My composition professor today was talking about Bitcoin (conversation about finances) and taught the class what fiat meant.
Since it’s the first week, we can’t really do much in class, so he took the time to speak to the class (full of 18/19 year olds, i’m the oldest😫) about how 401ks are a scam and how the monetary system is broken.
I was cheesing SO HARD when he brought up fiat & bitcoin. Best professor EVER.
Here’s the video he showed us today. https://youtu.be/nAHgr9dY9BU
Are you living in an alternate universe?
One where we've won already! 😂
As a foreigner, I've been researching 401k's for the last 30 seconds using ChatGPT
What is a 401K?
ChatGPT said:
A 401(k) is a U.S. retirement savings plan offered by employers. Key points:
Defined-contribution plan. You put in money from your paycheck before tax (traditional) or after tax (Roth, if offered).
Contributions often get employer matching up to a limit.
Investments usually go into mutual funds, ETFs, or similar options chosen from the plan.
Money grows tax-deferred (traditional) or tax-free (Roth).
Withdrawals allowed from age 59½ without penalty. Early withdrawals usually incur a 10% penalty plus taxes.
Required minimum distributions (RMDs) start at age 73 (traditional only).
It is a tax-advantaged way for U.S. employees to build retirement savings.
Want me to contrast it with UK pension schemes for context?
You said:
I understand it didn't start life as a pension plan, but ended up replacing them. Is this true? If so why?
ChatGPT said:
Correct. The 401(k) was not created as a pension plan. It emerged from a loophole in the 1978 U.S. tax code.
Timeline and shift:
Pre-1970s: Most large employers offered defined benefit pensions (guaranteed lifetime income). Risk was on the employer.
1978: Congress added section 401(k) to the tax code. The original intent was to give executives a way to defer tax on bonuses and stock options.
1980s: Benefits consultant Ted Benna realized the rule could be applied broadly so ordinary employees could defer salary into tax-advantaged accounts. Employers saw it as cheaper than running pensions.
1980s-1990s: Employers shifted en masse. Pensions are expensive and volatile, since the company must guarantee returns and cover shortfalls. A 401(k) moves the risk and responsibility to employees.
By 2000s: 401(k)s became the dominant private-sector retirement plan. Pensions remained mostly in government and some unionized sectors.
Why the replacement happened:
Cost control: Pensions are open-ended liabilities. A 401(k) fixes employer costs at the contribution match.
Volatility avoidance: Pension funding depends on market returns and interest rates. Companies disliked the balance-sheet swings.
Regulatory shifts: ERISA (1974) and later rules increased pension oversight and insurance costs.
Workforce mobility: Employers argued 401(k)s suited modern, more mobile employees.
Financial industry push: Wall Street profited from mutual funds and fees in 401(k) plans.
So yes: 401(k)s were an accident of tax law, later seized on as a cheaper alternative, which led to the slow death of private-sector pensions in the U.S.
Thinking about my composition teacher asking everyone what profession they are working towards, and how to pay the least amount of taxes based on said profession, all whilst teaching about how the government steals your money, how 401k’s are a scam, and how bitcoin is a better way to invest your money.
I have his class again tomorrow, and i’m so excited to see his crazy ass. Community Colleges just be hiring anybody 😭
