Tim Geithner has announced that the US Treasury is dipping its fingers again into the Federal Employee Pension Fund. Over the last few years governments are getting more and more comfortable raiding the funds set aside for its citizens. The US has been raiding Social Security for years bringing it to the brink of insolvency or should I say a corpse. Here is the breakdown of the nations that have decided to get careless with its citizens retirements.
· Portugal raided its Pension Fund to meet its deficit requirements to the tune of 5.6 Billion Euros.
· Ireland raided its Pension Fund to meet its deficit requirements to the tune of 24 Billion Euros.
· Argentina raided its Privately managed Pension Fund to meets it deficit requirements to the tune of 29 Billion Dollars.
· Hungary is attempting to change 15 Billion Dollars of Private Pension Funds back into the State system.
The US Treasury decided it was ok to suspend reinvestments in the Federal Pension Fund. Over the last 20 years the US Treasury put its fingers in the cookie jar six times to avoid hitting the debt ceiling. The Obama administration has its back against the wall. I believe they fear another fight over the debt ceiling, during an election year. Tim Geithner has effectively kicked the can down the road for a few months. The debt ceiling needs to be addressed, this is not going away. We all know that they will just raise the debt ceiling again. Do you think they will ever cut spending? I have my doubts.
How about IRA´s and 401k´s Mr. Geithner? There is around 6 Trillion Dollars of assets residing in IRA´s and 401k´s. That is a substantial amount of money and seems ripe for the picking. The US Federal Government has shown that it has no reservations about taking what does not belong to them. If Social Security was a piggy bank for politicians just think how they might look upon our IRA´s and 401k´s.
What would the US Treasury do first? They might require US citizens who put a portion of their salary into 401k´s and IRA’s to invest a certain percentage into low paying US Treasuries. Then imagine that situations further deteriorate. The US Treasury then decides that you have to increase your purchases of US Treasuries. Then the worst case scenario happens and the US defaults or hyperinflation occurs rendering your retirement portfolio worthless. I hope it never gets this far, but we prepare for the worst and hope for the best. The Federal Reserve is looking more and more primed for QE3. They will not stop, it might as well be called QE Infinity. Prepare yourself, I know I am.