Editor’s Note: Thought I would pass along this second article by analyst Frank Koster. (If you missed his first article, read it HERE.) While the possibility of the government “borrowing” from individual savings accounts may seem outlandish, you may find this history of government asset seizures to be interesting and useful.
By Frank Koster, Special Correspondent
Just so I am not at risk of alienating 50% of my readership, I just want to very quickly say – we don’t have a political bias here at Wyatt Investment Research.
As investors, our only goal is to look at what happens in the world around us and react.
Our team is diverse here – and we span all age ranges and backgrounds. There is no centralized narrative we’re trying to push. If I ever delve into politics, it’s only to tell you what people are saying and what it might mean for your money and investment strategies.
With that out of the way (no pitchforks, please), I do want to bring your attention to something a member of President-elect Biden’s coronavirus task force said recently . . .
His name is Ezekiel Emanuel, and he thinks an eight-week NATIONAL lockdown is necessary to control the pandemic.
As an advisor to Biden, you can be sure he would probably be suggesting this to the President Elect.
In similar fashion, Michael Osterholm (another Biden advisor)…
… says a US lockdown of four to six weeks could control the pandemic and revive the economy.
Now – to be clear, they are suggesting that, after a Biden inauguration, he should impose a nationwide lockdown on ALL 50 States.
Understandably, in the midst of what is turning out to be the greatest economic catastrophe in a century, this has got a lot of people worried.
To understand what my team and I are doing about it, click here to reserve your seat at our client-only webinar on strategies for profiting in this rapidly shifting environment.
Now, when it comes to questions of “how will people work” or “how can businesses survive,” the answer is they will hand more free money out (to everyone).
Of course, the next question is “With whose money?”
Aside from the Fed having printed more money in the single month of June than the United States had printed in its first 200 years of operation…
They would like to print much, much more.
This is a BIG risk to any cash savings you have (click here to learn how you can mitigate inflation and preserve your portfolio’s value with peace of mind).
But there is another thing that many overlook.
A risk that most people think “can’t happen.”
It’s the risk of the United States federal government of going into your 401(k), IRA, or even your savings account, and “borrowing” it to pay for social programs and wealth redistribution schemes.
And that is exactly the possibility that is being discussed now as well.
Neel Kashkari – the president of the Federal Reserve of Minneapolis – is the person suggesting it, to be exact.
Am I saying this is definitely going to happen?
No… but it HAS happened before.
In the 1930s, the President of the United States – FDR – confiscated everyone’s gold savings under penalty of imprisonment and heavy fines.
He paid everyone $26.67 per ounce of gold he confiscated.
Then, after all the gold was collected, he immediately increased the price per Troy Ounce of gold to $35, dropping the purchasing power of all Americans’ cash holdings by nearly 40% literally overnight.
And gold was ILLEGAL to own or possess until the early 1970s.
That happened right here in the United States, and it was so recent… that if you were born any time before 1985, you probably had a grandfather or a father who watched it happen.
In more recent times, countries that find themselves in a debt crisis have resorted to dipping into citizens’ retirement accounts.
Now, you may think that the government is not “allowed” to go take money from your personal savings account.
But they are.
Remember – when you put cash in a bank, it now belongs to the bank. The bank OWES you the money back, but it is under no obligation to actually give it back to you.
And at any time, the federal government can go and take that money for a variety of reasons.
The story is similar for your IRA. Understand – at any time… the federal government can change the rules of your IRA.
Just consider the following.
A HISTORY OF HIGHWAY ROBBERY
Here’s a “short” list of countries that couldn’t resist the temptation to take from people’s savings and investment accounts.
In 2010, the country’s government told its citizens to either remit their individual retirement savings to the state…
… or lose the right to the basic state pension. Meanwhile, they still had an obligation to pay contributions for it. The result? The government gained control over $14bn of people’s hard-earned money.
In 2009, the Irish government seized €4bn for rescuing banks… And then €2.5bn in 2010 to support the bailout of the rest of the country.
In 2015, President Evo Morales nationalized $10.2 billion held in individual retirement accounts.
Argentina’s famous corralito
Argentina’s government FROZE BANK ACCOUNTS and forbade withdrawals from US dollar-denominated accounts. All in the name of “saving the country.”
In 2014, the Polish government seized more than half the assets held in individual accounts.
The Bulgarian government came up with the idea of having $300m of private, early retirement savings transferred to the state pension scheme. Thankfully, trade unions protested and the government “only” used about 20% of the original plan.
In 2010, the French parliament decided to take €33bn from the national reserve pension fund FFR to reduce the short-term pension scheme deficit
This way, they would use the retirement savings intended for the years 2020-2040 earlier. Meaning, in the years 2011-2024.
And the government would be able to spend the saved-up resources on whatever else they wanted.
But what about the US?
I already talked about FDR…but has anything like that happened recently?
WHEN OBAMA THOUGHT YOUR IRA WAS TOO BIG
In April 2013, Obama proposed to cap retirement accounts at $3 million…
So that the government would raise $9 billion over the next decade.
Or take what happened in 2011 and 2012.
The Treasury Department borrowed from federal workers’ retirement funds… as our leaders debated raising the nation’s legal debt limit.
These were the fifth and sixth times in 20 years it had borrowed federal workers’ retirement money.
Also, in 2008, a U.S. House of Representatives subcommittee heard testimony in favor of scrapping 401(k) plans and switching to “guaranteed retirement accounts.”
Workers would put in 5% of their pay and the government would deposit $600 a year and guarantee a 3% return.
This way, they could save the $80 billion the government spends each year on 401(k) tax incentives.
In short: when the government is revenue-starved…our savings look like irresistible piles of cash.
And with a $27.2 TRILLION national debt and COVID destroying the economy. It’s no secret that the government needs money. A lot of it.
Is there an easier pool of cash than Americans’ savings?
As you’ve seen before, the possibility is being discussed as we speak. And it could very well crush your savings and dreams of retirement.
So what do I recommend?
I recommend you make a lot of money FAST because time is not on your side.
I’m talking about amassing as much money as possible, as quickly as possible.
Then? I suggest taking a portion of that money and getting into the most explosive growth trends of the next 10 years.
I’m talking about growth trends that can scream up 5,000% or more – no matter what happens in the world.
These trends are too strong to be affected by political upheaval, protests, hyper-inflation… even all-out war.
Finally, I suggest you lock up your wealth in an untouchable location that proceeds to grow and yield extraordinary gains 24/7.
Of course, all that sounds easier said than done, but my team and I have developed a proprietary three-step investment plan that checks all those boxes
It’s called the Trinity Retirement Blueprint, and it leverages your current subscriptions.
I’ll see you there.