Following in the footsteps of Hungary takes from the prudent savers to give to the spendthrifts.
The most striking example is Hungary, where last month the government made the citizens an offer they could not refuse. They could either remit their individual retirement savings to the state, or lose the right to the basic state pension (but still have an obligation to pay contributions for it). In this extortionate way, the government wants to gain control over $14bn of individual retirement savings.
The Bulgarian government has come up with a similar idea. $300m of private early retirement savings was supposed to be transferred to the state pension scheme. The government gave way after trade unions protested and finally only about 20% of the original plans were implemented.
Following in the footsteps of the perfidious Cristina Kirchner of Argentina an assortment of European countries is draining pension money to pay for current deficits. Poland, France, and Ireland are all, in a variety of ways, taking from either individual retirees or large retirement funds.
Even though the US government has crossed the Bernholz warming limit on deficit spending and huge deficits stretch out for years I do not expect the US government will seize personal retirement accounts. More likely it will reduce the size of tax deductions for contributions to such accounts. So you are better off putting as much into such accounts until retirement account contribution limits get lowered.
What I want to know: Once the US sovereign debt crisis develops to an acute crisis stage will most of the account balancing be done by tax increases, spending cuts, or inflation?
|Share |||By Randall Parker at 2011 January 08 03:20 PM Economics Predation|