Reinventing Retirement
instead of being forced to gamble with our futures
The current options for retirement in the US are to gamble your savings in the stock market, trying to outrun inflation, or sell your house on an inflated market and move where your money goes further—pricing out locals. It doesn’t have to be this way!
In this episode I continue the System Change Series on restoring local sovereignty, using the method I describe in my book, How to Dismantle an Empire. I’m starting with what I call The Unaffordable 4H—housing, healthcare, higher education and hope for retirement. I lay out some of the ideas in The Economics of Anarchy, Home is Where the Hearth Is and Reinventing Education.
My system develops a parallel community credit (carets) backed by local mortgages, for which the commonwealth exclusively controls taxation and the exchange rate. When carets are used for local trade and services, they incur no tax other than Social Security, which is a pension contribution rather than a tax per se. This insures their preferential use instead of the imperial currency—Euro, dollar, pound or yen.
Because you control the exchange rate for your caret, you can write protectionist policies for your residents and make the caret worth twice the imperial currency, giving them a 2:1 advantage in buying or renting housing. You can also tax money that leaves the area at 50%, giving local landlords and producers another 2:1 advantage.
I look at how this relates to retirement, and why social security is different than a social safety net, citing Eric Laursen's book, The People's Pension. I explain why I would use the Social Security Trust Fund to capitalize public banks and how that enables a solid return both on it and long-term savings. I redefine inflation as really dilution; Benjamin Franklin thought a stable interest rate countered inflation (contrary to the fluctuating Fed rate) and stated his optimum rate. I describe how even five-year-olds can start saving for their retirement. But I start by answering a common question on how we get control of the assets in the first place.
As some have pointed out, the corporations, banks and governments are not going to just hand control of the assets over to local communities. However, it’s my belief that we’re coming to a time—sooner rather than later—when the harms that have been done to us will be evident, in a way that’s inescapable to everyone. At that point, I think we’ll be in a position to make some changes, if we know what we want.
Even now, all of these institutional owners operating in your territory could be rated on a scale from regenerative to sustainable to extractive to predatory. If an owner is regenerative, they’re making the asset better than it was before and you want to encourage that with property tax breaks, energy subsidies, low-interest loans, etc. An owner helping make your community sustainable may get the same or be bought out at a fair price using eminent domain.
An extractive owner is one who’s taken more out of a community than they’ve put in. At some point, whether that’s 3X, 5X or 10X their investment, that debt should be considered repaid and the asset or infrastructure should return to the community. But a predatory owner is one who’s left the asset worse, whether it’s the soil, water, environment, electrical grid, health of the people or sovereignty of the community. Through local courts, reparations should be set that, at the very least, give back ownership of the assets.
If harms done by vaccine mandates become self-evident, for instance, the governments that imposed them and the corporations and institutions that went along with them should be declared no longer trustworthy or welcome to operate in our territory. In this sense, the worse things get, the better our chances of a complete repudiation and reversal. At the breakneck speed things are spinning out of control, this seems like the safest bet there is.
Now let’s look at what’s deceptively called inflation, which is really dilution of the money for the amount of assets backing it—housing and local services, not a basket of consumer goods made by third world countries or migrant workers. The Unaffordable 4H of housing, healthcare, higher education and hope for retirement, have gone up exponentially because they’re necessities that can’t be outsourced while salaries lag behind.
Matt Taibbi has written a review of Christopher Leonard’s book about the Fed, The Lords of Easy Money. In The People vs the Unelected he writes:
Generations of news consumers had been trained to think the Fed’s decisions to raise or lower interest rates as a narrowly construed, mechanical process. When inflation was high, officials like the famed Paul Volcker raised rates. When inflation was low, and/or the economy needed a boost, wise officials like Alan Greenspan lowered them. We were told this was all we needed to know.
In my book I show how the lowering of the interest rate—from the nearly 20% that it was when I bought my house—has caused housing prices to go up until the rate hit rock bottom. Then the bankers got people hooked on variable interest rates. Since we bid against each other for how much debt we can carry, this made someone choosing a fixed rate unable to compete.
Raising the interest rate now will only lower the price for new owners. The planned increases will force everyone with a variable rate to sell, primarily to Blackrock and Vanguard for whom money is no object. The existing owners will be priced out of the market, possibly at a loss of their down payment. They’ll own nothing, just like the bankers want. So fluctuating the interest rate puts more money into circulation when it goes down, with that money going to the bankers, and takes back the assets when it goes up. A neat trick.
The other thing it does is force us to trade our savings for the gambling chips of the stock market to keep pace with the inflation they created. ‘Shares’ of a company have no inherent value, only what you can sell them for to another sucker before the whole Ponzi scheme collapses.
We give our hard earned income to the venture capitalists, which are the bankers after our mortgage interest becomes their bonuses, and they give us a handful of tokens in their rigged game. The mixing of pension funds and earned savings with speculative windfalls protects the market from regulation and taxation because everyday people depend on it.
As I’ve said before, the success of the community is measured by the self-reliance of families through home and business ownership and new generations who stay because they want to, not because they can’t get out. The success of a regional government is measured by the self-reliance of communities, sharing of resources, and reciprocity of trade.
Selling a house in a high-end market to move and drive up prices elsewhere is not a sustainable way to fund retirement. It competes with young people looking to buy a home where they already live.
Commonwealths need and want to take responsibility for Social Security, which is a brilliantly designed system. In a chapter of my book called Taking Back Taxation, I quote from Eric Laursen's 700-page tome, The People's Pension:
Credit for Social Security's survival ... goes to Franklin Delano Roosevelt and his New Deal advisors. Long dead, they continued to exert a powerful influence because of the ingeniousness of their creation, which combined personal savings, social insurance, and public assistance in a way that booby-trapped it for anyone hoping to dismantle it.
I explain its background:
Established in 1935 with the Social Security Act, one of its chief architects was Frances Perkins, the Labor Secretary and Chair of the Committee on Economic Security. In one meeting she was goaded by Senator Gore to admit there was “a teeny-weeny bit of socialism” in the program, but in fact it was a masterful blend of mutual aid and self-funding entrepreneurism, which broke the dependence on company pension plans or the government dole.
Contrary to a public welfare allotment, Social Security was designed as an earned benefit that workers paid into from the first dollar they made—originally at a rate of 2% of payroll up to a maximum of $3000. Roosevelt drew criticism that it was a regressive tax that extracted a greater percentage from the poor, but he replied, “we put those payroll contributions there so as to give the contributors a legal, moral, and political right to collect their pensions and their unemployment benefits. With those taxes in there, no damn politician can ever scrap my social security program.”
Those with lower incomes get a higher percentage of their contributions in return, while those who top out at the maximum get a higher amount but a lower percentage. Social Security changed the fate of US families:
In 1900 over 60% of aging parents had lived by necessity with their grown children but by 1975 this had dwindled to only 14%. Initially only 60% of the workforce, mostly white males, were covered by the insurance but through successive expansions it now includes 95% of workers. This has reduced poverty particularly among retired African-Americans from 60% to 29% and among women from 53% to 15%. Payments to families, under which 3 million children qualify, have narrowed the child poverty gap by 21%. It established “a solemn compact between generations, one that bound children more closely to parents” but without the latter becoming a millstone around the former’s necks.
It also was found to encourage personal savings because it made the amount needed to make up the difference attainable.
How can commonwealths make sure that Social Security, or whatever public pension a country has, is protected? As described in previous episodes, the three steps to taking back local economies are:
Only allowing commonwealth banks to create money through mortgages.
Issuing carets (community credits) in advance of incoming debt payments as equal dividends to stimulate production.
Controlling the taxation and exchange rate of the caret to give greater benefit to local consumers and producers.
In the US, returning money creation to government instead of private bankers starts with the Social Security Trust Fund, a three trillion dollar debt owed by the US government to the people. To create this as government-issued money, rather than money loaned by the Fed, the Federal government could use their last remaining monetary power to ‘coin’ money. Through something called seignorage, they can produce coins and grant them any denomination they want. So three platinum coins could be minted and given a one-trillion dollar value each.
Divided by the people in the US, this would come to around $9000 each, which would go to the commonwealth to capitalize their public bank. It could never be withdrawn but would make each person an equal owner of the bank, along with every new baby born. This would entitle them to monthly dividends in the four areas I’ve described in previous episodes—locally produced food, wellcare, education and home improvement.
To generate the dividends, commonwealth banks would do what private banks under the Fed can now: issue loans up to 10X their capital (owner reserves) that also can’t exceed 10X their deposits. The money loaned is created out of thin air and not taken out of either the reserves or deposits. So, to make the numbers simple, if a bank has $1000 in capital, they can create $10,000 in loans. If the loans are at 3% a year, that would be a $300 annual return. But it would be a 30% return to the bank owners on their capital of $1000. So it would be possible to give the Social Security Trust Fund a return of 7% and keep it solvent forever.
To attract mortgages to the commonwealth bank, it could offer new mortgages and refinancing at a 3% fixed rate for the first six months, which would stay at 3% for the life of the loan. But we also want to bring the cost of housing down and reverse housing inflation. So we could announce that the fixed rate for new mortgages would go up by .1% each quarter over the next five years until it reached a stable rate of 5%, where it would stay.
Ben Franklin thought that a stable 5% lending rate and a 2% savings rate curbed inflation. If money was plentiful, he reasoned, people would pay off their mortgages because they couldn’t get a better return by lending directly. This would tighten the money supply. If money was tight, they’d borrow against their houses and put more money in circulation for local investment.
To attract deposits and enable a 30% return on the capital, I would offer residents 3% annual interest on their long-term savings up to a limit that varies by age. Even a five year old might contribute ^50 a month that they can earn by doing something useful for parents, grandparents or neighbors. A 40-yr-old might contribute ^500 a month, where it would max out. An amortized chart could show how much this will be worth by 65 years old.
Because the sky isn’t the limit, reaching the maximum income in retirement is attainable. Once the goal is met, there’s no need to keep saving. You can become a benefactor to others, giving away your skills, your time, your energy and maybe even your money.
To explore the nuts-and-bolts of my economic plan further, here’s Reversing the Reset:
With the consequences of the Great Reset becoming evident, what's the most helpful thing we can do? I give the perspective of A Course in Miracles, having just finished the 670 pp manual once again. I look at The Dawn of Everything by David Graeber and David Wengrow for an anthropology of anarchy. Vladimir Putin's June 17th address at St. Petersburg was an astute analysis of Europe and the US, with economic policies for Russia that support small business and home ownership. I apply his principles to the micro-communities we may need to start when economies in the West come crashing down, and show why it could be better than we'd dared to hope.
and this is a fun early one, no longer showing up on my YT page, on Krystal Ball called Adjacent Nation:
In Russell Brand's intro to his interview with Krystal, he talks about creating an Adjacent Nation with no mortgages, taxes or student debt. From my book, How to Dismantle an Empire, I describe my Regeneration Nation that turns debt and taxes into a system of community reciprocity. I reimagine money as the blood of the body politic, bringing energy. Krystal compares the populism of Bernie Sanders to the 1930's agrarian movement. Using The Wizard of Oz, I show how they differ and what we can learn from those politically savvy farmers.
Very hopeful. Looking forward to reading your book, which just arrived.