Will the End of QE Lead to Forced Retirement Accounts


By smaulgld   Follow   Wed, 26 Jun 2013, 5:09pm   484 views   16 comments
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“A government big enough to give you everything you want, is big enough to take away everything you have.” attributed to Thomas Jefferson

There has been a lot of talk lately that the Federal Reserve may soon taper its purchases of U.S.Treasury bonds and mortgage back securities.

There has also been some talk about forced retirement accounts.
Indeed, this topic was the subject of a recent Time magazine article.

There is irony in this proposal given we already have a mandatory retirement program called Social Security.

These two stories may have a common thread........

http://smaulgld.com/forced-retirement-accounts/

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  1. Bellingham Bill


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    1   5:23pm Wed 26 Jun 2013   Share   Quote   Permalink   Like   Dislike (1)  

    "attributed to Thomas Jefferson"

    by realilty-challenged right wing cranks who are attracted to fallacious thinking.

    "we already have a mandatory retirement program called Social Security."

    and thank god we do, if we didn't we'd have tossed all our disposable income into chasing up home values (and rents), including the 12% that FICA rakes off.

    all taxes come out of rents

  2. smaulgld


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    2   5:43pm Wed 26 Jun 2013   Share   Quote   Permalink   Like (2)   Dislike (1)  

    If social security already protects us against tossing disposable income into chasing up home values, do we need mandatory retirement accounts too?
    If so how large of a percentage of income would they be?

  3. Bellingham Bill


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    3   7:15pm Wed 26 Jun 2013   Share   Quote   Permalink   Like (1)   Dislike (1)  

    smaulgld says

    If so how large of a percentage of income would they be?

    Enough to guarantee a comfortable retirement, obviously.

    Savings out of income is the evidence of deferred consumption.

    Americans need a lot more of that.

    15% FICA
    5% Medicare
    10% PPACA
    10% IRA
    ---

    = 40% of gross taken as payroll taxes

    Tell ya one thing, housing rents and home prices would crash under such a regime.

    No big loss.

  4. sbh


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    4   7:27pm Wed 26 Jun 2013   Share   Quote   Permalink   Like   Dislike (2)  

    Bellingham Bill says

    Savings out of income is the evidence of deferred consumption.

    Americans need a lot more of that.

    Agreed. But the freedom to do yourself in is a basic American right and tradition.

  5. smaulgld


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    5   4:11am Thu 27 Jun 2013   Share   Quote   Permalink   Like (3)   Dislike (1)  

    If you out source that responsibility to a third party they generally not a better fiduciary than yourself.

  6. thomaswong.1986


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    6   4:46am Thu 27 Jun 2013   Share   Quote   Permalink   Like (1)   Dislike  

    Bellingham Bill says

    "we already have a mandatory retirement program called Social Security."

    and thank god we do, if we didn't we'd have tossed all our disposable income into chasing up home values (and rents), including the 12% that FICA rakes off.

    Which what many did anyway from 1998 to present. The public's speculation in RE continues today and into the foreseeable future. But that was not the case decades past, when many had common sense and discipline in savings and certainly had no intentions of inflating home prices.

  7. smaulgld


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    7   4:59am Thu 27 Jun 2013   Share   Quote   Permalink   Like (3)   Dislike (1)  

    It doesnt make sense to take someone's money because they might not be responsible with it and give it to a proven irresponsible party

  8. smaulgld


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    8   6:34am Thu 27 Jun 2013   Share   Quote   Permalink   Like (2)   Dislike (1)  

    Each person owes approx $50K of the national debt if you wish to calculate it that way

    http://money.usnews.com/money/blogs/my-money/2012/10/04/16-things-you-need-to-know-about-government-debt" title="US debt per citizen

  9. smaulgld


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    9   2:42am Fri 28 Jun 2013   Share   Quote   Permalink   Like (1)   Dislike (1)  

    Patriot bonds come to mind- come to the aid of your country/get the safety of US treasuries
    Not sure how they would pitch distress mortgage backed securities!

  10. dublin hillz


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    10   12:28pm Fri 28 Jun 2013   Share   Quote   Permalink   Like   Dislike (1)  

    smaulgld says

    Patriot bonds come to mind- come to the aid of your country/get the safety of US treasuries
    Not sure how they would pitch distress mortgage backed securities!

    Patriots bonds sound dangerously close to "victory gin"...

  11. futuresmc


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    11   12:57pm Fri 28 Jun 2013   Share   Quote   Permalink   Like   Dislike  

    sbh says

    Bellingham Bill says

    Savings out of income is the evidence of deferred consumption.

    Americans need a lot more of that.

    Agreed. But the freedom to do yourself in is a basic American right and tradition.

    Unfortunately the financialization of nearly our entire economy has made saving for retirement almost impossible for anyone who isn't a hedge fund manager. In the past, inflation could be countered by savings interest that exceeded the rate of inflation. It could be countered by choosing your assets based on the value you believed they would hold at the time of your retirement.

    Now, thanks to monetarism, the Fed can make or break your plans with a single statement. Institutions like Goldman Sachs can wipe you out single handedly by shaping the markets against you. There is no store of value that can't be tricked out by Wall Street. Even a home that is owned outright can be taken with eminent domain to be handed over to a better connected private interest or sold out from under you by a bank who mistakenly believed they still held a mortgage on it.

    While I am not completely swayed by the idea of forced retirement accounts, the government has to step in in some way to protect those who have forgone consumption and saved for retirement or the Medicare and Social Security crisises of the baby boomers will be the least of our worries. We are no longer living in an America where saving for retirement is merely a matter of putting money aside. There needs to be some means of protecting that investment from theft.

  12. still1bear


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    12   1:30pm Fri 28 Jun 2013   Share   Quote   Permalink   Like   Dislike  

    Bellingham Bill says

    "attributed to Thomas Jefferson"

    by realilty-challenged right wing cranks who are attracted to fallacious thinking.

    "we already have a mandatory retirement program called Social Security."

    and thank god we do, if we didn't we'd have tossed all our disposable income into chasing up home values (and rents), including the 12% that FICA rakes off.

    all taxes come out of rents

    Now all of a sudden SS is a retirement program!! It used to be an insurance program for some people (originally less than 10%). Now we don't need to save for retirement, we just need to whine "where is my social security!!". Surprise, surprise, another failed gov’t boondoggle. The same with the federal reserve. Originally it was supposed to provide stability for the banks and the whole credit system. Now it is supposed to solve all the problems in the world – yeat another failed boondoggle.

    Reasonable level of regulation and gov’t programs is necessary, but we surpassed this level long ago and still cannot stop. We need mo, mo ,mo gov’t. Talk about realilty-challenged left wing cranks.

    "Part of being president is there’s so much beneath you that you can’t know because the government is so vast”.

    Major left-wing crank David Axelrod.

  13. Bellingham Bill


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    13   7:29pm Fri 28 Jun 2013   Share   Quote   Permalink   Like   Dislike  

    still1bear says

    It used to be an insurance program for some people (originally less than 10%)

    "The majority of women and minorities were excluded in the beginning from the benefits of unemployment insurance and old age pensions, as employment definitions reflected typical white male categories and patterns"

    http://en.wikipedia.org/wiki/Social_Security_(United_States)#History

    This was thanks to the current core of the Republican party, racist Southern shitheads, who were Democrats at the time and would not vote in programs that helped black people.

    Same thing these shitheads are doing now with the Medicare expansion, blocking it in their states because it helps poor people.

    Now we don't need to save for retirement, we just need to whine "where is my social security!!"

    That $2.7T in the SSTF was taken from FICA payers 1990-2010 and needs to be disbursed to FICA payers starting around now.

    And damn straight "where's my social security"! 12.4% off the top from wage-earners since 1990, 10% since 1978, was taken from wage earners' paychecks and we need to keep the program going.

    As designed, it's rather brilliant actually, relying on productivity growth to cover retirees' basic living costs. Thus far, we've had plenty of growth, eh:

    http://research.stlouisfed.org/fred2/graph/?g=kao

    is real per-worker GDP.

    FICA is in fact a pretty decent retirement insurance program. Its monies not being routed via Wall Street is a feauture, not a bug.

    Now [the Fed] is supposed to solve all the problems in the world – yeat another failed boondoggle

    Stop thinking in fallacious terms and you might grow a brain someday.

    http://www.nizkor.org/features/fallacies/straw-man.html

    The Fed has been corrupted by the Republicans just like everything else they've touched since 1870. But its sins are peanut vs. the colossal socio-economic mistakes we've been piling up since 1980 if not earlier.

    Trade deficit, NAFTA, rising Gini, de-funding college education such that we're putting new graduates tens of thousands of dollars in debt at age 22, spending trillions on our stupid military, the list is long and soul-killing really.

    What the Fed has done doesn't even rate. Now, what it HASN'T done is another story.

    They, as the power center of our private banking system, should have policed the financial sector when the Bush administration (and the Reagan admin before it) let big finance run wild and screw everything up.

    Part of being president is there’s so much beneath you that you can’t know because the government is so vast”

    Well duh, dude. There are 2.8M employees in the executive branch. If Obama spent one second reviewing what each employee was doing it would take him 20 weeks a year just doing that alone. Throw in the military and you've got another 10 weeks burned.

    You've got to delegate, but delegation requires not really knowing what's going on. To find out, you've often got to wait for something bad to happen.

    Now, don't get me wrong, I do agree that the Feds are Leviathan and I'd like to see them cut back by 50% or so so that we could have more focus on state-level government.

    I disagree with the recent Ag Department ruling removing sugary food from the nation's high schools. That's top-down government at its finest.

    The principle that we are independent states is a harmful fiction, though. We didn't win WW2 or go to the moon being 50 little states, we did it together, and we need to continue developing interstate commerce and figuring out how to get along better.

    Federal programs like social security are great -- they allow people to move around more without having to deal with 50 or more different systems.

    That's what DC's job really is -- focusing on making the nation stronger in the e pluribus unum sense.

  14. Bellingham Bill


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    14   7:48pm Fri 28 Jun 2013   Share   Quote   Permalink   Like   Dislike  

    smaulgld says

    Each person owes approx $50K of the national debt if you wish to calculate it that way

    And each person OWNS $50K of the national debt, too.

    Well, ~$4T of it is foreign-held:

    http://www.treasury.gov/resource-center/data-chart-center/tic/Documents/mfh.txt

    $5T is trust fund debt, held in beneficiaries' trust

    http://www.treasurydirect.gov/NP/debt/current

    $2T is held by the Federal Reserve, literally here nor there in the scheme of things:

    http://research.stlouisfed.org/fred2/series/TREAST

    so in actuality we've got $10.7T of the national debt really held "by the public".

    That's $35,000 per capita. But again, one person's debt is another person's savings.

    To rebalance things is going to take moving toward a balanced budget, and that will require raising taxes a lot from here and cutting spending where we can.

    Never going to happen again (like it did in the 1990s) since the country has lost any semblance of political unity and desire to defend the public interest.

    Everybody's out to get theirs, and screw everyone else.

    Not going to go very well I think . . .

  15. still1bear


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    15   3:05am Sun 30 Jun 2013   Share   Quote   Permalink   Like   Dislike  

    Bellingham Bill says

    "The majority of women and minorities were excluded in the beginning from the benefits of unemployment insurance and old age pensions, as employment definitions reflected typical white male categories and patterns"

    http://en.wikipedia.org/wiki/Social_Security_(United_States)#History

    Fine, let’s double it, and pay women and minorities. That would be still less than 1% of population. There is nothing wrong with social insurance programs per se. What is wrong is unsatiable urge of the Left to grow it into oblivion. Now we have ~15% of the population on SS. This is way too much, and the worst is yet to come.

    Bellingham Bill says

    As designed, it's rather brilliant actually, relying on productivity growth to cover retirees' basic living costs. Thus far, we've had plenty of growth, eh:

    http://research.stlouisfed.org/fred2/graph/?g=kao

    is real per-worker GDP.

    As designed it was just a good propaganda trick by FDR. There was no need to create a parallel taxation system, it was much simpler to create a social insurance program by raising income tax. But the most intersting thing is your claim about plenty of GDP growth. Do you realize that GDP number is just as much of nonsense as the gov’t-massaged CPI ? Do you understand that e.g. all housing bubble transactions were included in GDP? I still remember how happy GW was talking about GDP growth. Some growth.. What about huge government waste of money just to keep itself busy? What about military adventures and nation-building? Do you realize they are also part of GDP? A big chunk of GDP growth (if not all of it) is now coming from the FED/gov’t blowing the new bubble. This “growth” will help nobody.

    Bellingham Bill says

    Stop thinking in fallacious terms and you might grow a brain someday.

    http://www.nizkor.org/features/fallacies/straw-man.html

    Dude, you made my day. Throwing insults is the first sign of weakness, and realisation of being wrong. Not that I care, but I prefer not to waste my time on your ilk. You need to contain your excessive dogoodness, it will do you no good. Instead of spewing your liberal venom, try to learn something better than throwing out phony GDP numbers. On ignore list you go.

  16. tatupu70


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    16   6:27am Sun 30 Jun 2013   Share   Quote   Permalink   Like   Dislike  

    still1bear says

    What is wrong is unsatiable urge of the Left to grow it into oblivion. Now we
    have ~15% of the population on SS. This is way too much, and the worst is yet to
    come.

    So, what is the percentage that is OK in your mind? I guess we should have instituted a limited baby policy like China after the War so that we wouldn't have this baby boom retirement problem...

    still1bear says

    Do you realize that GDP number is just as much of nonsense as the gov’t-massaged
    CPI ?

    Ah, another shadowstats guy. That explains a lot.

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