The point in my prior article is that "what can't go on won't go on" and "things that have to happen will happen". Nothing has changed. We still need to sell absurd amounts of bonds and can't go on the way we are. Our customers are less interested in our bonds. Although almost never reported on in the US, China's Shanghai stock market is in deep correction, almost a bubble burst. Higher interest rates might get bond buyers back, but will be a death blow to our economy. The alternative to monetizing our debt is to selling them to someone, but whom? Enter the 401k.
|Shanghai composite index. Technical analysis by http://www.stocktiming.com/index.htm|
The latest information is that the rule-making process is proceeding normally. Reports on the total amount of money in 401k accounts vary, but it's in the vicinity of 5 trillion dollars. My bet is that is an absolutely irresistible pile of money to the current administration. In this article, one of my first, I wrote:
The stock market crash of ’08, with the concomitant collapse of many 401k plans, has given the .gov an excuse. There is talk of nationalizing our 401k plans – in not so few words – so that we can replace those “risky” plans with a gubmint guaranteed (but teeny tiny) yield. See, for example, this piece on Market Ticker There's a good reason to think this is coming; our unsustainable debt has to be financed by selling bonds. Now that the sales of bonds are failing internationally, the .gov can sell them by forcing them into our 401k accounts!
I am not emptying my 401k .... yet. I am watching the process as best as I can.
You should, too.