money I have and all this becomes irrelevant.

When oil goes to $200 and causes another market crash, I will buy high dividend stocks or ETF's which distribute all of their returns. Then when the governments of the world bail out the market, I will sell at a big gain. Rinse, wash, repeat.

I'm not going to try to anticipate a crash, only take advantage if and when one occurs. I don't care if there is a stock market boom, only about inflation or depression, both of which I can take advantage of with cash.

If the economy stagnates, cash is great to have and does not lose any value. I can earn a percentage or two in an high interest savings account.

If we get high inflation, central banks will jack up interest rates, making real-return bonds cheap. I will buy them, and sell them when interest rates go back down.

I've been sitting back and watching the shenanigans of the last couple of years, and this is the plan I have developed. Seems reasonable to me, but time will tell.

I'm not in the USA, so don't know anything about IRA's. I have cash saved up in a tax deferral retirement plan we have here in Canada, an RRSP.

One of the reasons that economics is referred to as the dismal science is that it recognizes explicitly that in the long run we are all dead. If you don't have forever, then it makes sense to pay something to borrow money to get something done now rather than later and to pay interest for the use of the money you have borrowed.

The biggest unknown implicit in Gail's question is the investment time frame. Is Western civilization and capitalism about to collapse? The predictions of imminent collapse have been emphatic and frequent for a period longer than the last 2000 years. If a total collapse isn't going to happen immediately, how long will things continue to muddle along in a similar fashion to what is happening now? 5 years? 10 years? 25 years? 50 years?

To put these time frames into perspective it is useful to look at doubling times in comparison to rates of return because if you can invest your money so that it doubles while things are still working you should be able to prepare for disaster when it arrives better than if you don't invest. So,
for a return on investment of 2% your money doubles in roughly 35 years
for a return on investment of 3% your money doubles in roughly 24 years
for a return on investment of 4% your money doubles in roughly 17 years
for a return on investment of 5% your money doubles in roughly 14 years
for a return on investment of 6% your money doubles in roughly 12 years
for a return on investment of 7% your money doubles in roughly 10 years
for a return on investment of 8% your money doubles in roughly 9 years
for a return on investment of 9% your money doubles in roughly 8 years
for a return on investment of 10% your money doubles in roughly 7 years

If we are talking about a total collapse in 10 years, then it probably doesn't make sense to invest for the future. Things that produce not return on investment, but would be useful in a collapse make sense: for example gold, rural land (in parcels too small to produce and economic return, but big enough to feed a family), cash in a mattress or buried on your own property, and guns for self defense

As time frames increase from 10 years, then investing for a return on your investment makes sense. I freely admit that I can't predict what will do well over the next 30 years so I try not to concentrate any investments I've scraped together in any one area. A diversified mix of real estate, stocks, bonds, and cash should bring a return somewhere in the mid range of the above table. If things hold together, for another 15 years, then you should enter the decline phase with twice as much in resources as you would if you converted everything into cash now.

Finally, I don't dispute that fact that high energy prices were one of the causes of the recession, but I think that the role of malfeasance and corruption in causing the recession has been severely underestimated. The difference in the severity of the recession in the few jurisdictions in which bank regulators actually did their job with the US and the Euro zone where the regulators failed, is very stark. Australia, Canada, and Chile come to mind as locations where the regulators did their job. The recession has proven much milder and recovery much quicker in these countries than the locations where the regulators allowed their financial institutions to run rampant.

I think it is important to avoid allowing the use of peak oil as an excuse not to fix problems with financial system regulations.

"Finally, I don't dispute that fact that high energy prices were one of the causes of the recession, but I think that the role of malfeasance and corruption in causing the recession has been severely underestimated."


"I think it is important to avoid allowing the use of peak oil as an excuse not to fix problems with financial system regulations."



Social Security to start cashing Uncle Sam's IOUs

For more than two decades, Social Security collected more money in payroll taxes than it paid out in benefits — billions more each year.

Not anymore. This year, for the first time since the 1980s, when Congress last overhauled Social Security, the retirement program is projected to pay out more in benefits than it collects in taxes — nearly $29 billion more.


I'm in the process of making up my mind about this right now.
I have investments and separate Roth and 403(B) accounts. In June I'll turn 59. So, come late December or early January I'm going to cash out the 403(B) and pay off the taxes. It represents about 12% of my total invested money. Right now, I'm planning on putting at least half into gold and silver bullion and about half in cash.

This decision is made a little bit easier because my employer has ended the defined benefit plan and has gone to a defined contribution plan (neither of these plans have or ever had any match; sucks, I know). So, I elected out of contributing to the new defined contribution plan entirely. After the events of the past two years I'm not putting one more red cent into the equity markets. This leaves my 403(B) in sort of an inactive status for this year. I'd rather cash it out ASAP rather than just have it sit there and not be directly managed by me in any meaningful way.

Barring other changes I may make in my investment positions over the coming year, this will put me approximately 55% in gold, silver, oil, cash and about 45% in the equity markets. My overall strategy is to get out of equities entirely over a relatively short period of time; over the next couple of years or so depending upon how my best short term predictions for the markets evolve.

I am not necessarily so convinced that all our money will become worthless. Funds set aside for retirement may very well last that long and their best use may be their intended one, retirement funds. Peak oil may have gotten us into a recession now, but that doesn't mean permanent recession or economic decline is the inevitable outcome. A lot of folks have talked about ideas for transitioning to a "steady-state" economy, and oil isn't the only energy source available out there, even for automobiles! Remember, the doctrine of inevitability is what got us into this mess in the first place, and I don't think the situation is so hopeless that we necessarily ought to talk about spending our retirement funds just yet. It may just be that we cannot yet conceive of a better energy source than oil, for instance, simply because nobody has come up with it yet. That doesn't mean it won't necessarily be found, though.

Once More, Into the Breach! Probably the most important post on this string (not being big headed, but it's true...

I must say that our Actuary Gail loves to set the pot to boil. The discussion of last week on Campfire, “Should You Pay Down Debt” certainly proved that folks still care about their trusty friend the greenback, fiat currency though it may be, and the “philosophy” of money proved to be much more an art than a science. So it has always been.

This week we are talking about retirement money, and of course this leads us to discussions about what we want out of retirement, how much money we think we will need for what we want or hope for when we retire, and of course the discussion develops into one of trust in the American and world financial system, or the financial system of whatever nation you may live in respectively.

TRUST. I would make the argument that trust in the financial system and faith in the decency and fiduciary responsibility of the minions of the financial community has not be lower than it is now since the Great Depression. Not even in the 1970’s was there so much talk about the possibility of banks and financial institutions simply striking a few keys and destroying the wealth of depositors instantly, and about the possibility that the government would simply take your money by fiat law changes and leave millions of people penniless at the most vulnerable time of their life. Of course in the 1970’s there was no internet. The internet is being used as a producer of electronic broadsides, and like the broadsides printed in the days of the birth of the printing press, no one is taking responsibility for what they are saying.

Amazingly, that old vanguard of the doom and gloom movement, The Oil Drum, is now relatively moderate compared to the internet blogosphere at large, and even compared to the mainstream business media.
Investment gurus who for 3 decades told the public that if they did not invest in Wall St and accept the wisdom of the money changers they would retire poor are now being told by these same gurus that after having taken the advice of the Wall Street crowd for the last three decades…they are going to retire worse than poor or not at all. If I were to call these “investment advisors”, “planners’, “hedge fund managers”, “Wall Street Strategists”, or filthy thieves, it would require an apology to filthy thieves around the world, who are at least somewhat sincere in the craft and do not try to pass themselves off as performing any type of real service.

I really do not think the financial community knows how damaged they are in the eyes of the public, and by extension, how damaged the political system and the congress of whores are who are considered the puppets, the harlots of the financial community.
Leaving aside ALL fundamentals, leaving aside all concerns about resources, currency, debt, etc., the loss of credibility, the loss of faith in the decency and competency of the U.S and much of the world financial community will take decades to recover. Most of the folks on Wall Street today will in the grave or the old folks home before any semblance of normal financial transactions based on trust will recover to the levels known only 4 years ago. I can put it no other way: This generation of filthy thieves and incompetents have destroyed the financial industry and destroyed the prospects of millions of people to have a decent near term retirement for this generation. Such is the horrible damage they have done, and they should not be permitted to dine at the table of decent people or decent establishments, foundations or institutions. They should be named and shamed and driven out.

NOW, once more into the breach!
This is my own set of rules, this is my own plan, and I take responsibility for only it’s effect on my own wealth. It will be controversial, as I hope what I have said to this point was controversial. When it comes to money, it is a time for TRUTH, because what I want to happen, what I think ‘should’ happen, and what I ‘believe’ will not change the markets, will not change the economy. This is SO important to understand…even if a person believes that the U.S. and the developed nations of the world are depraved, wasteful, destructive and filthy, hedonistic, and deserving to be destroyed, swept beneath the waves, destroyed as surely as Pompeii…just because a person thinks that is what should happen does not mean that is what will happen. If I base my financial planning on wishful thinking I am essentially betting on luck and might as well consider the lottery an investment plan.

Given what I have said about TRUST above, I may wish for trust to return to the financial system tomorrow…all is forgiven, let’s get it on (what I call the Obama “You’ve been a naughty girl, but it just makes me so hot for you!” attitude toward Wall Street and the big banks), but out in the public the trust is shot.

More the pity, because this over-reaction has already caused MOST investors to miss the opportunity of a lifetime, and the opportunity provide about 6 months ago will probably not come again in most boomer lifetimes. It is a historical fact that when the markets rebound after a broad and deep crash (and the crash that occurred last year was both) the real money will be made in the 8 to 12 weeks off the bottom…if you were not there, you missed the boat. If you did not have the cash to take advantage of it, you missed the boat. If you did not have the nerve to get in at the moment of “blood in the streets” financial hysteria, you missed it, and no amount of wishful thinking will fix it now.

Look up the string on this string of posts and you will see, courtesy of “poobserv”, what is a mathematically correct chart of doubling times (the time it takes to double your money at respective return rates) which should give you some idea of what you have missed out on some 6 months ago. Coming off the bottom many stocks have rebound 300 and 400 percent, in a period of six to nine months.

ASTOUNDING. Look at the doubling times in poobserv’s post…even at 10% annual return compounded, it takes 7 years to double your money. In the last year, you could have achieved that by simply playing the Dow across the board. If you had taken the path of any selectivity at all, you could have done 50 years worth of work in less than a year. This is why taking advantage of these historical oddities is so important, and if you could not, or would not, you will (as will most of us) be left fighting over the scraps that have fallen off the edge of the table. This is what the remainder of my post will be about…how to get some scraps. That is all we can hope for folks, we have missed the big show.

First, the stock market: As I said, if you were not there last year, you really don’t have to bother with it now. Oh sure, if there are some targets of opportunity, special cases, then take them, but for the most part if your coming into the broader market now it is like going to a party a half hour before it ends. Why bother.

401K Plans…you are essentially staying for the matching by your employer. The idea that you will gain anything more than marginal returns is probably a case of hope over experience, but the matching by your employer means you really cannot lose until the market falls by half or more. You are essentially getting tax deferred insurance against a 50% market drop, plus you can borrow on the cheap against it. If at all possible, I would stay in the 401K and max the contribution, regardless of what I think the market is going to do, unless I felt the stock market will collapse by 50% or more in the near future…in which case I would stay in the 401K and shift to bonds.

Bonds…do not dismiss the idea of TVA Bonds. It is hard to picture a situation in which these would be defaulted on. They do not pay big, but they have never failed to pay since the issuing entity was born. Next in line, look at some utility bonds from select private utility issuers. It is a little known fact that even in the Great Depression, no major utility ever defaulted on it’s bonds, and most continued paying full interest throughout the depression. I have known whole families who lived off these bonds. All the normal cautions apply (ladder the bonds, diversify geographically, etc.) but they are not bad bets, especially the utilities that are diversified into hydro-electric, renewable and nuclear.

Gold…sorry, it’s just too high. This is another case wherein if you were not there in the run up, it is very probably too late now. I have nothing against gold when the price is sane, but not now.

Real estate…the time is coming, but not yet. The commercial real estate crisis is still underway. Houses in many parts of the country are still too high…the country is still far overbuilt. The collapse in real estate is built right into the aging demographic. I have seen multiple relatives in my own family sell large suburban homes that they raised their children in and move to apartments or condos closer to the city center…this trend is just now beginning . The houses are being refilled by young couples (in several cases young Hispanic couples, the only ones in the country still interested in kids and decent homes and neighborhoods and that whole “traditional values” thing…how ironic huh? Senor’ Ward Cleaver and Senorita Juanita rebuild the American dream (I knew a Hispanic young lady who would NOT buy anything but Pontiac’s…she was heartbroken when they went down the tubes, the old Gringos at GM didn’t have any idea how to sell to the fastest growing most loyal market they had, but that’s another story…

So here’s the breakdown….stay with the perfect pie but break it down differently for now (one half bonds one half diversified growth in the 401K mutual fund…thus even if the market drops by half you will only be giving up the money the employer put in), the rest in cash while your waiting for the other shoe to fall on real estate…and then conservative carefully picked DEVELOPED real estate (there will be some fine old houses you can STEAL, and unless you have buckets of cash and all the free time in the world, trying to develop real estate is a full time job...and gardening should be considered an expensive hobby...for most people they are simply not going to be able to fee themselves from gardens, I don't care what they may wish to believe) and build the opportunity cash to the max for special situations. The GOLDEN RULE: There is no friend greater than opportunity cash. None.

Now as far as “developing markets” and ETF’s….yeah, yeah, they are the hottest thing since sliced bread right now…which that alone should make you careful of them. Most developing economies are more reliant on imported oil and natural gas than the United States by far. I agree with “wallstreetexpress” that Canada is a special case, but you must do your research very carefully. It is important to know not only what they have in mineral resources, but also how the management of a respective company is investing the company money. But for the careful investor there are possibilities, IF you catch them at a discount. The problem is that the big players are already in, and prices in the quality stuff is already high. Just like with U.S. stocks, look for the special situations, and buy cheap and shop for the dividend payers so you receive pay for waiting…in this regard, Public Limited Partnerships with high dividends are a real possibility, but again, try to catch them cheap.

Now, the most important part…ask yourself what you want the money for. I read a post up the string by a retiree who was bragging that he essentially never took vacations, never bought the finer things. Is that a brag you want to get to make on your death bed? If so, fine…but not me. Do not underestimate the value of LIVING.

In the near future, we are going to see a flood of quality STUFF hit the market. We are talking about a flood of estate sales as the WWII generation and the first of the baby boom generation start leaving this mortal coil of tears behind….ceramics, textiles, glassware, jewelry, furniture, art, fine homes, collectable automobiles, vacation cabins, even collectable boats and aircraft…all will be hitting the block. The prosperous boomers did have one thing in abundance…TASTE. This is some of the finest and classiest stuff made by human hands in history. Do not dismiss the joy of being surrounded by beautiful objects, it is a desire of humans throughout history, and there will be some major BARGAINS coming for those with opportunity money. It may feel okay having gold bars in some vault somewhere, but to me much more rewarding having a lovely crafted and beautifully designed home on a lake or the coast with nice furnishings, nice artistic house wares and art, something I can enjoy every day. I am willing to bet I will not be the only one who feels this way.

This is the great trend no one is talking about. The developed nations simply have more stuff than people, and as the boomers begin to die away, this will become only more pronounced. Manufacturers of everything new are having to compete with a century of well designed (often brilliantly so) objects. The younger generation could be picking this stuff at almost giveaway prices soon, but many of them simply do not have the artistic sensibility to even know that is valuable…try to explain to a young person the importance of a home by Frank Lloyd Wright or furnishings by Le Corbusier, or a sculpture by Barbara Hepworth…they will look at you as though you were speaking Aramaic. I recently did a small poll among young people asking if they recognized the name Alfa Romeo, and NOT ONE person under 30 recognized the name. Housewares by Alessi were totally unknown also. This is a generation that eats at Wendy's and drives Kia's...and knows of no other brands having existed...

Lastly, and most controversially, be careful about betting against the U.S. dollar. There simply is still no currency in the world that has the strength of the dollar, anywhere. The Euro charade is starting to show signs of wearing on the audience, and the Chinese have basically conducted their economy by fiat and by hope…there is no way to know how much speculative debt is standing against the Chinese Yuan…they seem to have to report to no one, and they are still regarded as the miracle of economies…if you believe the Chinese economy will be the “golden economy” of the 21st century, then you are essentially betting in favor of the U.S. economy, since we are by far their biggest customer. As for me, I will take all the dollars I can get thank you very much…would I hedge, yes, but I don’t know with what yet…

Oh….and take a vacation now and then…no one on their deathbed ever wished for more money…but everyone regrets somewhere they haven’t gone or something they haven’t seen…and be nice to your mistress…it can be very rewarding.


Gold…sorry, it’s just too high. This is another case wherein if you were not there in the run up, it is very probably too late now. I have nothing against gold when the price is sane, but not now.

Gold is nowhere near its highs. To be equivalent to the high it reached in the early 1980s, it would have to be (inflation adjusted) over $3000/oz. And that was then, during a relatively minor crisis. It is tipped to go above $10000 next time.

I retired at age 50 on my IRA. I am posting for the first time here to share another option for IRA withdrawals. I am withdrawing monthly income without a 10% penalty. It is making use of the 72T clause. The only catch is that I can not stop drawing out the funds until age 59 1/2 and then I can do what ever I please with this asset. My financial history involved self directing this fund. I invested heavily in tech stocks and real estate investment trusts with good timing (withdrew each time just before the bubbles burst). Currently I am in gold, silver and mostly cash. I am converting the cash into means of production and reducing demands on future income. I am doing this by converting my home and the land around it to an urban homestead with significant use of permaculture concepts. When I am done the plan is to engage in full scale voluntary simplicity and produce as much of what I can as is feasible and do it here where I live with very limited import and export from my homestead. Export will hopefully involve bartering with the goods that I produce for those things that I can not produce and will not include sending waste to a sink. Production of food and medicinal plants, capturing and filtering water, and making use of energy from the sun and wood resources that I have on my lot are the central emphasis of my efforts. I have been landscaping my property for 30 years and have some very mature perennial food production already in place. I live alone and I can handle the labor intensive nature of this endeavor just fine for now. I am currently 56 years old and in very good health. While this would not work for most people (I was debt free at age 45 with a housing rent of just $90 a month - that is property taxes plus insurance) it has worked out very nicely for me. I have told my friends that either increases in health care costs or obscene property tax increases are the only thing that could alter my current plans. I have contingencies for those possibilities but hope I do not have put them into action.

Take care and time to prepare!

I'm going to venture a comment that will probably offend most of the "humanity is a cancer" types around here: If you're really worried about retirement, and are young enough to do so, have a lot of kids!

Having a lot of blood relatives around to protect and provide for you in your old age is a lot more sure than the abtract claim on other people's children that schemes like social security provide.

This seems to be the only option, there won't be social security and possibly pension programs, they're simply not sustainable.

"Having a lot of blood relatives around to protect and provide for you in your old age is a lot more sure than the abtract claim on other people's children that schemes like social security provide."

Why would we assume that? There is a reason the Social Security system is mandatory. My grandfather had 7 children, and by his middle age almost all of them were more than a hundred miles away from home, some far more, and the ones close by had kids and jobs and a wife (and a wife often does not take kindly to seeing her lifestyle being spent on mommy and daddy...["they should have planned for themselves, we have a life to lead...". Without a contract of some kind that is enforcable you have no claim on the lives of your children...did anybody around here read Shakespeare? Social Security was created to fill a very real need, and that need has not gone away...people who romanticize living off their children have never had to do it.


ThatsItImout with a well timed reality check!

This is another reason why ESPECIALLY if one has lots of kids, one still needs to accumulate wealth. A legal will is the hammer the old have always used to make sure that some of the kids will stick close enough to home to help them out. Doesn't life just suck?

You're living in real la-la land then, because Social security is unsustainable. I'd take my chances with some help from my children rather than complete strangers. Social Security and other unfunded liabilities will be gone.

"You're living in real la-la land then, because Social security is unsustainable"

But you may notice that I did not argue the issue of Social Security is sustainable...what I said is that there was a real need for it (there was) and the need still exists (it does) and that you simply cannot rely on the wealth of your children (you can't). Whether Social Security can honor the commitments it has made is a whole other discussion...and think of this...if the economy and government is in bad enough condition it cannot honor its commitments, why would anyone believe that then, of all times, you can go back to the kids, who will almost certainly be in very poor condition given the above circumstances. I just don't see that as likely. As Billie Holiday sang, "God bless the child who has his own". And the parent too...


After weighing all the advise above, I'm still left thinking that most of us are still missing the point. Security in retirement can be increase immeasurably with well developed social networks. The uncertainty that comes with peak oil and climate change can best be managed with an inquiring mind, good friends, and community co-independence. Saving for retirement is our way of extending our rugged individualism into old age. There is something to be said for those values - I have a strong tendency in that direction. But the IRAs languish with the financial parasites, while I put my energy into developing my own community currency. Saved seeds - honey - a pick up truck - fresh eggs - bike repair - healing skills - a willing strong back - a bed for travelers - a meal for friends - board member for the food shelter - community theater.