Parents Need to Teach This—Not Schools (Ep. 332)

"So what are we going to do for cash flow? This conversation needs to happen and it doesn't need to happen in our schools. Please people do not comment to me about how our school systems need to teach finance. Do you really think that a government entity should be teaching our kids how to manage money? No, parents need to learn and then parents need to teach kids. It is a responsibility of the parents to go out and get the information and learn. You are most likely watching this on your phone. You are listening to it on your phone. You can't tell me that you do not have the means and people do not have the means to self-educate themselves. A hundred percent they do. At least we have people like Dave Ramsey out there doing that. At least kids are being taught not to overspend. At least get them to understand the budget. There is the beginning, but it is not our schools that need to be doing that."

Hello, hello, hello, and welcome back to the podcast. Thank you very much for being here. All right, today, chapter four, Building Your Warehouse of Wealth. I'm not gonna lie. This is probably my favorite chapter. Tax qualified retirement plans. In my book, I call it the scam. But Nelson was being a little bit nicer. However, we... In this chapter, we really understand how much Nelson loved the government. Okay? So... So if you like the government, you're probably not going to like this chapter. But it should be eye-opening to you. Or I shouldn't say if you like the government. If you trust the government. So let's dig in.

So he wrote this in 2014. He wrote Becoming Your Own Banker in 2000. And so he talks about that a little bit that he said, I think I need to readdress this because apparently people aren't getting it. So he said, I just love this chapter. He says, Gosh, Here's my thing. I don't love the news. I don't like all the spins. I don't like all the lies. I don't like all the stuff in the news. And so I don't watch it. Like, I'll hear it. But I don't watch it. And so when you sit back, you can see how we're being played. This was just a fun chapter to reread.

He says, All such efforts by man eventually fail. But they do so over a long enough time frame that man does not see it happening. He is subject to the boiled frog syndrome. And so if you guys haven't heard of Nelson talking about the boiled frog syndrome, he's talking about, he says in here, he doesn't know that it's true, that that works. But he references the boiled frog syndrome a lot when he would talk. And he was basically saying, Hey, you take a frog, you put them in water, and you turn the heat up a little bit at a time, and pretty soon they're boiled, and they're dead. Right? And they didn't even know it was happening because it just happened a little at a time.

And so it was interesting because he said, LewRockwell.com had a book that two authors predicted that something like 9-11 was going to occur. Has the world changed since this time? Unless you are a boiled frog, just look at what is happening all around you. Trying to take a trip in an airplane. The world has changed significantly. All kinds of nonsense is going on under the supposed mission of protecting us. And he said, these two authors pointed out, go back 70 plus or minus years, and you have the Great Depression. The world changed and has never been the same. Go back another 70 years, and you have the War of Northern Aggression, known to some as the Civil War. And then Nelson goes on to talk about the fact that the Civil War was about taxation, not about slavery, and then gives lots of books to read on that.

He said, Every 70 years or so, something significant happens that changes the world in which we live. I predicted back in 1976 that Social Security would fail. Before it fails, they will attempt to prop it up. The source of funds they will use is reserves on private pension plans, HR 10 plans, IRAs, etc. In October of 2008, the incoming administration had personnel discussing confiscation of such plans and combining them into a guaranteed retirement account and to be administered by Social Security. See how the boiled frog syndrome works? One small deviation from tried and true principle and people become comfortable with it. It becomes normal. This leads to another deviation. In due time, it will lead to a complete U-turn in behavior and acceptance.

That is so true. So many people are like, well, this is just how you travel. If you traveled before 2001 or 2011 or 2020, every single time we travel, there's something new. It's just insane. The amount of changes, the things that change, they were like, well, that's just what we're used to. And if we buck the system and we say, no, we're not okay with that, then we become the problem. Because it's easier to go along and get along than it is to be the person bucking the system.

I am just naturally a system bucker of every kind. It is hard for people to tolerate me because I'm questioning things. You can hate me if you want, whatever. During COVID in 2020, I was not wearing a mask. I would go into Walmart and somebody would say, oh, do you have, ma'am, do you have your mask? I'm like, yep, I sure do. I take it out of my pocket and put it back in my pocket. I do have a mask. I'm not buying into the narrative. I've done my due diligence. I've looked at the things. I've talked to the doctors. I've talked to the microbiologists. I did my due diligence. And would have it been easier to go along to get along? Yep, yep. Did I lose people that I knew in that situation? Yep. They unfriended me on Facebook. Whatever. If that's your prerogative, you can do that. You can buy into it. I'm not buying into it. At some point, somebody has to take a stance.

And the government is saying, hey, you're not putting enough money into these IRAs and these 401(k)s. So we're going to give you incentives to do that. And we'll get into that in a little bit. We'll give you incentives to do that. Well, now, everybody's putting their money there and it's a big pool of money that's controlled by them. So if this guaranteed account bill would have passed, then what? They would have confiscated all the money.

I followed this bill for many years. In fact, I just looked it up before I came to record. The bill is kind of dead in the water now, but for many years, even while Trump was in office the first time, they tried to sneak this bill in again and it did not pass. And so I've kept an eye on it to see. In the years, not only did the guaranteed retirement account bill, was that kind of on and off, but they attached another bill to it that said, if the guaranteed retirement account bill passes, then we are going to freeze all investment accounts so that people cannot access a mandrinum. Because you know that's what most people would do. If we have a retirement account, we are in bed with the government in a roundabout way. They have the power on these accounts to do what they want.

And so when I looked this up to kind of see where it was at, the bill itself, they changed the name. Isn't that interesting? So that bill wasn't going anywhere. So then they changed the name very much like the Federal Reserve did when the bill passed in the middle of the night to create the Federal Reserve. Let's just rename it so people don't know what it is. They're doing the same thing to take land grabs. Like I've listened to a bunch of stuff on land grabs. Clay Connery has a really good podcast with a lady. This is a while back, probably a year, maybe two, that he interviewed some lady that was, she doesn't live in California maybe, but she grew up in California and she was talking about these land grab bills and the fact that they're changing the name on them so they can just come in and do some land grabbing.

But it's interesting that in 2022, there was a bill that passed that is similar to the guaranteed retirement account bill. This is interesting. In 2025, so that's this year, in 2025, it made enrollment for 401(k)s automatic. Now, I actually thought that that already was a thing. I didn't know that that had to be a bill because I have been seeing that for probably 10 years already that people are getting a job. They're, you know, I go from one job to the other. I sign up for my new job. They automatically are taking, I believe it's 3%, to contribute to a 401(k). It's automatic. It is now an opt-out system. So, if you have kids, if you have grandkids, if you yourself are going from one job to the next and you don't want to be putting money into a 401(k), then you need to be opting out of that system because it's an automatic enrollment.

The other thing that I found interesting with this 2022 bill is that they have a, what they're calling a savers match that starts in 2027. So, there was a savers credit. I was not familiar with that. The savers credit was for people that didn't make a lot of money and they replaced that with a federal match to put into a retirement account. A federal match. So, now we just have, you know, how much money can we get into that system so that we can have more money to steal, basically.

Nelson said, before World War II, there weren't many pension plans. The Revenue Acts of 1921, 1926, and 1928 initiated tax advantages for employment-based retirement plans. By 1929, these dates are important, about 15% of the private sector employees were covered by employment-based plans, which were concentrated in large corporations and in sectors in which government oversight tended to the strongest. Then along comes World War II. The bureaucrat in Washington knew how much gasoline you needed. You went to the grocery store in those days and it did not matter how much money she had. The limiting factor was ration points. Everything was controlled. So, there were no, you couldn't give raises, right? After World War II, they said, nope, you can't give any raises. So, what happened is under such restrictions, how does a business give an employee a raise without giving him a raise? Benefits, of course. This marked the real beginning of retirement plans and health plans as we know them today. They were tax qualified.

In 1950, Paul Poirot, I don't know how to say his name, at the Foundation of Economic Education, wrote an essay entitled The Pension Idea in which he demonstrated conclusively that the idea would never work and here we are in the 21st century and we see corporate pension plans falling apart with increasing regularity.

You know, my husband worked a milk plant and he was union because the plant was union and it was supposed to be like 30 and out or something. Now, it's 30 and broke. Like, he didn't even stay his full 30 years. It's broke. They're all broke because they took their money out of annuities and they invested them into the stock market. We don't have those that guaranteed income anymore. The employees of that milk plant wanted to get rid of the union so badly and they couldn't because if they voted the union out, then the past employees would not get their pension. Well, guess what? All the past employees are their friends. They're not going to do that to their friends. So they stay in the union and these unions are absolutely pointless. Pointless. They don't protect anybody. They don't negotiate anything. In his particular union, there was no negotiation. But now, the union is broke and they want the government to come in and save their butt. It's the most ridiculous thing ever.

So we've given these tax benefits to these people. So now, the appeal was made to the authorities. We need a tax break too. So for everybody, right? They're like, hey, we need a tax break too. Now comes the HR 10 plans. Initially, participants in this category could contribute $2,500 per plan. The contribution will be taken off of your income for tax purposes for this year. It will build tax free until your retirement age and you are going to be in a lower tax bracket at that time. Yep. Always lower tax bracket and you can rest assured that there will be changes in the future. None of them to your advantage. The sole proprietors and partners agitated more and the contribution limit was raised to $7,500 per year.

The government said we're going to start HR 10 plans. You can put in $2,500 a year. People said that's not enough. So then they said, okay, you can put in $7,500 a year. More time passed and the balance of the population said, wait a minute, you authorities have blessed the corporate employees with a tax break. You have blessed the sole proprietors and the partners with a tax break. What about us? Give us a tax break too, right? Because we're seeing everybody else is getting it. Well, we want it too. So then comes the individual retirement accounts. So you guys know them as IRAs. If we will give these folks a tax break, then we will start saving more and we will solve the problem. So let's create IRAs so then people can put more money in and they can save more. What was the result? The savings rate went down.

That was interesting that the savings rate went down. I would have not thought that, but I'm not going to read it to you. What Nelson is saying is that they're saying, hey, you can put money in this IRA. You're going to get this extra rate of return. So good for you. The market's going to do what the market needs to do. So you don't need to save as much. So people quit saving and then they started spending money on other things. So Nelson says, what did Joe Sixpack conclude? He says to himself, wow, with a plan that good, I don't have to save half as much as I did before. Right? I can take the difference and make a down payment on a boat. And so the savings rate went down.

Consider then the reasoning when government creates a problem, erroneous taxation, and then turns around and grants you an exception to the problem they created, a tax qualified plan. Aren't you just a little bit suspicious that you're being manipulated? All of these plans were introduced as a means of helping citizens out. If they really wanted to help, all they needed to do was reduce taxes. Do you really think they want to do that? The real object is to control your life. And you just stand there and willingly participate. What in the world happened to the ability to think?

He's not wrong. Nelson is not wrong. Those of us that do not go along to get along, that buck the system, we are looked at as the problem. Right? Why are you such a problem maker? Why can't you see that somebody is doing something to help? Why can't you see that they're not doing it to help? That they're doing it to control? The more we let them in, the more control that they have.

The first nine pages of the IRS code describe income. The following 1100 pages describe the exceptions to the code. In essence, the code is saying, we own everything, but we will grant you these exceptions. Does this help you see the hidden agenda? The best way for them to accomplish the goal is to make you dependent on them. There is a tremendous element of dependence in the act of worship. You will worship that on which you are dependent. When people think that these blessings in life come from government, they will also end up in slavery.

I did a little Google search before I recorded. I wanted to see how much money is sitting in retirement accounts. In 401(k), there is a total of $12.2 trillion. In IRAs, there's $16.8 trillion. The average account balance in a 401(k) is $144,000. IRA is $137,000, Roth is $52,000, and a traditional IRA is $211,000. The median savings. I also ran this because people don't have enough money saved for retirement. And 45 to 54-year-olds have a median savings of $115,000. 55 to 64-year-olds $185,000. 65 to 74-year-olds $275,000 plus is $130,000. I mean, think about that. I'm 51 at the time of this recording. $115,000 is what people have saved.

And people think I'm crazy. And I have gotten a lot of backlash from the podcast that I did that young people today, being in your 20s, are going to need $30 million of tomorrow's money to retire. That's about $3.6 million in today's dollars, if I remember my numbers correctly. And if we're making $100,000 today, and we only have $180,000 to $200,000 saved, we have two years of retirement.

When people come to me and say, oh, Mary Jo, I sold my business or I sold something, had this happened yesterday. Met with a client that's going to be buying a business from somebody, and the guy wants a million dollars for his business. And they were trying to help him figure out how he was going to, what to do with this million dollars? Can he put it in a policy and then use it for retirement? What's he going to do? And I said, a million dollars. The guy is 57 years old. A million dollars is not enough money to get him another 30 years.

And Nelson talks about this in this chapter. We want to retire early. So we work for 30 years and then we want to retire for 30 or 40 years. And nothing wrong with that if you've created cash flow. Very much like the conversation I had yesterday. If we're 57 years old and he's selling his business for a million dollars, he needs more money. So can he owner finance you so he's got some cash flow coming in? But he needs cash flow for 30 years. So even the cash flow he has coming in, if he does a contract with you and he owner finances you and he decides he's going to do that for 10 years or he's going to do that for 20 years, that's not enough. He's probably going to outlive that.

And Nelson talks about that in this chapter too, that a lot of people will say, well, people aren't living as long today. They're not going to live until they're 90. I'm sorry, but life insurance companies are insuring people till they're 121 years old. Living to 100 is not a big deal anymore. The medical field has advanced. Technology has advanced. We have health at our fingertips basically at this point.

And so I actually reached out to the insurance company, to the head actuary at the insurance company I use. And I said, hey, why do you guys have policies that go to 121? Because if I go online and I look what the average age is, people are dying younger. And it explained it very well. She said, the people that we insure have to go through underwriting. We're basically insuring the healthiest people out there. If we're not healthy and we're going to die early, we're not going to insure you, right? They're being selective. So people that are healthy, that are taking care of themselves, those people are going to live well past 100. We may see Gen Xers, Gen Z. We might see them live to 120, well, we won't see them live to 121, but they may live to 121 years old, right? And so we know people are living longer. How are we going to save up enough money to live to 121 years old?

We're also putting money into these retirement accounts and not understanding that if we go into the nursing home and Medicaid kicks in, all of that money has to be used. You can't take that with you. You have to buy it down or you have to spend it down or you have to do whatever. Now, pay for the nursing home with it. That's why it's there. If you die and you pass it on to your kids, there are rules about how soon they have to take it. There are taxes that have to be paid. You used to be able to die and then your kids could just roll it to another IRA and then they could just keep rolling it. And the government said, no, no, no, you have 10 years that you have to take it out. Because think about it, the government makes a rule that at 73, you have to start taking money out of that IRA. Well, if you died, now they're not going to get money from that IRA and that passed on to a younger person. So now taxes aren't getting paid for a very long period of time. And it was a really good way to avoid taxes. Well, the government's not going to do that. They're not going to be okay with that. They want to make sure they get their money. They are making the rules and we are just in bed with them.

And so Nelson as an Austrian economist, he could see what was happening, but he also sat on the outside and really paid attention. The one thing that I loved, absolutely loved about Nelson is that he was old. You know, at the time of writing this book, he was 81 years old. He passed away at 88. And so it was fun to talk to him because he had lived through the beginning of a lot of these things and he was already paying attention to economics at that point and questioning what they were doing and why they were doing it. And so he just says, hey, in here he talks about the fact that social security is going to fail. It's a 70-year program. It's over at 70 years. I believe he said it's over at 70 years. So at some point it's going to fail.

If we don't pay attention to what's happening economically, they can control us. The more Netflix they have, the more clothes that they sell us, the more home interior stuff they sell us, the lower they keep rates so that we can buy campers and boats and all the fun things. The more that you want to show me football, right? All of that stuff can be very distracting and keep our kids busy. Whatever it is that society is doing and that they're encouraging is what? Just for us to keep our eye on a different ball when we should be paying attention to what they're doing, right?

Like I've said it before in one of the podcasts that my husband always teases me when I add my two cents where he doesn't want it. He will say, keep your eye on your own bobber. And that's essentially what the government's doing, right? They're like, don't pay attention to our bobber. You go keep your eye on your own bobber. You keep yourself super busy over here and we're going to confiscate money. Confin— And I'm going to use the word confiscate. We're going to confiscate money from you because it's an automatic enrollment because you are too stupid to understand what you're doing with your retirement. So we're going to help you out and we're going to make you contribute to a 401(k). And then you're going to say, hey, you know what? I want to take that out before 59 and a half and then we're going to take 10% of it. So it's a really good way to confiscate money. That is my opinion. I will die on that hill because it is not something that people understand.

Think about this. How about we educate people on how to utilize money? Wouldn't that be something? And we make it easy for them to understand it. I was talking to a client yesterday and he is doing some owner financing. They're going through a course and learning how to do some owner financing on homes so that people that can't qualify for bank loans can get into houses. And then he would charge an interest rate. It's done. It's a super cool process because people that are not fortunate enough to get a loan can still get into a house. And he was saying that it's frustrating to work with the people that can't qualify for these loans because you're working with people that have zero financial literacy. And he said, and what's worse is they don't really want to know.

And so my question is, is why don't they want to know? What has caused people to say, I don't want to understand money? Is it because somebody has made it really hard? Is it because we have emotional ties to not ever having money and we have some financial PTSD? What is going on in that scenario? Because I think a lot of people have this conception that money's evil. People with money are evil. It's hard to understand because everybody makes me feel dumb. There's ways that we can teach the public about finances and get them rewired so that we're not just saying, hey, let's give our money into this system and this is going to work. It's not working.

The average individual, the median individual does not have enough money to retire today. Even the average, when I googled this, the average numbers for somebody at 65 were like $600,000. So the median number was $200,000. The average was like $600,000. $600,000 at 65 years old is not enough money to retire. Not even close to enough money to retire for 30 years.

So what are we going to do for cash flow? This conversation needs to happen and it doesn't need to happen in our schools. Please, people, do not comment to me about how our school systems need to teach finance. Do you really think that a government entity should be teaching our kids how to manage money? No. Parents need to learn and then parents need to teach kids. It is a responsibility of the parents to go out and get the information and learn. My gosh, you are most likely watching this on your phone. You are listening to it on your phone. You can't tell me that you do not have the means and people do not have the means to self-educate themselves. 100% they do. And at least we have people like Dave Ramsey out there doing that because that is so necessary. At least kids are being taught not to overspend. So Dave might say, hey, put your money in the market. I know a lot of people that I like that say, hey, put your money in the market. I do not agree with that. I am saying, hey, how do we teach them cash flow? But at least get them to understand the budget. There is the beginning, but it is not our schools that need to be doing that.

Okay, a little bit of passion there. Let me know if there's anything that you guys have comments, questions, concerns on. maryjo@withoutthebank.com. If you have gotten your books, fantastic. Get your appointment set up so that we can get you on the schedule with John or myself. We can answer any questions for you, help you get started if that is the right thing for you to do. All right, you guys have a fantastic rest of your day.

Thanks for listening to the Farming Without the Bank podcast. We hope today's episode has inspired you to take control of your finances in new ways. Don't forget to check out our website, farmingwithoutthebank.com, and engage with us on our Facebook page, Farming Without the Bank. Join us next week as we smash more financial myths and empower you to accomplish your financial goals.