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The Fed's Exit Strategy- Mandatory Retirement Accounts?

Mandatory Retirement accounts? to buy what? What else- US Treasuries that the Fed and no one else will buy.

From Smaulgld.com
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/

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This just happened in Poland


Wouldnt count it out in the US

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Would be a lot easier to make US citizens buy T Bonds

than to try and force the Chinese to do so. Our purchases would help pay back China and fund the government

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Why would we want to pay back

Why would we want to pay back China or fund the government?

If China made a threat

WE might want to pay them back

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China knows that they only way it gets paid back

is by Fed monetizing the debt-ie through inflation
BUT if the US forced its citizens to BUY treasuries that would be REAL money and would satisfy the Chinese and that money could be used instead of raising taxes to fund the US government-in effect the mandatory purchases of T bills could be viewd as a tax but many would not see it as such

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WE would'nt

but our government would. Hence the mandatory retirement accounts

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