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Comment by quacked | Hacker News Reader

When I was young, I assumed the 401k had been around forever. But it was introduced in 1978! We're nearing the end of the 50-year period that the guys who invented it would really need to get staggeringly rich off of the concept, and now that they're getting ready to die everyone's overreliance on the system they set up is causing total gridlock in American life. You can't do ANYTHING that threatens the stock market. The President can't give good advice like "save your money and don't go into debt on new cars" because if people stop spending, everyone's retirement accounts stagnate.

(Edit: as a matter of fact, recently the President has been actually advertising going into debt for new cars. And it works! My poor-with-finances brother wants to buy a $38,000 truck, and he's got less than $500 in savings and rents an apartment.)

I'm between 25-30 and I'm not even remotely planning on having enough money when I retire. My plan is to have kids, teach them to be clever and resourceful, and then live with them. If they won't have me, I'll live as a pauper in the grand new order when I have to retire. Greater men than I have died penniless.

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I have a very similar outlook. It's pretty clear to me that things are moving faster and faster in society and likely not towards anything very good. So it seems naive to expect the old models to continue working.

My "retirement plan" therefore is something between conventional wisdom and prepping. Put some money into savings for emergencies and the remaining possibility that stocks may have some growth in future, but diversify into self-reliance. Buying land and tools that can be used to live off at low cost (i.e. no rent, do my own maintenance, grow some of my food and fuel) and assume that I probably won't ever afford to retire but hopefully will afford to just be able to work less and less over time.

Your last statement is certainly a good and humbling thing to remember. What's the point in amassing all this wealth anyway, since we certainly can't take any of it with us when we go. Giving your children the wealth of knowledge they will likely need in times to come is probably much more practical.

I'm glad to hear you say that. There are a lot of people out there who are kind of thinking the same thing. The only thing I really worry about is that if the time does come and we really need to use our paltry reserves of food, land, ammunition, etc. whether or not we have the ability to do the real civilizational dirty work--forming strategic alliances, committing violence when necessary, avoiding starvation through back-breaking farming work that actually yields harvests, etc.

Like, I've got some acreage, the skills to warm my old house through the winter on the woods, and enough knowledge to garden through the summer. But what about food in spring and fall? What if a band of 200 raiders from the city walks down the groomed road my driveway is off of and decides they want to live on my patch?

And even if civilization doesn't fall, do you really "own" land when your ownership claims are validated by paid police and the people who don't own land not thinking to come and take your land? I wouldn't say civilization "fell" between 1900 and 1930, but surely those Russian landowners assumed they "owned" their land before the Bolsheviks started peacefully discussing their ideas with the Tsarist government.

You start thinking about this stuff and realizing that these problems have been solved over and over again, since before writing. All of the stuff in history that seems so antiquated (like needing elaborate gift-giving rituals when meeting neighboring foreign nobility) suddenly seems clever and meaningful when it's juxtaposed against the context of starvation, enslavement, death by the plague, and no electricity.

These outcomes are pretty extreme and therefore I think pretty unlikely. I think it's useful to consider but maybe harmful to expect them and prepare only for such events. One thing I also think is very important, maybe most important of all in regards to what you bring up, is to invest not only in things but to invest in people.

Build a community of people around you that you can depend on and who can depend on you, a mutual aid network. Strong relationships are what's needed when state/societal or bureaucratically demanded relationships break down. But in a less extreme setting, like if you lose your job or have a tragedy or catastrophe in your life/community, having strong support among friends can be the difference between getting back on your feet or ending up homeless or otherwise worse off.

Just the push back on financial advice by guys like Dave Ramsey is shocking. You tell people to save, avoid debt, don’t buy new cars, etc and people react with almost anger at the suggestion.

It's impossible today to have any sort of major asset without going into debt. Simply said, wages are so low you can't really save up for anything - like what, 60% of Americans live paycheck to paycheck?

Back in the Ford era, it was at least commonly understood common sense that people need to be able to afford products. Today? The people are held poor so that they can't afford to strike, much less openly revolt, and nickeled-and-dimed by the credit industry.

The advice from Ramsey and friends makes sense and is objectively the best thing people can do, but at the same time its messaging is clear: miss out on the fun everyone else has achieved by debt.

I agree with you and your parent commenter.

> Today? The people are held poor so that they can't afford to strike, much less openly revolt, and nickeled-and-dimed by the credit industry.

I think it's less that they're held so "poor" (i.e. not having access to a lot of cash) as that they are so completely effectively barred from any kind of sustenance outside of the Debt System that striking would mean the total abandonment of any kind of life they're used to. A real revolution would mean complete blockage from almost every public space and service--unlike the past, there's not anywhere for you to go if you're at odds with the banking system. You'll starve, or you'll be tracked and thrown in jail to suffer the wrath of the stupid, uncivilized drug-addicted gangs. There's not even food in the lands surrounding the towns and cities, it's all single-crop cash yields that get exported.

People are also very carefully manipulated (not necessarily deliberately--it's just the net result of all aggregate manipulation) to be extremely suspicious and cautious of anything that would upset the life they're used to. If you talk to anyone above $140k/year household aggregate about the possibility of living 2-3 families in one home or never travelling by air again they look at you like you're speaking a foreign language.

> It's impossible today to have any sort of major asset without going into debt.

The system is headed for feudalism, where majority of the population will never own land/home, and will have lesser rights than those that do.

People who think this is a fantasy, should check what percentage of the population can afford a lawyer. it's like 20-30% tops

I think there's pushback because it's kind of a "just buy more money" solution.

On the whole, the problem isn't that people are buying $70k trucks and escalades that's keeping them poor. It's not having enough income.

The difference personally between $70k and $90k is massive and the difference between $90k and $120k is massive. That's the difference between underfunding my retirement and no savings and still being fairly tight on fun money, and having all of those things and still being able to pay that surprise $2k vet bill and just not save as much that month.

And I pay less to own than I did to rent, in a nicer house, and I'm building equity when I do it.

Was there an attitude change towards savings/etc there too? Sure. But like, the biggest difference was just having more money. You can't save when you don't have money coming in.

And at $70k I was making more than the median family with kids. People have to make do with a lot less than that. And that becomes "can't fix the car" or "can't afford to go to the hospital" or "kids don't eat breakfast" at the bottom end. $40k with kids is poverty, and that's an awful lot of people. When your shitty insurance drops you a $40k bill for a weekend in the hospital you're not paying that and it will take the rest of your finances with it.

At an individual level yes, acting wisely with money is all any one person can do. But it comes off as entitled when you tell people that they personally are doing it wrong, when the overwhelming majority of people in the economy are losing. The middle-class lifestyle as we have come to know it basically requires you be in the top 10% of income earners in your local economy. At some point it's a society-wide problem, people respond to the incentives you give them as best they can with the resources they have. But a talk-show host saying "just buy more money" isn't going to fix those social-level problems. The problem isn't people, and if your system requires magical rational-actors who will wageslave for 50 years without the occasional vacation or other nicety and die penniless in retirement after cutting social security, then your system is going to fail.

At a societal level, there is no "one weird trick from a talk-show host" to bypass the incentives we've set up or vastly increase the amount of resources any one person is allocated. Well, crime I guess.

This was a very well-written response to the parent commenter and to my own attitude to which the parent commenter was responding.

> The middle-class lifestyle as we have come to know it basically requires you be in the top 10% of income earners in your local economy.

Absolutely true. I've found that to not worry about any of (health, retirement, surprise bills, vehicles, housing) you need about $100k/year post-tax, and that's in a heartland state with "low" COL.

> The problem isn't people, and if your system requires magical rational-actors who will wageslave for 50 years without the occasional vacation or other nicety and die penniless in retirement after cutting social security, then your system is going to fail.

Amusingly, this is one of the reasons I'm not too worried about the inevitability of the system crashing. The current system is bound for failure. It's practically designed to fail. Once it fails, something will have to take its place. I think there's just enough civilizational inertia that the US isn't headed for total anarchy, as is always a risk for less-developed places when the currency and the food importation falls through.

I appreciate your habit of acknowledging the response and style, it's very disarming even if you were to then disagree ;) Just feels very much in the spirit of what HN is trying to encourage even though it's a hot-button topic (I saw yet another thread got folded into this one, lol).

I mean I just feel that on average you get what you incentivize. Yeah for any one person, advice can help them break the average but on the whole people respond how the system has encouraged them to respond. It's the same as the critique people make about communism... if your system requires people to go against human nature, it's not going to work. Individuals may, but on the whole, humans are gonna act like humans. Implying that people are doing it wrong personally because they're failing in a system in which the overwhelming majority of people are failing becomes personally offensive and that's why people react negatively.

The crushing underlying fact of american society is that the middle class isn't middle anymore, probably over half of people are working-poor at this point and there's really only a handful of middle-class left in america (in the "own a house, go on vacation once in a while, not worry about surprise bills" sense). And maybe that's part of why people react viscerally negatively to it too... nobody wants to think of themselves as lower-class and that's rubbed in your face when Ramsey tells them to live within their means. You can't afford that vacation and neither can your friends, you're all wage-slaves, just like 90% of america. Back onto your treadmill, hamster.

Building local communities and building for resiliency is really important, as another commenter was discussing. I have this early 80s tractor that I inherited from my grandparents, it's nothing special but it's had very little wear since my grandpa got alzheimers soon after and they started having it mowed by a service, and it's had some basic preventative maintenance (oil changes once a decade, new tires, etc) and I've found myself thinking that I probably should keep it around even if I upgrade to something newer. Because it's got a briggs+stratton 2-cyl boxer motor on a steel frame and it's going to be something I can find parts for forever and repair it if it comes down to it, and that's kind of a novelty in a world of cheap throwaway junk. Same for appliances, I have old 90s washer+dryer that came with the house and it's nothing particularly special, it's worn out and needs at least a couple hundred bucks of parts each, but I hear nothing but horror stories about the newer stuff. Or cars are another one... everything is digital now and not really intended for user service beyond changing the oil and brake pads and such. There is a small crossover between ESC (which is really important around here in winter) and the point everything became unserviceable and that "window of repairability" seems very desirable.

Societally we are just getting to this place where reliability and durability is something that's starting to nag at me, and it's interesting to hear I'm not the only one.

I have a veteran friend who is working to get his translator from afghanistan and his family a visa and get them moved over here... he's got a little farm so he'll have a place to put them. Same thing. I think people are starting to look over the cliff and worry about what comes after. And building local communities is going to be the ticket.

Just buy more money isn’t an accurate summary. If anything, Ramsey’s advice is aimed to helping people climb out of the pit.

Saving $1,000 for an emergency fund. Paying down debts one at a time with the “debt snowball” approach.

His advice doesn’t appeal to people who are making a lot of money at all and most of the push back is from people who will give you speeches about compounding interest rather than paying debt.

“Live like no one else, so you can live like no one else.”

What’s the alternative? Pensions? If your retirement is dependent on a pension, and the pension goes belly up, then you’re left with a fraction of what you planned for (since PGBC doesn’t cover it all)

The realistic alternative is multigenerational family units sticking together.

Grandparents help raise the grand kids instead of day care and baby sitters. Kids take care of their aging parents. Communities pull together to help each other.

There are complexities to it, but without a lot of the artificial financial structures that we have in place (loans, insurance, stocks, government programs) that’s probably what society has to revert to and in many ways it’s the most efficient long term way for society to function.

Outright impossible to do with the demands of employment these days - young people are expected to go wherever the jobs are, they cannot stick around in some backwater rural town to take care of their parents. Not to mention that people these days don't have anywhere close to enough children, and it's pretty immoral to force people to breed like rabbits for their retirement.

Children sticking around isn't the only option. My mom intends to follow me once I've found a place to settle down in the next few years. I'll give her extra money which should allow her to live quite well on top of what she has saved and she's already expressed interest in helping with grandkids if I have any (I probably will at some point).

Obviously this plan is made much easier by remote work and good earning potential for tech workers and I suppose some parents will be more attached to where they currently live than my mom is. But multi-generational is not outright impossible, I'd wager a significant chunk of the population could pull it off to varying degrees in one way or another.

> Outright impossible to do with the demands of employment these days

Trylly modern thinking is, if the Market disagrees with Gravity, then Gravity is wrong.

> What’s the alternative? Pensions?

In Germany, we have a "rollover system" - you pay a government-mandated fixed percentage of your income into pensions system in exchange for pension credits. The contributions from all current payers (plus a sizable chunk of tax money) are then distributed to current pension receivers, and the worth of a pension credit point ("Rentenpunkte") is regularly-ish adjusted for inflation.

Is that similar to Social Security in the US? Maybe Social Security is at a smaller scale

I'm no expert in US pension schemes to be honest, but I quickly looked up - y'all pay 6.2% each (employer and employee) of your wage, here in Germany it's 9.3% each - and our wages tend to be lower than in the US as well.

And yet, we here don't really need private pension savings. It'd be interesting if someone with a better understanding of USSS could chime in for the reasons.

Ultimately retirement always has the same problem: a retired person wants to consume something today without producing anything today. They can't genuinely save it up: if they packed meat in their 20s and wrote code in their 40s, the meat isn't going to be any good and the code will be deprecated in their 80s. The theory of retirement is that there is some surplus of work being produced which can be redirected to people who are not working. A pension plan or a retirement plan or personal savings effectively causes some of your income to be unspendable today, making it today's surplus for today's retirees (even if it causes the value of a database record in your name to increase). But when you are retired, it doesn't matter if that previous surplus was achieved through a pension plan or a retirement fund or personal savings or the kindness of their children: if there is no surplus today, then you can't have it today. When it happens, perhaps it will look like a bank run or a currency collapse or a crash in the stock market. But those are just the economy's way of telling you your society is already bankrupt; they don't necessarily cause the bankruptcy in the first place.

So what is the alternative? Is there one? If you want to eat a steak, either you slaughter the cow yourself, or someone else makes more than they need and chooses to sell it to you. The way a retirement is funded might change whether someone with more than they need choose to sell it to you, but it isn't going to make steaks exist.

You are bang on. The question comes down to whether or not you can produce something in exchange for fuel, textiles, shelter, food, medicine, law, and the protection of violent men. If you can't, you have to rely on stashed currency. In the current system, stashing currency slows down the market returns of the people who designed and own the system, so every single facet of life is designed to making stashing currency difficult or ineffective.

The only way to care for unproductive populations is to make personal sacrifices and care for them, at a loss/to the detriment of your own possible financial and lifestyle returns.

There has got to be another way at beating the system but as it stands how does one get over the fact that inflation would wipe away the value of the currency you are holding? Some argue that bitcoin is the answer but who knows really.

My personal feeling is that current currency system is fatally flawed and set up deliberately to not be stable. The plan for continuing market gains is to import consumers, import low-wage labor, and continue to consolidate production into hyper-corporations. I think that eventually something is going to happen that the system really can't account for (famine, plague, war, etc.) and it will be broken down and built "anew", with new norms for behavior and lifestyle expectations.

There's no way to beat a game by its own rules when the rules are set up specifically to allow certain parties to take advantage of the game. Apologies for sounding like a high school libertarian, but I can't think of any simpler way to say it than that.

There is no pragmatic alternative. A debt-backed financial system will always fail to adequately provide for unproductive populations (children, elderly, disabled, insane). In fact, every financial system will fail to adequately provide for that population. The only thing that can provide for them is the deliberate actions of productive, able-bodied people, regardless of what financial system everyone is participating in.

I have a lot of ideas about what could be done, but it's all armchair revolutionary theorizing.

Instead of having a thousand tiny pension corps we could just... have one big one. Some kind of Social Security system, perhaps.

And yeah social security is running a deficit and will have to reduce payments by a whole 25% or 30% in another 20 years... unless we just remove the payment caps. Wow.

Like at the end of the day the resources are present in american society to take care of the elderly in retirement. We are not physically running out of green bean casserole. It's just a question of allocation. At the end of the day the money needs to be allocated and just like day 1 of the social security program, there's going to be a lot of people who don't have time to pay into a system before drawing out. The resources will need to be allocated to pay for the wageslavery of the last 30 years.

Boomers are going to get theirs regardless, they will make sure of that, but, they're intent on pulling the ladder up behind them like they've done on every other major social issue.

Boomers don't care if Xers or Millenials don't have anything saved up, they got theirs and they got social security on top. But if things don't change, there's gonna be an awful lot of starving grandparents again when X and Millenials hit retirement, cause we don't and they're making sure we won't have social security either.

Social Security was introduced as a solution to the problem of economic security for the elderly. If we fail to meet this goal, and people see the consequences of the failure, it would likely be a bad look for politicians; public support for the program will rise, and the program will be reformed.

I'm single, probably not being able to change that. So I guess I will just end up dead at or before retirement... Not really so horrid thought yet.

Houses are another fun one. There are a lot of boomers who will be looking to cash in on their houses at the same time as everyone else. Plus the increases to interest rate will have the effect of pushing down the amount people are willing to bid on future houses.

Boomers who bought in the 80s-90s are in no danger of being underwater, but, there's going to be a lot of people whose houses are worth a lot less than they were in 2021. People who bought in the last 5-10 years are going to find that their assets at best are not going to appreciate very much, and sometimes investments do go down, that's the risk. It's not going to be an automatic escalator to the upper-middle class like it was a few decades ago.

And that's a good thing for younger generations (if landlord corps don't buy everything up) but the political power of boomers and of heartland states are really the elephant in the room with american politics.

This is very interesting - did you read this in a book or a blog or something? I’d love to add it to my list.

Honestly, I'm kind of drawing my own conclusions about the financial system based on what I've read. I'm also almost embarrassed to reveal my reading list, as it reveals me as a dilettante, with an undergraduate-sophomore understanding of economics. However, I am very happy and presently financially secure with a good life, so at least my choices about spending aren't completely stupid.

I would say these are the sources from which I draw a lot of my opinions about the financial system:

- Max Dama on Automated Trading (57-page PDF written by a quantitative trader)

- Out-Sourced Profits: The Cornerstone of Successful Subcontracting by Dr. J. L. Hart-Smith (memo written by a Boeing employee about why Boeing was failing to make money and simultaneously driving down quality in the airliner industry)

- The Big Short by Michael Lewis

- Hipsters on Food Stamps Parts I-III by The Last Psychiatrist (blogger whose blog, "The Last Psychiatrist", is my favorite source of writing and whose advice I orient most of my life and behavior around. Many of his other articles touch on the credit-based financial system)

- WTF Happened in 1971? (Website showing trends in American life after the gold standard was abandoned in 1971, it's not necessarily well-researched and they draw a lot of conclusions that more experienced researchers would contradict)

- Wikipedia (some great reads on the history of the joint-stock corporation, dollar, credit card, 401k, home loan, auto loan, credit score, etc.)

There's a lot of other things I've read, but they're not explicitly about the financial system. I feel very strongly about the structure of civilization and the process of creating engineered goods, and I find that most of my complaints about problems with those two things in modern times resolve back to "the people incentivizing work to happen in modern civilization are amoral, corrupt, and actively destroying the historical incentives that people had to work towards ends that could be described as 'common good'". This leads to my constant sniping about the credit system and 401ks.

Thanks for sharing this list :)

The beginning of https://thelastpsychiatrist.com/2012/11/hipsters_on_food_sta... seems very promising ...

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