MONEY MARKET ACCOUNTS
Last year, a group of international bankers called The Group of Thirty, met and issued some recommendations about money market accounts.
On the surface, The Group of Thirty is just an “informal” group of very senior finance people who make recommendations about global banking and finance. But a close look finds it made up of the usual suspects – predators from the Bank for International Settlements, The U.S. Federal Reserve Bank, Goldman Sachs, the International Monetary Fund and others of like kind.
One of their recommendations was that money market accounts should be changed so that there are “…no explicit or implicit assurances to investors that funds can be withdrawn on demand.”
This means that if the institution considers that withdrawals are occurring at an unsafe rate, the money market fund could deny you access to your funds.
It is no surprise at all then that the Security and Exchange Commission recently proposed a rule change that would allow money market funds to suspend redemptions if the board of directors deemed it advisable. The “advisable” is a litany of banker speak, but the bottom line is that not only are money market accounts not federally insured (which has been the case) but now there are conditions under which your deposits are no longer liquid.
Money market accounts are currently paying about .61% of 1% interest. They aren’t insured and, should the rule pass, carry no guarantee instant liquidity.
Move the money to a savings about (under $250,000 and in a well rated bank).
And if your mutual fund has your liquid cash in a money market fund, have them move it to a well rated insured institution.
RETIREMENT ACCOUNTS
About a year and a half ago, I wrote an article entitled, Protecting Your Assets.
The point of that article was,
Which brings us to the point of this article, which is that when the government finishes their spending binge, and wakes up to their eye-watering fiscal hangover, they will turn inward with a vengeance, seeking to filch money from every nook and cranny of the U.S. population.
The article also said in part:
Testimony before the House Committee on Education a few months ago suggested that personal retirement accounts (IRAs and 401Ks) should be converted into government-controlled accounts called Guaranteed Retirement Accounts (GRAs). They would be managed by that bastion of fiscal propriety the Social Security Administration.
California Democrat George Miller’s House Committee on Education and Labor heard a proposal from Teresa Ghilarducci, director of the Schwartz Center for Economic Policy Analysis at the New School for Social Research in New York, to eliminate tax breaks for 401(k) and similar retirement accounts such as IRAs and convert them into Guaranteed Retirement Accounts managed by the Social Security Administration.
Why should we not be surprised then at the January 8, 2010 article in Business Week which reveals the plan by the U.S. Department of the Treasury and Department of Labor to protect you by converting your 401Ks and IRA into annuities that have a steady payment stream?
The U.S. Treasury and Labor Departments will ask for public comment as soon as next week on ways to promote the conversion of 401(k) accounts and Individual Retirement Accounts into annuities or other steady payment streams, according to Assistant Labor Secretary Phyllis C. Borzi and Deputy Assistant Treasury Secretary Mark Iwry, who are spearheading the effort.
These people are snorting Karl Marx.
My article also quotes the Casey Report from a year ago:
Your government considers you a national resource to be exploited. If you don’t get your money out of the country before the government gets your money out of you, you’re an idiot, and you’re going to get what you deserve.
—The Casey Report, January 2009
This regulation hasn’t passed yet, but I hope you can see that there is serious intent to make it so. I strongly recommend that you get with your CPA and or tax advisor and at least run the numbers on what would it mean for you to liquidate those retirement accounts.
I am NOT recommending that you just up and do that. There are significant tax consequences to such moves. But I also want you to be aware that Uncle is looking at gaining control over these assets, and you should undertake an informed analysis of your options before such regulations go into place (should they carry through on their plan).
There is more to this chapter as well as some additional options in the article which is now part of an e-book I have just published. And while it is self serving commercial, I do recommend you buy it and read it.
The book, Crisis by Design has entire chapter of recommendations on how to protect yourself and your assets in these extremely challenging times in the worlds of finance and investment. The book is available at www.behindthewizardscurtain.com.
SOLUTIONS SUMMARY
1- Check out your bank’s safety at www.bankrate.com. If you want a professional analysis of your bank or recommendations for an alternative, contact me at this email address – Bruce@brucewiseman.net
2- Transfer money market assets to bank savings accounts.
3- Consult with your CPA on the advantages and disadvantages of liquidating your retirement account/s should the government move to convert your retirement assets to some kind of “steady payment” annuity.
4-Go to www.behindthewizardscurtain.com and get a copy of CRISIS BY DESIGN. Yes, it’s a commercial, but I wouldn’t have written the book and wouldn’t urge you to read it, if I didn’t think it was important and that it would help you to flourish and prosper.
Have an OUTRAGEOUS 2010.
Bruce
