Friday, October 21, 2016

Pension Funds

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Late last month, the Supreme Court issued a ruling that sets the legal stage for something believed impossible just a few years ago.

The ruling came in the case of Tibble v. Edison pitting retirement experts and investment managers against government regulators over the question what constitutes the best interests of beneficiaries.

In short, the federal government can, on its own authority and without recourse, seize private pension plans, 401(k) plans and Individual Retirement Accounts (IRAs) and place them under government control if regulators believe the funds are being poorly managed.

Paul Joseph Watson writing for interviewed economist Martin Armstrong about the ramifications of this Supreme Court ruling and what it means for the property rights of middle class Americans should economic shocks – including a government default on public debt somewhere down the road – lead to sharp drops in the value of retirement portfolios going forward.

According to Armstrong, the Tibble v. Edison decision found that not only do employers have a duty to protect employees from poorly performing mutual funds – something no employer could possibly guarantee – and that to stem “losses”, the government can place troubled retirement plans under government management.

Armstrong added that:

“Between the court ruling and the Obama administration’s push for stronger fiduciary rules,” the developments send a, “strong message that government can much easier seize the pension fund management industry of course to “protect the consumer…”

Armstrong warns that the ruling, “sets the stage to JUSTIFY government seizure of private pension funds to protect pensioners,” when the economy gets “messy”.

“This fits perfectly just in time for the Obama administration’s next assault as they prepare a landmark change of its own by issuing rules requiring that financial advisers put the interest of customers ahead of their own…” “This creates a very gray area wide enough to justify public seizure of pension funds under management.”

In other words, if annual government deficits, the size of the national debt and the coming impact of unfunded mandates including Social Security and Medicare conspire to poison investor confidence in markets, the resulting drop in the value of retirement portfolios would allow the federal government to “nationalize” investor wealth in the name of saving investor wealth.

Evidence in such a scenario surfaced following the 2008 financial collapse in the housing industry and the release of reports on some of the coping strategies the federal government was considering at the time.

One of the more disturbing options was a plan by the federal government to seize the private 401(k) pensions of millions of Americans while enforcing a 5 per cent payroll tax increase as part of bailout program the Social Security Administration would be empowered to impose on retirees to “redistribute pension funds “fairly” amongst citizens”.

In addition, Armstrong warned that the seizure of pensions would be a first step in a wider move to impose “economic totalitarianism” on the American people along with the elimination of physical cash to give central big banks more power to manage cash flows.

Just recently, Bank of England economist Jim Leaviss floated the idea of eliminating cash in an article he wrote for the UK Telegraph. In it, Leaviss said:

“Forcing everyone to spend only by electronic means from an account held at a government-run bank would give the authorities far better tools to deal with recessions and economic booms.”

In early May, German Council of Economic expert Peter Bofinger echoed Leaviss’s idea saying the imposition of a cashless society would make it easier for central banks to enforce their economic policy.

Sceptics who dismiss such ideas as “conspiracy theories” should note that cash control measures are already being implemented in the United States.

Just this past week, former House Speaker Dennis Hassert was charged with “structuring” a series of cash withdrawals from his bank account to hide payments to a blackmailer who threatened to go public over sexual misconduct decades ago. And while charges stemming from the alleged incidents had long expired on the statute of limitations, the structuring charges had not.

Regulations state that banks must report cash transactions of $10,000 or more to federal authorities. Prosecutors allege that Hassert kept withdrawals below the reporting limit to avoid detection resulting in the charges against him.

Readers should note that economists consider Armstrong an authority on the subject of sovereign debt because he correctly predicted the 1987 Black Monday crash that saw the Dow drop more than 500 points on a single day as well as the 1998 Russian financial collapse.

Armstrong predicts America will experience a financial collapse marked by severe financial dislocations and widespread social unrest – including riots – in 2016.



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