Free Republic
Browse · Search
News/Activism
Topics · Post Article

Skip to comments.

401k/IRA Screw Job Coming?
Market Ticker ^ | 01/08/2009 | Karl Denninger

Posted on 01/08/2010 11:07:28 AM PST by Zeddicus

Now this is a guaranteed rape job.

In a short conversation this noontime that CNBC apparently has omitted from their archives (Why's that folks?) Rick Santelli was talking about a potential to effectively force money into the Treasury market.

Where would they get this?

From your 401k and IRA accounts!

From Businessweek:

The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.

Let me tell you what this is - it is an attempt to prevent the collapse of the Treasury market!

Forcing people into Treasuries as an "annuity" is exactly what Social Security allegedly is. Except that Treasury stole the money that was collected in FICA taxes and spent it!

Guess what? They'll do that here too - you're going to "invest" in Treasuries which of course are effectively a CALL option on the future taxing ability of the government.

The problem is that with an aging population and the immigrant problem (illegal immigrants that is), along with offshoring, the aggregate wage base will drop and thus this is the most dangerous investment of all!

What's even worse is that the government has intentionally suppressed Treasury yields during this crisis (and will keep doing so by various means, including manipulating the CPI - the "inflation index" - as they have for the last 30 years) so as to guarantee that you lose over time compared to actual purchasing power.

THIS HAS BEEN THE CASE SINCE THE 1980s AND IT WILL NOT CHANGE!

I have been talking about this for quite some time and recall writing a Ticker on it a year or more ago, although I can't find the entry immediately.

Let me be clear:

I have no quarrel with the government mandating that you have a choice in your IRA or 401k account to buy short-duration Treasuries - much like the "G" fund that government and civil-service workers have.

But - "choices" have a funny way of turning into mandates, and this looks to me like a raw admission that Treasury knows it will not be able to sell its debt in the open market - so they will effectively tax you by forcing your "retirement" money to buy them!

This may be the only way for Treasury to hold down interest rates to something reasonable in the intermediate term, but doing so will instantaneously remove a major source of funding for the stock market - that is, the monthly and quarterly inflows from retirement accounts.

You can bet this won't be good for you, the ordinary American.

You can also bet that once such an "option" is made available there is a very high probability of the government doing things that either promote or simply don't stand in the way of another stock market crash as a means of "herding" your money into Treasuries - so they can blow it - all under the guise of being allegedly "safe".

Of course this begs the question - what if the government can't pay down the road when you retire, just as they can't pay on a forward basis with Social Security and Medicare?

This "proposal" can only mean one thing - Treasury smells smoke. Maybe you should pay attention to what they're huffing!

And before you say "oh they'd never do that" I want you to read this:

Here is a warning to us all. The Argentine state is taking control of the country’s privately-managed pension funds in a drastic move to raise cash.

...

My fear is that governments in the US, Britain, and Europe will display similar reflexes. Indeed, they have already done so. The forced-feeding of banks with fresh capital – whether they want it or not – and the seizure of the Fannie/Freddie mortgage giants before they were in fact in trouble (in order to prevent a Chinese buying strike of US bonds and prevent a spike in US mortgage rates), shows that private property can be co-opted – or eliminated – with little due process if that is required to serve the collective welfare.

Any questions?


TOPICS: Business/Economy; Editorial; Government; News/Current Events
KEYWORDS: brokenpromises; confiscation; cwiiping; denninger; destroy401ks; destroyiras; economy; investments; stockmarket; ticker
Navigation: use the links below to view more comments.
first 1-5051-100101-150151-192 next last

1 posted on 01/08/2010 11:07:31 AM PST by Zeddicus
[ Post Reply | Private Reply | View Replies]

To: Zeddicus

Well, I guess the timing of my recent layoff was fortuitous. Means I can get my 401k money under the radar before .GOV confiscates it.


2 posted on 01/08/2010 11:09:01 AM PST by Zeddicus
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus

Dear Lord, save us all! We will all be under welfare.


3 posted on 01/08/2010 11:09:50 AM PST by GauchoUSA
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus; Jack Black; Travis McGee

These idiots are trying to start CWII.


4 posted on 01/08/2010 11:10:16 AM PST by Lurker (The avalanche has begun. The pebbles no longer have a vote.)
[ Post Reply | Private Reply | To 2 | View Replies]

To: Zeddicus

If you do a web search, you will find that George Miller (D-CA) among others were touting exactly this a year or more ago. The proposal Miller made was that Uncle Sam would guarantee the 401K holder the value of the fund as of mid 2008 (before the crash) if the fund would be turned over to be managed by Uncle Sam. Sounds good, doesn’t it? Until they would change the rules so as to deprive you of most of it.


5 posted on 01/08/2010 11:11:03 AM PST by randita (Chains you can bereave in.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus

“Forcing people into Treasuries as an “annuity” is exactly what Social Security allegedly is. Except that Treasury stole the money that was collected in FICA taxes and spent it!”

There is no trust funds of any type whatsoever. ALL monies go in to the General Fund and then it is used to pay for expenses. So they didn’t steal anything, they meerly lie to everyone.


6 posted on 01/08/2010 11:11:42 AM PST by stockpirate (Dec. 24, 2009, the day liberty in America died to applause in the US Senate. Republicans helped)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus
Forgot source link.

401k/IRA Screw Job Coming?

7 posted on 01/08/2010 11:12:42 AM PST by Zeddicus
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus

Face it, the money’s gone and they’re trying to hide that fact as long as they can.


8 posted on 01/08/2010 11:13:40 AM PST by tired1 (When the Devil eats you there's only one way out.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus

A bridge too far.


9 posted on 01/08/2010 11:13:44 AM PST by bmwcyle (Free the Navy Seals)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus

They are really looking at nationalizing all private, state and local governemt retirement accounts.


10 posted on 01/08/2010 11:14:10 AM PST by stockpirate (Dec. 24, 2009, the day liberty in America died to applause in the US Senate. Republicans helped)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus
Didn't the government in Argentina do this a few years ago?
11 posted on 01/08/2010 11:14:53 AM PST by rawhide
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus

Bump!


12 posted on 01/08/2010 11:15:39 AM PST by mtbrandon49
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus

This is not the first time this has come up. The leftists have coveted IRA/401K’s for a long time. I think I remember Jesse Jackson running on the idea of taking that money and using it for reparations.

I think last year some Dems were talking about taking that money and putting it into social security in exchange for small monthly payments. or something like that.


13 posted on 01/08/2010 11:16:04 AM PST by GeronL (http://libertyfic.proboards,com)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus

Reminds me of the proverb, “A Fool and his Money are soon Parted”.

Or in this case..Patriots and their money!


14 posted on 01/08/2010 11:17:59 AM PST by Soothesayer9
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus

If something like this becomes a reality, then the biggest dupes were those who converted traditional IRAs to Roth IRAs in the last ten years — and paid income taxes on the conversion in the process.


15 posted on 01/08/2010 11:18:03 AM PST by Alberta's Child (God is great, beer is good . . . and people are crazy.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus
I really do not see this as ever happening, but with the dems in control, who knows. However, I think the courts will save the investors, unless they are stacked with dem appointed judges.

I know, I know, I am at fault for living responsibly. I should be willing to give up this money to the irresponsible, who have to make bigger decisions between lottery tickets, beer, and drugs.

16 posted on 01/08/2010 11:18:17 AM PST by rawhide
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus

My suspicion is that this leads to civil war.


17 posted on 01/08/2010 11:19:07 AM PST by Brilliant
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus

One of my accounts(American Funds) grew 30% last quarter.


18 posted on 01/08/2010 11:19:55 AM PST by AppyPappy (If you aren't part of the solution, there is good money to be made prolonging the problem.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus

¡Not Good!


19 posted on 01/08/2010 11:21:10 AM PST by ▀udda▀udd (7 days - 7 ways Guero >>> with a floating, shifting, ever changing persona.....)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus

A friend told us of this scheme about a year ago. He said that basically any pre-tax money in IRAs or 401Ks isn’t really your money since you haven’t paid tax on it, they could decide to do whatever they want with it. Scary


20 posted on 01/08/2010 11:23:13 AM PST by happilymarriedmom
[ Post Reply | Private Reply | To 1 | View Replies]

To: tired1

“Face it, the money’s gone and they’re trying to hide that fact as long as they can.”

Well, if they can’t borrow it, they’ll have to take it.

Interesting thing here is that they’ll get to tax folks who take their money out of retirement plans in fear of the government, and then if it’s not enough, they can take the rest and “invest” in treasuries to finance more spending.

The other thing this might do is convince people NOT to put more money into 401k’s and spend it instead - increasing consumption.

They’ll get money on the rumor alone.

These are diabolical folks.


21 posted on 01/08/2010 11:23:21 AM PST by RFEngineer
[ Post Reply | Private Reply | To 8 | View Replies]

To: Zeddicus

I never understood people that went postal before.....this last year.


22 posted on 01/08/2010 11:24:43 AM PST by ladyvet (WOLVERINES!!!!!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus

This is all by design—to impoverish you. So you’ll beg for a crumb of food by your new world order masters. Look who the hell is in charge of the White House if you need proof.


23 posted on 01/08/2010 11:25:43 AM PST by WKUHilltopper (Fix bayonets!)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus

Just more ammunition for the liberal massacre in the next election....


24 posted on 01/08/2010 11:25:50 AM PST by AngelesCrestHighway
[ Post Reply | Private Reply | To 1 | View Replies]

To: Brilliant

Yup. See the tag...


25 posted on 01/08/2010 11:25:58 AM PST by Drill Thrawl (Another day, another injury, another step closer. Are you prepared?)
[ Post Reply | Private Reply | To 17 | View Replies]

To: Zeddicus

Just to keep current: The Chi Coms haven’t bought any Treasuries since May, 2009.

The biggest buyers of Treasuries has been - the Treasury!


26 posted on 01/08/2010 11:26:04 AM PST by RexBeach ("Those are my principles...if you don't like them, I have others." Groucho Marx)
[ Post Reply | Private Reply | To 1 | View Replies]

To: rawhide
Argentina seizes pension funds to pay debts. Who's next? - 10/21/08
27 posted on 01/08/2010 11:27:10 AM PST by OB1kNOb (Q: What's the difference between Obama and his dog, Bo? A: Bo has papers.)
[ Post Reply | Private Reply | To 11 | View Replies]

To: Soothesayer9

Have you ever wondered about how a fool and his money got together in the first place? :)


28 posted on 01/08/2010 11:27:14 AM PST by RexBeach ("Those are my principles...if you don't like them, I have others." Groucho Marx)
[ Post Reply | Private Reply | To 14 | View Replies]

To: Brilliant

It would be nice to get 20 to 30 million tax payers to not file 1040’s and a million businesses refuse to remit withheld payroll taxes. Put them in escrow out of reach somehow.


29 posted on 01/08/2010 11:30:43 AM PST by listenhillary (I believe AGW is real now. It was caused by scientists and greenies LYING!)
[ Post Reply | Private Reply | To 17 | View Replies]

To: Zeddicus

What’s worse is that even if they don’t end up doing anything, the mere whisper of this will hurt the markets. Once people (like me) hear of this, they’ll STOP CONTRIBUTING TO THEIR 401k PLAN, and if possible, PULL MONEY OUT. Once again, the unitended consequences of policies penned by ignorant bureaucrats will screw us all.


30 posted on 01/08/2010 11:31:57 AM PST by Mich Patriot
[ Post Reply | Private Reply | To 1 | View Replies]

To: Zeddicus
Hello Iceland/Argentina. It will be a win/win for TPTB (The Powers That Be). You will get snagged on taxes if you liquidate early to avoid confiscation or get slowly ground down as the interest rates on T's are kept artificially low. As the Ticker says Turbo Tax Timmy and company smells smoke. You can see the equities market crash with this insanity and greed. What was once considered Tinfoil is about to be real. On the bright side maybe this will wake J6P up.
31 posted on 01/08/2010 11:31:57 AM PST by Polynikes (Haakkaa Paalle)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Brilliant

You can bet on that. When are we going to stop this madness?


32 posted on 01/08/2010 11:34:13 AM PST by dumpthelibs (dumpthelibs)
[ Post Reply | Private Reply | To 17 | View Replies]

To: randita

AS soon as this looks like a reality, the market will crash as everyone, yours truly included, will go to cash out their 401k’s and IRA’s, tax penalty be damned.


33 posted on 01/08/2010 11:34:39 AM PST by Kozak (USA 7/4/1776 to 1/20/2009 Reqiescat in Pace)
[ Post Reply | Private Reply | To 5 | View Replies]

To: Zeddicus
I already paid the taxes and spent the money.

I know they would come for it.

34 posted on 01/08/2010 11:35:14 AM PST by Jim Noble (Hu's the communist?)
[ Post Reply | Private Reply | To 1 | View Replies]

To: listenhillary

Not filing? Hell, these clowns in DC may drive 20 or 30 million taxpayers into rebelliion.


35 posted on 01/08/2010 11:36:58 AM PST by tgusa (Gun control: deep breath, sight alignment, squeeze the trigger ....)
[ Post Reply | Private Reply | To 29 | View Replies]

To: Polynikes

We found $$ in the ammo boxes that were supporting my in-laws bed. We use to think that was crazy but not so much anymore!


36 posted on 01/08/2010 11:37:13 AM PST by happilymarriedmom
[ Post Reply | Private Reply | To 31 | View Replies]

To: Zeddicus
If, as students, we bothered to read the History Books of the Pre-PC era the reader would soon discover that the Revolutionary war was started for less offences than we have seen in the last few years.


37 posted on 01/08/2010 11:38:03 AM PST by darkwing104 (Lets get dangerous)
[ Post Reply | Private Reply | To 1 | View Replies]

To: randita

I would certainly prefer to control my own 401k and IRA. Miller acts like the market will never recover (Yeah, if the rats maintain control, it won’t), but my investments are already approaching the levels they were in 2008 despite the recession. I don’t want the government “helping” me with my money.


38 posted on 01/08/2010 11:38:45 AM PST by MediaMole
[ Post Reply | Private Reply | To 5 | View Replies]

To: Alberta's Child
"If something like this becomes a reality, then the biggest dupes were those who converted traditional IRAs to Roth IRAs in the last ten years — and paid income taxes on the conversion in the process."

I would argue that Roth Conversions were a scam perpetrated by the feds. Here's why:
1 - Most people have a larger marginal tax rate while saving in IRAs than they do during retirement when the withdraw. Supposing you only have X dollars to contribute, you are better of with X (pretax) than with the post tax amount in your Roth. The larger principal grows faster, and you pay a lower marginal rate when retired.
2 - The Roth conversions were a windfall for the feds. They got to tax money they otherwise were not going to tax for decades.
3 - Does anyone really believe they won't change the rules? I suspect at some point, they will means test Roth IRAs. For example, if you have more than $1M in assets, you have to pay taxes during withdrawals.

My final gripe, in general, is with putting my money into an account that has strings attached. This is true of all these retirement accounts. I would rather pay my taxes and have my money be free and clear of all the rules.
39 posted on 01/08/2010 11:39:00 AM PST by laxcoach (Government is greedy. Taxpayers who want their own money are not greedy.)
[ Post Reply | Private Reply | To 15 | View Replies]

To: randita
Sounds good, doesn’t it? Until they would change the rules so as to deprive you of most of it.

Yup. Just like GM's bond holders had nothing to worry about from the government stepping in. Nothing at all...

40 posted on 01/08/2010 11:40:49 AM PST by Hoffer Rand (There ARE two Americas: "God's children" and the tax payers)
[ Post Reply | Private Reply | To 5 | View Replies]

To: Zeddicus

Wow...if this goes through, there will be alot less Congresscritters around....”accidentally” being found in hog farms....if you get my drift.


41 posted on 01/08/2010 11:42:02 AM PST by DCBryan1 (wake me when the shooting starts....then I will go feed the hogs.)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Brilliant
My suspicion is that this leads to civil war.

In which case the best investment now would be canned goods, bottled water, and ammunition.

42 posted on 01/08/2010 11:43:00 AM PST by Snardius
[ Post Reply | Private Reply | To 17 | View Replies]

To: rawhide

GREAT post rawhide.


43 posted on 01/08/2010 11:44:30 AM PST by Mich Patriot
[ Post Reply | Private Reply | To 16 | View Replies]

To: GeronL

“I think I remember Jesse Jackson running on the idea of taking that money and using it for reparations.”

I don’t doubt JJ was talking about that but I remember Robert Reich and his sidekick Actenburg (HHS under Clinton) were talking seriously while running HHS about taking 15% of the current balance of all 401K/IRA accounts and 15% of all future contributions to ‘invest in the inner cities’. They claimed this was necessary since the market didn’t fully recognize the values of such intestments and that these ‘investments’ would pay for themselves by reducing crime, poverty, etc.

I also doubt that there are few politicians that wouldn’t slobber over the thought of taking a sizeable portion of all 401k/IRA accounts to pay for their pet projects, ie, health care, reparations, etc.


44 posted on 01/08/2010 11:47:34 AM PST by DugwayDuke
[ Post Reply | Private Reply | To 13 | View Replies]

To: Zeddicus

AMcon mag had a fiction piece last month about America’s dollar being destroyed Argentine style. With this being floated I would say our goose is cooked. Beans, brass and bullion will be 2010’s market leaders.


45 posted on 01/08/2010 11:48:16 AM PST by junta (S.C.U.M. = State Controlled Unreliable Media)
[ Post Reply | Private Reply | To 1 | View Replies]

To: Brilliant
My suspicion is that this leads to civil war.

At which point it is good bye United States; for at least the next handful of decades.

46 posted on 01/08/2010 11:48:22 AM PST by Michael Barnes (Call me when the bullets start flying.)
[ Post Reply | Private Reply | To 17 | View Replies]

To: Snardius

DAMN!!! Every time I think I’ve got enough 9MM on hand, another story like this comes out.


47 posted on 01/08/2010 11:48:31 AM PST by Mich Patriot
[ Post Reply | Private Reply | To 42 | View Replies]

To: Big Giant Head; Marie Antoinette

Ping.


48 posted on 01/08/2010 11:48:52 AM PST by listenhillary (I believe AGW is real now. It was caused by scientists and greenies LYING!)
[ Post Reply | Private Reply | To 44 | View Replies]

To: Zeddicus

Progressive types have been jealously eyeing all of that cash sitting in private 401K’s and IRA’s and plotting ways to get their mitts on it for a quarter-century now


49 posted on 01/08/2010 11:48:55 AM PST by Buckeye McFrog
[ Post Reply | Private Reply | To 1 | View Replies]

To: Pan_Yan

ping


50 posted on 01/08/2010 11:51:52 AM PST by Pan_Yan
[ Post Reply | Private Reply | To 43 | View Replies]


Navigation: use the links below to view more comments.
first 1-5051-100101-150151-192 next last

Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.

Free Republic
Browse · Search
News/Activism
Topics · Post Article

FreeRepublic, LLC, PO BOX 9771, FRESNO, CA 93794
FreeRepublic.com is powered by software copyright 2000-2008 John Robinson