Definition of kleptocracy
Posted by aogTuesday, 23 February 2010 at 22:22
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PowerLine has a post about the recurring subject of 401(k) accounts being converted to government annuities. I thought this was very fringe but apparently there are government agencies requesting comments on the subject. I have to agree that a claim that it will be just “voluntary” is not be trusted — any one with clue realizes that the expected conversions will vastly outnumber the actual ones and at that point would could trust Congress to not steal once the precedent has been set?
On the other hand, it would seem that any such move would set off a near revolution of protest from the American Street. That such a thing is even being discussed demonstrates, to me, a near pathological disconnect by our ruling class. It’s even worse now that literal pitchforks and torches have been made legitimate for political protests by the MAL.
Friday, 26 February 2010 at 15:15|
Forgot to mention above that it may not be obvious from the short description of the system at the linked page, but one aspect is that one should also re-balance among the various sectors when doing the monthly analysis. If any sector has grown so much that it comprises 25% or more of the total amount, then sell enough of that fund to bring it back down to 20% of the total, and apportion the money among the other sectors so that all are roughly equal again.
Between that, the previous comment and the information at the linked site, that’s truly everything one needs to know to implement this wonderful system. KISS triumphs again! (The acronym, not the band.)
I urge anyone who’s investing money to evaluate the system and see if it’s a better concept than whatever is currently being followed.
…whether she recommends the mattress or the bird feed bin in the back yard for bundles of benjies…
The bird feed bin. Lower fire risk, and both burglers and tax officials know to look in/under people’s mattresses. The trick to increased security is to do something other than what most people do.
Rather depends on your age, doesn’t it?
Yeah, true that.
That’s not even counting the fact this would simply kick the problem down a decade or so, since it would involve no reform of spending…
The “reform in spending” that we’re most likely to get won’t be frugality in D.C., it’ll be higher interest rates and reaching the hard limit on the national credit card. That isn’t going to be good for the markets over the medium-term. Remember that during the first Great Depression, the Dow meandered its way down over 90% from apex to nadir. There’s absolutely no reason that it couldn’t happen again.
And yeah, if one were a nimble trader, then one could make a fortune from the market gyrations, but 401(k)s aren’t set up to facilitate that, and most people aren’t nimble traders in any case. Mostly they buy-and-hold, which means that they’re going to be stuck holding 90% losses. And even Jesse Livermore went bust in the end.
So I agree, an annuity backed by a fiscally-troubled gov’t isn’t worth much, but history suggests that it’s possible, even probable, that sticking with a 401(k) isn’t going to be very useful either. My favored path is to sell that 401(k) NOW, withdraw the money and take the tax hit. But many people’s 401(k) plans don’t allow that course of action.