The Coming Obama Retirement Trap Has Started!

by Ron Holland

Mandatory IRAs just proposed by Obama Administration on 1/25/10 is the 1st step in stealth nationalization & forced investment of our retirement benefits to support the treasury debt market! Read the veiled report in Business Week.

A Personal Note from the Author

Dear Concerned American:

I begin with a quote from a politician who believed in an all-powerful central government and in using that power to achieve his vision for a nation. "He who has his thumb on the purse has the power." ~ Otto von Bismarck, a statesman who created the modern Germany and known as the iron chancellor.

But however well-intentioned he might have been, he built the regulatory groundwork and government institutions for a centralized federal state that was later taken over by an evil political leader who created a tyranny seldom seen in the world before, or after. The tyranny started in 1933, 35 years after Bismarck's death, was National Socialism and the leader was Adolf Hitler. All of this came after Germany's military defeat in World War One and a national debt crisis, followed by hyperinflation and currency collapse

I fear that today the control, nationalization and ultimate confiscation of trillions in private US retirement plan assets is on the horizon. Rick Santelli alluded to the possible nationalization and forced investment into treasuries on CNBC as recently as January 8, 2010. There was also similar coverage on Bloomberg and Business Week.

Reports out of Washington indicate that new retirement annuities may be promoted by Obama aides. This is just the beginning! The question every successful American with substantial retirement assets must ask is "what will you do if our retirement funds are forced to become the buyer of last resort for US treasury obligations?" Unless you believe Congress and Washington bureaucrats will do a fair job of allocating and distributing your personal retirement assets between yourself and others, you must begin now to protect your assets.

As the United States moves into a new decade of military overreach abroad and national bankruptcy at home, Washington is on a desperate search for more revenue and a solution to the future financing of the trillions in national debt obligations currently held by foreign central banks and investors. Economists, politicians and smart investors know the dollar's days as the world reserve currency are numbered, as is our ability to finance the national debt.

Although the historical government solution to unsustainable government debt loads has always been the destruction of the debts by currency depreciation and eventual hyperinflation, there is always an intermediate step used to buy more time for the politicians in power. This action, usually side-stepped and downplayed by the establishment historians paid to hide the real facts of history, is wealth confiscation. Napoleon had it right when he stated, "History is a state of lies agreed upon."

The largest source of liquid private wealth remaining in the United States is the $15 trillion in private retirement funds. The ultimate ownership, control and future of these funds has already been compromised and exchanged for the favorable tax treatment of private retirement plans. Congress writes the laws, so they can tax, penalize, hold your funds hostage and, although they'd never use the word "confiscate," use your assets at their discretion.

The retirement trap I'm writing about is only a proposal at the present time and since it may well begin in the latter years of the Obama Administration, assuming the Democrats can somehow maintain their majorities in Congress, I'm calling it the "Obama Retirement Trap." But make no mistake, the government need for current revenue and their frenzied search for liquidity to monetize their debt obligations is an unspoken quest of both political parties. The establishments of both political parties will do whatever it takes to stay in power, including the raiding and pillaging of your retirement funds.

I am not a Johnny-come-lately to the area of retirement planning. Although I've been in the investment business since the early 1970's, and often write about political and freedom-oriented issues, my background has always been in retirement planning. I've been following the government move to raid private retirement funds since the early 1980's with my The Threat of the Private Retirement System book written in 1983. I warned again about this in my 1994 book Escape the Pension Trap. The threat receded somewhat with the Bush Administration, but it is now back with a vengeance and the revenue needs of Washington will eventually trump any government promises and guarantees.

I created the first self-directed hard asset IRA account for gold and collectibles back in the late 1970's and I still remember the day when I was sitting in the office of James U. Blanchard III, a champion of liberty and sound money, in New Orleans. His National Committee to Legalize Gold spearheaded a nationwide grassroots campaign that restored the right of Americans to again own gold bullion following Roosevelt's gold confiscation during the 1930's Great Depression.

Congressman Ron Paul gave us a call to inform us that at the last minute, language had been inserted into the 1981 Economic Recovery Act, Section 314(b) ruling "collectibles" as not in the "public interest" of the United States and, therefore, prohibited from future retirement plan investments. This language promoted by Wall Street and the banks destroyed the opportunity to buy retirement investments performing best during those years of high inflation. More importantly, this section created a precedent for the Secretary of the Treasury to label any investment as not in the public interest in the future – and therefore prohibited from retirement plans.

You will be forced into another Social Security-like scheme with the proposed mandatory Guaranteed Retirement Annuity, with 5% of your salary confiscated into the program. You will also eventually find your existing retirement funds forced into the government program and you will lose your ability to invest and protect your retirement funds outside of the dollar, government bonds, and the US investment markets at some time in the future. The only questions are when and what the final details of this, the greatest potential wealth confiscation in the history of the world, will be.

My goal in writing this report is to make you aware of the threat with enough time to take some of my recommended actions to protect your retirement wealth, and thereby minimizing the Washington threat and their future confiscation efforts. Conventional retirement experts and most Wall Street investment advisors will say that I'm paranoid and crazy to advance such a theory because they want to retain the management, the fees and the commissions from your retirement investments.

The risks and threats of standing up to Washington’s wealth confiscation and aggression are great. But we have to take a stand. One of the greatest men in history I've studied was a relatively unknown, career army colonel coming from a respected family who lived right across the river from the nation's capitol. Just before the start of a war, the head of the nation offered this officer the opportunity to take command of the entire national army if he would only lead an invasion and turn against his state and people. This officer declined the offer and all that went with it. The head of the nation was so outraged that he had the officer’s home and plantation occupied, confiscated and used as a burial ground for the war dead, never to be returned to his family or their descendents.

The president was Abraham Lincoln, the colonel was Robert E. Lee and his home, called Arlington, is now known as Arlington National Cemetery right across the Potomac River from Washington, DC.

"Sirs, my name is the heritage of my parents. It is all I have, and it is not for sale. Do your duty in all things. You cannot do more, you should never wish to do less." ~ Robert E. Lee

I believe the best retirement planning advice I can offer to successful individuals is to do exactly the opposite of what the government and most retirement or investment professionals suggest. Washington always recommends what is in their best interest, as do most bankers and investment firms, the so-called financial experts who just received trillions in bailouts and guarantees with your tax dollars.

Can you appreciate the irony and hypocrisy of financial institutions like Merrill Lynch or the Bank of America, just to mention a few, who have so little respect for the American public that they can still advertise to manage your investments or even handle your day-to-day banking needs when both went technically bankrupt? They pay themselves outlandish bonuses, yet they only survive in business at all because of the billions in bailouts and guarantees paid for by you, the American taxpayers, and forced on you through the lobbyists they used to buy the bailout votes in Congress.

I'm retired from the investment business. But I want to warn the American public about the growing threat to our retirement assets and benefits from a government gone wild, desperate for revenue, and looking for funds to buy their increasingly risky and ultimately worthless treasury obligations. You've been warned, I've done my duty as an American and an expert in the field. The rest is up to you.

Key Elements of the Obama Retirement Trap

Stealth Nationalization

Following their attempt at "so-called" health care reform in 2009 and 2010 – the first step in total nationalization of health care – Washington will next turn its attention to another broken program, the private retirement system. Although both health care and the private retirement system need real reform, the government, as usual, will use the problems to expand federal control and redirect the contributions currently going into quasi-private programs back towards the bankrupt coffers of the federal government.

Your Retirement Plan Will Soon Become Washington's ATM Machine

Today over $15 trillion is sitting in tax-favored retirement plans, including $4 trillion in IRA accounts. Retirement savings make up 35% of all private assets. Washington is broke, the deficit is soaring and Congress simply can’t wait for Americans to retire so they can start taxing these funds. The politicians are tired of waiting; they need your money now.

The Trojan Horse

The nationalization will begin with a modest proposal to increase retirement security and basically create a new, third level of mandatory retirement benefits in addition to private plans and Social Security. This will be described as a Guaranteed Retirement Annuity or Account. Teresa Ghilarducci is the author of this leftist plan which first appeared in 2007 at the Economic Policy Institute: Agenda for Shared Prosperity. In 2008, she became the new Director of the Schwartz Center for Economic Policy Analysis at the New School for Social Research. In her book When I’m 64: The Plot Against Pensions and the Plan To Save Them, she hypes her retirement solution for millions who do not have adequate retirement savings. Her ultimate solution is to confiscate most of the retirement assets of successful and wealthy Americans.

In the proposal, the government will even make an annual contribution to every citizen’s account of around $600 annually, covering the unemployed, under-employed and all working Americans. The initial problem for productive, successful Americans is that Washington will require, in exchange for their contribution, that all working Americans contribute 5% of their annual salaries or income into this new "guaranteed account" managed and run by the hard-working bureaucrats at the Social Security System. Successful Americans will of course complain about losing the deduction for this contribution, which is little more than a new 5% tax on income. But this is just the beginning of the problem for Americans with substantial retirement savings and outstanding benefits.

The Devil Is In the Details

Different proposals would delay retirement age until age 64, and some even later. The guaranteed retirement annuity would be structured to allow the government to hold and invest the money. Unlike your current private plan, it would be very difficult for members to withdraw their money before and even after retirement, except over the life expectancy of the participant.

I fear, following implementation of the contributory GRA program, a future legislative action by Congress would be to end the tax deductions and tax-deferred growth of all retirement plans, thus forcing these funds into the government controlled annuity. Your forced retirement contributions would be pooled and professionally managed by Social Security. Also, beneficiaries would be cheated out of half of any benefits remaining at the death of a participant because Ghilarducci’s plan has 50% of all balances at death reverting to the Feds, not the beneficiaries.

The Confiscation Event

At some time during the next decade, a global run on treasury debt and the dollar will also likely take the American stock market down past lows not seen since the financial meltdown crisis in 2008 and 2009. The 50% to 75% stock market pullback during the actual bankruptcy of the Washington debt and paper dollar will send shock waves through retirees and current plan participants as their private retirement plan balances plummet.

At this time, Washington will "come to the rescue" and guarantee all private retirement plan market values back to pre-crisis levels. The gullible American public will overwhelmingly support this effort by switching their dwindling funds into the Guaranteed Retirement Annuity managed by the government. For the first few years, Washington will probably label those few of us who warn that Americans have lost their retirement benefits as extremists, Ron Paul paranoids and Tea Party advocates.

Then it will become crystal clear to all Americans that their retirement benefits have been given away for a promise by an evil group of plunderers who have never in their history kept a promise, a guarantee, or their word on anything. The greatest theft of wealth in the history of the world will have taken place and only those few who took heed of an early warning will still have their retirement benefits and security.

You Will Be Forced To Become The Final Buyer of Last Resort For Collapsing Washington Treasury Obligations

Although the faltering dollar could rebound in the short run, the longer-term prognosis is terminal unless Washington dramatically reduces spending and borrowing. When the global run on treasury debt and the dollar develops, the current relative minor fluctuations in values today will be replaced by a virulent death spiral of historic proportions rarely seen in world history.

Sometime in the next decade, the Washington dollar collapse will take its shameful place in history at the pinnacle of fiat currency robberies by politicians and central bankers. We will lead the world in wealth lost and future generations saddled by illegitimate government debts.

In the meantime, Americans should insulate themselves from the coming dollar and debt debacle by investing in gold bullion stored in the US, as well as outside, in secure facilities like the one offered by Global Gold Inc. in Switzerland, through mining shares, as well as through foreign currency diversification with the euro and Swiss franc. Don’t wait, take action now while you still have the opportunity to protect and preserve your wealth.

In the future, when the rest of the world’s investors, governments and central banks have lost enough purchasing power through their misguided investment in Washington treasury obligations, they will still have the luxury and financial freedom to diversify maturing treasury obligations and new funds into other non-dollar bonds, gold etc. But Americans will not have this choice. They will find that their retirement funds in the mandatory guaranteed retirement annuity will be used to purchase much of the rollover of treasury debt not repurchased by the Federal Reserve System.

The taxpayers will be forced to become the buyer of last resort in the final collapse of Washington treasury obligations. This is sort like being forced to purchase stock in AIG weeks before the final stock crash.

You Are A Narrow Target of Opportunity: Not A Grand Conspiracy

This is just another revenue generator for Washington and a payback for the unions, just like the planned nationalization of health care. The target is successful, productive Americans who make good annual incomes or who have been frugal and built up substantial retirement benefits in qualified plans.

There Will Be No Public Outcry Like With Nationalized Health Care

Don't expect a broad public reaction to the stealth nationalization to protect your hard-earned benefits. Most unemployed, underemployed, union workers in failing union plans, and eventually state and local government employees will benefit from this attack on the retirement assets of productive, successful Americans working in the private sector. You are a minority and the mob rule of democracy warned about by Thomas Jefferson is just doing what it has always done. But this time with you as the target.

"A democracy is nothing more than mob rule, where fifty-one percent of the people take away the rights of the other forty-nine." ~ Thomas Jefferson

Don't Cry For Us Argentina

Bankrupt governments have a recent history of confiscating and nationalizing private retirement programs. Back on October 21, 2008, Fernandez de Kirchner, the president of Argentina, announced plans to take over $29 billion of private pension accounts, saying a state-run system would protect retirees from fluctuations in financial markets. Roque Fernandez, an economy minister and central bank president in the 1990’s, said the move is a "confiscation" of people's savings.

How the Government Benefits From the Guaranteed Retirement Annuity

Initially, the government will receive a dramatic increase in revenue as Americans will be required to contribute (without a deduction) 5% of their annual income (without a cap like Social Security) into the GRA. These contributions will be accounted for in some type of statement, but the actual funds will disappear into the Washington coffers just like your annual Social Security taxes.

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