I received this note from a reader regarding the confiscation of retirement accounts:
Doc,
Thank you for your kind words. I do have a question for you.
You only need to read the first paragraph of this article for my question:
“It is an incredibly common occurrence. It has happened in numerous countries in just recent memory. Poland, Hungary and Bolivia are a few in the last years where retirement funds have been seized.
Total funds currently held in private IRA and 401K accounts in the US are estimated to be in the neighborhood of $10 trillion. That number looks awfully enticing to the US government which is currently indebted to the tune of $19 trillion and holding liabilities of over $100 trillion.
As we dance on the brink of a massive collapse, the government’s already empty coffers will be even further decimated as the economy contracts massively and tax receipts plummet.
In that moment, rather than reducing expenditures and doing massive layoffs and closures of departments, like any regular business would do, politicians will nationalize retirement funds for the “good of the country.
And we continue to see movements in that direction".
I don't imagine the government will outright steal IRA accounts but force IRA owners to buy government bonds with funds in their accounts and portfolios.
I can't seem to get an answer to this question:
Does this list of accounts to be "confiscated" also include Roth IRA's?
I have a Roth IRA account that I'm trading/investing in mining stocks.
Would you know if Roth IRA's are included is such a list?
Also, I find it highly unlikely that the government would invade IRA owners' accounts and the number of senior citizens and baby boomers approaching retirement would go ballistic and vote every representative and senator out of office.
Even if the government were to declare martial law, the number of voters over the age of 50 is enormous in this country.
Also, whoever thought up this idea didn't give it much thought.
Imagine if you will that you were 80 years old and had your IRA account "converted" into a 30 year treasury bond.
No doubt, you would become a very serious suicide case.
Serious enough to take the last of your savings, rent a U-Haul, fill it full of manure, and ignite it in some government building.
As an 80 has lived his life and the government has rendered him "broke," he has nothing to lose.
Anyway, back to my original question....
Do you know if Roth IRA's are included in this list?
****
My response:
Any kind of retirement account would be on that list.
But I think they will create hyperinflation in the ultimately futile attempt to keep .gov open as things really start unraveling.
That would be the worst case.
Along the way, it could be an overnight devaluation that cuts the value of everything dollar-denominated in half or more.
With so-called Helicopter drops to keep the masses distracted.
This could trigger the positive feedback loop ignited by rising treasury yields and ongoing fiscal monetization.
That's confiscation of wealth.
And what's crazy, is that a majority will be supportive of it in the name of doing 'something'.
A majority will beg for them to do more.
It's like trying to stop nuclear warhead proliferation with a nuclear war.
Implemented in the name of national defense or some other movement created to capture the minds and emotions of the masses.
Look what the masters of Ivory Tower finance are begging for now.
Just this week, the market has become euphoric after former Fed-chair, Ben Bernanke visited Japan to purportedly 'help' them facilitate "helicopter money".
I used to be a constant reader of the Wall Street Journal. I remember back in 2007-2008 how the tone of that publication morphed from so called fiscally conservative narratives into ‘bleeding hearts for intervention’ to save the markets.
They were aligned with the general sentiment.
Indeed, much of public sector saw their retirement accounts cut in half - mortgages were suddenly underwater. And job prospects suddenly bleak.
And many in the financial mainstream supported the worst possible things policy makers could do; doubling down on the mistakes of the past - perpetuating the nonsense, and making things much worse.
In the next big scary crash...
A Roth IRA 'confiscation' could simply be presented as a subtle 'option' to 'protect you' with a 'government guarantee'.
Even in a crisis, you may not be forced or 'invaded', but merely coerced into giving up a bit more control of your wealth - for the good of the cause.
It might be billed as "Currency War Bonds" to protect us from the 'terrible' Chinese or Russians who are hacking our currency.
Or some other story that captures the political wind.
MyRA was floated years ago. It disappeared for a bit, then it came back again.
On the heels of negative interest rates... The impending ban on cash is another ring-fence measure.
A ban on cash would 'prevent' a run on banks, paving the way toward more monetary policy intervention - foisted upon on us without a single vote.
I know a fair number of 80 year olds, and I can envision them trading in an account that is losing value fast - in exchange for a 'guaranteed’ stream of cash, prescription meds, and/or a roof.
Of course, there may always be a few octogenarians (80 is the new 60?) with the energy left to bother with a U-Haul and one last great adventure.
As Orwell said, "If you want a vision of the future, imagine a boot stamping on a human face - forever."
Then imagine people begging for that boot.
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