The Next Phase: Looting Social Security, 401Ks, IRAs and Whatever Is Left?

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SamLinder's picture
SamLinder
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The Next Phase: Looting Social Security, 401Ks, IRAs and Whatever Is Left?

http://jessescrossroadscafe.blogspot.com/2009/02/next-phase-in-march-of-...

After what we have seen in the last eight years in particular, why
do we assume that there is any boundary to the venality of powerful
men? That there is ever enough?

Crony capitalism gives way to
coolie capitalism. The belief in the priority of the privileged few to
possess the greatest share of the nation's wealth endures.

Where is the justice? Where is the reform?

"Greed is a fat demon with a small mouth and whatever you feed it is never enough."
Janwillem van de Wetering

“Experience
demands that man is the only animal which devours his own kind, for I
can apply no milder term to the general prey of the rich on the poor."
Thomas Jefferson

"The more we do to you, the less you seem to believe we are doing it."
Dr. Josef Mengele

 

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Farmer Brown
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Re: The Next Phase: Looting Social Security, 401Ks, IRAs ...

Sam,

This warning is some 80 years late.  The SS "fund" does not exist.  It never has.  It's a made-up concept.  The money current payers pay goes directly to beneficiaries (retirees), and since there is not enough for that, the SS "fund" is negative.  That's the way it's been since inception.  It's the biggest Ponzi scheme ever devised.  

Ditto for medicare and medicaid.  

What the government should be working on is reform of all three of these entitlement programs so as to cut outlays by about half.  It is political suicide to do so, so unless Obama really is a great leader, I doubt it will happen.  The likely soluton is to print more money.

As for looting 401k's and IRAs:  If the dollar were backed by gold, then I'd worry about them taking such steps.  But, since the dollar doesn't mean anything, there is no need to raid these programs.  They can just turn on the magical printing press.  Much easier politically.

I find the likelihood of them raiding private security-boxes at banks in search if gold, and making gold possession or sale (except to the government) illegal, which is something they have done before, to be much higher.  They could be forced to do this if, for example, foreigner banks stop lending us money.

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propamanda
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Re: The Next Phase: Looting Social Security, 401Ks, IRAs ...
Patrick Brown wrote:

As for looting 401k's and IRAs:  If the dollar were backed by gold, then I'd worry about them taking such steps.  But, since the dollar doesn't mean anything, there is no need to raid these programs.  They can just turn on the magical printing press.  Much easier politically.

I think the point that this fails to address is that inflation IS the equivalent of confiscating the value of one's savings account or 401K.  I fully believe that 401K and IRA programs will be raided, but that it will be done in the most covert way.  If the hard earned money you put in the bank today is worth nothing tomorrow, it's value has been confiscated.

Of all people, Alan Greenspan, wrote an amazing article explaining that without a gold standard, the government is free to use inflation to purposely move wealth away from people who save their money.

"In the absence of the gold standard, there is no way to protect savings from confiscation
through inflation. There is no safe store of value. If there were, the government would have to make
its holding illegal, as was done in the case of gold [during the Great Depression]. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as
payment for goods, bank deposits would lose their purchasing power and government-created bank
credit would be worthless as a claim on goods. The financial policy of the welfare state requires that
there be no way for the owners of wealth to protect themselves.
This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a
scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a
protector of property rights. If one grasps this, one has no difficulty in understanding the statists'
antagonism toward the gold standard.
Alan Greenspan - 1966

Read the entire 1966 article by the master, himself: 

I http://www.ok-safe.com/files/documents/1/Gold_and_Economic_Freedom_an_Ar...

 

Amanda

 

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Farmer Brown
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Re: The Next Phase: Looting Social Security, 401Ks, IRAs ...

I totally agree, propomanda.  I was assuming we all agreed printing fiat money is just another way of taking a portion of everyone's exisiting money.  The only difference is political expediency.  I wrote about this in another thread, here: www.PeakProsperity.com/forum/time-get-out-way-what-capitalism/12461   Sorry, I don't know how to create a hyperlink but that's the URL.

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SamLinder
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Re: The Next Phase: Looting Social Security, 401Ks, IRAs ...
Patrick Brown wrote:

Sam,

This warning is some 80 years late.  The SS "fund" does not exist.  It never has.  It's a made-up concept.  The money current payers pay goes directly to beneficiaries (retirees), and since there is not enough for that, the SS "fund" is negative.  That's the way it's been since inception.  It's the biggest Ponzi scheme ever devised.  

Ditto for medicare and medicaid.  

What the government should be working on is reform of all three of these entitlement programs so as to cut outlays by about half.  It is political suicide to do so, so unless Obama really is a great leader, I doubt it will happen.  The likely soluton is to print more money.

As for looting 401k's and IRAs:  If the dollar were backed by gold, then I'd worry about them taking such steps.  But, since the dollar doesn't mean anything, there is no need to raid these programs.  They can just turn on the magical printing press.  Much easier politically.

I find the likelihood of them raiding private security-boxes at banks in search if gold, and making gold possession or sale (except to the government) illegal, which is something they have done before, to be much higher.  They could be forced to do this if, for example, foreigner banks stop lending us money.

Hi Patrick,

It's the biggest Ponzi scheme ever devised.

I absolutely agree with you. I found the article interesting but was dismayed that the author acted as if there was actually an account containing Social Security funds. I remember seeing a show about the Social Security Fund some time ago - might have been 60 Minutes or a 20/20 program. Anyway, the person in charge showed the reporter where all the "money" was kept. It was nothing but a filing cabinet containing a bunch of IOU's. The article's author incorrectly stated the following (emphasis mine):

Actually, the government has already spent their money. Every year the
Treasury has borrowed the surplus revenue collected by Social Security

and spent the money on other purposes--whatever presidents and Congress
decide, including more tax cuts for monied interests. The Social
Security surplus thus makes the federal deficits seem smaller than they
are--around $200 billion a year smaller. Each time the government dipped
into the Social Security trust fund this way, it issued a legal
obligation to pay back the money with interest whenever Social Security
needed it to pay benefits. 

That's a crock. As you well know, the Treasury has "borrowed" (read: stolen) all the revenue collected by Social Security.

Since I'm now beginning to draw a Social Security check (having achieved this magical age of 65), I always have this nagging fear in the back of my head that the government will yank away one leg of the 3-legged stool we were told for so many years to make sure we had as part of our retirement planning (pension and savings being the other two).

To say I'm a bit miffed with the whole thing would be quite an understatement!

I find the likelihood of them raiding private security-boxes at banks
in search if gold, and making gold possession or sale (except to the
government) illegal, which is something they have done before, to be
much higher.  They could be forced to do this if, for example,
foreigner banks stop lending us money.

I think they'll find the populace not quite as compliant as the last time they did this!

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SamLinder
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Re: The Next Phase: Looting Social Security, 401Ks, IRAs ...
propamanda wrote:

I think the point that this fails to address is that inflation IS the equivalent of confiscating the value of one's savings account or 401K.  I fully believe that 401K and IRA programs will be raided, but that it will be done in the most covert way.  If the hard earned money you put in the bank today is worth nothing tomorrow, it's value has been confiscated.

<snip>

Amanda

Amanda,

What a coincidence. Earlier today, I came across this article that talks about just this very thing - you may find it an interesting read:    http://www.financialsense.com/fsu/editorials/amerman/2009/0212.html

However, be aware that he is only providing Part-1 and that he wants you to sign up
for a free subscription to read the subsequent parts. It may be legitimate - or not. Undecided

Farmer Brown's picture
Farmer Brown
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Re: The Next Phase: Looting Social Security, 401Ks, IRAs ...

 Sam,

Unfortunately, people like you, i.e., current beneficiaries, are the ones most likely to be hurt be either cutting programs or funding them via fiat-money inflation.  

I'm only 37, and as far as I'm concerned, I am not pretending that SS will be around when I'm 65 (or 165 - if that becomes the new retirement age!) .  What scares me is what effects hyperinflation or program funding cuts will have on existing beneficiaries.  Anyone who relies on this income stream for any significant portion of their retirement, will be in serious trouble. 

What do you think will happen?  Will grandparents move in with children or grand children?  Will everything just collapse, the SHTF, and all bets are off?  Grab your guns and your Twinkies?  How are we going to get out of this?  

Just curious how you see it as a current beneficiary.  

Also, in another thread we ended up debating something (I can't even remember what), but forgot to respond to your last post, which I do remember I totally agreed with!

Cheers,

Patrick

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Re: The Next Phase: Looting Social Security, 401Ks, IRAs ...
Quote:

I remember seeing a show about the Social Security Fund some time ago -
might have been 60 Minutes or a 20/20 program. Anyway, the person in
charge showed the reporter where all the "money" was kept. It was
nothing but a filing cabinet containing a bunch of IOU's.

From usatoday.com in 2005:

These 2 quotes struck me the most:

 

Quote:

Sen. Jon Corzine, D-N.J., a former investment
banker, accused Bush of misleading the public. "U.S. Treasury
securities have the ability to be paid under any circumstances based on
the ability of the government to print money," he said.

"What did (Bush) expect to see there? Gold?"
asked Dean Baker, a liberal economist who says Social Security does not
face a financial crisis. "The trust fund contains government bonds that
are just like any other government bonds."

 

http://www.usatoday.com/news/washington/2005-04-05-trust-fund_x.htm

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Re: The Next Phase: Looting Social Security, 401Ks, IRAs ...

Oh man.

Thanks, Sam.   I found the article you posted (http://www.financialsense.com/fsu/editorials/amerman/2009/0212.html) to be really interesting.

And in a way, truly disturbing.

      "Bernanke got his nickname of “Helicopter Ben” from a flippant comment he made, in which he dismissed deflationary fears with a joke about dropping money from a helicopter if needed. This is a very important joke, with drastic implications for your personal net worth.  

 . . .

     The Fed is creating money at a rate never seen before, trillions of dollars a month, effectively out of thin air. The Fed typically doesn’t do this, because, of course, such actions rapidly destroy the value of the currency. But if the person in charge of the money supply understands that destroying the value of the currency is how you prevent deflationary spirals from getting started – and believes massive and fast government intervention is the best way to stop an incipient depression before it gets any worse – then much of what the Fed has been doing becomes more understandable."

 

 

 

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Re: The Next Phase: Looting Social Security, 401Ks, IRAs ...

Quick question here: Are we forced to participate in SS? Isn't there some way you can opt out? Is there a form to fill out that says, "Thanks, but no thanks."? I know of a couple of different people over my lifetime that are not "in" SS. How was this possible? Any hints, ideas, instructions? At this point, it seems really stupid to continue to pay into a black hole. But, having said that, maybe there is some logic at work because, assuming they do pay you when you reach 65, it would be in inflated dollars, right? So, maybe it is the least safe "safe haven"? Please, someone bring clarity to this, if possible.

Many thanks, in advance- Tim 

 

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Re: The Next Phase: Looting Social Security, 401Ks, IRAs ...

horstfam,

As far as I understand the system, and I think I understand it pretty well, there is no legal way not to contribute unless you are not drawing an income to begin with.  As for the least "safe" safe system, yeah, I suppose, as much as I agree that licking bird droppings off trees is the least "nutritious" nutritious diet.  ;)

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Re: The Next Phase: Looting Social Security, 401Ks, IRAs ...

The Social Security program is currently running a surplus. In other words, payroll tax revenues into the program exceed expenditures (benefits paid out). According to Social Security System actuaries, this is likely to continue until about 2017, eight years from now (the dismal current economic climate might adversely affect this outcome). The annual Social Security revenue surplus has consistently been spent by Congress; in turn the U.S. Treasury issues "IOUs" that comprise the so-called Social Security Trust Funds. Hence the filing cabinet(s) referenced elsewhere in this thread that house the "trust funds". The "value" in the Social Security Trust Funds is a legitimate claim upon the federal government to honor its promises.

In about 2017 or thereabouts, the system will slip into a deficit mode, after which benefits paid out each year will exceed payroll tax revenues. The Social Security Trust Funds -- according to the official position -- will at that point be drawn upon to make up the deficit. The trust funds are projected to last until somewhere around, say, 2040 or 2042 (being precise isn't so important; it might as well be 2025 or 2030). The official position implies that the crisis does not come until the Social Security Trust Funds are exhausted. This is misleading.

The Social Security Trust Funds contain no actual money or assets other than a promise to pay. That promise is underwritten by the U.S. Treasury. When, roughly eight years from now, the Social Security Administration calls upon the U.S. Treasury to make good on the Trust Funds to cover the system's annual cash deficit, that money must come from somewhere. As has been said so many times and so eloquently in various threads on this website, the most likely outcome will be that the Fed makes the money available for this and other spending demands by printing it. If you or I write a check in payment of goods and services, we are expected to have money in the bank to cover it. The Fed can write checks on thin air -- a bank account with a zero balance -- and its checks are honored just like yours and mine. This works pretty well as long as the Fed keeps the money supply growing at about the same pace as national economic growth. A fiat money system can theoretically be made to work, given a commitment to fiscal discipline on the part of the central bank and national treasury. But that's the ideal; we must live in the real world, in which fiat money systems are hopelessly corrupt. I won't go into this further because I believe readers of this website understand the shortcomings of a fiat money system. Please note that I am not addressing the fractional reserve banking system. This post is already too long.

The somewhat pessimistic outlook for Social Security (I'm typing this at you in measured tones) is positively optimistic compared to the fiscal train wreck that is Medicare. In a word, Medicare is toast. National health care policy is a special interest of mine. I wrote my master's thesis on the subject before Noah built the Ark (hey, it seems that long ago!). I need to keep this short, so suffice it to say that health care rationing is in our future, and it will be ugly. God help us.

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Re: The Next Phase: Looting Social Security, 401Ks, IRAs ...
Patrick Brown wrote:

Sam,

Unfortunately, people like you, i.e., current beneficiaries, are the ones most likely to be hurt be either cutting programs or funding them via fiat-money inflation.  

I'm only 37, and as far as I'm concerned, I am not pretending that SS will be around when I'm 65 (or 165 - if that becomes the new retirement age!) .  What scares me is what effects hyperinflation or program funding cuts will have on existing beneficiaries.  Anyone who relies on this income stream for any significant portion of their retirement, will be in serious trouble. 

What do you think will happen?  Will grandparents move in with children or grand children?  Will everything just collapse, the SHTF, and all bets are off?  Grab your guns and your Twinkies?  How are we going to get out of this?  

Just curious how you see it as a current beneficiary.  

Also, in another thread we ended up debating something (I can't even remember what), but forgot to respond to your last post, which I do remember I totally agreed with!

Cheers,

Patrick

Hi Patrick,

Unfortunately, people like you, i.e., current beneficiaries, are the
ones most likely to be hurt be either cutting programs or funding them
via fiat-money inflation.  

Thank you for the cheerful news - maybe I should just invest my dwindling SS funds in case lots of single-malt scotch!  Tongue out

 

I'm only 37, and as far as I'm concerned, I am not pretending that SS
will be around when I'm 65 (or 165 - if that becomes the new retirement
age!) .  What scares me is what effects hyperinflation or program
funding cuts will have on existing beneficiaries.  Anyone who relies on
this income stream for any significant portion of their retirement,
will be in serious trouble. 

I used to wonder if SS would be around for me in its current form. So far, I've been lucky. How long will it continue? Who knows? Here's something to think about: The Baby Boomers, of which I am slightly out in front by two years, have had a tremendous effect on our society ever since they started appearing in 1946. This population bulge has been responsible for a lot of the changes this country has seen as they moved through the decades. If you think for one minute that they are going to quietly stand by and watch their government destroy a portion of their retirement............................

Inflation is definitely an issue. With the trillions of dollars being injected into the system, I don't see how it can't have an effect. Remember the old, but simple, definition. Too much money chasing too few goods. From a lot of the reading I've done, the claim is that government can rein in inflation if they move quickly enough. Will our government be that clever? I wouldn't put up any gold or silver to bet they are. So, there again - possibly rough times ahead. In the CC, Chris said the next 20-years will be unlike anything we've seen before. I believe him - the only question is how long, and how violent, of a roller coaster ride will it be until we pull back into the station. (Ladies and Gentlemen - place your bets, please!)

 

What do you think will happen?  Will grandparents move in with children
or grand children?  Will everything just collapse, the SHTF, and all
bets are off?  Grab your guns and your Twinkies?  How are we going to
get out of this?  

Just curious how you see it as a current beneficiary.  

Any, or all, of the above - depending upon your individual situation. Personally, I don't think the whole system will collapse completely nor do I think I'll need to grab a gun and Twinkies (although the latter might be a good idea anyway!). My expectation is that our country (and the rest of the world) will go through some rocky times then gradually pull out of this gawdawful mess - though it may take a couple of years (or more).

 

Will grandparents move in with children or grand children?

I imagine that will happen in many cases as a large number of people lose their homes. But, it won't happen to everyone - after all, who would we all move in with? (Don't tell our daughter, but we've got our eyes on their spare bedroom, just in case.  Wink)

A number of site members have chosen to disconnect from the Matrix (as Chris M. and Damnthematrix have done) as their way of preparing for what may come. As I've said before, I admire and respect their choice and wish them well. Perhaps they will be proven right - or not. Undecided

I'm of the "Shelter in Place" school of thought. Most of us are unable, for one reason or another, to buy land and start farming again as our forefathers did. I think "Dogs" said it best in the "Civilization! - *Some Restrictions Apply" thread, post #18 (http://www.peakprosperity.com/forum/civilization-some-restrictions-apply...).

 

Also, in another thread we ended up debating something (I can't even
remember what), but forgot to respond to your last post, which I do
remember I totally agreed with!

That's ok - I can barely remember what I had for breakfast yesterday, so I'm glad we agreed on whatever it was! Laughing

 

Remember, like the weatherman, the above is just one man's prediction. If my prognostication is as good as theirs, don't believe a word I say! Sealed

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SamLinder
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Re: The Next Phase: Looting Social Security, 401Ks, IRAs ...
BSV wrote:

<snip>

The somewhat pessimistic outlook for Social Security (I'm typing this at you in measured tones) is positively optimistic compared to the fiscal train wreck that is Medicare. In a word, Medicare is toast. National health care policy is a special interest of mine. I wrote my master's thesis on the subject before Noah built the Ark (hey, it seems that long ago!). I need to keep this short, so suffice it to say that health care rationing is in our future, and it will be ugly. God help us.

Sigh............... Another thing for me to worry about. Good thing I don't lose sleep over this stuff - I'd have been dead years ago! (Where the heck did I put that single-malt scotch!)

BSV - you are absolutely correct in everything you said. It's times like these that I wish I was an ostrich so that I could put my head in the sand and wait until all the bad things went away! ('course by that time, I would have suffocated..............)

Welcome to the mad house. Cool

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SamLinder
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Re: The Next Phase: Looting Social Security, 401Ks, IRAs ...
horstfam wrote:

Quick question here: Are we forced to participate in SS? Isn't there some way you can opt out? Is there a form to fill out that says, "Thanks, but no thanks."? I know of a couple of different people over my lifetime that are not "in" SS. How was this possible? Any hints, ideas, instructions? At this point, it seems really stupid to continue to pay into a black hole. But, having said that, maybe there is some logic at work because, assuming they do pay you when you reach 65, it would be in inflated dollars, right? So, maybe it is the least safe "safe haven"? Please, someone bring clarity to this, if possible.

Many thanks, in advance- Tim 

 

Tim,

Here's some interesting statistics about who must participate in SS. Visit the wiki link below for even more info about SS.

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

Dates of coverage for various workers

  • 1935 All workers in commerce and industry (except railroads) under age 65.
  • 1939 Age restriction eliminated; seamen, bank employees added; additional domestic workers and food-processing workers removed
  • 1946 Railroad and Social Security earnings combined to determine eligibility for and amount of survivor benefits.
  • 1950 Regularly employed farm and domestic workers. Nonfarm
    self-employed (except professional groups). Federal civilian employees
    not under retirement system. Americans employed outside United States
    by American employer. Puerto Rico and Virgin Islands. At the option of
    the State, State and local government employees not under retirement
    system. Nonprofit organizations could elect coverage for their
    employees (other than ministers).
  • 1951 Railroad workers with less than 10 years of service, for all
    benefits. (After October 1951, coverage is retroactive to 1937.)
  • 1954 Farm self-employed. Professional self-employed except lawyers,
    dentists, doctors, and other medical groups. Additional regularly
    employed farm and domestic workers. Homeworkers. State and local
    government employees (except firemen and policemen) under retirement
    system if agreed to by referendum. Ministers could elect coverage.
  • 1956 Members of the uniformed services. Remainder of professional
    self-employed except doctors. By referendum, firemen and policemen in
    designated States.
  • 1965 Interns. Self-employed doctors. Tips.
  • 1967 Ministers (unless exemption is claimed on grounds of
    conscience or religious principles). Firemen under retirement system in
    all States.
  • 1972 Members of a religious order subject to a vow of poverty.
  • 1983 All federal civilian employees hired after 1983; all employees
    of nonprofit organizations. Covered state and local government
    employees prohibited from opting out of Social Security.
  • 1990 Employees of state and local governments not covered under a retirement plan. [64]

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