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Discussion on Annuitization of Retirement Accounts

SK O'Neal
14 February 2014

    Note the links below to today's article on a subject worth discussing a bit further. 

    I frankly didn't bother with the state of union speech a while back, but those unfortunate souls who must analyze such things for their regular columns are discussing a matter that has been on the radar for several years - the defacto confiscation of retirement accounts under the pretext of annuities.  My first acquaintance with this process was at work in 2003, when the private annuitization of the federal Thrift Savings Plan accounts was being discussed. My objection was the transfer from
a government run fund to private companies that would then pay an annuity from the lump sum transferred.  Of course, private companies can go bankrupt, and for a number of reasons, not all of which are of natural causes.  At the time, the national debt was approaching a whopping 8 trillion dollars.  What is particularly interesting at the moment is the figure quoted in today's  article - the $21 trillion estimated valuation of total retirement savings of Americans.  Given that the formally recognized national debt is at $18T, we have a difference of about $3T, divided by the annual budget deficit, if a realistic estimate can be obtained, as a measure of years, and not many, until the two figures are equal.

     Such classes of calculations are, I believe, good indicators of timing for major financial events.  I recall a statement in 2008, indicating that the Boomer generation reached an inflection point in the relationship between net savings contributions and onset of retirement withdrawal.  Such a demographic factor, if it is indeed valid, puts the QE process inaugurated in the fall of '08 in a definitive perspective, and likewise the current situation with our national  debt  Uncertainties in the accessible

Definition of "Annuitization"

    The process of converting an annuity investment into a series of periodic income payments. Annuities may be annuitized regularly, over a long or short time period, or in some cases, in one single payment.
    After an annuity has been through the process of annuitization, the investment is said to have been annuitized. Annuitized investments are not necessarily paid out completely to the beneficiaries. Depending on the terms of the annuity policy, some of the money could go to the person's estate, to a trust or to the insurance company, for example.

retirement funds plus uncertainties in upcoming budget requirements could easily render the point of equality this year or next.  Confidential information recently received by John Moore indicating a domestic military situation that includes major public unrest may then be rendered in the perspective of a sequel to a serious financial instability as a logical precursor. 

    Arguably the most dominant factor in the calculation is the dynamic between inflation and deflation.   L. Dent and other analysts who base their predictions on historical demographics have been consistently suggesting a strong deflationary downturn, lasting until about 2020.   Other considerations would demand the massively inflationary effect of the Quantitative Easing strategy of the Fed through dilution of the currency, and we certainly have experienced double digit annual inflation in a number of categories.  What appears to be the case, as I have mentioned in discussions of global strategy, is the gross transfer of wealth through a process that combines inflation and deflation pressures simultaneously, sometimes referred to as "stagflation" in the literature.  The chief
counterbalance to the inflationary factors is clearly the exsanguination of consumer buying power by devaluation of their financial and real estate holdings, and its exaggerated  effect due to the short circuiting of the QE monies away from Mainstreet and into the banks and offshore corporations.  It is interesting how precisely paltry the net effect on the CPI is, including its basis for calculation of the recent minuscule COLAs, further prostrating buying power and masking dollar inflation.  Infusion of Mexican workers to the point of competing with those already established, puts even more downward pressure on wages and buying power.  This is an extrinsic forced demographic factor, and a fully deliberate process that is being executed against the interests and welfare of the American public, compounding the efforts to mask dollar dilution.  Beginning with the 911 events whose true functional purposes included the masking of the multi-trillion dollar level devaluation of the technical sector with a war footing as its distraction, the demographics resolved into a collateral transfer to the real estate market under the same  "throw money at it and everybody gets rich"  philosophy that inflated the

Definition of "Quantitative easing (QE)"

Quantitative easing (QE) is an unconventional monetary policy used by central banks to stimulate the economy when standard monetary policy has become ineffective.  A central bank implements quantitative easing by buying specified amounts of financial assets from commercial banks and other private institutions, thus increasing the monetary base and lowering the yield on those financial assets. This is distinguished from the more usual policy of buying or selling short term government bonds in order to keep interbank interest rates at a specified target value.

stock market, and equally unstable in its fundamentals.  This phenomenon seems to have its genesis in the statistics of the Boomer generation itself, in which there was a massive surplus of income that had to then compete for places to put it, resulting in over-saturation of the markets.  That demographic has turned over, and is being selectively exacerbated by the financial sector and its larger social agenda, in preparation for a calculated trajectory of collapse and leaving the financial classes in a more traditional state of historical separation.  In 2006, the financial sector quietly began to pull the supports out of the appraisal and financing process that supported the housing boom, and in 2007-8, it failed, followed conveniently by QE-1, the Fed's extortion of Congress under threat of inevitability of martial law, and its ultimate wholesale assignment of debt to our  nation's future.  Preferring to label such a process as "running a nation's finances like a bar tab on the Titanic," I can only conclude that the endpoint of the current fiscal policy is deliberate infarction of the United States in favour of a new global labor base.  Exhaustive de-industrialization and a plethora of social engineering designed to dissociate our social and ethical norms only supports such a thesis, as we see, for instance discussed by Valerian and Iserbyt (Matrix III, and Deliberate Dumbing Down of America).  Historically, the only remedies for such a condition have been either a redemptive process ranging from Moses to Hitler, or else, and most commonly, war.  Even the most benign appraisal of our future must base its balance sheets upon the complete loss of savings and equity by the lower 99 percent, perhaps representing the original intent of the overall process.  But of course, there is also a consummately larger charge against the  solvency of the dollar in the derivatives market, also intrinsically unstable, and scarcely an accident. 

    All of this leads to the realization that statistics such as the CPI are completely meaningless as is the average temperature of a person whose head is in the oven and feet are in the freezer.  A truly valuable calculation would be the status of dollars, metals and real estate as markets destabilize and the dollar, along with the American economy, simultaneously face the music.  Eventually, the matter will, I believe, reduce to the apportionment of two principal resources - the physical stocks and productive capacity of homesteads and organized communities, and a remainder of seed investment mediums, probably best in metals and other high-density portable wealth, whose value will experience a severe transient in practical trade value to eventually become the basis for a new round of currencies.  Both are, of course, commodities.  A final crucial intangible commodity is good will, and the ethos that supports it.  The secret to holding excess wealth  would be, under such assumptions, the ability to hold these special commodities through every insult of devaluation during the time that gold and silver shall be cast into the streets along with anything else that cannot be eaten, or carried.  The wise investor will discover how to apportion such holdings, and later see the metals and such reach tremendous value if he has been smart enough to survive. An alternative to such conditions is the quasi-stable descent into poverty of the general population under the thumb of police state administration of the entire planet.  The beguiling inducements that might lead us down such a path are many at this moment, misleading multitudes of uncomplicated viewpoints, but our likeness to sheep may end at such a time, albeit with another great tragedy to work through.  Then, of course, there is another idea.........

Referenced Links:

also, Sovereign Man article at bottom:℠ (Right-side navigation page SSI insertion)