I have been of the opinion for a while now that the final stage of
economic collapse will be precipitated by a sovereign debt crisis,
followed by a hyperinflationary currency collapse.
A sovereign debt crisis implies the inability of the US government to
borrow the proper amount of funds on the open market in order to fund
deficits, roll-over short term debt, and fund ongoing daily
operations.
Before this can happen though, there must be a rather precipitious
decline in open market interest in US debt, which I would expect to be
backstopped by Fed monetization of the debt. According to a recent
report, the Fed bought 80% of all Federal Government debt issuance
last year. This is not sustainable without an eventual collapse in
demend for US$ denominated assets. So we're on our way to an eventual
repudiation of US debt issuance.
The government will do absolutely everything in its power to stop this
from happening, obviously. I have felt the most obvious solution would
be an overnight confiscation of all 401(k), IRA, and money market
assets. They could simply make it illegal to sell more than a small %
of your assets or you may lose the ability to access "good as cash"
assets such as money market funds. I initially foresaw this as an ad
hoc-middle-of-the-night Lehman style collapse scenario where there
wouldn't be much planning. You'd just wake up to find out that the
gov't mandates that 20% of your 401(K) must be in US Treasuries and
you can only withdraw 10% of money market funds per month, or some
similar scheme where the gov't would force liquidity to remain the
system in order to keep everything from going completely Mad Max.
Interestingly enough, some bright bulbs in DC have been thinking along
the same lines. They know there is only one more pile of cash on the
table, and that is American's private retirement savings. When AIG
nearly collapsed, it would thought that it could have lead to every
retirement annuity in existence to go bankrupt. This is an intolerable
political situation that I have no doubt would be remedied via
confiscation of all or a portion of America's estimated $15 trillion
in private retirement savings.
Keep your ears open on this topic... I have a feeling you'll start
hearing trial balloons about changes to the structure of money market
funds/401(k)/IRA.... they aren't going to wait for the crisis to pave
the way for this.
Here's an article on lewrockwell.com that details the mechanics of how
exactly the government would go about doing this:
http://www.lewrockwell.com/holland/holland12.1.html
Key Elements of the Obama Retirement Trap
Stealth Nationalization
Following their attempt at "so-called" health care reform in 2009 and
2010 – the first step in total nationalization of health care –
Washington will next turn its attention to another broken program, the
private retirement system. Although both health care and the private
retirement system need real reform, the government, as usual, will use
the problems to expand federal control and redirect the contributions
currently going into quasi-private programs back towards the bankrupt
coffers of the federal government.
Your Retirement Plan Will Soon Become Washington's ATM Machine
Today over $15 trillion is sitting in tax-favored retirement plans,
including $4 trillion in IRA accounts. Retirement savings make up 35%
of all private assets. Washington is broke, the deficit is soaring and
Congress simply can’t wait for Americans to retire so they can start
taxing these funds. The politicians are tired of waiting; they need
your money now.
The Trojan Horse
The nationalization will begin with a modest proposal to increase
retirement security and basically create a new, third level of
mandatory retirement benefits in addition to private plans and Social
Security. This will be described as a Guaranteed Retirement Annuity or
Account. Teresa Ghilarducci is the author of this leftist plan which
first appeared in 2007 at the Economic Policy Institute: Agenda for
Shared Prosperity. In 2008, she became the new Director of the
Schwartz Center for Economic Policy Analysis at the New School for
Social Research. In her book When I’m 64: The Plot Against Pensions
and the Plan To Save Them, she hypes her retirement solution for
millions who do not have adequate retirement savings. Her ultimate
solution is to confiscate most of the retirement assets of successful
and wealthy Americans.
In the proposal, the government will even make an annual contribution
to every citizen’s account of around $600 annually, covering the
unemployed, under-employed and all working Americans. The initial
problem for productive, successful Americans is that Washington will
require, in exchange for their contribution, that all working
Americans contribute 5% of their annual salaries or income into this
new "guaranteed account" managed and run by the hard-working
bureaucrats at the Social Security System. Successful Americans will
of course complain about losing the deduction for this contribution,
which is little more than a new 5% tax on income. But this is just the
beginning of the problem for Americans with substantial retirement
savings and outstanding benefits.
The Devil Is In the Details
Different proposals would delay retirement age until age 64, and some
even later. The guaranteed retirement annuity would be structured to
allow the government to hold and invest the money. Unlike your current
private plan, it would be very difficult for members to withdraw their
money before and even after retirement, except over the life
expectancy of the participant.
I fear, following implementation of the contributory GRA program, a
future legislative action by Congress would be to end the tax
deductions and tax-deferred growth of all retirement plans, thus
forcing these funds into the government controlled annuity. Your
forced retirement contributions would be pooled and professionally
managed by Social Security. Also, beneficiaries would be cheated out
of half of any benefits remaining at the death of a participant
because Ghilarducci’s plan has 50% of all balances at death reverting
to the Feds, not the beneficiaries.
The Confiscation Event
At some time during the next decade, a global run on treasury debt and
the dollar will also likely take the American stock market down past
lows not seen since the financial meltdown crisis in 2008 and 2009.
The 50% to 75% stock market pullback during the actual bankruptcy of
the Washington debt and paper dollar will send shock waves through
retirees and current plan participants as their private retirement
plan balances plummet.
At this time, Washington will "come to the rescue" and guarantee all
private retirement plan market values back to pre-crisis levels. The
gullible American public will overwhelmingly support this effort by
switching their dwindling funds into the Guaranteed Retirement Annuity
managed by the government. For the first few years, Washington will
probably label those few of us who warn that Americans have lost their
retirement benefits as extremists, Ron Paul paranoids and Tea Party
advocates.
Then it will become crystal clear to all Americans that their
retirement benefits have been given away for a promise by an evil
group of plunderers who have never in their history kept a promise, a
guarantee, or their word on anything. The greatest theft of wealth in
the history of the world will have taken place and only those few who
took heed of an early warning will still have their retirement
benefits and security.
You Will Be Forced To Become The Final Buyer of Last Resort For
Collapsing Washington Treasury Obligations
Although the faltering dollar could rebound in the short run, the
longer-term prognosis is terminal unless Washington dramatically
reduces spending and borrowing. When the global run on treasury debt
and the dollar develops, the current relative minor fluctuations in
values today will be replaced by a virulent death spiral of historic
proportions rarely seen in world history.
Sometime in the next decade, the Washington dollar collapse will take
its shameful place in history at the pinnacle of fiat currency
robberies by politicians and central bankers. We will lead the world
in wealth lost and future generations saddled by illegitimate
government debts.
In the meantime, Americans should insulate themselves from the coming
dollar and debt debacle by investing in gold bullion stored in the US,
as well as outside, in secure facilities like the one offered by
Global Gold Inc. in Switzerland, through mining shares, as well as
through foreign currency diversification with the euro and Swiss
franc. Don’t wait, take action now while you still have the
opportunity to protect and preserve your wealth.
In the future, when the rest of the world’s investors, governments and
central banks have lost enough purchasing power through their
misguided investment in Washington treasury obligations, they will
still have the luxury and financial freedom to diversify maturing
treasury obligations and new funds into other non-dollar bonds, gold
etc. But Americans will not have this choice. They will find that
their retirement funds in the mandatory guaranteed retirement annuity
will be used to purchase much of the rollover of treasury debt not
repurchased by the Federal Reserve System.
The taxpayers will be forced to become the buyer of last resort in the
final collapse of Washington treasury obligations. This is sort like
being forced to purchase stock in AIG weeks before the final stock
crash.
You Are A Narrow Target of Opportunity: Not A Grand Conspiracy
This is just another revenue generator for Washington and a payback
for the unions, just like the planned nationalization of health care.
The target is successful, productive Americans who make good annual
incomes or who have been frugal and built up substantial retirement
benefits in qualified plans.
There Will Be No Public Outcry Like With Nationalized Health Care
Don't expect a broad public reaction to the stealth nationalization to
protect your hard-earned benefits. Most unemployed, underemployed,
union workers in failing union plans, and eventually state and local
government employees will benefit from this attack on the retirement
assets of productive, successful Americans working in the private
sector. You are a minority and the mob rule of democracy warned about
by Thomas Jefferson is just doing what it has always done. But this
time with you as the target.
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RE: Your retirement on the table
i got a question, not really related to all of this, which frankly, makes very little sense to my pea brain.
the question is this:
from what i've been hearing it sounds to me like under the clinton years the clinton admin managed to bring the annual deficit to a surplus. that is no mystery. the government was bringing in more in revenue than it was expending, hence a surplus. RIGHT?
i've also seemed to hear recently that not only did cliton manage to run a surplus in the annual government budget but that he also got the DEBT generally under control. from what i heard it sounded like the national debt was essentially 0 when clinton left office. IS THIS TRUE?
i have heard many times that clinton ran annual surpluses, but i was not aware that he had even reduced the national debt, let alone possibly eliminated it?
then of course the last admin came in and ran deficits every year and accumulated what, 3 trillion in debt over the course of 8 years?
those annual deficits continue now, which means the debt continues to grow.
but does anyone know the answer to that question under clinton? did he really reduce the national debt? or was it just annual budget surpluses that he was running and really didn't even touch the total debt?
RE: Your retirement on the table
> i've also seemed to hear recently that not only did cliton manage to run a surplus in the annual government budget but that he also got the DEBT generally >under control. from what i heard it sounded like the national debt was essentially 0 when clinton left office. IS THIS TRUE?
i dunno why, but people have a tendancy to really confuse the two. i
had this guy in the office swear up and down til he was blue in the
face that the debt was $0 when bush took office. not true. here's the
deal... let's say you clear $5,000 per month. And this month you spent
all of that and you additionally borrowed $200 via a credit card. for
the month, you had a DEFICIT of $200. if you already owed the credit
card company $800, now you have a total DEBT of $1,000 since you just
added $200 via your monthly deficit.
> i have heard many times that clinton ran annual surpluses, but i was not aware that he had even reduced the national debt, let alone possibly eliminated it?
i think for a year or two clinton may have had small surpluses (like
$100 billion). so, in those years, not only was the gov't able to pay
interest, they were actually able to pay down principal. i think this
may have only happend like 3 or 4 times in the whole 20th century.
The last time there was $0 national debt... come on... this is too
easy... drum roll.... Andrew Jackson, who served as president
1829–1837.
Jackson had business interests throughout the country. the country
borrowed money from european bankers to buy the lousiana purchase.
following that there was a massive monetary expansion, which i suppose
jackson made money off of. then when debts came due in some odd
finance scheme, there was a massive monetary contraction due to demand
for silver/gold specie to pay creditors and a depression occurred that
nearly destroyed the frontiersman. he hated debt.
> then of course the last admin came in and ran deficits every year and accumulated what, 3 trillion in debt over the course of 8 years?
right. but, here, get this... that doesn't include off balance sheet
stuff. lol wut's that? well, they "borrow" from social security and
medicare to fund current government operations. in theory, given
demographics, large sums of money should be saved right now in order
to deal with the demographic collapse we are most certainly witnessing
the early stages of (retiring baby boomers). that money they should be
saving for, cuz they are going to need to support retirees some day,
is not being saved and is thus a liability. the thing is they don't
count it i guess cuz they don't have to borrow it YET. like, we know
for sure, we have about X people needing Z dollars per year to live
after they retire, with medical. its a complete mathematical
certainty. so, not only is there the massive interest we have to pay,
we know absolutely for sure we have to come up with what is really
like $50 trillion between now and 2035 for people that are just
starting to retire. MONEY THAT IS NOT BEING SAVED.
so, as it is now... the interest payments on the DEBT is roughly equal
to the size of the pentagon's budget (guns), which just so happens to
be equal to the budget of the department of health and human services
+ social security (butter).
that's why i'm so bearing on the long term economy. this isn't about,
oh, the american public doesn't get it, or obama is the devil, or
republicans suck or whatever. its fucking math. there's absolutely no
way committments (interest payments, social security payments,
medicare payments) can ever be met under the current system. we would
mean drastic, and i mean drastic, changes to come about in order for
our economic system to both exist and be robust enough to support the
operation of the federal government in the long term.
this is the crux of the great crisis.... right now you've got like 12
people working for every retired person. every retried person consumes
everything they "paid" into social security in the first 4 years of
retirement. and right now we're paying like, what, 7% social security
tax? so, what happens in 15 years when there are only like 4 people
working supporting the retirement of retirees due to demographic
shifts (who will, i assume, now get prescription drug coverage and
medicare as well)... obviously the tax rate will have to go to 25%
just to support people that are not producing any capital, only
destroying it. and, oh yeah, there's ever escalating debt payments,
global warfare, cap and trade, and universal health care. we're
looking at the government taking abou 75% of everything you earn by
2025. there's no way around it. and they know it. so they will take
down the insurance companies and consume them whole. and in time, they
will take your 401(k) and your IRA and your private pensions. they
will have to bleed everyone dry to keep the system together. THERE IS
NO WAY AROUND IT.
its just math. we're completely fucked. we, as a culture will have to
decide, do we let our country go completely bankrupt and in my opinion
enter some sort of 14th century collapse scenario, or do we just have
our retired parents live with us til they die ... and of course, all
sorts of parts of the social safety net will HAVE TO go away just to
say solvent. this is the crux of the crisis. math and fucking
demographics and no one gets it.
because once we go bankrupt, anything can happen. i mean anything.
> but does anyone know the answer to that question under clinton? did he really reduce the national debt? or was it just annual budget surpluses that he was >running and really didn't even touch the total debt?
bill clinton was the most conservative president since herbert hoover.
although he (and really, the republican congress who submitted the
budgets) reduced deficit and had some surpluses, i have no doubt an
analysis would show that the debt was bigger at the end but at the
beginning.
one final note... i once sat down with a spread sheet and an inflation
calculator.... Ronald Reagan grew government spending at double the
rate Bill Clinton did during their respective terms. so much for "smal
government conservative" and "big government liberal" myths, eh?
RE: Your retirement on the table
So I go to the anarcho-capitalist meeting. 30 invited, 5 show up. It
was actually really great conversation. Worth the cabs and the cold.
I told this 19 year old kid that the Wizard of Oz is about bi-metalism
and give him the whole run down about silver and western farmers and
gold and eastern bankers ...
Anyway....
MIND: BLOWN
You shoulda seriously seen the look on his face when I started laying
it all out.
Yeah, its about the gold standard, kid.
What was it like before the internet? Well, let me tell ya...
RE: Your retirement on the table
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RE: Your retirement on the table
> Before teh internetz, we had to Rickroll people with vinyl LPs and a
> phonograph.
> Before teh internetz, there was no LULZ. People either laughed or they
> didn't, which was quite obvious by just looking at them.
> etc., etc.
RE: Your retirement on the table
RE: Your retirement on the table
Or in theaters! Remember Peewee Herman?
From: Greasy D. <>
To: PHL Syndicate <>
Sent: Fri, January 29, 2010 12:27:53 AM
Subject: RE: [syndicate] Your retirement on the table
RE: Your retirement on the table
> or in their own mind!
> Or in theaters! Remember Peewee Herman?
I always thought that whole thing was completely ludicrous, he was jerking
off in a porno theater, wtf else are those places for ? Maybe you're not
supposed to do that according to the rules, but seriously, come on. This is
the best quote from the wiki about it "Detectives would periodically visit
pornographic theatres and observe the audience, arresting those engaged in
indecent exposure".
That has to rank as the most redundant, useless and idiotic waste of
taxpayer money, EVER. I'm not sure how we got from losing your 401k to a
spirited defense of public masturbation, but there you have it.
TGIF !!!
Kieran
RE: Your retirement on the table
> spirited defense of public masturbation, but there you have it.
> taxpayer money, EVER.
Remeber the pentagon spent 400 dollars on a hammer and 600 dollars on a toilet seat? They probably paid the pentagon buyer 100,000K a year to make those judicious purchasing decisions.
--- On Fri, 1/29/10, Kieran <> wrote:
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RE: Your retirement on the table
--- On Thu, 1/28/10, oblio <> wrote:
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RE: Your retirement on the table
of it. This is deficit =0, not debt = 0. He did no paydown the debt he just kept it from getting worse. He had some help, the republican congress (who actually pass the budget) worked with him on it. It started as their platform, but they both get credit since they passed it together.
--- On Thu, 1/28/10, oblio
<> wrote:
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RE: Your retirement on the table
this is all as i thought it was. whatever i was listening to was simply wrong or lying. which happens quite often.
it was like in the republican response when dude said "1 in 10 americans is currently unemployed."
right. exactly.
RE: Your retirement on the table
--- On Thu, 1/28/10, TragicHipster <> wrote:
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RE: Your retirement on the table
> This is essentially akin to when FDR took all the private gold in 1933 and gave people paper money instead...only it was worth half of what the gold was.
>
> If dingles up the 401Ks that will be wicked bad.
yeah, i think a lot of people have been thinking... well, they debased
the currency by 40% in order to help alleviate a debt crisis in the
30s so.... totally effed up, but debasement is what governments do in
these situations. but essentially all currencies are fiat now so
there's nothing to debase, aside from each other's relative values.
as it is now... social security is at worse a ponzi scheme, and at
best, a pay as you go scheme... you contribute money to a system and
its immediately transferred to the retired. there's no magic account
with your name and ss# on it where its collecting interest, or being
lent out, or invested. its 100% consumption.
if they can get their hands on the insurance industry... similar
effect. insurance companies would no longer have vast pools of capital
invest. it would simply be nationalized and passed through to
government expansion (just like how ss surpluses are "borrowed" - i'm
certain the same thing would happen with health insurance). just think
about how much investment goes on in the world due to the insurance
company capital sitting around. now imagine the world without it.
scary, as i'm sure insurance companies have trillions that are
invested and contributes to economic growth. if you stop that and go
to a pay as you go scheme like social security, its pretty damn
devastating to capital investments internationally. think of the rust
belt. same deal. continued, slow collapse.
so, let's just consume, rather than invest, all that capital that
passes through the hands of insurance companies and then force private
retirement savings, or a portion of them, into directly funding
government. all they'd really need to do is pay out an annuity in the
future.
i dunno... but if you think about it... if they can pull off both of
the above described thefts, you can easily sustain this government and
the welfare/warfare game for another 15-20 years. if not? epic fail. i
have a feeling someone at the fed or in dc may have thought about this
:)
RE: Your retirement on the table
anyway... headed out to philly anarch-capitalist meetup group tonight.
i'll be going to some place in south philly looking for a dude who
will have a copy of rothbard's "man, economy, and state" with him at
the bar. should be a good time.
RE: Your retirement on the table
--- On Thu, 1/28/10, TragicHipster <> wrote:
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