One who intends to leave others better off for his having existed.

2/1/14

President Barack Obama's myRA savings plan appears to be a Ponzi scheme; George Bush, Ron Paul, Paul Krugman etc...

"People will earn interest at the same variable interest rate as the federal employees’ Thrift Savings Plan (TSP) Government Securities Investment Fund."

http://www.washingtonpost.com/business/economy/starter-savings-accounts-obamas-myra/2014/01/30/00600ec0-8930-11e3-a5bd-844629433ba3_story.html
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"The [Thrift Savings Plan] G Fund is invested in short-term U.S. Treasury securities specially issued to the TSP."

...the G Fund must be invested in nonmarketable U.S. Treasury securities specially issued to the TSP. The G Fund investments are kept by electronic entries, which do not involve any transaction costs to the TSP. The G Fund rate is set once a month by the U.S. Treasury based on a statutorily prescribed formula, and all G Fund investments earn that interest rate for the month. (The G Fund rate is also used in other Government programs, such as the Social Security and Medicare trust funds and the Civil Service Retirement and Disability Fund.)

If Bernard Madoff distributed money received from new investors to older investors
until there wasn’t enough money to continue
without any real transaction costs, because there were no actual transactions
doesn't the MyRA idea look like it would operate under the same structure?

Although the securities in the G Fund earn a long-term interest rate, the Board’s investment in the G Fund is redeemable on any business day [except within a severe debt limit crisis] with no risk to principal. The value of G Fund securities does not fluctuate; only the interest rate changes.

The G Fund is redeemable on any business day with no risk to capital
and doesn't fluctuate because it's not really real?

G Fund securities earn a statutory [conjured] interest rate equal to the average market yield on outstanding marketable U.S. Treasury securities with 4 or more years to maturity. The G Fund rate is calculated by the U.S. Treasury as the weighted average yield of approximately 125 U.S. Treasury securities on the last day of the previous month. The [1.47%] yield of the security has a weight in the G Fund rate calculation based on the amount outstanding.

The "nonmarketable" Treasuries are just like the Social Security Trust Fund,
which is just like the G Fund,
which would be just like the MyRA fund.

... The Treasury securities used in the G Fund rate calculation have a weighted average maturity of approximately 11 years.

https://www.tsp.gov/PDF/formspubs/GFund.pdf
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Notice the 1 year return at the link above is 1.47%, because; "The interest rate resets monthly and is based on the weighted average yield of all outstanding Treasury notes and bonds with 4 or more years to maturity."

Doesn't mean the money is in the notes and bonds.

Just means that's how they figure out how much to pay.

Could have said 10 years or more and it wouldn't have mattered, because there really isn't any money in the fund, which is why when the debt ceiling issue came up, the government said the fund was affected and/or used the incoming payroll savings to offset the limit.
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"Official Federal debt—the number politicians reference when talking about “debt reduction”—fails to include the expected costs of mandatory spending for programs like Social Security, Medicare [and now Obama's myRA savings plan.]

Creative accounting labels these unfunded liabilities “mandatory expenditures” rather than “debt,” allowing these costs to stay off the books despite the fact that millions of Americans have been promised these payments. Accounting for all expenditures, both present and future, and making adjustments for expected future revenues, Boston University Economist Laurence Kotlikoff estimates a more accurate measure of our country’s debt actually exceeds $200 trillion.

...these unfunded liabilities must be paid and without meaningful reform, future generations will bear the cost with substantially higher taxes, drastically curtailed government services, or some combination of the two."

http://hartzman.blogspot.com/2013/10/creative-accounting-hurts-future.html
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"...there is no lock box and the Social Security [and now Obama's myRA savings plan] funds are an entry into a government accounting book that don't really exist except as an IOU.

Politicians of all stripes have used the Social Security [and now Obama's myRA savings plan] money to pay for other government expenses.

...The classic Ponzi is where you get money from one group and then find another group to pay the "returns" to the first, and so on, until you run out of people and the game is up.

[Charles] Ponzi...took money from one group, telling them they would get it back later, and then spent the money with another group, telling them the same thing.

The difference between a Ponzi, Social Security [and now Obama's myRA savings plan], is that SS is legal and is done in full view of the public with everyone knowing the deal."

http://hartzman.blogspot.com/2013/04/john-mauldin-on-social-security-and.html
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"Social Security [and now Obama's myRA savings plan] is structured from the point of view of the recipients as if it were an ordinary retirement plan: what you get out depends on what you put in.

...In practice it has turned out to be strongly redistributionist, but only because of its Ponzi game aspect, in which each generation takes more out than it put in. Well, the Ponzi game will soon be over, thanks to changing demographics..."

Paul Krugman, 1996
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"Our Social Security system [and now Obama's myRA savings plan] is the very definition of a Ponzi, or pyramid scheme."

Congressman Ron Paul
Constitutionalist Libertarian
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"Some in our country think that Social Security [and now Obama's myRA savings plan] is a trust fund, in other words there's a pile of money being accumulated…because you put money in the government saves it for you, and then when you retire you get it out…

That's just simply not true.

The money, payroll taxes going into Social Security [and now Obama's myRA savings plan], are spent.

They're spent on benefits and they're spent on government programs.

There is no trust.

We're on the ultimate pay-as-you-go system…

The only thing Social Security [and now Obama's myRA savings plan] has is a pile of IOUs from one part of government to the next…, therefore when you have more retirees living longer for greater benefits with fewer people paying in, the system inevitably will go into the red."

George W Bush
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"...We’ve spent six decades passing the generational buck -- taking ever-larger sums from the young and giving them to the old, while promising the young their turn, when old, to expropriate their own offspring.

This massive Ponzi scheme is turning the American Dream into the American Nightmare.

Is it justifiable for a nations elders
to promise themselves tens of trillions of unfunded benefits
like Social Security, Medicare, Medicaid, state level obligations
[and now Obama's myRA savings plan],
for future generations to pay for?

Stopping it means dramatically limiting the growth of federal spending."

Laurence J. Kotlikoff and Richard Munroe

1 comment:

Thomas Rockford said...

Don't be so quick to dismiss. If Obama can get enough myRA participants, e.g. loyal militant voters,then his next move could be a campaign for a "living rate of return".

How unfair that the myRA owners have to buy debt instruments at crummy interest rates from the greatest debtor nation in human history. How about instead creating a myAnnuity where the delta between the return on treasuries and a "fair" investment return of say 8% would be funded by .... wait for it.....asking the rich to pitch in. Obama is not in the business of solving problems, he's in the business of creating entitlements and resentments
- Tom from LifeAnt.com