Obama Introduces Another Ponzi Scheme Called MyIRA Retirement Confiscations Coming!

Friday, January 31st, 2014

I’m not big on watching State of the Union speeches, but I did read the highlights of the most recent one… and one thing in particular grabbed my attention.

President Obama proposed a plan called “MyRA,” which is shorthand for “my IRA.” It’s supposed to be similar to a Roth IRA account offered by employers.

Since this portion of Obama’s speech was short, I will quote it here in full:

“Let’s do more to help Americans save for retirement. Today, most workers don’t have a pension. A Social Security check often isn’t enough on its own. And while the stock market has doubled over the last five years, that doesn’t help folks who don’t have 401ks. That’s why tomorrow I will direct the Treasury to create a new way for working Americans to start their own retirement savings: MyRA. It’s a new savings bond that encourages folks to build a nest egg. MyRA guarantees a decent return with no risk of losing what you put in. And if this Congress wants to help, work with me to fix an upside-down tax code that gives big tax breaks to help the wealthy save, but does little to nothing for middle class Americans. Offer every American access to an automatic IRA on the job, so they can save at work just like everybody in this chamber can.”

The idea being promoted with this plan is that people can elect to start out with a small amount of money and have contributions as low as $5 deducted from their paychecks. This is all in the name of the poor, because they often don’t have enough money to contribute to retirement plans.

I think a cynic could criticize this whole plan from a lot of different angles. Ironically, I was working on an article about the possibility of 401(k) confiscations in the future, and this proposal by Obama could be seen as a subtle first step towards the government getting its hands on retirement accounts.

It starts out as voluntary… and eventually will be pushed as a mandate.

Funding Deficits

While eventual 401(k) confiscations could be part of the agenda of MyRA, I think there is a bigger reason for Obama to push this plan. It’s actually a short-term solution for Obama to partially fund the deficit, as well as a longer-term plan to kick the can further down the road.

Obama’s plan says the funds would be backed by the U.S. government. He claims these will be no-risk investments. But if they are investments, somebody has to bear the risk…

The way I see it, the government is trying to get millions of people to hand over their money to buy government debt. Once this is achieved through MyRA, it wouldn’t surprise me if it were offered to all 401(k) holders.

Again, it will start out voluntary, but perhaps it will eventually be pushed as mandatory. And it will become easier to push if there is some kind of a major stock market correction.

Obama’s speech happened to occur the night before the Federal Reserve announced a continuation of its tapering — which is nothing more than a reduction in its rate of monetary inflation. So while the Fed continues to create money out of thin air, it is doing less of it.

This means the Fed will not be buying up as much government debt. And this means the deficit will have to be funded more by foreign central banks or investors.

Some of the politicians in Washington, D.C. are starting to see the writing on the wall. They realize the Fed can’t support them forever — or at least not to the same extent it has been. The government does not want to cut spending and is therefore trying to come up with other ways to raise money.

While this new MyRA plan will not add up to a lot at the beginning — particularly if it really is just low-income people who start out — it will eventually add up to many billions of dollars in just a few years. And if the government can get the average 401(k) investor to start buying this “guaranteed” fund down the road, then it could be looking at hundreds of billions of dollars.

MyRA vs. Social Security

What are the differences between MyRA and Social Security? One difference is that MyRA will be voluntary — at least for now.

Another is that your MyRA account will have your name on it… although it is not too different from Social Security in that respect. Social Security does tell you how much you can expect to receive when you retire.

But there are also striking similarities between the proposed MyRA and Social Security. The main similarity is that the Treasury will take your money and spend all surplus funds.

For many decades, the government has spent the surplus money from Social Security. The government would collect Social Security taxes in excess of what it had to pay out in Social Security benefits, and the rest would be dumped into the general fund and spent.

There is no Social Security lockbox. There is a Social Security trust fund filled up with a bunch of IOUs from the government. Social Security holds more government debt than China.

This is how Bill Clinton was able to claim budget surpluses in the late 1990s. The government was still running a deficit, but the surplus funds from Social Security were enough to cover it. It has all been an accounting gimmick.

But with the major recession that began in 2008 came smaller than expected tax collections. In addition, we have seen the start of baby boomers hitting retirement age.

So in the last few years, we have seen an end to Social Security surpluses. And as Social Security goes further into deficit, the government is desperate for new funds…

What better way than to start a whole new Social Security-like Ponzi scheme?

Now the government can get more money for the Treasury to spend and write more IOUs. This time, the IOUs will be held by individual investors in their MyRA accounts instead of the Social Security trust fund.

The government is doubling down on its bets. Instead of just sabotaging Social Security, the politicians figure they can get away with the same trick again. The saying “fool me once, shame on you; fool me twice, shame on me”really applies here.

Let’s see if the American people are big enough suckers to fall for this.

Interest Rate Risk and Government Risk

These “investments” will put the taxpayers on the hook for more risk. When the government guarantees something for nothing, you can be sure someone else is paying something for nothing. How can Obama promise “a decent return” with a guarantee of no risk?

There has to be a risk to somebody, and that risk is being pushed onto the American people — particularly taxpayers. However, the risk isn’t exclusive to taxpayers. Anyone who has U.S. dollars is taking on risk too due to the threat of more inflation.

If the government is going to issue the equivalent of bonds to MyRA investors, what will happen if interest rates rise?

When interest rates go up, the price of a bond goes down. So unless you hold that bond to maturity, the price of your investment will be lower. And if interest rates rise and you do wait for a bond to mature, then you will likely get paid back in money that has lost significant purchasing power.

In the end, there are really only three likely scenarios…

One is that the Fed inflates the money supply a lot, and the MyRA investors lose money through a depreciated currency.

The second is that taxpayers foot the bill and bail out the government, which then pays on its promises to the MyRA investors.

The third possibility is an outright default, which means MyRA investors will lose all of their investments. While I don’t see this happening in the near term, anything is possible in the long term.

Though it doesn’t seem likely, there is also a fourth possibility that is even more remote…

The fourth scenario is that MyRA investors turn their money over to the government, the government keeps their money tucked away safe and sound, and it returns it all as promised.

Are there any fools out there who believe this one?

A Powerful Weapon of Financial Warfare—The US Treasury’s Kiss of Death

by Nick Giambruno, Senior Editor | April 15, 2015
It’s an amazingly powerful weapon that only the US government can wield—kicking anyone it doesn’t like out of the world’s US-dollar-based financial system.

It’s a weapon foreign banks fear. A sound institution can be rendered insolvent at the flip of a switch that the US government controls. It would be akin to an economic kiss of death. When applied to entire countries—such as the case with Iran—it’s like a nuclear attack on the country’s financial system.

That is because, thanks to the petrodollar regime, the US dollar is still the world’s reserve currency, and that indirectly gives the US a chokehold on international trade.

For example, if a company in Italy wants to buy products made in India, the Indian seller probably will want to be paid in US dollars. So the company in Italy first needs to purchase those dollars on the foreign exchange market. But it can’t do so without involving a bank that is permitted to operate in the US. And no such bank will cooperate if it finds that the Italian company is on any of Washington’s bad-boy lists.

The US dollar may be just a facilitator for an international transaction unrelated to any product or service tied to the US, but it’s a facilitator most buyers and sellers in world markets want to use. Thus Uncle Sam’s ability to say “no dollars for you” gives it tremendous leverage to pressure other countries.

The BRICS countries have been trying to move toward a more multipolar international financial system, but it’s an arduous process. Any weakening of the US government’s ability to use the dollar as a stick to compel compliance is likely years away.

When the time comes, no country will care about losing access to the US financial system any more than it would worry today about being shut out of the peso-based Mexican financial system. But for a while yet, losing Uncle Sam’s blessing still can be an economic kiss of death, as the recent experience of Banca Privada d’Andorra shows.

Andorra, a Peculiar Country Without a Central Bank

The Principality of Andorra is a tiny jurisdiction sandwiched between Spain and France in the eastern Pyrenees mountains. It hasn’t joined the EU and thus is not burdened by every edict passed down in Brussels. However, as a matter of practice, the euro is in general use. Interestingly, the country does not have a central bank.

Andorra is a renowned offshore banking jurisdiction. Banking is the country’s second-biggest source of income, after tourism. Its five banks had made names for themselves by being particularly well capitalized, welcoming to nonresidents (even Americans), and willing to work with offshore companies and international trusts.

One Andorran bank that had been recommended prominently by others (but not by International Man) is Banca Privada d’Andorra (BPA).

Recently BPA received the financial kiss of death from FinCEN, the US Treasury Department’s financial crimes bureau. FinCEN accused BPA of laundering money for individuals in Russia, China, and Venezuela—interestingly, all geopolitical rivals of the US.

Never mind that unlike murder, robbery and rape, money laundering is a victimless, make-believe crime invented by US politicians.

But let’s set that argument aside and assume that money laundering is indeed a real crime. While FinCEN seems to enjoy pointing the money-laundering finger here and there, it never mentions that New York and London are among of the busiest money laundering centers in the world, which underscores the political, not criminal, nature of their accusations.

And that’s all it takes, a mere accusation from FinCEN to shatter the reputation of a foreign bank and the confidence of its depositors.

The foreign bank has little recourse. There is no adjudication to determine whether the accusation has any merit nor is there any opportunity for the bank to make a defense to stop the damage to its reputation.

And not even the most solvent foreign banks—such as BPA—are immune.

Shortly after FinCEN made its accusation public, BPA’s global correspondent accounts—which allow it to conduct international transactions—were closed. No other bank wants to risk Washington’s ire by doing business with a blacklisted institution. BPA was effectively banned from the international financial system.

This predictably led to an evaporation of confidence by BPA’s depositors. To prevent a run on the bank, the Andorran government took BPA under its administration and imposed a €2,500 per week withdrawal limit on depositors.

However, it’s not just BPA that is feeling the results of Washington’s displeasure. FinCEN’s accusation against BPA is sending a shockwave that is shaking Andorra to its core.

The ordeal has led S&P to downgrade Andorra’s credit rating, noting that “The risk profile of Andorra’s financial sector, which is large relative to the size of the domestic economy, has increased beyond our expectations.”

For comparison, BPA’s assets amount to €3 billion, and the Andorran government’s annual budget is only €400 million. There is no way the government could bail out BPA even if it wanted to.

The last time there was a banking crisis in a European country with an oversized financial sector, many depositors were blindsided with a bail-in and lost most, or in some cases, all of their money over €100,000.

While the damage to BPA’s customers appears to be contained for the moment, it remains to be seen whether Andorra turns into the next Cyprus.

BPA is hardly the only example of a US government attack on a foreign bank. In a similar fashion in 2013, the US effectively shut down Bank Wegelin, Switzerland’s oldest bank, which, like BPA, operated without branches in the US.

To appreciate the brazen overreach that has become routine for FinCEN, it helps to examine matters from an alternative perspective.

Imagine that China was the world’s dominant financial power instead of the US and it had the power to enforce its will and trample over the sovereignty of other countries. Imagine bureaucrats in Beijing having the power to effectively shut down any bank in the world. Imagine those same bureaucrats accusing BNY Mellon (Bank of New York is the oldest bank in the US) of breaking some Chinese financial law and cutting it off from the international financial system, causing a crisis of confidence and effectively shuttering it.

In a world of fiat currencies and fractional reserve banking, that is a power—a financial weapon—that the steward of the international financial system wields.

Currently, that steward is the US. It remains to be seen whether or not the BRICS will learn to be just as overbearing once their parallel international financial system is up and running.

In any case, the new system will give the world an alternative, and that will be a good thing.

But regardless of what the international financial system is going to look like, you should take action now to protect yourself from getting caught in the crossfire when financial weapons are going off.

One way to make sure your savings don’t go poof the next time some bureaucrat at FinCEN decides a bank did something that they didn’t like is to put the money into hard assets in safe jurisdictions. Physical gold and silver stored offshoreand foreign real estate fit the bill.

Until next time,

Nick Giambruno
Senior Editor

Questions or comments? Send them to service@internationalman.com.

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“If tyranny and oppression come to this land, it will be in the guise of fighting a foreign enemy.”

~James Madison

I believe we have a moral obligation to starve the beast! Tax day 2015

On August 5, 1861, facing rapidly deteriorating economic conditions and a horrible defeat at Bull Run, President Abraham Lincoln signed the Revenue Act of 1861 into law.

It was the first time in US history that the federal government would charge an income tax on its citizens. But Lincoln felt that it was vital to fund what would become one of the most unconscionably costly conflicts in US history.

The original law in 1861 set a flat tax rate of 3% on incomes above $800.

(Using the gold price as a benchmark, this is equivalent to 42.26 ounces, or roughly $50,500 in today’s dollars. Not that there’s any inflation.)

The income tax was tweaked occasionally throughout the war, and it lasted for a few years afterwards to help fund reconstruction.

But it was ultimately lifted in 1873 during the administration of Ulysses S. Grant. And aside from a single episode in 1894, there would be no income tax in the United States of America for nearly 40 years.

Ironically, during this 40 year period the United States emerged as the largest, most powerful economy in the world.

And they achieved this with no income tax. No inflation. And very little public debt.

Today it’s entirely different. The dollar has lost over 99% of its value. And US debt is more than has ever been accumulated by any other nation in the history of the world.

Entitlement program costs are soaring. The US government’s own figures estimate that the long-term funding gap for Social Security, Medicare, etc. is at $40 trillion. Many private estimates are several times that amount.

This is obviously concerning.

But what’s even more concerning is the complete lack of care and attention this issue receives.

Politicians continue to spend money with a dangerous sense of entitlement.

They believe that since they’re “America” they can do whatever they want without consequence, as if the laws of the financial universe don’t apply.

And their judgement is clearly lacking.

They already borrow money and go deeper into debt just to pay the interest on the debt they already owe.

And yet they continue to spend, often on the most destructive things like bombs, drones, and war.

They throw money at failed programs. They hire armies of bureaucrats who make life more difficult for productive citizens. And they equip legions of police and armed enforcers to intimidate the population into submission.

All of this is ultimately supported by taxes. Your taxes.

You see, the creditworthiness of any nation is underpinned by its ability to raise and collect taxes.

If investors feel like a government has an intimidating-enough system of taxation that can bully citizens into compliance, they feel comfortable loaning a government money.

It’s a very simple calculus: when the US government goes into debt, YOU are the collateral.

Whether you realize it or not, whether you signed up for this obligation or not, you’re on the hook. You’re the guarantor.

It’s obscene when you think about it; these people have carte blanche to ruin the country, and then they stick you with the bill.

Remember this as you’re standing in line at the post office to send off that 1040.

Continuing to pay taxes into this system only encourages them.

Yeah sure there’s an election coming up in the Land of the Free. It’s looking to be another wide open field among a bunch of insiders who are responsible for causing all the problems.

This vote (as we’ll discuss down the road) is completely meaningless.

What is tremendously impactful, however, is how you ‘vote’ with your dollars.

Every day you are making an election. By choosing one brand over another in the supermarket, or by buying an iPhone versus an Android, you are essentially voting for the better candidate.

Over time, the good candidates who have a history of providing quality products and services rise to the top. And the bad candidates are starved of the resources they need to go on.

It’s time to starve these people of the resources they need. Continuing to pay them every year only encourages them. It sends a signal that we support their decisions.

Cutting off their resources is a far more effective strategy than checking a box in a voting booth.

No, I’m not suggesting that anyone commit tax evasion or stop filing a tax return. This is a one-way ticket to the jailhouse.

But I personally feel a moral obligation to arrange my affairs in a way which maximizes every deduction possible and to pay the absolute minimum that is required by law.

There are countless options… from using tax-deferred options like IRAs or foreign corporations, to even moving abroad.

US tax code, for example, provides a clear path for Americans to move overseas and pay no tax on the first $100,800 in foreign earned income.

Or you can move to Puerto Rico and pay absolutely nothing on investment income or corporate dividends.

Most people don’t realize how many options they have at their disposal to cut what they owe.

— Simon Black

And in my mind, it not only makes obvious financial sense, but it’s one of the best weapons anyone has to fight back.

Comrades Roosevelt and Gregory Peck: When Hollywood Sent Its Scripts For Stalin’s Approval

Very poignant and well written Lada! That’s so true, public perception in the West about Russia has been totally manipulated by MSM. Now they can’t deny their own history, Hollywood has the proof on silver screen that Russia is a friend and ally during WWII, LOL!
Now with all this negative press against Putin, hardly anyone believes it any more, Putin is “Man of the Year” for the last 15 years straight, and PEOPLE all over the world love, admire, or at least appreciate his leadership and peacekeeping efforts, unlike the warmongering West.
Also well noted is the propaganda’s always one-sided. Washington always bashes Russia relentlessly, and Moscow never resorts to childish name calling and bullying. Reason and maturity prevails!!!
Hahaha, Washington promoting the Soviet Union, I Love It! That was indeed the “Golden Era”. 🙂

Futurist Trendcast

We are approaching the 70th Anniversary of the Great Victory over German Nazism and associated invaders (also known in the Russian world as the Great Victory in the Great Patriotic War), which will be celebrated in grand style on Moscow’s Red Square on May 9th, 2015. I thought it would be a terrific idea to do a few posts commemorating this date; in the future, I may do a separate piece presenting some of the most famous and amazing Russian songs and films. These reminders are especially important, considering how many out there are trying yet again to re-write history, something to which I don’t take kindly. I especially don’t appreciate the ungratefulness and arrogance of all those countries whom Russians and other peoples of the Soviet Union liberated in 1944-45 at the cost of 27 million lives, endless suffering, and destroyed country.

Sabotage by the leaders of US, UK…

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