The Govt is monkeing with our savings again

[Zofja1]

Read in the Stephen Barr column of the Washington Post, that the government is borrowing from our funds again. He said, if I understand correctly, that they are not investing all the money, but, they claim that it will not hurt us. That always makes me uncomfortable. Some years ago a NY senator (now deceased, whose name escapes me) made a big stink about it, but, nothing was changed. Grrr::

[Wimpy]

Treasury Dept. Moves to Avoid Debt Limit
By MARTIN CRUTSINGER
The Associated Press
Monday, March 6, 2006; 11:29 AM
WASHINGTON -- Treasury Secretary John Snow notified Congress on Monday that the administration has now taken "all prudent and legal actions," including tapping certain government retirement funds, to keep from hitting the $8.2 trillion national debt limit.
http://www.washingtonpost.com/wp-dyn/content/article/2006/03/06/AR2006030600635_pf.html (http://www.washingtonpost.com/wp-dyn/content/article/2006/03/06/AR2006030600635_pf.html)

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I wonder if the raid on and ultimate bankruptcy of Social Security began in the same manner. The only thing keeping the U.S. from hitting this debt ceiling earlier was the fact the expense of the Iraqi War was not factored into the budget.

BOHICA!

[saturneptune]

How often does this happen? Is this just the G fund? Does it get paid back? Is there anything we can do about it? Never heard of this one before. The politicians have really made the federal budget a mess. It would be really nice if they kept their hands off our TSP.

[Wimpy]

This is the second time they've done it that I'm aware of and to my knowledge it just involved the G-Fund. I agree...hands off should be the operative word.

[cowboy]

My thought on this is if you don't want the government to use the G fund then why should they give you an interest rate. Basically that is what the fund is it is the cost of the government to use the fund when needed providing you the very safe interest rate with one of the most stable governments in the world. If you don't want the government to use your money maybe one of the other funds is your cats meow.

[Griffin]

This is the second time they've done it that I'm aware of ....


Wimpy,

In the past, has this been transparent to the TSP investor? (i.e. will the fund continue to recieve it's periodic penny and function normally?)

[Oaktree]

As long as they repay the fund with the interest included what is the problem?

[SkyPilot]

The problem is that it "feels uncomfortable". :confused:

[Cortez]

Bernanke will just whip out the printing press and pay the G fund back. Any interest will be low since the government has an unofficial policy of refusing to recognize inflation.

[Mike]

While the idea of the government raiding our retirement funds is troubling, the fact of the matter is that as long as the rate of return is unaffected and the funds are available for withdrawal, we really have nothing to complain about.

If we start seeing stories of TSP participants being unable to take distributions due to the funds being unavailable (since the government already borrowed / spent them), then we have a major problem.

[Wimpy]

I think Cortez hit at the underlying aspect of what seems troubling with this arrangement when he said, “Bernanke will just whip out the printing press and pay the G fund back.” In essence, that is what happens when our money is first deposited into our TSP accounts in the G-Fund. It is loaned to the government (when the trustee purchases treasuries on our behalf) at the going interest rate. Much of both interest and principal is paid with printing press money as the deficit clearly indicates.

By the government ‘raiding’ of this fund, by suspending the issuance of these treasuries in trade for our payroll deductions to the G-Fund, they are establishing a dangerous precedent of ‘under funding’ these accounts as they did with Social Security. I believe Social Security was, at one time, fully funded and now is under funded or bankrupt. Many corporate pensions, once fully funded, are NOW bankrupt…and legally so.

As sheeple become conditioned to the concept of these ‘raids’ being harmless, it is not much of a leap to convince the sheeple the TSP can function in exactly the same manner as Social Security. In other words, instead of being fully funded it will be funded by New Blood whose salaries are also paid by ‘counterfeit money’. If there is not enough New Blood to support the TSP payouts, the shortfall will be…you guessed it…‘counterfeited’. TSP participation (employee payroll deductions) would no longer be optional in this scenario…they would be mandatory.

How would you feel about your neighbor taking out a home equity loan to buy a matching set of BMWs and then paying the home equity off with their credit cards and when the credit card statement comes in the mail box, instead of paying it off with something tangible, your neighbor goes into the basement and prints that money to pay off the credit card bills?They’ve essentially ‘counterfeited’ and added paper fiat to the monetary system that was ‘unearned’ or not connected in any fashion to GDP. This devalues the existing currency in circulation causing inflation and the prices YOU pay for consumer goods to rise. You’ve basically subsidized his luxury car purchase. You begin fashioning a hangman’s noose and cry out for justice without even considering the government does the same thing a billion times a day, and in a much more leveraged fashion, when they print paper fiat currency, in excess of GDP, to pay for pork they can’t afford. They are committing the same fraud the guy in the basement is committing. The guy in the basement will go to jail, if caught, while the guys and gals at the FED and treasury will get a bonus…that they better spend very fast.

The bottom line: You ARE NOT getting back exactly what was stolen (that taken without your consent) the second time around. Matter of fact, you are not getting it back on the first go either, but at least you contractually agreed to that arrangement by depositing your money there. I suppose one could say, with this latest precedent being established, one has agreed to it, by default, for future deposits we give without a corresponding treasury being issued.

It works for Social Security, why not the TSP, one might ask? Social Security is bankrupt and is totally dependent upon New Blood coming into the system to pay current retirement obligations. These obligations will be increasing several times over in the next two decades. In my mind, this is why the immigration flood gates, legal or otherwise, have been opened up.

The U.S. is in technical bankruptcy and spending beyond its means. Our TSP accounts, our 401ks, our IRAs, and our pensions have ALL become cash cows, with a gigantic BULLS-EYE painted on them, to these D.C. Desperadoes who will milk them dry in one form or another. Inflation (printing away the debt owed) is one form of milking. Out right confiscation is another. We may very well see both forms of milking before the Triple Deficits are reined in and balanced.

The greatest wealth transfer in all of history is taking place in front of our very eyes but most of those eyes are glazed over and dulled. They are too busy maintaining their delicate balance inside the financial hamster wheel to even notice they are sucking wind and going nowhere. Through clenched teeth and flared nostrils they say those funds are protected by law. Patriot Act III, IV, V, or VI or some executive order could end the legal protections ‘the law’ currently provides against outright confiscation and all in the name of ‘national security’. But, they don’t need a new Patriot Act to steal your funds via inflation, do they?

Ultimately, as private sector pensioners are currently learning first hand, the individual investor is responsible for the outcome of their financial decisions. No one has as much of a vested interest in those funds as the individual investor does and it would be extremely unwise to pretend otherwise. If the U.S. Gov’t is unable to protect private sector pensioners, one would be awful arrogant to assume their TSP funds have any absolute guarantee. At best, the math may work out, but in terms of what those funds will actually purchase will most likely leave one on that hamster wheel a few more years than originally anticipated…especially if all one’s financial eggs are in a basket with a humongous bulls-eye painted on it.

If you currently don’t have any gold to protect yourself from the ravages of inflation, but are holding out for the TSP trustee to add a precious metals fund…don’t hold your breath. There will be a precious metals fund eventually…at the top of the market…but you will buying in at the top…not a good plan.

There is a way to use your TSP to fund a gold position to insure your remaining funds against the fraud of inflation. Simply take out a TSP loan of 10% of your total TSP assets and go buy some gold. If what I say comes true, your gold will off-set the devaluation of your remaining TSP funds. With insurance you don’t profit from a loss, but simply hope to break even minus the original premium paid. But you really don’t have a whole lot of time…the fuse is very short and is already lit.

If you believe in gold not only as insurance against inflation, but also believe in gold as a viable investment…increase your gold position NOT with a TSP loan, but rather with cash saved or garnered from selling depreciating assets such as extra and/or expensive cars, snowmobiles, and boats. Cut your overhead and use the extra funds to protect yourself and profit from the marauders who are drooling all over your thrift.

[tsptalk]

Very good post Wimpy!

[Birchtree]

Tom,

Are you being facetious?

Dennis

[tsptalk]

No, not facetious. I am not saying whether I agree or not. It was simply a well written and well thought out post. I wish I could write like that. :)

[Wimpy]

Tom,

Thanks for the kind words!

Wimpy

[FUTURESTRADER]

[. Simply take out a TSP loan of 10% of your total TSP assets and go buy some gold. If what I say comes true, your gold will off-set the devaluation of your remaining TSP funds. With insurance you don’t profit from a loss, but simply hope to break even minus the original premium paid. But you really don’t have a whole lot of time…the fuse is very short and is already lit.[/SIZE][/FONT]

If you believe in gold not only as insurance against inflation, but also believe in gold as a viable investment…increase your gold position NOT with a TSP loan, but rather with cash saved or garnered from selling depreciating assets such as extra and/or expensive cars, snowmobiles, and boats. Cut your overhead and use the extra funds to protect yourself and profit from the marauders who are drooling all over your thrift.[/QUOTE]

gold ETF = (GLD) or open a futures account :) btw, silver etf and msci EFA futures coming soon to a broker near you. 'The new CME E-mini® MSCI EAFE futures contract will be listed for trading at 5:00 p.m., Central Time, on Sunday, March 19, 2006, and will trade exclusively on the CME® Globex® electronic trading platform.'..what effect???

[Wimpy]

Thanks for mentioning the ETF.

Gold held for insurance should probably be held very close at hand, in physical form. Gold held/traded for investment purposes needs the liquidity of more sophisticated financial exchanges, such as an ETF.

Individual gold and silver stocks also provide tremendous leverage to the price of precious metals and can be purchased via online brokerage accounts.

[Jackbnimble]

Wimpy,
I will gladly pay you Tuesday for some gold today.......

It was very well written, but I could see you were going to the gold argument in about the 3rd or 4th paragraph.

With gold prices like they are wouldn't a current investment in gold be "buying in at the top"?

[Army Invester]

If this is all so obvious and Ron Paul preaches it from the roof tops, how come the public remains total ignorant? Could it be that when we graduate from high school we don't even know how to manage a checking account, much less live in a captialist society?

[Bullishreturn]

Back to the start of this thread-

I heard another rumor that we are closing in on the debt cap again, and they may be using our "G" fund to finance the government again soon. (see first article in this thread).

Anyone got a link to the latest saga of the debt ceiling and the "G" fund? When do they expect to hit the cap and need to start playing with OUR money?

[Show-me]

http://www.forbes.com/markets/feeds/afx/2007/07/30/afx3967902.html

Paulson asks Congress to raise debt ceiling again in October
07.30.07, 5:15 PM ET

WASHINGTON (Thomson Financial) - The US Treasury Department asked Congress today to raise the US debt ceiling, anticipating that the current cap on federal debt will be reached this fall.

In a letter to Senate Majority Leader Harry Reid of Nevada, Treasury Secretary Henry Paulson said the current ceiling of 8.965 trln usd would be reached in early October, and that Congress should raise the ceiling 'as soon as possible.'

[Jackbnimble]

At Risk? Maybe you should take your money out of the TSP if you believe it is truely at risk Chicken Little.

[qibovin]

Are we talking about ALL TSP moneys or just those in the G-fund? It is my understanding that the reason the G-fund can pay a (relatively)constant rate of return with "no risk" of loss is that it is essentially a loan to the US Gov't (with which they can do whatsoever they darn well please). I agree that there is a risk, but the risk is that the gov't will default on this "loan." If that happens, we've got a lot bigger problems to worry about that our TSP account balances!

[nelsonal]

The G fund invests fully in US government debt, just like Treasuries, except they are special T-Bills that don't pay normal tbill rates, they pay a T Note or T Bond rate set each month.

[logdoc]

I didn't know that the Gov't was tapping out the G fund as well as the Social Security Fund. Holy #%@^*&^%?^!B!!!X!!@.
I had hoped to put about 50% of my pile of money into the G fund. So my nice fat retirement which starts this summer and is relying on my TSP account to cover about 30% of my income my be milked to death by the Beltway bandits. I wonder how many Senators and Representatives know that this is happening to their retirement programs as well. Son of a B..................

[Jackbnimble]

"Just two months ago the the US Treasury reported that the debt had passed the $9 trillion mark for the first time, the announcement coming just a few weeks after Congress had agreed to raise the 'debt ceiling' to $9.8 trillion. Given the rate at which the president has squandered his projected surplus it is possible that the figure will rise above $10 trillion before he leaves office. "

I think they know... They passed the law to approve it.

We need to clean house up there, from congress to the White House and none of the options we currently have are exciting me.

[nelsonal]

You can't have it both ways. How is the government supposed to invest the G (Government Securities) fund in government debt without borrowing the money?

[Elgallo]

Now you know why you can do unlimited transfers INTO the G fund but not any other fund.

Oh and BTW those unlimited G fund transfer are not free either!!

[nnuut]

I plan to roll my TSP into an IRA or other fund that I can manage as I choose as soon as I retire, if not before. We are allowed to make an in-service penalty-free withdrawal and I just might do that. The country is bankrupt and our "trust funds" are nothing but IOU's on paper. China holds a larger share of US debt than the trust funds and if it and other usual buyers choose not to buy more, the trust funds are in trouble. Debt auctions are already failing with more to come.

Congress has an entirely SEPARATE retirement "fund" that is truly untouchable - it is not counted in the budget nor is it tapped like the "trust funds." They are entitled to it as soon as they are elected, whether they serve out their term or not. They are not covered by FERS as they are elected/appointed, not "hired" career servants like the rest of us. They can contribute to TSP but they do NOT get matching funds (sort of like CSRS employees).
This seems to be the REAL info on this subject?
http://www.senate.gov/reference/common/faq/retirement_for_members.shtml
Report on their Retirement Plan
http://www.senate.gov/reference/resources/pdf/RL30631.pdf