Even on day 2 after election, I already fear the bigger government that is to come as promised by Democrats. All these people who continue to think that government should take care of their people (by becoming bigger & more expensive) simply don’t understand one basic thing: government simply CANNOT take care of themselves, and there is just no way for them to take care of others. Ron Paul on the other hand understands that point perfectly.
I just read the posted messages from kaimu at BillCara.com about CONFISCATION of 401k account. Here is the link to the original news article. I don’t know who is so dare of doing such things, but by confiscating 401K accounts, and lumping everything into a “GRA” Guaranteed Retirement Account is going to a super-big disaster for US stock markets. Here are some details of the proposals:
1. Confiscating all 401K accounts and turn them into GRA.
2. Every workers will be forced to contribute 5% from their paycheck, in addition to the existing social security and medicare taxes going forward.
3. There will be a guaranteed return of 3%.
Here is the consequences that I think what will happen:
1. Before confiscation, if allowed, there will be a massive exodus from 401K/retirement accounts. That basically means that stock markets will TANK beyond imagination. The same confiscation has been done by Argentine government, and that was the consequence. I simply don’t understand what these people are thinking.
2. All the confiscation on the remaining balances will eventually be sold and the proceeds will buy safest “Treasury bonds”.
3. Economy will shrink even further due to the additional 5% of the collection on paychecks.
People, US citizens, we’d better WAKE UP! We already have a “bankrupt” social security system. The only assets that social security fund has is US treasury bonds, or in another words, debt or IOUs from the USA government. If my right hand (social security agency) owns IOUs of 2.4 trillions from my left hand (executive branch of the USA), what do I have really? NOTHING! The only way to pay for social security is to continue to ask my left hand to collect income tax, and continue to ask my right hand to collect social security tax to pay for ongoing social security payments. My right hand can have one quadrillion of IOU owed by left hand, and I will still have nothing.
Now if Democrats will add this 5% collection for GRA, which is really another form of tax, government will get bigger, and people of USA will continue to shrivel. Yeah, the 5% GRA tax will go directly into the safest investment of more IOU.
Who is going to pay for your retirement? GRA? Social security? Government? We’ve got a big government that collects a huge percentage from the GDP. Collecting from the young people in the form of taxes to pay for the current retirees is the same as robbing your own children in the same familiy. It will NEVER work. In the meanwhile from this process, all the big fat cats in the Washington DC and Wallstreet continue to collect a big commission in the form of benefits/salaries for politicians and bailouts to Wallstreet. Eventually, this process will impoverish everyone, because once a government collects 100% of the GDP, we effectively become a communist country, not a socialistic country.
If US government can take care of herself, she would not be in such a heavy debt. A few people in the government can never allocate economic resources as effective as in a capitalistic society where millions of people are competing against each other. More socialism simply will not work.
The faster we are on this current track to bigger governments, the sooner we will destroy all of our collective wealth thru a totally devalued US dollar. If you don’t have anything, you may think this is a great way to zero out everyone’s wealth. Everyone will have nothing, and let’s all start over?! NO, the reason that I continue to speak out is that my heart will be so broken to see so many hungry people around me without food and necessities, and I can barely help some of them. It’s just not going to be “everyone has nothing, and let’s start over”. It’s going to be millions of hungry and angry people, while the most wealthy or the smart people may have their 90% wealth wiped out. But they will have food to eat because they have allocated their wealth in other tangibles, and not you. That is the specter of hyper-inflation, and that is always the road taken by hyper-inflation. There is just no exceptions.
Be intelligent! There can never a free lunch handed out by the government. The government takes from us, and we form the government. You cannot make yourself wealthy by taking something out of your own pocket, let someone else handles it and collects a commission, and then gives it back to you for the remaining of what’s left.