Savings tax. Be afraid. Be very afraid.

[Guest032516]

According to an IMF paper, the debt is so out of control that extreme measures are not far off. Here is the link:

http://www.telegraph.co.uk/finance/f...year-high.html

Here are some key quotes:

---------------------------------------------
Much of the Western world will require defaults, a savings tax and higher inflation to clear the way for recovery as debt levels reach a 200-year high, according to a new report by the International Monetary Fund.
.....
The paper said policy elites in the West are still clinging to the illusion that rich countries are different from poorer regions and can therefore chip away at their debts with a blend of austerity cuts, growth, and tinkering (“forbearance”).

The presumption is that advanced economies “do not resort to such gimmicks” such as debt restructuring and repression, which would “give up hard-earned credibility” and throw the economy into a “vicious circle”.
.......
The paper says the Western debt burden is now so big that rich states will need same tonic of debt haircuts, higher inflation and financial repression - defined as an “opaque tax on savers” - as used in countless IMF rescues for emerging markets.
....
Financial repression can take many forms, including capital controls, interest rate caps or the force-feeding of government debt to captive pension funds and insurance companies. Some of these methods are already in use but not yet on the scale seen in the late 1940s and early 1950s as countries resorted to every trick to tackle their war debts.
The policy is essentially a confiscation of savings, partly achieved by pushing up inflation while rigging the system to stop markets taking evasive action. The UK and the US ran negative real interest rates of -2pc to -4pc for several years after the Second World War. Real rates in Italy and Australia were -5pc.
-------------------------------------------------------------

Well, there you have it. Have you put away a bunch of money in your 401(k)?

The government appreciates that, thank you very much. They will need to "borrow" it from you for a while.

[BJerk]

Without the deficit spending, we would have had a depression. The economy is picking up, tax receipts and employment will rise, and the virtuous circle of prosperity, compliments of Obama, will lift us out of debt. Additionally, your topic is misleading. I read it thinking their would be a tax on capital. It is hardly news that inflation wrests away savings value, but it ain't a tax.

[Guest032516]

Originally Posted by Bert Jones

Without the deficit spending, we would have had a depression. The economy is picking up, tax receipts and employment will rise, and the virtuous circle of prosperity, compliments of Obama, will lift us out of debt. Additionally, your topic is misleading. I read it thinking their would be a tax on capital. It is hardly news that inflation wrests away savings value, but it ain't a tax.

Virtuous circle? Did you read the article? If so, point out the virtuous circle. The whole POINT of the article is that the crappy "recovery" we have had will NOT be enough to stop the consequences of all the debt. Austerity and/or deficit spending aren't getting it done.

And my topic isn't misleading. First it isn't MY topic. It is the description given by the IMF. I will take their word over yours.

"Forced" feeding of government debt while you are prevented from moving your money elsewhere amounts of a tax.

While it is true that inflation eats into savings, that isn't a real problem if your rate of return is higher than the rate of inflation.

But this is something different. If the government is deliberately increasing inflation while sticking pension funds with low yield government debt and not allowing them to move the money elsewhere, then it is effectively a tax. The buying power of your money gets progressively less and less. In the end you are left with less wealth than you had when you started. That is a tax.

[CJ7]

answer:

more tax cuts for the upper class

[Guest032516]

Originally Posted by CJ7

answer:

more tax cuts for the upper class

No. Spending cuts and increased taxes on everyone for an extended period.

And that included paring back significantly on entitlements. Retirement age gets pushed back for everyone before you can collect SS. If government tries to inflate its way out of this mess, it will hurt SS beneficiaries anyhow. The cost-of-living adjustments won't keep up with inflation if inflation is significant.

Deep cuts in defense, too.

And big reductions in the number of government employees.

[CJ7]

Originally Posted by ExNYer

No. Spending cuts and increased taxes on everyone for an extended period.

And that included paring back significantly on entitlements. Retirement age gets pushed back for everyone before you can collect SS. If government tries to inflate its way out of this mess, it will hurt SS beneficiaries anyhow. The cost-of-living adjustments won't keep up with inflation if inflation is significant.

Deep cuts in defense, too.

And big reductions in the number of government employees.

damn, and I thought tax cuts for upper-crusters fixed everything ... who knew?

[Chica Chaser]

Originally Posted by CJ7

answer:

more tax cuts for the upper class

Or, taxing retirement savings accounts 401k's and IRA's. Lots of money sitting out there the government hasn't got their hands on yet.

[FU_CC]

Originally Posted by Chica Chaser

Or, taxing retirement savings accounts 401k's and IRA's. Lots of money sitting out there the government hasn't got their hands on yet.

ha

[WTF]

Originally Posted by ExNYer

No. Spending cuts and increased taxes on everyone for an extended period.

And that included paring back significantly on entitlements. Retirement age gets pushed back for everyone before you can collect SS. If government tries to inflate its way out of this mess, it will hurt SS beneficiaries anyhow. The cost-of-living adjustments won't keep up with inflation if inflation is significant.

Deep cuts in defense, too.

And big reductions in the number of government employees.

Now you are starting to post how the real world is....figure out wtf is going to happen and try and adjust your savings accordingly. The smart money knew that this recession was not going to be a normal recovery, that had nothing to do with Obama....it had to do with the nature of the recession. Smart money was in the market.

[BJerk]

Originally Posted by ExNYer

No. Spending cuts and increased taxes on everyone for an extended period.

And that included paring back significantly on entitlements. Retirement age gets pushed back for everyone before you can collect SS. If government tries to inflate its way out of this mess, it will hurt SS beneficiaries anyhow. The cost-of-living adjustments won't keep up with inflation if inflation is significant.

Deep cuts in defense, too.

And big reductions in the number of government employees.

Ok - I can go for all but the cutting government employees.

[Guest032516]

Originally Posted by Bert Jones

Ok - I can go for all but the cutting government employees.

No surprise there.

You just LOVE government not matter what, don't you?

I'd like to simplify the tax code and reduce the number of IRS employees needed to enforce it.

I'd like to get rid of the TSA and about a third of Homeland Security.

Bye-bye Department of Energy.

There a plenty of federal employees that need to go.

[Jackie S]

This idea of raiding retirement funds, savings, 401-K's etc has been floating around a while.

Governments can't stand it.

Remember years ago when they took a look at all that Social Security Money just sitting there?

[FU_CC]

Originally Posted by ExNYer

No. Spending cuts and increased taxes(change to let some tax exempt expire) on everyone for an extended period.

And that included paring back significantly on entitlements. Retirement age gets pushed back for everyone before you can collect SS. If government tries to inflate its way out of this mess, it will hurt (middle and lower income) SS beneficiaries anyhow. The cost-of-living adjustments won't keep up with inflation if inflation is significant.

Deep cuts in defense, too.

And big reductions in the number of government employees.

Originally Posted by Chica Chaser

Or, taxing retirement savings accounts 401k's and IRA's. Lots of money sitting out there the government hasn't got their hands on yet.(you mean (dividend)

[JD Barleycorn]

Originally Posted by Bert Jones

Without the deficit spending, we would have had a depression. The economy is picking up, tax receipts and employment will rise, and the virtuous circle of prosperity, compliments of Obama, will lift us out of debt. Additionally, your topic is misleading. I read it thinking their would be a tax on capital. It is hardly news that inflation wrests away savings value, but it ain't a tax.

What is the hell did they do before deficit spending? Also you forgot to mention the entire theory; you deficit spend when times are bad and you pay off your debt when times are good. That second part is pretty important.

[JD Barleycorn]

Originally Posted by Bert Jones

Ok - I can go for all but the cutting government employees.

More of that "too big to fail" philosophy right Bertie. Why can't government employees be laid off or fired for some of their stupidity. Tell us why they are exempt.