>>>The real threat of conversion or confiscation would result in panic withdrawals from these accounts. <<<
Interesting point... considering that was exactly what I was thinking about, which makes me think that whatever confiscation happens will done in a far more insidious manner.
Evidently, all they need to do is get looney college professor to seed the notion of confiscation and some people will cash in their retirement accounts loosing a major portion of it to taxes and penalties.
Repression (what the Fed is doing now, and has been doing since about 2003) destroys all savings by stealth -- not just the much-smaller sums in the accounts under discussion. Even your piggy bank.
Repression = Deliberate monetary inflation + knocking down interest rates. Savers can't realize any interest/earnings on their savings, and meanwhile the Fed is sucking all the value out of those savings by printing extra funny-money which it then delivers to the Government to spend at pleasure.
The academic argument right now is between the deflation camp (Mike Shedlock and the Austrians -- I mention Mike because his pieces are often posted here in FR) and the inflation camp. The Austrians are basically saying, no, no, we have deflation because credit is being destroyed: ignore those price increases, inflation DOES NOT have anything to do with price increases.
Well, manifestly prices are increasing on a lot of things, so I don't know whom to believe in this faculty-lounge eraser-throwing contest. If Shedlock's right, you need to hoard cash; if the inflationists are right, you need to hoard gold, Australian dollars, Canadian mining and forestry stocks, anything (like Coca-Cola) with big foreign earnings, and overseas bond funds.
A hell of a lot is riding on "who's right?" but these guys can't get their act together since 2007 -- they've been arguing like cats and dogs for five frickin' years while everything goes to hell, and we're all standing around with our ****s in our hands, trying to figure out who's right.
The nightmare is that credit inflation and prices have now delinked and we get the worst of both worlds, like "stagflation" in the 70's. Hate it? Does it screw you? That's what you're going to get. How about that formula?