With all of the monetary and fiscal insanity running rampant
in the world, you can be sure that I am, more than ever, 100% against almost
everything and everybody, but especially annuities.
For those who are not familiar with annuities, it's a steady
stream of regular payments from an insurance company paid to you, for as long
as you live, which you purchase in advance by giving an insurance company a big
wad of money now. When you die, they keep what's left.
My reason for steering clear of annuities and insurances is
because, at the beginning of the Weimar inflation in Germany, 1921-1924, a
1,000 Deutschmark per year annuity was, so they say, a satisfactory retirement
income.
At the end of the inflation, just a few years later, nobody
in the whole country received an annuity check, but nobody even cared. This is because the cost of the postage
stamp, with which to send the 1,000-mark annuity check to the happy recipient,
cost more than 100,000 marks by 1924!
Now THAT'S some inflation! The stamp cost 100 times more
than the benefit itself!
So I have never given annuities any thought, other than to
haughtily disdain them in this day and age of rampant money creation, and thus
disdain them in this day and age of continual price inflation, which makes a
mockery of annuities and fixed income streams of any kind.
I was reminded of them, however, by the essay "The
staggering costs of Bernankeism" by Martin Hutchinson at his Bear's Lair
column at PrudentBear.com.
He writes that "Baby boomers who are approaching their relatively
late retirement at 67 with $500,000 no doubt feel they are in pretty good
shape. They will awaken from their reverie when they discover that one typical
insurance company quotes that amount as purchasing an annuity of only $2,966
per month ($2,755 for women) with no pension for the surviving spouse or
guaranteed minimum payout period."
In short, it's a bare-bones annuity contract where, at age 67, you must
live another 14 years to "break even" on the cost of the
annuity. Whenever you die, remember, the
insurance company keeps whatever is left.
The problem is, according to the Hysterical Mogambo Analogy (HMA)
between the USA of today compared to Weimar Germany 90 years ago, in a few
years your monthly annuity check will still be $2,966 per month, as per the
contract, but the price of a postage stamp will be around $3,559,200!
Actually, since I have obviously been drinking, I will drunkenly
confide in you, my best buddy, my best bud, my BFF, my bestest budderoo in the
whole world. So listen closely, ignoring my stinking breath because, just
between you and me, see, I've been thinking that the current situation
resembles not Weimar Germany, but ancient Rome, which is 10 times worse. Maybe
11 times worse! Or 12! Who knows how much worse it will be?
So remember to keep that "Germany or Rome?" thing under your
hat, especially since it is clear that Mr. Hutchinson does not want to get
drawn into a stupid-yet-pointless debate, and instead of rendering an opinion
one way or the other, writes, with a delicious kind of dry, dark humor that
seems so in keeping with the current situation, "Doubtless, most baby
boomers faced with this shock will opt not to annuitize, hoping that between 67
and 74 or so, when their money runs out, they will graduate from feeling 15
years younger than their actual age to being dead, solving the problem."
At this witty joke, I laughed!
And it felt good to laugh!
Laughing again after years and years of screaming in fear, screaming at
family, screaming at neighbors and complete strangers about the painful
inflation in consumer prices that follow, and that must always necessarily
follow, from the huge increases in the money supply for the last quarter of a
century by the damned Federal Reserve, and now into the foreseeable future,
too.
And when they cried out "Begone, crazy man! Vex us no more with
your silly theories!", I would reply "Crazy, am I? Is not the Entire
Freaking Record (EFR) of history the same, sad, stupid story of one
idiotic/corrupt government after another borrowing itself into bankrupting
debt, and the currency debasement/inflationary horrors that always followed?"
In fact, the little inflation-calculator provided by the Bureau of
Labor Statistics, which is the lowest, low-ball, government-massaged "Move
along. Nothin' to see here" estimate of inflation found anywhere, still
calculates that it takes $2.02 in 2012 to equal the buying power of $1 in 1987!
Prices have, at least, doubled in the last 25 years!
The salient point is that the buying power of anyone's monthly annuity
begun in 1987 (when the average annual family income was $24,350) has, after 25
years, been cut almost exactly in half. Half!
Ugh!
And if you think that was bad, consider the catastrophic price
inflation coming at us from over the horizon, like a wave of ravenous wolves,
that will surely follow the astounding increases in the money supply by the
Federal Reserve, the ECB, and the IMF, which is to name only 3 central-bank
scumbags doing that disastrous crap!
Arrgghh! I am screaming in fear!
And then, in mid-howl of outrage, I realized that I admired Mr. Hutchinson's
sunny optimism of people hoping to die soon, because if a postage stamp goes
from 44 cents to $3,559,200, then that now-adequate $2,966 monthly annuity
payment will soon cease being anything of value.
But it is all academic anyway, as I figure that "most baby
boomers" will not have $500,000 to pay for the annuity in the first place,
as estimated by the fact that the average retirement accounts of working people
over 50 is around $50,000, and by the additional fact that $500,000 is more
than TWICE as much as the entire NET WORTH of most people in the Whole Freaking
Country (WFC), especially now that their incomes have not increased, their
taxes have increased, their retirement investment accounts have gone down and
their houses have deteriorated in value, all dragging down their net worth,
making it all worse and worse.
At this ugly point I am exhausted and drained, with barely the energy
to thank the heavens that simply buying gold, silver and oil is so easy, and so
seemingly guaranteed successful by 4,500 years of statistical proof.
With my last ounce of strength, I lift my head from the barroom floor,
smile and weakly say "Whee!"
Hi! I enjoy your posts greatly but this one I have an issue with. The first half is white print on black which is fine. The second half is black print on black which is not fine. I can't read it for some strange reason. I don't know if it is your blog or my computer. If it is your blog, please fix it!! If it is my computer, then I am out of luck (OOL). Thanks!
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