The U.S. Consumer Financial Protection Bureau (CFPB) is so “concerned” about Baby Boomers falling prey to financial scams, they will be looking to assume responsibility of your retirement under the “Office for Older Americans” (no joke, this the actual name). The facade of “concern” will be used to take control of pensions, IRA’s and 401K, and manage (loot) it like they have Social Security. When the financial system starts to collapse due to interest rates rising, these accounts will be seized for the “security of the nation”. Thanks to everyone in advance for your trust in govt and your donation to the Union, and the bailout of the bankster banks. BTW, all you govt employees already loaned your employer money out of your retirement accounts (“TSP” Accounts) to keep the lights on when the debt ceiling was exceeded months ago. They gave you an IOU assuming the debt ceiling would be raised, but since that is not guaranteed, I would call it theft and a lie.
Let’s briefly review the success of the socialistic policies since the “Raw Deal” was enacted by FDR. The family unit has been destroyed because the govt took responsibility for taking care of the elderly, something that for centuries was done by the children. The govt then raided the very fund (Social Security) they said would be used to take care of the parents (sorry folks, there is no lock box). After being told to save conservatively in bonds, the Nanny State then manipulated bond returns to near zero to prevent from blowing up their own budget, and preventing those living on fixed income from keeping pace with inflation. Now that interest rates can’t be manipulated below zero, which is preventing them from rolling their debt without increasing the debt expense, govt will simply take your personal retirement accounts to pay their bills.
The govt has been able roll its increasing debt without increasing interest expense because rates have been in a downtrend for over 30 years. You can also see in the chart above that each recession (shaded areas) since 1990 was preceded by a counter-cyclical rally in rates, which increased the debt expense and cost of rolling the debt. Denninger provides a great example to understand how this debt Ponzi has been accomplished.
If you had the misguided notion to bank your retirement in your house, govt blew up that nest egg and increased property and other taxes to sop up what was left over. I guess the govt did serve one function – it made the elderly realize that you can never stop learning and the school of hard knocks is always open. In summary, the govt’s cradle-to-grave false promise, which includes welfare that provides destructive incentives, has replaced the family structure with govt, a foundation of Communism.
The manipulation of rates to prevent the deficit from exploding has caused significantly lower returns for pensions, which typically have 40% invested in treasuries. This is the rock and the hard place that our government has backed itself into, with the “only” solution being to once again sacrifice the public for the protection of govt and bank jobs. Govt can never look at themselves as the source of the problem, because they know it means downsizing themselves.
If pension funds, which are the bulk of the $19.4 trillion in retirement accounts, start redirecting the 40% that’s allocated to treasuries into stocks to get higher returns, then interest rates will rise and stock indexes could shoot to the upper boundary of the “Jaw of Death” pattern. Of course, the reward of higher returns also comes with higher risk, which will ultimately takes its toll when interest expense on the debt blows a hole in the budgets of every entity that thought zero rates would last forever.
This deflationary death spiral is justifying the NSA/Stassi tactics to find and confiscate money around the globe and raise taxes, fees, and penalties to feed government that reduces the real capital needed for growth. The result will be ever-increasing money printing to pay the bills, which will initially send the dollar higher, as capital flees Europe and the other nations that implode first. The rising dollar means rising debts for everyone in the world holding dollar-based instruments, which will lead to defaults and collapse of our debt-based system.
This is when you will see the dollar replaced as the reserve currency and pushed off the cliff (USDX < 0.72), and dollar-based commodities, like oil and foodstuffs, will rise to unaffordable levels for many. When the dollar goes, the house of cards will collapse. If you don’t want to understand the implications and be scared straight, then don’t listen to this interview with former Treasury official under Reagan, Dr. Paul Craig Roberts.
History rhymes because the passions of man never change. Our current debt problems, the use of force to impose power, and the degradation of societal mores has happened many times in human history. Chalmers Johnson provides a historical perspective, and the signs of decay that result from govt corruption, overreach, and the inability to reform. If you doubt the unsustainable overreach that Professor Chalmers discusses, please view the 330 individual DOD contracts for August 2013.
If you want access and control of your retirement accounts, get your money out if you can. If you can take your pension in a lump sum, which has become virtually impossible over the last 10 years, do it. Cash out your IRA and pay the tax and penalty (taxes will never be lower and the 10% penalty will be nothing compared to the haircut the govt will impose). If you’ve rolled an old company 401K into your current company 401K, you can roll the old company portion into an IRA and withdrawal it. On the remaining portion, keep taking the maximum loan available as often as possible to control what you can.
The govt confiscation of retirement accounts will probably not happen until after 2016, but one never knows. Pensions have already been sacrificed in bankrupt cities like Detroit and countries like Poland, and now Russia. When 50% of collected taxes go to pay pensions, you can only raise taxes so much before the folks revolt. Bail-ins and the attack on pensions will accelerate as rates rise and govt grabs the remaining chairs when the music (debt) stops. These will be the sign post on the way to your IRA and 401K confiscation.