Jim’s suggested retreat from "carrot on a stick" government retirement programs may seem prohibitively expensive and foolish to some right now, but it takes only one unexpected event and historical predictable reaction to it to smash the basket that carries all your investment eggs.
Bernanke’s open-ended QE3 provide a real sense of the urgency behind the scenes. If the Fed wanted to stimulate it would have purchased corporate debt and place real money in the private economy. Perhaps the motivation was not stimulus but rather transfer of ownership of toxic assets from the private to public sector before it’s too late.
QE3, like its predecessors, will fail to stimulate investment and employment. When the economy begins to falter in 2013 and turn in 2015, confidence will be challenged. If confidence deteriorates, it will curtail the government’s ability to borrow. Governments desperate for cash will not hesitate to consider funds that have benefited from kindness of government over the years as a quick, patriotic solution to their problem.
Commentary: Retirement Accounts: Problems Above And Beyond Sentinel Ruling and Custodian Integrity
My Dear Extended Family,
There is one more serious problem with all retirement accounts above and beyond the Sentinel Ruling and the integrity of the custodian.
If a systemic failure and lower dollar causes an unwanted increase in interest rates in light of the Fed as the major consumer of treasury paper in the last 18 months, how would the US government fund itself? You can be certain that China and the Middle East are not coming to the rescue.
One way would be to liquidate retirement accounts ($2 trillion USD) and put treasury paper into them to save the poor worker and coming retirees from loss as MSM and MOPE would say.
Look around the world at governments either eyeing retirement programs or invading them. You will find it is already happening.
Please, at a minimum, stop creating and funding them.
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