Economists, politicians, and smart investors know the dollar’s days as the world reserve currency are numbered as is our ability to finance the national debt.
The largest source of liquid private wealth remaining in the United States is the $15 Trillion in private retirement funds. The ultimate ownership, control and future of these funds has already been compromised and exchanged for the favorable tax treatment of private plans. Congress writes the laws, so they can tax, penalize, hold your funds hostage and although they’d never use the word, they can “confiscate” your assets at their discretion.
The retirement trap is only in the proposal stage at this time (circa Feb 2012) but make no mistake that the U.S. Govt’s need for current revenue and their frenzied search for a short-term fix so they can continue to buy future government debt obligations when no credible investor will buy them. The entrenched establishment of both parties will do anything to stay in power and this will include raiding and pillaging your retirement funds.
The latest plan first appeared in 2007 at the Economic Policy Institute: Agenda for Shared Prosperity and in a book titled “When I’m 64: The Plot Against Pensions and the Plan to Save Them.” It contains an approach for millions who do not have adequate retirement savings and the solution to confiscate most of the retirement assets of successful Americans.
Each year, the government will put $600 into a Guaranteed Retirement Account (GRA) for you and every other working person in America. If $600 amounts to more than 5% of your annual compensation (meaning you earn more than $12,000), you will be required to contribute 5% of your total compensation to the GRA. The Feds will promise to pay a 3% “inflation adjusted return” on each GRA based on the government’s Consumer Price Index. When you retire, you receive a portion of the account each month. When you die, your heirs receive only 50% of what is in your account and the rest goes to Uncle Sam!
Following the introduction of the GRA, the next step will be to cap the tax deduction for annual contributions to existing private retirement plans at $5,000. Next will be a tax on every retirement plan’s income; this will provide an immediate flow of revenue to the Feds. Finally, there will be a prohibition on buying any non-U.S. investment for any retirement plan.
A plan this radical can’t just be slipped through by Congress. It can only be placed into law as part of a solution to a first-class national crisis.
Here are some examples of national crisis to watch for:
- loss of AAA status for U.S. Treasury Bonds (a variation of this happened in Aug 2011 when S&P downgraded the Long Term Credit Rating of the U.S.A);
- another terrorist attack or military disaster like the collapse of Pakistan or an Israel/Iran conflict;
- another economic meltdown including China deciding to not purchase any more U.S. Treasuries.
Any of these events would take place in an atmosphere of deep public worry and fear.
This is when Washington would come to your rescue and guarantee to restore your retirement funds back to a “pre-cash” level in exchange for you to “voluntarily” move your retirement assets into your new Guaranteed Retirement Accounts.
For those that don’t sign up for a GRA, they will likely be burdened with additional withdrawal penalties and taxes on their retirement plans, limitations on investment choices, and likely mandatory minimum holdings of U.S. Treasuries.
When the next economic or stock market crisis hits, your retirement assets will be at risk from this type of confiscation effort no matter which political party is in control … and the greatest theft of wealth in the history of the world will have taken place!
What should you do to heed this early warning and still have your retirement benefits and security? Obtain more financial education and learn how to protect yourself during these trying times of massive money printing, fiat currency, and soon-to-be runaway inflation. Purchase precious metals, including gold, to hedge or protect your net worth against the decreasing value of the US Dollar, which is just paper money.
I favor a quote from Steve Forbes … Forbes says that pursuing additional financial education and the resulting increase in our financial literacy will open our eyes to being savvy with our money and using alternative wealth creating strategies; this will be they key to resolving our financial crisis.
To gain the necessary financial education, it is best to pursue association with, access to, and membership in, a wealth creation community. As a result, you will learn about alternative wealth creating strategies and consider investments in non-dollar denominated assets … perhaps emerging markets … perhaps energy assets that are inherently useful like oil rigs, hydropower, or methanol plants … perhaps precious metals, rare earths, water rights, oil, natural gas, potash mines, or gold mines … things hard to build, difficult to replace, and costly to substitute … definitely not financial stocks, definitely not retail stocks, definitely not commercial property.
For those wanting protection of their purchasing power in gold, there are several ways that may be appropriate to obtain this protection. These include direct ownership in minted coins, use of gold exchange traded funds, gold mutual funds, and junior gold stocks. Many are investigating having part of their IRAs in gold, silver, precious metals, and non-dollar denominated currencies.
In addition, for those that truly believe default of sovereign debt is the greatest risk we all face, it is wise to learn how to implement a multiple flag strategy to diversify this risk or provide protection against higher taxes, capital controls, hyperinflation, civil unrest, erosion of personal liberty, and the rise of a police state. With a multiple flag system, you consider taking preparations like, but not limited to, establishing a foreign bank account, purchasing some real estate overseas, seeking alternate sources of income, dual citizenship, and carrying multiple passports.
I will continue to provide examples of things we need to learn, the secrets of the insiders, as part of being savvy with our money, and introduce alternative wealth creating strategies, in future articles and updates at my blog over the next few weeks.
Finally, I want to thank Ron Holland, a guest contributor to Whiskey and Gunpowder published by Agora Financial, as he was the source of some of the material mentioned in this post.
In closing, be sure to Meet Me at my website, WhoIsMikeFarrell; Read Posts about my Internet Marketing Business at aspenIbiz blogspot; and Obtain Some Tips About Being No 1 on Google at aspenIbiz My Go-To-Market Partners website; and Learn How to Live Longer at aspenIbiz My Life’s Advantage Today site.
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