It is being reported that agencies with governmental power are considering mandating that people with retirement investments, either in IRAs or 401(k)s, convert part of their savings into government bonds for the purpose of making annuity payments. Allegedly this is to protect investors who have seen the value of their investments decline due to the decay of the housing bubble and the decay of the stock market.
China is unwilling to buy ever increasing amounts of government debt, and private investors are unwilling to buy debt at what amounts to a negative interest rate. The Federal Reserve cannot, at this point and for political instead of economic reasons, raise interest rates. So how will the government unload these toxic assets?
It is noted due to recent United States interactions with Switzerland, that the United States government is desperate for cash. Increased pressure on tax evaders will slightly slow but will not stop this crisis as the true cluprit is spending far in excess of what the government receives in tax reveues.
That leaves the government searching for what money is still available to be seized.
Those who are currently working are not using their retirement funds. They will not notice in the short run if those funds disappear. Eventually, when it is time to collect on the government debt that the retirement money was used to buy, it will become obvious that the funds are no longer there.
This would turn every retirement fund into Social Security, a pile of promises from the government to repay what has been taken, backed by no real value other than the potential of future taxes collected. It is well known that it is difficult for a person to live off of Social Security when retired, that a retiree must have either other savings or family that can be relied on. This move, if it happens, would eliminate the other savings.
The end result, should this pass, is to ensure that when it is time to retire, everyone who was saving will be poorer.
Doug Casey on Lew Rockwell