Government Confiscation of Retirement Accounts

Quantitative easing, i.e. money printing by the Federal Reserve, looks like it's set to continue forever, there being no other source of large amounts of money with which to fund the government's huge and growing deficits. But wait, maybe there is another source of funds: your retirement accounts. Gonzalo Lira makes a convincing case for the ease and plausibility of government confiscation of retirement accounts:

What pool of money is just sitting there, not doing much, while being legally barred from its owners? What pool of money is easily accessed, yet is large enough to fund the deficit?

The retirement accounts of the American people: Both individual private accounts, and pension funds.

After all, the total for all pension monies is roughly 100% of GDP (this includes Social Security). And the Federal government has already raided the “Social Security lock box”—that box is stuffed with Treasury IOU’s.

So the Federal government might well turn to the private sector for cash. The Federal government might conceivably claim that ongoing funding needs require that every single 401(k) and IRA divest from its portfolio of stocks and bonds, and be fully invested in Treasuries.

This could be accomplished very easily, from a practical standpoint—just inform banks, and have them turn over to the Federal government all your mutual funds and stocks you agonized over, and get long-term Treasury bonds of nominal equal value in exchange.

401(k)’s and IRA’s would be the first ones the Federal government would go after—for the obvious reason that union pension funds have the union’s political muscle. But individuals? They have no political machine. So they’re screwed. [...]

There might be short-term political damage, but like losing your virginity or carrying out state-sponsored torture programs, it would be the necessary start for a slide that will never end. After this first “retirement asset swap” carried out on the 401(k)’s and IRA’s, the Treasury department would start doing more of this to ever-bigger pension funds, until eventually all retirement assets would be converted into Treasury bonds.

Hey, they did it in Argentina. And as Yves Smith always sez, America has become Argentina, but with nukes.

I'm not so sure about the lack of political damage; it seems to me that a huge public outcry would ensue, which doesn't mean that it couldn't happen. The wealthy - and that means just about anyone who's been reasonably frugal and saved their money for retirement - are a huge target; the 51% of the population that has little money would love to get their hands on it, and the elite on Wall Street and in Washington will help them do so.

An article at Lew Rockwell's site recommends a number of actions to take for those who believe that this threat is real. For starters, stop contributing to your retirement account - that's an action I've already taken.

As if we didn't have enough to worry about, now we have to worry about America becoming another Argentina.