Mandatory Retirement Accounts?

Mandatory Retirement Accounts

A government big enough to give you everything you want, is big enough to take away everything you have.” attributed to Thomas Jefferson

Buy Gold Online

How to Buy Gold

JM Bullion

How to Buy Silver

UPDATE: January 29, 2014: Obama Announces MyRA Retirement Savings Accounts

The Fed’s Exit Strategy?

There has been a lot of talk lately that the Federal Reserve may soon taper its purchases of U.S.Treasury bonds and mortgage back securities.

There has also been some talk about forced retirement accounts. Indeed, this topic was the subject of a recent Time magazine article. There is irony in this proposal given we already have a mandatory retirement program called Social Security.

These two stories may have a common thread.

A slow down or outright cessation of the Fed’s purchases of US treasuries would have an adverse impact on bond prices and interest rates would rise. Previously on this blog we have noted the impact such a rise in interest rates would have on the stock and real estate markets and the overall economy.

Another area that will be impacted by the tapering or cessation of the purchases by the Fed of US Treasuries is the United States government. The United State government benefits from the Federal Reserve’s bond purchases in two ways:

First it provides the government with an additional source of revenue as the government does not run solely on the taxes it collects, it supplements its tax revenue with deficit spending by issuing treasury notes which the Federal Reserve now buys in large quantities.

Secondly, with the Fed buying US treasuries, interest rates are kept low and the U.S. Government gets to fuel its deficit spending at record low rates.

If the Federal Reserve were to taper or stop its bond purchases, the U.S. government would see an increase in its cost of borrowing as rates would rise. Simultaneously, the tapering or cessation of bond purchases could cause the stock and real estate markets to crash.

At that point there would be disarray. The much touted wealth effect would be gone as people’s stock and real estate equity would be gone as well as any retirement savings held in 401K’s and IRA’s and the U.S. government would be short a major source of funding.

A possible solution? A Bail In! U.S. citizens who have approximately $9 trillion in IRAs and 401K plans would be required to hold U.S. treasuries in those retirement accounts.

Its been calculated that each citizen’s portion of the U.S. is about $50,000.

The U.S. Government could using such a calculation to argue (or issue an executive order), you owe it and it is patriotic to help out and pay your fair share.

The U.S. government could easily point to the volatility of the stock market as being a poor retirement investment vehicle and that U.S.Treasuries would provide the right type of security for a safe retirement portfolio.

Problem/crisis solved: US citizens become the new buyer of last resort of U.S. Treasuries.


Mandatory Retirement Accounts- The Fed’s Exit Strategy?

Don’t Fear the Taper!

Get Free Updates From

Subscribe to and get the free In Case You Missed Itweekly email as well as updates and analysis on gold, silver, real estate and the economy.

Also get the free report “Twelve Key Differences Between Gold and Silver” when you subscribe.

Buy Gold and Silver

Further reading:

Obama Announces MyRA Retirement Plan at State of the Union

Jim Rogers on 401K plans

Obama on 401K’s

President Obama’s Executive Order on Financial Capability for Young Americans

Please visit the Smaulgld Store for a larger selection of recommended Kindles, books, music, movies and other items.

Or you can support by making all your Amazon purchases through the search widget below and by ordering your gold and silver by clicking on the JM bullion ads on the site:

Buy Gold and Silver

DISCLOSURE: Smaulgld provides the content on this site free of charge. If you purchase items though the links on this site, Smaulgld LLC. will be paid a commission. The prices charged are the same as they would be if you were to visit the sites directly. Please do your own research regarding the suitability of making purchases from the merchants featured on this site.

The content provided here is for informational purposes only. Making investment decisions based on information published by Smaulgld (SG), or any Internet site, is not a good idea. Accordingly, users agree to hold SG, its owner and affiliates, harmless for all information presented on the site. SG presents no warranties. SG is not responsible for any loss of data, financial loss, interruption in services, claims of libel, damages or loss from the use or inability to access SG, any linked content, or the reliance on any information on the site.

The information contained herein does not constitute investment advice and may be subject to correction, completion and amendment without notice. SG assumes no duty to make any such corrections or updates. As with all investments, there are associated risks and you could lose money investing. Prior to making any investment, a prospective investor should consult with its own investment, accounting, legal and tax advisers to evaluate independently the risks, consequences and suitability of that investment. SG disclaims any and all liability relating to any investor reliance on the accuracy of the information contained herein or relating to any omissions or errors and as such disclaims any and all losses that may result.

Post Navigation