Interesting Opportunities with Your 401k and Crypto

With all the mayhem resulting from previous administrations, a recent opportunity in 401k investments has emerged.

May 9, 2022

By: Bobby Casey, Managing Director GWP

401k crypto We are living in quite a clown world. But what is happening now isn’t all because of something someone did in the last couple years. It’s a culmination of insanely stupid decisions. And stupidity, much like a loan, comes with compounded interest until such time as it is fully reconciled.

So here we are. Unfathomable inflation, a contracting GDP, and a labor market that has appeared to peak, are all converging and it’s fairly obvious who is to blame. This is the handiwork of politicians and bureaucrats who have put more thought into a Ministry of Disinformation and a Department of Environmental Justice, than they have into economics.

Environmental Justice as defined by the US Department of Energy’s Department of Legacy Management is:

Environmental justice is the fair treatment and meaningful involvement of all people, regardless of race, color, national origin, or income, with respect to the development, implementation, and enforcement of environmental laws, regulations, and policies. Fair treatment means that no population bears a disproportionate share of negative environmental consequences resulting from industrial, municipal, and commercial operations or from the execution of federal, state, and local laws; regulations; and policies. Meaningful involvement requires effective access to decision makers for all, and the ability in all communities to make informed decisions and take positive actions to produce environmental justice for themselves.

The US has a Department of Legacy Managment whose purpose is to make sure that if we do ecological damage that it gets redistributed evenly across all the neighborhoods? Teams of people swarming around the Green Agenda; but the only staff left to work on the economy was the interns and Press Secretary?

People are living in greater economic uncertainty now more than ever in large part because of the obscene policies from 2020 to 2021. The bill has come due. I’m normally a “bootstrap logic” type person, but you can’t exactly pick yourself up by the bootstraps when someone pulls a rug out from under you either.

Sometimes Occam’s Razor is the best rule to follow: a philosophical rule that the simplest of competing theories be preferred to the more complex.

No point doing the mental acrobatics to rationalize the disaster, or see if we can blame anyone else in this. The US government is trying to blame the Russian and Ukraine conflict for this just to deflect responsibility.

Every once in a while, however, there’s a glitch. A little something we can take advantage of to make things a little better for ourselves. Usually these loopholes are attributable to the abject absence of foresight on the people who wrote the bills.

Quick jog in American history. The 70s were not great, economically. The President during the second half was Jimmy Carter. Two terms came came to characterize that administration’s economy: stagflation and malaise. The latter used to explain the former.

Stagflation consists of persistent, high inflation, combined with high unemployment, and stagnant demand in a country’s economy. During the Carter administration: inflation hit 12.2% in late 1974, soon after he took office, nearly twice the annual pace of increase through November of last year. The inflation rate hit a record high of 14.6% in March and April of 1980.

You wouldn’t be wrong to think the US was reentering a similar economic era considering they can currently check all the boxes for stagflation.

Carter gave a speech that would later down the line be given the moniker of his “Malaise Speech“. He never uses the word, but rather gave an entire speech that all but defined it.

A strong case can even be made that it was during his administration that the groundwork for the horrible foreign policies we have now with the Middle East were cured.

He was a one-term president with a few apologists for his big peanut-farming heart. As a person, he’s probably very decent, but as a president, he was weak.

That said, out of that pile of thorn bushes we call his presidential term, sprung a single rose: the 401k.

Today, the 401k is the most popular retirement investment vehicle is not the number one investment vehicle overall, in the United States. This is where the majority of people’s investments are (if they have any at all).

What makes them so popular is it reduces the tax obligations when the contributions are made, and then defers them to when they are withdrawn. In some cases, it can bring your household down to a lower tax bracket. When you’re withdrawing, you’re retired so you aren’t bringing in the same incomes, and when you are taxed, you’ll still be taxed at a lower bracket.

A small provider, ForUsAll, is adding the cryptocurrency asset class as a possibility for account holders to own. Last week, Fidelity, one of the largest 401k plan providers, announced it would roll out access to bitcoin as a 401(k) investment later this year.

The Department of Labor disapproves, and Fidelity will likely have to testify before the Senate to get it pushed through. The disapproval comes from the volatility of cryptocurrencies, but I’m wondering how that case is going to be made by the folks who made the US dollar and economy so volatile, that it would cause the rally on crypto in the first place.

It remains to be seen. Even in the case of ForUsAll, there are limits and investments into crypto are considered “high risk”. Likewise, it’s only a handful of qualified cryptocurrencies that made the list for investment. They are even requiring that investors who are interested in crypto take a full class on what that entails prior to having access.

In the end, people have been screwed over by what was supposed to be stable and safe investments too. People can get in on crypto through other investment channels like 401ks and IRAs and that is something I expect to see more of moving forward.

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