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MyRAs...Where the governemnt sends QE to retire

beebee
edited June 2015 in Off-Topic
"There isn’t enough money in our economy for MyRAs to bail the government out of its bond glut. So we should be alert to what may be coming down the pike. The tax laws already require IRA funds to be invested in stocks and bonds to qualify for the tax deduction. It wouldn’t surprise me at all if at some point in the near future there was a proposal in Washington to require a percentage of all IRA funds to be invested in debt of the U.S. government.'

obamas-myra-savings-plan-wolf-in-sheeps-clothing

Comments

  • jerry
    I think we can agree that readers of forbes and visitors to thi sweb site should probably not pursue investments in My IRAs . I also doubt there many of those in the previous sentence would be eligible/ Still I think the article is too critical of these investments as vehicles for those eligible particularly in a world where CD investments are just wrong. I am also less worried about the Government than I am about running into some (but not all or even a majority) of financial advisers
  • Sven
    A very one-sided article. He is out to scare others to promote his books and services.
  • beebee
    edited June 2015
    @jerry & @Sven,

    Fair enough with respect to the merits of MyRA.

    What I find interesting is the process and strategies central banks (US Fed maybe ahead of the other Central Banks) will implement to unwind all of the stimulus that has propped up the wounded economies of the world. Be prepared for creative new ways (MyRA being one of them) to deal with this unwind.

    Who will be the buyers of these bonds as rates rise? A rise in interest rates harms the Fed's balance sheets on a scale most us can't comprehend. Will the Fed create new products and methods to unwind their bond holdings? I think so.

    How about converting some of these obligations into ST, IT and LT STRIPs (Separate Trading of Registered Interest and Principal Securities) by reversing out the capital loss and removing the coupon (no interest rate risk)?

    5 year, 10 year, 30 year STRIPs might be a very popular bond during a 30 year period of rising interest rates. American Century have offered these STRIP bonds in mutual fund form (BTTRX, BTTTX), but laddering them individually might be the best way of holding STRIPs.

    Wiki on STRIPs:
    Zero-coupon_bond_Strip_bonds

    Priority one for the Fed was to help banks repaired their balance sheet by back stopping losses with US bonds. I think banks will play a big part in pedaling US bonds as they also wish to replace these assets.

    MyRA seems to be just one of "many new products" to will help central banks and banks unwind the massive amount of QE. There will be many more.

    The great QE unwind is the wolf in sheep's clothing, not the merits of MyRA program.
  • MarkMark
    So instead of toasters we might be offered free government debt obligations for opening new accounts?
  • beebee
    edited June 2015
    Mark said:

    So instead of toasters we might be offered free government debt obligations for opening new accounts?

    Hopefully one of these new bank account "prizes" isn't described as "G.D.O wallpaper".
  • scott
    bee said:

    Mark said:

    So instead of toasters we might be offered free government debt obligations for opening new accounts?

    Hopefully one of these new bank account "prizes" isn't described as "G.D.O wallpaper".
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