Best of the Week
Most Popular
1.Trump Delirium Triggers Stock Market Brexit Upwards Crash Towards Dow 20,000! - Nadeem_Walayat
2.The Future Price Of Gold Will Drop Below $1000 In 2017 -InvestingHaven
3.May Never Get Another Opportunity to Buy Gold at this Level Again - Chris_Vermeulen
4.Delirium - The Real Reason Why Donald Trump Won the US Presidential Election - Nadeem_Walayat
5.Why Nate Silver / Fivethirtyeight is one of the Most Reliable Election Forecasting Indicator? - Nadeem_Walayat
6.Gold Price Forecast: Nasty Naughty November Gold Price Trend - I_M_Vronsky
7.Gold Mining Stocks Screaming Buy! Q3’16 Fundamentals - Zeal_LLC
8.Delirium of Trump Mania Win's Mr BrExit US Presidential Election 2016 - Nadeem_Walayat
9.The War On Cash Goes Nuclear In India, Australia and Across The World - Jeff_Berwick
10.Hidden Signs for Gold and Silver - P_Radomski_CFA
Last 7 days
Trump Sets The Stage For A Huge Gold Rally In 2017 - 6th Dec 16
BrExit Tsunami Claims Emperor Renzi's Scalp, Counting Down to End of the EU, Next? - 6th Dec 16
Failed EU - Means an Expanded Dictatorship - 6th Dec 16
Crude Oil Prices: "Random"? Hardly - 5th Dec 16
The Coming Stock Market Crash and WWIII - 5th Dec 16
This Past Week in Gold Market - 5th Dec 16
Stock Market Short-Term Correction Underway - 5th Dec 16
If Trump Doesn’t Do This, We Will Have the Great Depression 2.0 - 5th Dec 16
India’s Demonetization Could Be the First Cash Domino to Fall - 5th Dec 16
Our Future Economy, Jobs, Banking, And Governance - 5th Dec 16
Gold and Silver Bullion Buying Opportunity for 2017? - 4th Dec 16
First UK BrExit then Trump, Next BrExit Tsunami Wave to Hit Italy HARD Sunday! - 3rd Dec 16
The 10YR Yield and SPX Stocks Bull Markets - 3rd Dec 16
Gold And Silver – Do Not Expect Much Difference With Trump Compared To Obama - 3rd Dec 16
Gold, Currencies and Markets Critical 61.8% Retracements - 2nd Dec 16
Gold Junior Stocks Q3’16 Fundamentals - 2nd Dec 16
Adventures in Castro’s Cuba - 2nd Dec 16
We Are Putting Off the Inevitable - 2nd Dec 16
Macroeconomic Cycles & Demographics - A Fuse, An Explosive and The Igniting Catalyst - 2nd Dec 16
How Moving Averages Can Identify a Trade - 1st Dec 16
Silver Prices and Interest Rates - 1st Dec 16
America, is it Finally time for us to say Goodbye? - 1st Dec 16
Blockchain Technology – What Is It and How Will It Change Your Life? - 1st Dec 16
Burn the Flags, Can Trump Salvage The Sinking US Economic Ship? - 1st Dec 16
Will US Housing Real Estate Market Tank in 2017? - 1st Dec 16
Referendum Puts Italy's Government to the Test - 30th Nov 16
Why We Haven’t Seen Gold Price Rally after Trump Victory - 30th Nov 16
Breakdown and Slide in Crude Oil Price - 30th Nov 16
A 'Wicked Rally' in Gold Price Predicted - 30th Nov 16
Silver Market Sentiment Looks Golden - 30th Nov 16
Indian Demonetization Denotes Severe Stress in the Global Gold Market - 30th Nov 16
Owning Gold and Silver in Troubling Times - 29th Nov 16
Trump's Presidency - Stock Market Crash or Start of New Mega-Trends - 29th Nov 16
Prime Minister Modi's War Against Corruption, Black Money and Fake Currency Notes in India - 29th Nov 16
Can President Trump Really Drain the Swamp? - 29th Nov 16
President Trump’s Economic Plan Isn’t Going to Work - 29th Nov 16
The US Bond Bear Market Has Begun! - 29th Nov 16
Simple Yet Powerful Technical Trading Tools - 28th Nov 16
Public Infrastructure – Welcome to the World of Waste, Fraud, and Abuse - 28th Nov 16
Fifty Years Later, Moore's Computing Law Holds - 28th Nov 16
An Elusive Stock Market Top - 28th Nov 16

Free Instant Analysis

Free Instant Technical Analysis


Market Oracle FREE Newsletter

$10000 Gold

Obama Turns America’s Retirement Dreams into Nightmares

Politics / Pensions & Retirement Apr 29, 2013 - 12:53 PM GMT

By: Money_Morning

Politics

Keith Fitz-Gerald writes: If you think the U.S. government will not - or cannot - seize your money the way the government in Cyprus is doing, check out page 18 of the President's Proposed Fiscal Year 2014 Budget of the U.S. Government.

That's exactly what he intends to do.

Not years from now. Not decades from now.


Today.

This is organized crime on an incomprehensible scale and, if it passes, it will be legal, too.

Robbing Your Nest Egg
Anxious to raise more than $9 billion dollars over the next 10 years, President Obama has proposed a $3.4 million limit on individual retirement accounts (IRAs), 401ks and other tax-advantaged accounts as part of his 2014 budget.

In theory, this is going to generate a lot of cash by capping the amount of money that could be contributed tax free to tax-advantaged accounts like 401ks and IRAs.

In reality, it's going to backfire spectacularly by creating a huge disincentive to save, while also penalizing those who desperately need to build wealth as a defense against their spendthrift government.

Proponents of this plan say the proposal only affects an estimated 100,000 households - give or take - and a mere 0.3% of the 20 million IRAs in this country, and an infinitesimal 0.0041% of 401k plans according to Employee Benefit Research Institute data.

I think they're dead wrong. When it backfires, it will steamroll the entrepreneurial backbone of this country - small businesses and their employees - much the same way the Patient Protection and Affordable Care Act (PPACA), better known as "Obamacare," has.

Here's why:

■The Government is the poster child for the Law of Unintended Consequences. Since when has any government plan ever functioned as intended? This initiative is going to creep backwards into Middle America faster than you can spell barbecue. It's almost axiomatic that once a tax or fee is targeted on a small population of individuals, it slowly and inexorably expands. It never shrinks or disappears. Ever.
■Money is mobile. It will leave the country just as it leaves any punitive jurisdiction and go where it's treated best. Ask Germany why its millionaires are shifting money to Singapore. Why has there been capital flight out of France in the face of higher taxes? Why is Italian money headed for Luxembourg? Closer to home, why is California hemorrhaging? Why do newly minted IPO millionaires become Nevada citizens? You get the point...history is filled with examples of how money moves when it is targeted.
■Mission Creep. When it leaves, the government will face a revenue shortfall so the plan will be expanded and the cap balance will be lowered to sweep in still more Americans at far lower balances.

This is a joke...$9 billion over 10 years?! The government is going to stick it to people to raise $900 million a year - an amount of money that's completely inconsequential in the scheme of things.

It doesn't matter which side of the aisle you sit on, nor does it matter how much money you have or haven't saved. This is a direct attack on our financial liberties and our assets.

It's immoral and it's no different than what happened in Cyprus recently when that nation levied taxes on depositors in an effort to shore up decades of bad government decision making and profligate spending.

Another Financial Shell Game with Political Payoffs
I've often joked that the reason we have such terrible economic problems at the moment is because nobody in Washington actually understands how real money works, let alone what it's actually worth.

Now I'm not joking.

But that's not even the worst part of it - guess who's got their fingers right in the middle of the proverbial pie? Yup... Wall Street and big business. If this cockamamie idea actually passes, the cap will "encourage" the wealthy to put more money into insurance products, including annuities and life insurance - both of which generate tens of billions in management fees a year... on your money.

This is like being "voluntold" to do something.

We're going to have another JPMorgan food stamp situation on our hands, only this one will be a lot bigger over time.

I bring this up not to dump on JPMorgan, but to make a point about the incestuous relationship between big business and government programs.

Most people are outraged to learn that the financial behemoth (which received a $94.7 billion taxpayer funded bailout in 2008) receives a fee of between $0.31 and $2.30 for each food stamp recipient in 23 states. They're positively gob-fobbed when they understand that since 2004 the company has collected more than $560 million in fees for processing government benefits.

It's not by coincidence that JPMorgan's political donations to members of the House and Senate Agricultural Committees have gone from only $82,000 in 2002 to more than $325,000 in 2010. Kinda takes corporate "welfare" to an entirely new level.

This time around the players aren't the big banks but their financial services "cousins" like MetLife Inc., Prudential Financial Inc., Allianz and Lincoln National Corp, all of whom are heavy hitters in the insurance and annuities markets.

Not surprisingly, many of those same companies are also involved in providing retirement plans which, of course, also require tremendous oversight and generate huge fees...soon to be ginormous fees, if Obama's scheme passes.

I realize that all of this is hard to imagine and even harder to get behind, particularly if you are not one of the 100,000 being targeted at the moment.

So let me tell you why you should care no matter how much wealth you have today or want to have in the future.

Here's the real game and what I believe is ultimately the end game.

Robbing Peter to Pay...Peter
Government spending is so bad and so out of control that "we" already owe ourselves more than $222 trillion dollars. That's the true "fiscal gap" between America's assets and its liabilities, according to Boston University Professor of Economics Lawrence Kotlikoff, who reviewed CBO numbers to arrive at such a stunning figure.

You'd think the government would simply stop spending; that's what any responsible individual or company does when the amount of money they owe exceeds what they make.

But Congress can't...they've socialized risk. The only way to keep the Ponzi scheme going is to keep handing out freebies. "They" just hope the bluff is called on the next guy's watch.

And that brings me back to President Obama's proposal.

The government has to sell debt to fund its operations. Right now it relies on an international network of buyers who are growing weary of the United States' fiscal policies and leery of its ability to pay back those obligations. What better way to ensure you have buyers than to create a captive monetary pool?

President Obama's plan, or at least some version of it, will pass in the next few years. Then, when it doesn't work, the government will step in to save the day by allowing exemptions and special tax-advantaged contributions under the guise of offering better financial security if - ta da- they are in the form of Treasury purchases. Chances are they'll play the "patriotic" card too while they're at it.

This would not only maintain the cap the president seeks but also ensure that even higher levels of debt are effectively monetized without resistance.

You'd think I'm describing something from George Orwell's "1984" but I'm not.

Japan has done this for years. Few people understand that one of the primary reasons that nation has not totally collapsed as a result of their financial crisis is that an estimated 95% of workers and retirees own Japanese government bonds. Therefore the combined public, private and corporate debt that's nearly 500% of GDP is almost irrelevant.

Bernanke and the president could only dream of having that kind of spending power.

Then again, perhaps they already do...

I'll be monitoring this situation closely in the weeks ahead - as you might imagine, everybody literally has something to lose.

But you know what?

Savvy investors have something to gain, too, which is why I'll be back in touch with information on where to stash your cash and what structures you can use to protect your assets. I'll also have more on specific investments that are going to benefit from this.

Somebody, as the old saying goes, is gonna make a pile of money.

It might as well be us.

Source :http://moneymorning.com/2013/04/29/obama-turns-americas-retirement-dreams-into-nightmares/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2016 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

Catching a Falling Financial Knife