Obmama Announces myRA Retirement Savings Accounts

That’s why, tomorrow, I will direct the Treasury to create a new way for working Americans to start their own retirement savings: MyRA… MyRA guarantees a decent return with no risk of losing what you put in . President Obama – State of the Union Address 2014.

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Update: Whitehouse Fact Sheet on Myra: “Making Progress Through Executive Action”

Since the start of the Smaulgld blog last spring, we have noted that the economic “recovery”, characterized only by rising stock and real estate prices, was dependent upon the Federal Reserve’s multi-year, multi-trillion dollar quantitative easing programs whereby they print money out of thin air to purchases U.S. Treasury Bonds and mortgage backed securities in order to keep interest rates low. Low interest rates allow the U.S. government to continue to borrow money at low rates to fund its deficit spending and allow the too big to fail banks to remain solvent while removing toxic mortgage backed securities from their balance sheets.

The Fed, in recent years has been purchasing between 60-80% of the newly issued U.S. Treasuries, has been struggling to find an exit from QE realizing that the world’s U.S. bond investors (primarily China and Japan) would not tolerate perpetual printing and debasement of the U.S. Dollar. We have often speculated on this blog that exiting from QE would collapse the stock and real estate markets and hence the recovery, and therefore a clean break from QE would not be possible, UNLESS an alternative buyer of U.S. Treasuries could be found.

Last summer (June 2013) we noted that the new alternative buyer could be U.S. citizens:

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.

In subsequent podcasts, posted here and on You Tube, we have repeated this theme.

President Obama took the first step last night in guiding U.S. citizens towards buying U.S Treasury Bonds. We would think after the next stock crash/financial crisis, it’s possible that mandatory conversions of securities held in IRA’s and 401Ks to U.S. Treasury bonds be ordered (of course at similar low rates of interest that T-bonds are currently paying).

After all its “safe”, “guaranteed” and the patriot thing to do.

One can only wonder if a website will be set up to help facilitate the purchases of U.S. Treasuries.

Mandatory Retirement Accounts- The Fed’s Exit Strategy?