One of my big questions in modern investing is how to keep the government from stealing the money, either directly or through inflation. The various types of accounts you list are tax advantaged retirement accounts. In a 401k you contribute pre-tax money that grows tax free, but you pay taxes on it when you take it out after you retire. If you need it early, there are substantial penalties. The contribution limit per year is a fixed amount, I believe. In a Roth you contribute post-tax money, but it can grow and is disbursed tax free. The amount that can be contributed per year is much smaller than a 401k, 2000 to 3000 dollars per person, but I believe the limit is scheduled to go up. The problem with any of these accounts is that what the government giveth, the government can taketh away. The attraction of these accounts is their tax favored status, and laws can be (and are) changed. Another big concern is that you don’t have any attractive options for taking the money back out in the face of a massive recession. The best thing that I have figured out to do is money market/stable principle funds. That is another limitation of those instruments - generally your choices are more limited than investing through your own broker or Etrade/Scottrade/etc. account.
If I actually lived in the States right now, I would be buying some gold and silver (and guns). Just about every jewelery store can sell you coin or bullion gold. You should check the spot price and become familiar with the spot values offered for various different coins (Canadian maple leaves, South African kruggerands, etc). There are a variety of ways to store them, but it all depends on your level of trust for the institutions. The question I would ask myself are “If the FBI or DT (Treasury) showed up at the bank/store/holder of my gold, and demanded the surrender of it, would the institution give it up?” A paranoid man would pay for the metal with cash, refuse to give names or sign anything, not tell anyone he had it, and keep it in a place where no one could get it and where it was defended by the aforementioned guns. Fairly recent events in Indiana show just how far the federal government will go in violating the rights of its citizens to protect its own monetary hegemony.
I personally think there is a lot of risk in holding money in banks right now, due to the collapsing fractional reserve lending. I have begun limiting my exposure to potential loss by paying off debt (mortgage) rather than holding cash in the account. Some would argue that the present and coming inflation makes paying off debt now a fools game (due to the decreased real value anticipated on a future dollar), but I look at it as I have assumed an obligation to pay, and since the future is unknown, I may as well pay off the debt I have assumed.
My opinion on credit cards is as long as you pay in full every month and spend with credit like you spend with cash, there is no problem. A credit card is a horrible place to carry debt. The mob has better lending terms! Cash has power, though. If you like to negotiate, then shop with cash and let the store owner know that you will pay them with cash. You can probably negotiate a better price than sticker, due to the credit expenses that the card companies charge the vendor. Cash is also much harder to trace than the credit card. I ask myself again “If the FBI showed up at the credit card issuer and demanded a record of my transactions, would they give them out?” Almost certainly. What can be tracked can be easily siezed.
Another of my grave concerns recently is how dependant the various markets are on government information and policy. A perfect object lesson that the US is not a free market is the huge run up immediately following the $200BN pledged by the Fed to loan. The underlying health of the whole system had not changed. Performance since then illustrates that it hasn’t.
Perhaps one of the economists can speculate on what will happen to commodity prices during this recession/depression. The prices now are skyrocketing due a large degree (in my opinion) to the plummeting value of the dollar. However, during the big one the consumption of commodities dropped a huge amount due to contraction of the boom-expanded capital goods industries. I recall Rothbard pointed out that pig iron production dropped by 2/3 from the 1920’s peak to the Depression low. That would have to affect the price of iron, steel, etc. Other industrial metals and commodities would surely follow. Ag commodities have been driven up by federal regulation toward ethanol and alternative energy. Again, federal policy is distorting the market value. Policy can change.
I may post more later. Good luck!
