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Last Updated on: 1st February 2014, 06:42 pm
Unveiled during his State of the Union address this week, President Obama heralded the “myRA” retirement plan as a way to help 39 million households get started on a “lifetime of savings”.
Don’t fall for it — this is government confiscation, pure and simple.
Legendary investor Jim Rogers called it years ago, when he predicted that the only way our government can get out of debt is to attack our retirement accounts.
But we’ll get back to that in a little bit…
First, let’s look at who it’s for how it’s supposed to work.
The myRA savings account is intended for the roughly half of U.S. workers who don’t have access to employer-sponsored retirement plans.
Contributions, which will be deducted from after-tax pay won’t be taxed on withdrawal. Interest will be minimal, but the principal will be “guaranteed” by our government.
Obama is creating the myRA by executive order. But he can’t order employers to offer it.
That’s why he’s asking Congress for a bill requiring employers that don’t provide a savings plan to connect their employees with automatic-enrollment IRAs.
The myRA would be one of the options. Workers who don’t want to participate in an automatic-enrollment IRA could theoretically opt-out, in the beginning at least.
Do We Really Need the Government to Get Into the Retirement Plan Business?
There are 7,238 mutual funds, 1,257 insurance companies,3,895 brokerage firms and 7,867 hedge funds in the U.S. Clearly, there are plenty of retirement investment options available to Americans already.
So why do we need our government to get in the retirement plan business?
If the issue is access, then Americans should already have that covered. We don’t need another employer-sponsored plan because we all have the right to invest in our own personal IRA, Roth IRA, SEP IRA, or Simple IRA.
Hence, there are plenty of retirement choices already.
President Obama asserts that Americans need to save more, and the government needs to “help” you do just that.
Is it just a coincidence now that the Federal Reserve is tapering their government bond purchases, that President Obama unveils his master plan to get us to buy government bonds through a myRA?
I think not.
The Fed has destroyed their own balance sheet while buying bonds in order to keep interest rates low. The Fed now has $4 Trillion of assets on their balance sheet and only $60 Billion in equity.
In other words, they’re leveraged 66 to 1. When Lehman Brothers went bankrupt, the financial behemoth was “only” leveraged 30 to 1. Another casualty of 2008, Bear Stearns, was leveraged 50 to 1 before they blew up.
It seems that the Fed and our government sense that they can no longer defy the laws of economics. The Fed has to stop buying bonds, and it knows it.
So how can we get out of this mess?
First, you have to realize that there is no “we”. There’s the government / Fed consortium (They), and then there’s the rest of us (We).
And the only way “They” can get out of this is by taking control of Our money now, and paying us back with a drastically cheaper dollar way out in the future.
The Only Way Out: Inflation
The only way to “pay back” the $17 Trillion mountain of debt the government has amassed is to inflate their way out.
The guys at the Fed are idiots but they’re not stupid. They know that if they can devalue the dollar through inflation, they can make that $17 Trillion debt seem like $8.5 Trillion in 15 – 20 years.
At the same time, our government has to keep interest rates low so they can make small interest payments on the debt. They can do this by finding a big pool of government bond buyers.
Where would they find a large enough group of suckers to loan them money at 2% forever, only to be paid back with vastly devalued dollars?
And Walla!! Obama gives you the myRA.
So expect the terms of the myRA to become more onerous in the future. Expect it to be less voluntary. And expect your money to be wiped out by government-sponsored inflation if you participate.
How to Avoid Confiscation by Inflation
For now, our government is only suggesting that we investing in their bonds that will be devastated by inflation. In the future, it would not be a stretch to say that they could mandate that a certain amount of our paychecks and IRA's must go into this scheme, a la Social Security.
The way to avoid this certain wealth destruction is to transfer your IRA's and 401k's to a Gold IRA which happens to kill two birds with one stone. By transferring to a Gold IRA you can get the ultimate in control of your retirement money, along with the ability to invest in gold which protects you from inflation.
If you'd like more information on how to do this, fill out the boxes below and you'll get your Gold IRA kit immediately.