The US national debt has increased by roughly $1 trillion annually over the past several years.
The Federal Reserve has conjured an astonishing amount of money out of thin air in order to buy a big chunk of that debt.
But even the Fed has limitations. According to its own weekly financial statement, the Fed’s solvency is at precariously low levels (with a capital base of just 0.8% of assets).
And on a mark-to-market basis, the Fed is already insolvent. So it’s foolish to think they can continue to print money forever and bail out the government without consequence.
The Chinese (and other foreigners) own a big slice of US debt as well.
But it’s just as foolish to expect them to continue bailing out America, especially when they have such large economic problems at home.
US taxpayers own the largest share of the debt, mostly through various trust funds of Social Security and Medicare.
But again, given the $42 trillion funding gap in these programs, it’s mathematically impossible for Social Security to continue funding the national debt.
This reality puts the US government in rough spot.
It’s not like government spending is going down anytime soon; it already takes nearly 100% of tax revenue just to pay mandatory entitlements like Social Security, and interest on the debt.
Plus the government itself estimates that the national debt will hit $30 trillion within ten years.
Bottom line, they need more money. Lots of it. And there is perhaps no easier pool of cash to ‘borrow’ than Americans’ retirement savings.
$7.3 trillion in US IRA accounts is too large for them to ignore.
And if you think it’s inconceivable for the government to borrow your retirement savings, just consider the following:
1) Borrowing retirement funds is becoming a popular tactic.
Forced loans have been a common tactic of bankrupt governments throughout history.
Plus there’s recent precedent all over the world; Hungary, France, Ireland, and Poland are among many governments that have resorted to ‘borrowing’ public and private pension funds.
2) The US government has already done this with federal pension funds.
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