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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
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1 posted on 01/08/2010 11:07:31 AM PST by Zeddicus
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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
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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
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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.)
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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.)
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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)
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To: Zeddicus
Forgot source link.

401k/IRA Screw Job Coming?

7 posted on 01/08/2010 11:12:42 AM PST by Zeddicus
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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.)
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To: Zeddicus

A bridge too far.


9 posted on 01/08/2010 11:13:44 AM PST by bmwcyle (Free the Navy Seals)
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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)
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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
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To: Zeddicus

Bump!


12 posted on 01/08/2010 11:15:39 AM PST by mtbrandon49
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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)
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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
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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.)
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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
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To: Zeddicus

My suspicion is that this leads to civil war.


17 posted on 01/08/2010 11:19:07 AM PST by Brilliant
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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.)
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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.....)
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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
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