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Friday, September 10, 2010

Auto IRA

There's a a rumor circulating of a new "reform". It's called the "Auto IRA".

In a regular IRA, the worker/slave gets to decide if he wants to make a contribution or not. The Auto IRA is mandatory. It's funded via a payroll tax.

Some employers have a default enrollment 401(k) plan. That isn't immoral, because the worker can always opt out. However, it is somewhat tricky. A clueless worker might be unaware that he's making a 401(k) contribution.

A pro-State troll says "Good! The State is forcing people to save for retirement!" The fallacy is that it's mandatory.

Suppose I'm starting a business and want to save my salary for seed capital. The Auto IRA, like all other taxes, makes it hard for non-insiders to accumulate capital. Instead of saving money to invest in my business, I'm forced to invest in the Auto IRA.

If you own a business, reinvesting in your business almost definitely is better than investing in the stock market. The stock market is one big scam. In your own business, you have 100% control. For a corporate stock investment, you're paying for the waste/fraud/theft of a corporate bureaucracy.

The Auto IRA forces people to invest in the stock market or bond market. The Auto IRA would be a huge State subsidy for the financial industry. Stocks and bonds are one huge scam.

(It is possible to have physical gold and silver in an IRA, via certain custodians. However, they charge fees. It's inferior to taking actual physical possession.)

If you buy/sell gold/silver for cash, avoiding immoral/unconstitutional capital gains taxes, that's a better deal than an IRA. Gold and silver have a higher expected return than stocks and bonds. With gold and silver you can trade off-the-books, avoiding taxes.

The stock market is one big scam. The State financial system will probably collapse in the next 20 years. Given that, an IRA investment is worthless. I'm seriously considering cashing out my IRAs, paying the withdrawal penalty, and buying physical gold and silver. I haven't done that yet. I'll switch all my non-IRA investments first. I might be wrong about "The State will collapse soon.", in which case holding my IRAs is a hedge against the possibility that I'm wrong.

The Auto IRA is one big scam. It would force people to invest in the fraudulent stock market or bond market. It's a State subsidy for the banksters. The Auto IRA would make it hard for a small business owner to raise capital via reinvested earnings/salary.

When the State collapses, an IRA investment will be worthless.


Scott said...

What the are ACTUALLY TALKING ABOUT with the IRAs is the state will confiscate them and issue you credits for the new "guaranteed IRA" system with a fixed rate of return. Argentina did this a few years ago and made billions off of the scheme.

FSK said...

I saw that, but forgot to add it here.

That plan was "Instead of having the cash value of your IRA, you're forced to purchase an annuity." The fallacy is that the implied interest rate of the annuity is only a couple percent, compared to what you can get in other investments.

Scott said...

Well not only that but suddenly it's no longer your money, the state is "holding it" by which they mean they but it in the same general fund as income taxes and spend it the same year they get it, and then they "credit you" while mumbling about a "trust fund" and "lockbox" that doesn't now nor has it ever existed, and then as retirement closes in they announce "the system is bankrupt" and your money is gone, having been spent decades ago.

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