so ,whats the plan folks ? ...we just gonna go down with the ship? ..that it ! ... UH Oh yea invest in gold :o
Keith | moneymorning
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:
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.
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.
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.
Obama Turns America’s Retirement Dreams into Nightmares
April 30, 2013Keith | moneymorning
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.
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.
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