The Obama Administration’s Secret Plan to Hijack Your 401(k)s and IRAs
In Global Politics, Investments, Retirement on July 26, 2010 at 5:45 pm
The government is getting by, for now, on the generosity of (mostly foreign) buyers of U.S.sovereign debt and on the ability of the Federal Reserve to carry out currency and bond marketmanipulations.
Unfortunately for the inside-the-beltway elitist spendthrifts, even establishmentarian, suck-upto-power credit reporting agencies such as Moody’s have been forced to publicly acknowledge that Uncle Sam’s critically-important “AAA” credit rating is hanging by a thread and will soon have to be revised downward.
Foreign buyers of skyrocketing U.S. debt – the biggest of which are China and Japan – areincreasingly balking at buying the growing flood of U.S. Treasury bonds needed to keep thegovernment’s doors open. (Even the liberal-leaning Washington Post warned on April 7, 2010 that bond buyers are now seeing “lending to Uncle Sam as a riskier proposition than lending to blue-chip firms.”)
The solution to the government’s financial woes, as certain powerful politicians see it, is not tohave Washington live within its means. No, the solution is to “raise revenue” by any means necessary – borrowing it, printing it, and, yes, even stealing it.
When governments get desperate for money, they scheme to change the incentives and rules to milk more money of out of private wealth holders. Sometimes, in a financial “crisis,” they move with deliberate speed to seize assets outright.
That was the case in Argentina recently.
The Heritage Foundation reported on October 31, 2008:
This week Argentina’s leftist president, Christina Kirchner, announced she would move forward with her plan to seize the nation’s private pension funds. Kirchner claims government seizure of the funds is needed to protect Argentinians from the global market crisis. But most observers believe her real motive is to use the $30 billion in seized assets to ease the massive debt obligations her leftist spendthrift government has run up.
The biggest source of heretofore largely untapped revenue for U.S. politicians is privateretirement accounts. Some 60 million American households own and control 401(k) retirement funds valued at around $4 trillion. Including 403(b)s, IRAs, Health Savings Accounts, and all other vehicles through which Americans hold retirement assets, the total runs to $15 trillion.
So what are the actual chances of a 40l(k)/IRA asset grab? It may not happen as suddenly as in Argentina, but a piecemeal approach appears to be very likely. The prerequisites are already being readied for implementation.
IRA and 401(k) De-Privatization Plans:
More Than an Obama Wish-List Item
Every crime has a motive. It’s not just ideology but practicality that drives our ruling politiciansto seek control over large pools of private wealth. The harsh reality of national insolvency is forcing this danger to the forefront.
Washington is readying confiscatory revenue-raising subterfuge because the funding crisis forSocial Security is no longer something that can wait to be dealt with years down the road. The crisis is starting to unfold now. As the New York Times acknowledged, “This year, the system will pay out more in benefits than it receives in payroll taxes, an important threshold it was not expected to cross until at least 2016, according to the Congressional Budget Office.” The trickle of red ink will soon become a flood under the pressure of 78 million retiring Baby Boomers.
The herding of the investing public into investments of the government’s choosing has begun.As Bob Chapman of The International Forecaster explains, “The looting of retirement plans is still in the planning stage, and you’re seeing these trial balloons go up.”
For example, in a little-noticed move, the Federal Deposit Insurance Corporation (FDIC)recently launched a campaign to “encourage” (as Bloomberg put it) pension funds to makeinvestments in “distressed assets” tied to failed or failing banks. Since the FDIC is undercapitalized by tens of billions of dollars and is bracing for hundreds of bank failures, its motivation seems pretty clear: get retirement plans to help prevent, defer, or absorb huge losses in the banking system.
The U.S. Treasury and Labor Departments have already introduced proposed regulations (CFR, Part 1, RIN 1545-BJ04) to alter investment incentives for fund managers to begin pumping money into government-approved “investments.” Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry are specifically spearheading an effort to promote the conversion of 401(k) and IRA assets into annuities (see February 2, 2010 Federal Register document).