Coming Soon: Substituting Government Annuities for Your 401(k)?
This raises more than a few questions. Why annuities, for instance? As noted later in the article, "Seven in 10 U.S. households would object to a requirement that retirees convert part of their savings into annuities," and the "why" of that opinion isn't that hard to figure out: they're a bad deal for everybody except the guys selling them. Consumer gurus like Clark Howard have been warning people away from high-commission "guaranteed" annuities for years. I bet everyone reading this knows of somebody who's been ripped off by an annuity salesman.
But now ... now the government would be the annuity salesman -- except that if the administration gets its wish, there won't be any "selling," you'll just be forced to take the money you've earned and "convert" it to a construct that they'll allow you to "invest" in. No more of this willy-nilly mutual fund nonsense for you plebeians; we'll tell you how you're going to pay for things, so hand over the cash -- it's your patriotic duty!
It would be plenty bad enough if the "guaranteed" government annuities were limited to bailed-out insurers like AIG. But Karl Denninger of The Market Ticker took a deeper look and found an even scarier outcome. Denninger believes this is really a scheme to prop up the market for Treasury bonds by forcing citizens to "invest" in them.
As Denninger points out, "Forcing people into Treasuries as an 'annuity' is exactly what Social Security allegedly is. Except that Treasury stole the money that was collected in FICA taxes and spent it!"
And he's right. The fictitious "Social Security trust fund" is just a pile of Treasury notes. If we're all forced to buy trillions more of them -- because the government has over-borrowed so dramatically that nobody else will -- all we're going to get in return are more IOUs with nothing backing them up but the promises of politicians.
Those politicians will be retired themselves -- on rich taxpayer-funded pensions that you and I aren't eligible for -- long before the IOUs come due. But they'll have taken your money to pay for their games, and if you think you'll be getting it back, I have some oceanfront property in Atlanta that you might be interested in.