401k Fracking

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December 5, 2013

Obama's Plan to Snatch Your Savings

By Jeffrey Folks

In his first term, Obama managed to get his paws on health care, banking, energy, student loans, the auto business, and more.  Now he has his sights set on your 401(k).

The left has had its eye on retirement savings for years, but so far takeover attempts have been rebuffed.  One egregious attempt was the proposal, following the 2010 financial crisis, to "safeguard" retirement savings by requiring that they be rolled over into Treasury bonds.  Had this legislation succeeded, it would have appropriated all or part of the retirement savings of millions of Americans.  The funds would have been used to finance further expansion of government.  In return, savers would have received a promissory note from the federal government similar that issued by the Social Security Trust Fund.

Needless to say, most investors were not keen to convert their savings into Treasury obligations -- or, to be more precise, into an unsecured note promising a return approximating that of Treasury bonds.  That is because, as with every other endeavor, government's management of retirement savings (aka Social Security) has been a disaster.

Those who believe that Social Security has done a good job of investing their savings are greatly mistaken.  Over the past 200 years, the real, inflation-adjusted return of the U.S. stock market has been 7%.  Had one invested $100,000 in the U.S. market in 1802, one's total return after inflation (or that of oneself and one's descendants) would have been more than $100 billion.  By comparison, investment in government Treasury bills would have yielded approximately $50 million.  (Figures are extrapolated from John C. Bogle's Common Sense on Mutual Funds.)....

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Like I say, I told you so

So, the drowning man escaping King Solomon's Mine would not let go of his new found wealth and was drowned.

Get out of your 401k, now. Take a penalty.

An article Greg sent in on the 401k being the next target of the socialists. I mentioned this a few months ago, which I highlight, here, to demonstrate I am not crazy.  

 

When I report on the few things I see that are going on, they sound so bizarre to many as to violate the "normalcy bias,"  i.e. just more conspiracy worries from Gene.  Put a post-it on your refrigerator:  these are not normal times.

The ultimate plan is to FORCE you to invest 5% of your salary into a retirement fund.  Recall, the forcedsocial security confiscations were put into a "trust fund" for your protection.  The trust fund was pushed aside and money taken.  There is no trust fund.  

The administrator of the proposed national retirement plan is, you guessed it, the Social Security Adminsitration.  The illusion being, again, that some trust fund will be created for your benefit, whereas the money will be used to pay for the Marxist programs. You see, all these obligations are guaranteed by the U.S.  Sure. Your heart medicine is not guaranteed.

Percentage of personal income taken by Social Security (combined and self employed):   15.3%

Average tax burden, for now, state and federal:  30.6%

Proposed 5% for forced investment in T Bills:       5%

Loss of income, right off the top:                         51.9%

Add sales tax, mortgage, insurance and you are a serf enjoying indebted servitude. Oh, you want to eat, get medical and home insurance?  We have been suffering so long, we don't remember that people used to have money at the end of the month, that people started new businesses and, not that long ago, could afford domestic help if they were upper middle class.  Now, the high income earners show off their new stove.

Real estate was always thought of the great investment, where your money was safe and grew.  If you still think that, get out a piece of paper and a pencil.

Ohhmmmm.  Happy people live longer, so I am going off for a coffee whilst smiling and humming. ...

In July 2008 the Office of the Chief Actuary of the Social Security Administration calculated an unfunded obligation of $13.6 trillion for the Social Security program....(Wiki)

It is time to get out of any plan the government can grab. I would suggest taking your penalty, if any, and putting your assets in something that will not deteriorate if it is in dollars.  You will be better off even with the penalty.  You will get that back very quickly if you are out of dollars and free of the black hand of the Marx. If you think you should stay the course to be a good citizen, you are a chump.  Oohhmmmm.

The key is what to do with the money.  One apparently reasonable place to put cash is in TIPS which are supposed to be indexed to protect you against inflation, but you have to trust the government.  I will look into where to put money and report back.   

A better post-it:  DECOUPLE NOW.  It can be done, but it is like kicking a drug habit to get away from the pusher.  It won't be easy, but what it the alternative to dying a worker bee?

Class Warfare's Next Target: 401(k) Savings

By NEWT GINGRICH AND PETER FERRARA Posted 02/17/2010 06:52 PM ET

You did the responsible thing. You saved in your IRA or 401(k) to support your retirement, when you could have spent that money on another vacation, or an upscale car, or fancier clothes and jewelry. But now Washington is developing plans for your retirement savings.

BusinessWeek reports that the Treasury and Labor departments are asking for public comment on "the conversion of 401(k) savings and Individual Retirement Accounts into annuities or other steady payment streams."

In plain English, the idea is for the government to take your retirement savings in return for a promise to pay you some monthly benefit in your retirement years.

They will tell you that you are "investing" your money in U.S. Treasury bonds. But they will use your money immediately to pay for their unprecedented trillion-dollar budget deficits, leaving nothing to back up their political promises, just as they have raided the Social Security trust funds.

As former British Prime Minister Margaret Thatcher said, "The trouble with socialism is you run out of other people's money to spend." 

This "conversion" may start out as an optional choice, though you are already free to buy Treasury bonds whenever you want. But as Karl Denninger of the Market Ticker Web site reports: "'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."

Moreover, benefits based on Treasury bond interest rates may be woefully inadequate compensation for your years of savings. As Denninger adds, "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 inflation index) so as to guarantee that you lose over time compared to actual purchasing power."

This proposal follows hearings held last fall by House Education and Labor Committee Chairman George Miller, D-Calif., and Rep. Jim McDermott, D-Wash., of the Ways and Means Committee focusing on "redirecting (IRA and 401k) tax breaks to a new system of guaranteed retirement accounts to which all workers would be obliged to contribute," as reported by InvestmentNews.com.

The hearings examined a proposal from professor Teresa Ghilarducci of the New School for Social Research in New York to give all workers "a $600 annual inflation-adjusted subsidy from the U.S. government" in return for requiring workers "to invest 5% of their pay into a guaranteed retirement account administered by the Social Security Administration."

Argentina provided a precedent in 2008, taking over that country's private retirement accounts for forced investment in government bonds to cover spiraling deficits. Ambrose Evans-Pritchard editorialized at the time in Britain's Daily Telegraph that this may be "a foretaste of what may happen across the world as governments discover .. . that the bond markets are unwilling to plug the (deficit) gap. . .. My fear is that governments in the U.S., Britain and Europe will display similar reflexes."

This is just the latest chapter in what is developing into a war by the left on America's seniors. All that class-war rhetoric about "the rich" ends up targeting seniors, who tend to have accumulated the most in savings and investment on average because they have been around the longest.

President Obama, House Speaker Pelosi and Senate Majority Leader Reid targeted seniors for hundreds of billions in Medicare cuts to finance expanded Medicaid for the poor and other new entitlements in the ObamaCare health care takeover legislation. If you liked your health insurance, you were supposed to be able to keep it, except for the 25% of seniors who had chosen Medicare Advantage private health plans for their Medicare coverage.

Even the Medicare actuaries estimated that most of those seniors would lose their Medicare Advantage coverage because of all the ObamaCare cuts for those plans. Obama has even begun rationing for seniors under Medicare by slashing payments to heart and cancer specialists serving seniors under that program.

All of this reflects a fundamental problem underlying socialist economic policies. If the government keeps punishing responsibility and rewarding failure, society ends up with a lot less responsibility and a lot more failure, destroying prosperity in the process.

As former British Prime Minister Margaret Thatcher said, "The trouble with socialism is you run out of other people's money to spend." And now they want to spend our retirement savings.

Congressional Republicans should introduce legislation to block the government from ever proceeding with anything like this. Call it the "Keep Your Hands Off My 401(k) Act of 2010."

• Gingrich is former speaker of the House.

• Ferrara is director of entitlement and budget policy for the Institute for Policy Innovation.

401 K: Suckers game

Here is a major suggestion from me. It is for free, so consider these two factors.

Robert T. Kiyosaki, writer of  best-seller Rich Dad Poor Dad, a sensible economic self-help book, is pounding home the point that the introduction of the 401K was a terrific trap for people because no one has bothered to teach people anything about investment. They are depositors, not investors. They do what they are told, as they move along the corridor to the slaughter house.

Another bright plan afoot, if the Socialists retain power, is to confiscate your 401K and replace it with a national pension fund. Here is an inflammatory guy's radio broadcast, who, curiously, seems right most of the time and has sources.

 What's that you say?  My concern is just a crazy right wing thing. Could be, so just keep your plan.

The new pension fund will be run by the Social Security Administration, the one that used to have a trust fund.

You are a giant target for the amorphous Wall Street and the gluttonous government.  They (Goldman Sachs being the government) keep you a target by offering you tax breaks and threatening tax penalties, even while your 401K drops in value every day.  Scared of these penalties? Why? Your 401 K went down last year, what, 50%, then its value decreased 17%  in buying power this year. It is likely, in the end, the dollar will vanish, Max Keiser thinks it will be officially devalued by 50%.I don't think you should be afraid of a penalty.

If you are really smart and getting 4.5%, like me, on bank money, you are only LOSING 14.5%.  Great return. So, daily, I watch for silver bargains on Ebay.

The reason that oil goes up while supplies are fine has nothing to do with global warming, cooling, tickling, or hrumphing.  It has nothing to do with evil BIG oil and all those FAT old-lady shareholders. In fact the macro-cost is NOT GOING UP.  Your U.S. Dollar is going down.  Until you understand this, you are, as once was said, a chump.

Now, here is the killer: there is nothing stopping the government from stealing your retirement account; after all, you will be getting your single-stealer medical plan and a nation pension plan. Your 401K is a massive target and the government is more than a massive, hungry beast.

In the past, in anticipation of all this fancy footwork by citizens attempting to preserve their property, a right preserved in the Constitution, the feds made it a crime to own gold. They didn't want Americans to turn in their paper and get the promised gold in return. Of course, other nations could.

Trust me, the government will do anything to get your money.  This government will let you die to get it.

From the Economic Populist:  

For example, has anyone heard the news media use the term "crash" in regards to what happened to the stock market in late 2008? I haven't. Nor have I heard the term "financial panic". Yet that is exactly what happened to the stock market, but the media doesn't tell you that because it wants you to keep sending your money to Wall Street in the form of your 401k.

Just look at the firms that the taxpayer has bailed out. They've set up off-shore operations in order to avoid paying taxes. Sweet deal, huh?

The point of all this, is get your money back into your basement. The 401K is costing you money and could cost you it all.   

Later, more on what to do.