Obama to propose new IRA invested in Treasury Bonds

[zoog]

Buried in all the State-of-the-Union-address news stories (mostly headlined with raising minimum wage for federal contractors), is a proposal to create a new retirement plan for workers who don't have an 401k through their employer. The plan would invest in Treasury bonds. I wonder if this is a step towards eventually forcing us all to hold Treasuries in 401ks and IRAs, as has been discussed on itulip before.

Among those actions is a new retirement savings plan geared toward workers whose employers don't currently offer such plans. The program would allow first-time savers to start building up savings in Treasury bonds that eventually could be converted into a traditional IRAs, according to two people who have discussed the proposal with the administration. Those people weren't authorized to discuss it ahead of the announcement and insisted on anonymity.

source: AP

[vt]

Re: Obama to propose new IRA invested in Treasury Bonds

First the government needs to borrow less from the social security trust fund. They "borrowed" it and gave IOUs. There are reasons this was done and the money was not stolen. But it's not good financilal management:

http://blogs.marketwatch.com/encore/...cial-security/

The key problem is there is no equity portion to the asset mix, which is poor pension management. Retirees need a balanced approach.
Warren Buffett called bonds "legalized confiscation".

The fact this is being done at the end of a 30 year bull market in fixed income and the start of a bear is troubling. Plus the government is trying to engender inflation, which is also bad of bonds. The government is punishing those it should be helping towards retirement security.

[ProdigyofZen]

Re: Obama to propose new IRA invested in Treasury Bonds

Buried in all the State-of-the-Union-address news stories (mostly headlined with raising minimum wage for federal contractors), is a proposal to create a new retirement plan for workers who don't have an 401k through their employer. The plan would invest in Treasury bonds. I wonder if this is a step towards eventually forcing us all to hold Treasuries in 401ks and IRAs, as has been discussed on itulip before.
.


source: AP

The US government is moving toward old school government finance: having domestic institutions/investors buying all the treasury debt like Japan.

[coolhand]

Re: Obama to propose new IRA invested in Treasury Bonds

The US government is moving toward old school government finance: having domestic institutions/investors buying all the treasury debt like Japan.

Yes, and I think the reason they are being forced to evaluate this is b/c the world is moving away from funding the US Treasury needs by virtue of the competing (& objectively superior) system being put together by the biggest trading nation on the planet - China.

Why would anyone settle trade (esp for depleting resources) in dollars when one could settle in gold? B/c historically, if you moved away from the dollar, you got hurt by the US military.

But Syria & Iran have credibly shown the world that China can protect nations that wish to move from the dollar from the wrath of the US...so Obama must find new sources of demand for UST's to finance all the entitlement packages...

[don]

Re: Obama to propose new IRA invested in Treasury Bonds

But Syria & Iran have credibly shown the world that China can protect nations that wish to move from the dollar from the wrath of the US

China may have been in the mix in the Risk/Reward evaluations by the US in those countries but China has zero military projection capability in either Syria or Iran. It was Russia who provided a military presence off Syria, not China.

[coolhand]

Re: Obama to propose new IRA invested in Treasury Bonds

China may have been in the mix in the Risk/Reward evaluations by the US in those countries but China has zero military projection capability in either Syria or Iran. It was Russia who provided a military presence off Syria, not China.

Iran has consistently been one of if not the biggest supplier of imported oil to China. I doubt they would've stood by and let that supply source be hit by the US military & my guess is that was communicated through back channels.

As far as China's military projection, you may be right, but we also know that China has nuke missile subs that the US has had trouble detecting as recently as 6 yrs ago: http://www.dailymail.co.uk/news/arti...red-faced.html

Can China project power via the US carrier battle group method yet? No way, not close. But if China has nuke subs that the carriers can't hear till it's too late, does that matter?

Lastly - China continues to have the ultimate military trump card, economically speaking. The US military is a function of the Petrodollar - the petrodollar is not a function of the US military. Remember which came first. Petrodollar started in 1971...the US military was having a tough go of it then & for the next 10-15 yrs.

Jim Rickards has talked that top US military brass are scared of a world in which the US can't print dollars to pay for the US military machine & its oil needs (US military is single biggest oil consumer in the world.) China can single-handedly move away from the petrodollar whenever they wish. That would quickly lead to problems in the US domestically & for the military machine that relies on that petrodollar for cheap oil & for hardware...

[doom&gloom]

Re: Obama to propose new IRA invested in Treasury Bonds

Buried in all the State-of-the-Union-address news stories (mostly headlined with raising minimum wage for federal contractors), is a proposal to create a new retirement plan for workers who don't have an 401k through their employer. The plan would invest in Treasury bonds. I wonder if this is a step towards eventually forcing us all to hold Treasuries in 401ks and IRAs, as has been discussed on itulip before.



source: AP

I feel my sphincter itching... That is never a good sign.

[BadJuju]

Re: Obama to propose new IRA invested in Treasury Bonds

I feel my sphincter itching... That is never a good sign.

You need more fiber.

[zoog]

Re: Obama to propose new IRA invested in Treasury Bonds

You need more fiber.

I hear Treasury bonds are high-fiber...

[aaron]

Re: Obama to propose new IRA invested in Treasury Bonds

There is a huge amount of debt backing the dollars (Treasuries) as well. The FED has proven that, no? They just have to hint that they will not buy debt with new money and the dollar goes up and Treasuries go up .

It is quite ingenious if they can pull it off. Congress wont' invest in the country, so FED gets the rest of the world to do it (like the Chinese model). So long as they can control the speed of capital flowing back to the United States, and make sure it is directed properly (business creation, real estate, and stox, TECI), it could be a good outcome. And, the inflow of money should not cause the price of oil to rise in world markets. Thus, the dollar does not weaken on the world stage as much.

It is almost like the U.S. has been exporting the bad inflation for so many years and now gets to import the good inflation. Perhaps we can aspire to a modern infrastructure like they have in China, but built American-style to last 100 years.

[BadJuju]

Re: Obama to propose new IRA invested in Treasury Bonds

I hear Treasury bonds are high-fiber...

30g of Obama bonds a day for me, then!

[charliebrown]

Re: Obama to propose new IRA invested in Treasury Bonds

Am I missing something???

I can already open a low cost IRA at Vanguard, Scottrade ... or some other low cost brokerage house and buy a treasury bond fund $1000 minimum.
I can deduct the 1000 from my income for tax purposes. ($5000 max). I guess if myIRA had bigger limits it might level the playing field with a 401k. (16500 max)
However unlike a 401k myIRA would restrict me to treasuries.

If I don't like the fluctuating principle I can by savings bonds or i bonds from treasury direct. 50 dollar minium. (10,000 max) not pre-tax, however tax
deferred until the funds are withdrawn.

What does this plan give me that I dont already have available???

[lektrode]

Re: Obama to propose new IRA invested in Treasury Bonds

Am I missing something???

I can already open a low cost IRA at Vanguard, Scottrade ... or some other low cost brokerage house and buy a treasury bond fund $1000 minimum.....

What does this plan give me that I dont already have available???

guess eye must've as well - but CB, you're missing The Point of this 'new benefit for the working class' - its NOT that it actually addresses 'the problem' (of them in the political/crony class SCREWING The Rest Of US) - same way the 'affordable' care act does NOT address The Problem (of the med-ins-legal-drug-industrial complex SCREWING The Rest of US)

its simply a 'solution' so that they can say that they're DOING something....

and gives the lamestream media-industrial complex something they can run with (in between the commercials/adverts) to keep THEIR team looking _better_ than the oppressors of the working class (that'd be _anybody_ that threatens the status quo or thats not advancing The Agenda ('marriage rights', gun 'control', free 'education', free birth control, 'free' housing and 'affordable' medical services; aka enhances The Welfare/dependent State)

and did ya notice? - how the biggest cheers were typically for GIVING AWAY THE TREASURY ?

or that when he got round to discussing the .mil aspects - how the dems all cheered - but the generals all sat there straight-faced/arms crossed?

to me, THAT was the entire story - the rest of it was pure BS - cept for maybe the loudest cheer for the wounded army ranger - which ultimately was just more theatrics designed to show how they all 'support the troops' - but the generals reaction to his previous statement was THE REAL STORY.

havent seen anything about that anywhere yet....

[zoog]

Re: Obama to propose new IRA invested in Treasury Bonds

...What does this plan give me that I dont already have available???

It gives you automatic payroll-deduction into a retirement account (like a 401k).

In a Bloomberg article there was this statistic: "Among workers earning between $30,000 and $50,000 a year, 72 percent of those covered by an employer-sponsored payroll deduction retirement plan such as a 401(k) participate, while only 5 percent of those without such a plan set aside money through an individual retirement account, according to a 2010 analysis by the Employee Benefit Research Institute."

To whatever degree this plan is altruistic, they must figure that getting the other 95% of those without 401k's to save for retirement would be a good thing. Left to their own devices, most people never get around to saving if it requires continual effort on their part and that constant internal debate of "should I save this money or spend it?".