The Fed's Exit Strategy- Mandatory Retirement Accounts?Submitted by Smaulgld.com on Thu, 08/01/2013 - 20:10
Mandatory Retirement accounts? to buy what? What else- US Treasuries that the Fed and no one else will buy.
Mandatory Retirement Accounts
“A government big enough to give you everything you want, is big enough to take away everything you have.” attributed to Thomas Jefferson
There has been a lot of talk lately that the Federal Reserve may soon taper its purchases of U.S.Treasury bonds and mortgage back securities.
There has also been some talk about forced retirement accounts. Indeed, this topic was the subject of a recent Time magazine article. There is irony in this proposal given we already have a mandatory retirement program called Social Security.
These two stories may have a common thread.
A slow down or outright cessation of the Fed’s purchases of US treasuries would have an adverse impact on bond prices and interest rates would rise. Previously on this blog we have noted the impact such a rise in interest rates would have on the stock and real estate markets and the overall economy.
Another area that will be impacted by the tapering or cessation of the purchases by the Fed of US Treasuries is the United States government. The United State government benefits from the Federal Reserve’s bond purchases in two ways: http://smaulgld.com/mandatory-retirement-accounts/