There is approximately $17 trillion sitting in retirement accounts, 401ks, and pensions. Sources of liquidity of such magnitude are certainly at risk in the face of the upcoming financial crisis. The U.S. government, its central bank, and its entire financial and banking system are about to face a massive shortfall for cash.
In 2008 the bailout required via TARP was $700 billion, and estimates of backdoor easing and bailouts are in the tens of trillions, or more, not to mention the confirmed and admitted trillions in Federal Reserve off balance sheet transactions. This time the bubble is many multiples bigger, deeper, and broader. The derivative time bomb fuse has been lit. In fact, one very informed friend of mine believes there is $5 trillion per week in backdoor derivative “papering over” taking place right now.
We have seen bail-ins across the globe and warned clients and friends that they are coming to a bank account and IRA/401k near you. When governments and their central banks go broke, they steal from private industry. It is historical fact. It is the basis for taxation.
I initially thought that the IRA & 401k bail in would be dressed up as a “Save America Bond” that would be sold on the populace to help rebuild once the next banking crisis hits. Ownership of this bond would be mandatory at a certain percentage within IRA and 401k accounts and it would pay a nice guaranteed rate of return. The majority of the populace would swallow the bait. However, I was wrong. I believe that the powers that be are already “bailing in” in a much more covert way.
About two weeks ago we received news that a major 401k administrator was doing away with its money market fund only to offer a short-term government bond fund instead. Just yesterday I received a letter that a client of mine had just received from another even bigger 401k administrator–one with like $3 trillion in assets under management big.
Then it hit me; they don’t have to sell anything to the public. Our criminal government doesn’t need permission. It will simply collude with the big banks to force treasury investment via limited investment portfolio options. Let me explain…
Money market accounts are cash equivalent accounts, currently holding almost $3 trillion. This is where you would normally keep your IRA or 401k cash if you were not invested in stocks, bonds, mutual funds, et cetera. Many people think they are “out of the market” when they have told their advisor or plan administrator to sell their stocks. If your account is with Paychex or Vanguard, not only are you still in the market but you are 100% in U.S. government bonds; it’s very sneaky. Most people won’t even catch it.
I believe that the U.S. central bank, a.k.a. the Federal Reserve, and the U.S. Treasury have colluded with the Wall Street banks to force investment into treasury bonds to prop up the U.S. dollar. The announcements from these institutions are proof. However, I believe they are in the process of taking it a step further.
A vast majority of 401k and IRA accounts in this country are held and administered by the big banks. The self-directed IRA marketplace is only about 2% of total retirement assets. Next, we will see the investment portfolio options completely change. There already exist some 401k plans that have very limited investment options, maybe three or four different baskets of mutual funds offered by XYZ institution, and of course a money market or cash equivalent. I believe we will see limits across the board, and that money market is just the beginning. The next letter from your IRA custodian will inform that it no longer allows the ownership of individual stocks and other securities but only mutual funds, which by the way own mostly, if not only, U.S. treasury bonds. The vast majority of people will be forced into U.S. treasuries unbeknownst to them.
Another element of the Vanguard letter that should be noted is their mention that this new “Vanguard Federal Money Market Fund, as a U.S. government money market fund, will not be subject to fees or restrictions under the new regulations.” Does this mean that fees will be imposed on the institutions that do not comply? As my partner, Gus, would say, “When collusion fails, coercion is required.”
For this reason, among others, we have long been advocates of using a shelter like the LLC IRA to remove assets from the system without the tax burden. Putting your IRA into a self-directed limited liability company allows you to invest in tangible assets that cannot be stolen with the swipe of a pen and click of a mouse.
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