Skip to comments.401k/IRA Screw Job Coming?
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!
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 countrys 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.
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.
Dear Lord, save us all! We will all be under welfare.
These idiots are trying to start CWII.
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.
“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.
Face it, the money’s gone and they’re trying to hide that fact as long as they can.
A bridge too far.
They are really looking at nationalizing all private, state and local governemt retirement accounts.
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.
Reminds me of the proverb, “A Fool and his Money are soon Parted”.
Or in this case..Patriots and their money!
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 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.
My suspicion is that this leads to civil war.
One of my accounts(American Funds) grew 30% last quarter.
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
“Face it, the moneys gone and theyre 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.
I never understood people that went postal before.....this last year.
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.
Just more ammunition for the liberal massacre in the next election....
Yup. See the tag...
Just to keep current: The Chi Coms haven’t bought any Treasuries since May, 2009.
The biggest buyers of Treasuries has been - the Treasury!
Have you ever wondered about how a fool and his money got together in the first place? :)
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.
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.
You can bet on that. When are we going to stop this madness?
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.
I know they would come for it.
Not filing? Hell, these clowns in DC may drive 20 or 30 million taxpayers into rebelliion.
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!
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.
Yup. Just like GM's bond holders had nothing to worry about from the government stepping in. Nothing at all...
Wow...if this goes through, there will be alot less Congresscritters around....”accidentally” being found in hog farms....if you get my drift.
In which case the best investment now would be canned goods, bottled water, and ammunition.
GREAT post rawhide.
“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.
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.
At which point it is good bye United States; for at least the next handful of decades.
DAMN!!! Every time I think I’ve got enough 9MM on hand, another story like this comes out.
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