Reality Check Q&A #15

Gary North

Oct. 30, 2009

LIBERTY

Do you believe human liberty is going to advance or retreat over the next ten years? Fifty years?

This is easy to answer. There will be a decrease of liberty over the next decade. There will be an increase in the next 50 years.

The modern welfare state is going to die over the next 50 years. All over the world, it will die. The promises will be defaulted on.

Over the next decade, governments will do whatever is necessary to defer the day of reckoning. They will raise taxes, increase regulation, take over capital markets, and inflate. They will tighten the noose. They will make escape very expensive.

COMING TO AMERICA

Age 45
Location Germany
Occupation Financial Strategist with a small German bank and freelance newsletter writer (sideline)
Retirement year: 2028
Annual income: 100k fixed plus bonus (up to 100k) and 90k
freelance
Net worth (not home): 350k
Home equity: Renter, no home
Your #1 goal: Do the right thing for my family, especially for my 8 year old son who is highly gifted musically
Deadline ?
Your #1 fear: Dramatic growth of state-directed policy in Europe as an answer to the developing worldwide recession
Your plan to deal with it: Leave Germany

Question: Shall I take the job offer from a US financial newsletter publisher and go to the USA? Problems: 1) No working permit for my wife. 2) No knowledge of education possibilities for my son, who needs a top-class music teacher.

I assume that the job here is secure and high paying. I suggest that you make sure the publisher is in good financial shape. You need to get a copy of the financial statements for the past three years. Don't assume the outfit is solvent. It had better be mainly Web-based.

There are fine music teachers here. They are cheap to hire as tutors. To be blessed with great musical talent is to be cursed with lifelong poverty. These people will work for food, or close to it.

RETIREMENT

Is the company match on my 401k (100% match up to 3% of my salary) really worth it with the stock market going nowhere and inflation eating the value of my money?

My options (could be more... but I don't see them all):

1) take the full match; put nothing more in 401k (no gold or foreign currency available)

2) skip the 401k; pay off debt

3) skip the 401k; buy land, gold, and self-defense

Option #3.

IRA

Age: 62 (wife 54)
Location: Homer Glen (suburb of Chicago), IL
Occupation: Retired
Retirement year: 2008 (wife to retire in 2012)
Annual income: $100K gross (my pension accounts for $35K)
Net worth: $300K (401k - $220K; gold - $45K; land - $35K)
Home equity: $180K
#1 goal: Protect/increase net worth.
Deadline: Immediate
#1 fear: Penury
Plan: Convert 401k to IRA. If IRA is correct way to go, of what should it consist and who can do this conversion for me? Is my pension beyond protection?

At your age, it really is too late. It does not make any difference. You will not be able to retire. Keep your job.

If you can't pull out the 401(k) money, switch to an IRA. Then start pulling it out.

Talk with this CPA: Rob Clayton. www.RobClayton.com He specializes in self-directed IRAs.

CAREER

Age: 30, girlfriend 30 (planning to get married in the next 2-3 years)
Location: Washington, DC area
Occupation: Political analyst for DoD, multi-lingual (Spanish, French, Italian -- various levels of fluency), currently studying Mandarin Chinese (intermediate level), G/F is an admin assistant.
Retirement year: Don't know
Annual income: mine $87,000+ gross, joint $135K+
Net worth (not home): $45K in a Roth IRA consisting largely of oil royalty trusts + $27K in gov't TSP (G Fund) + $8K in gold coins; G/F has credit card debt of about $15K, I have no personal debt.
Home equity: $35K/mortgage: $100K+
#1 goal: Get out of the rat race
Deadline: The one God gives me
#1 fear: Being stuck in the rat race, gov't financial crisis will wipe everyone out

Question: Will be moving to Taiwan this year to study an additional year of Chinese (for job). Job commitment requires me to stay at current position for at least 5 years. What are my best options to achieve my goal should I decide to leave gov't service?

Marry the girl immediately. Joint life, joint income, lower taxes. Get those dependents coming. You will need them to support you in your old age. The government won't.

If she won't go to Taiwan with you, don't go to Taiwan.

Look for business employment now. You are multi-lingual. Not many Americans are. Get to a part of the country that has a better lifestyle. If you work for the government, you are in the rat race.

What happens if you get the training and then quit? Did you sign a contract? If so, don't go. You are tying up six years of your life. You will be a true bureaucrat after six more years -- useless.