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Posted on 05/22/2010 7:16:34 AM PDT by Libloather
Is Your IRA or 401K a Target of Government Appropriation?
Chris Blasi
Published 5/19/2010
Will the laws and rules in place to protect individuals in their attempt to set something aside for retirement be safeguarded by the representatives elected to advocate for them in Washington? Will the principles and moral integrity of the political class keep them from appropriating the trillions of dollars held in 401k's and IRA's? I'm not so sure!
While the answer is most likely yes, when one realizes the magnitude of the financial predicament the U.S. might well find itself in shortly, it is indeed, conceivable that such an appropriation of private retirement accounts might prove to be too compelling for most politicians to resist.
With an economy and financial system on life support, trillions of dollars of new U.S. debt must be sold to keep up the daily operations of the welfare state. Unfortunately, the recent match-ups between desperate seller and willing buyer (transparent buyers) have been falling short. As a result, debt monetization appears to be expanding via the growing share of debt auction issuance being taken down by "Direct Bidders". Consequently, if this continues, a new source of massive funding must be found very soon.
Several years back theorizing on the possibility of a government takeover of private retirement monies was bandied about only by those labelled "conspiracy nuts" by the main stream financial media. Consequently, a pliant public has been successfully conditioned to scoff at such speculations. Indeed, to even suggest that the US Congress would lay claim to the retirement savings of the common man were the ravings of the "un-American", as per the attitude projected by the media shills to such musings.
Will We See an Introduction of Guaranteed Retirement Accounts?
In the annual report of The White House Task Force on the Middle Class, Joe Biden discussed the possible creation of so-called "Guaranteed Retirement Accounts" (GRAs) which would provide protection from "inflation and market risk" and potentially "guarantee a specified real return above the rate of inflation." Why such a magnanimous gesture?
Where would such a deeply indebted public find the extra funds to invest in such a sure fire offer?
Forgive the cynicism, but as an aside, should such a creation come to be, what are the odds the officially declared rate of inflation used to index such a vehicle would fall short of real CPI? And risk....is there not risk in being stuffed with IOU's that nobody seriously believes would ever be paid off in a currency retaining any semblance of purchasing power?
What is the Motive and Opportunity Behind GRAs?
Connecting the dots in the speculation of this pending scheme, and utilizing basic detective methodology, we find motive and opportunity jumping out at us. The motive would be to keep a bankrupt political and economic system going a little while longer. The opportunity would be that the trillions of other people's dollars would be 'protected' in the hands of Congress. Indeed, unless there is some other massive pool of untapped wealth yet to be discovered, and appropriated, the rumours as to the confiscation of individual retirement monies may have legs!
To successfully commit such a assault, it would serve the orchestrators best if a crisis ensued whereby the victims implored the perpetrators for their gracious protection. This point causes me to wonder if an event, or series of events, might transpire that drive disillusioned equity investors to the "safety" of government guaranteed paper.
A good foundation toward such a transition has been laid. Ample disdain for Wall Street exists, and it is easy to ramp up courtesy of this crew's whorish behaviour. One could surmise that with stocks still selling below their peak of a decade ago that it would not be particularly difficult, with the assistance of a clueless and complicit media, to cause the public to sour on the "stocks for the long haul" mantra. Maybe just one major sell off, coupled with some additional high profile exposure of the creepy doings of investment bankers, would set the stage for a major short-term shot in the arm for a beleaguered Treasury and Federal Reserve.
Is an Orchestrated Decline Coming in the Stock Market?
What if the funding shortfalls of the Treasury become so acute that the magnitude of monetization required threatens to collapse the financial system or send interest rates skyward? Could such a possibility lead certain elite powers to decide, under the cover of darkness naturally, that national security calls for an orchestrated take down of the stock market? Accepting this as a possibility depends on one's beliefs pertaining to several key criteria, namely:
1. The degree of financial duress one believes the U.S. is under
2. The impact continued monetization will have on financial system stability
3. The participation levels for future debt auctions
4. The machinations the powers that be are capable of.
Should one believe the deployment of GRAs are reasonably probable, then the remaining action item in this scenario would be to coax the public into personally assuming the debt the rest of the world was refusing to accept. If the beliefs of many regarding activities conducted by The President's Working Group on Financial Markets (Plunge Protection Team) were sound, could not this same entity be utilized for such theoretical events as those described? The possibility such an initiative might be needed to rescue the Treasury market does add an additional, and considerable, threat to the equity markets.
Lastly, for those who believe very unsavoury things transpire when it comes to power and money, then a substantial sell-off in the equity markets would present a convenient buying opportunity for well-funded international interests at the expense of millions of ordinary investors. Would this not be a natural extension to the play book used throughout the economic crisis, with a slight variant? Instead of socializing the mortgage and derivative losses of bankers upon taxpayers, in this scenario, mountains of unwanted debt would be dumped on a politically powerless citizenry in exchange for their ownership interests in viable revenue generating entities.
Where Should One Invest?
It is times like this that the "no counterparty risk" element of gold and silver really shines. As such, I strongly believe every investor should allocate a portion of their assets into physical gold and silver. As to ETF's, I am not convinced they are a reasonable substitute for the time tested wealth protection provided by physical gold and silver. And while mining stock or warrants have provided leveraged returns in past precious metals bull markets, they would most likely suffer a decline, at least temporarily, in any stock market plunge.
House Democrats Contemplate Abolishing 401(k) Tax Breaks
Would Obama, Dems Kill 401(k) Plans?
USA: Proposals to Confiscate Workers’ Personal Retirement Accounts
TESTIMONY OF TERESA GHILARDUCCI
For a Mandatory Universal Pension System by Teresa Ghilarducci
401(k) Foe Teresa Ghilarducci, the Most Dangerous Woman in America
I have been hearing about this for a long time...the governments plan to take over 401ks etc. For years I have been thinking that I would take the tax hit and take all out of my 401ks.....I wonder if I would be any worse off by doing that or by letting the government have all of it!
of course the people in charge now want to take the 401k and IRAs... those people are ‘the rich’... any account with more then some number they will pick (most likely $10k)... will be ‘trimmed’/confiscated to pay for the government programs they forced on the rest of us over the years.
they will justify it as redistributing the wealth, when in reality it is just theft.
then again, i see progressive taxes as theft (and unConstitutional)
There will be blood in the streets if they try that.
Even if it worked out the same monetarily, the cumulative effect of people taking their money out, essentially expressing a vote of "no confidence" in the government's plan and ability to manage the money sends a message. That's worth something.
agree, if my entire life savings is stolen from me, I’m afraid that will leave my only two choices: 1) be a slave or 2) fight for my freedom and rights even if it results in my death.
I’m not really very interested in either choice, but being a slave is not something I would willingly let happen.
The plan would be to take your 401K and replace with a “promissory” note to be paid at retirement. A Ponzi Scheme to pay off debt. You’ll never see your money again because whoever votes this BS in, will be long retired themselves by the time your payment is due.
True...many of us would not but many more would give all that useless dollars for bread, clean water, etc. Most people don't have enough food and clean water in their homes to last them a week much less a year.
” principles and moral integrity of the political class “
Those words do not belong together.
Isn't that what the Federals already do with Social Security receipts?
fyi
The Supreme Court has already ruled that the government has no obligation to pay Social Security. The law can be changed at any time, reducing your already-paid-up benefits by any amount the government deems necessary. They can even reduce them to zero without any legal problems at all.
I’ve been watching this issue with interest. I’m trying to hold on until January. I’ll be over 59.5, I’ll retire and that can be my income for next year. Is that “going Galt”?
If they appear to be moving on this before Jan, I’ll pull it and take the hit. I’ll be DAMNED if I’ll let them have it all, I’ve done without to save it, let them do without for a change!
Yep, this would start the shooting.
Don't delude yourself.
The vast majority of the US would go right along with it.
It will be couched in terms of promoting "income equality" and they will believe that they will be given part of the "unfairly large" retirement accounts that others have undeservedly accumulated.
This will go through congress like a dose of the salts.
Have you noticed that in the past two years promoting "income equality" has become a new government goal ? I had always thought that income inequality was what motivated people and led to great economic, social, and scientific progress. But we are being led down the socialist path.
Let’s see... Store a big pile of money in a governement program and hope they decide not to get their hands on it?
that always seemed like a bad idea to me.
CWII BUMP
There is a problem with that plan if you have a 401k through a present employer; you are not allowed to cash it out, even with the tax hit and penalty, if you are still working for the employer. The best you could do, without being laid off or quitting your job, would be to take an 'in-service withdrawal' which is limited to about 25% of the total value of your 401k.
AS we get closer and closer to November it will be VERY entertaining to see what the DemoRATS try to pass as they realize that their majority in both houses is likely to go away.
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