What is the next Wide Scale Asset-Forfeiture?

[PriestTheRunner]

Hey guys, I wanted to start a quick thread for ideas/suggestions on what class of property or asset will be the next large asset forfeiture?

My presuppositions are these:
~ Asset forfeiture on a wide scale is basically guaranteed if (1) the left stays in its far left position, (2) the left is in a position of power at the time and (3) an economic crises hits the government.
~ The assets seized will likely be something that is easily taken in our electronic age (see examples below, typically the government aimed for the 'easiest target' at the time).
~ If they left continues its leftward trend (and somehow doesn't cause civil war 2.0) it may seize property even without a economic crisis.


Some main points:

~ To those who say "it can't happen here", it already has and it still does (to some extent). FDR issued Executive Order 6102 April 5th, 1933, forcing everyone to turn in their gold (hence naturally only taking from the wealthy) except for a small amount. He then encouraged congress and signed the Gold Reserve Act of 1934 which changed the 'official' price of gold from $20.67 per troy ounce to $35- effectively a 70% increase in the value (which naturally devalued the buying power of the dollar amounts given just a few months earlier for the gold). The result was a government-approved theft of over half of everyone's wealth held in gold. Thats one example.
~ Another example of it happening here is Civil Forfeiture which is its own basket of problems. Civil Forfeiture is unfortunately common but isn't based in a socialist agenda. I include it only because it shows a template (and a mindset) that confiscation of property is perfectly acceptable if one segment of the society can be deemed 'others' (in this case 'criminals'). It is very easy to see the left using the exact same 'others' tactics against the so-called '1%', but when you get the left to spit out actual numbers, it is clearly the upper middle class and up that they have a problem with (the numbers I have seen are those making 130-150k a year or more, but varies basked on where you look). It is an example of what society can do when you create an outlier group (like jews or blacks in Nazi Germany, Whites in South Africa, The Kurds in Turkey, etc...) and how easily that mindset allows for property confiscation- and is an example that the US legal system and society allows it currently for an 'outlier' group (or perceived group). Hopefully this is fixed soon, though.
~ Yet another example is the Social Security fund that we just 'borrowed' from (uh-huh, sure). I shouldn't need to lay that one out on here...


My point is, it always seems to be the easiest "high value asset" to obtain that is targeted. In the US, it was gold (hard to hide as banks were on board). In Venezuela, it was foreign owned businesses (no effective political power). In South Africa, it is farmland (no firepower to resist, immobile asset that you cannot leave with). In England and much of Europe, it is wages (through 40%+ taxation).

As such, the US most likely isn't going to see take rates above 40% for any income earners. The progressive rates guarantee the majority of the voting block wont see taxes that high (because it would cost the left votes), and there is not enough money from the '1%' to pay for everything the left wants (IE if you taxed 100% of income above 1 million it wouldn't even pay for free college, much less socialized medicine, etc). Because of this, I don't see taxation being an effective 'target' in the US. It either wouldn't be high value enough or would be a political non-started if it started reaching down into the 'normal' income levels.

What I do see as a target is anything with high value, easy confiscation and already has government involvement. Social security was gutted (and basically acted as a property confiscation) and remains so, so it is no longer viable to seize, especially if populate rates decline as they likely will. As such, the next 'big target' I see is 401k / IRAs / Other investment avenues that have government oversight and (in the eyes of some) control.



My main question is how likely is a seizure of investment accounts assuming the above presuppositions are met and is there any other major asset that I am missing that would fit the bill? I would very much like to 'retire early' and have the savings rate to do so, but I do have considerations about the future of investing in the US (about a 20 year time-span is my immediate concern, and then having a revenue-generating asset class beyond that point for about 30-40 years). With the longer time frame, it isn't impossible to imagine. Real-estate and landlording seems safer than investing once you account for some of these concerns (as the widespread seizure of real estate in the US would almost certainly lead to civil war or only be the result of a massive governmental shift to full socialism/communism). The after-inflation rate of return is about 6% on a decent rental vs 7% on the stock market.

Thoughts?

[anygunanywhere]

Ammo. I’ll give it to them one at a time.

[tomneal]

Trial Balloons
A few years ago they sent up a trial balloon to force convert all IRA and other retirement accounts into government bonds. It did not go over well. The folks with retirement accounts hated the idea. Oh, I guess stock brokers did too.

In the last couple of years they sent up trial balloons to get rid of all cash money. Starting with $100 bills and 500 Euro notes. 'cause only "criminals" need big bills (or any cash). That balloon could have floated higher if, they didn't have a simultaneous initiative to keep 'bad' businesses from using banks. This coming from the folks that think "Guns=Bad".

I have seen the math that there is a 38% chance of seeing a revolution in the United States, in average lifespan of 78.7 years.

[PriestTheRunner]

Trial Balloons
A few years ago they sent up a trial balloon to force convert all IRA and other retirement accounts into government bonds. It did not go over well. The folks with retirement accounts hated the idea. Oh, I guess stock brokers did too.

In the last couple of years they sent up trial balloons to get rid of all cash money. Starting with $100 bills and 500 Euro notes. 'cause only "criminals" need big bills (or any cash). That balloon could have floated higher if, they didn't have a simultaneous initiative to keep 'bad' businesses from using banks. This coming from the folks that think "Guns=Bad".

I have seen the math that there is a 38% chance of seeing a revolution in the United States, in average lifespan of 78.7 years.

This is pretty much exactly what I was anticipating, though I haven't seen anything come out on it. Do you have a link to the bolded section above? Trying to find the example.

[Abraham]

Ah, what did T. Jefferson state about the tree of liberty and...?

No, I sincerely don't want civil war, but if relentless tyranny is push onto the American public, what then?

Accept it like some serf at the behest of his masters, or ....?

[RoyGBiv]

Ammo. I’ll give it to them one at a time.

I like your style Sir.

[Jeff B.]

Trial Balloons
A few years ago they sent up a trial balloon to force convert all IRA and other retirement accounts into government bonds. It did not go over well. The folks with retirement accounts hated the idea. Oh, I guess stock brokers did too.

In the last couple of years they sent up trial balloons to get rid of all cash money. Starting with $100 bills and 500 Euro notes. 'cause only "criminals" need big bills (or any cash). That balloon could have floated higher if, they didn't have a simultaneous initiative to keep 'bad' businesses from using banks. This coming from the folks that think "Guns=Bad".

I have seen the math that there is a 38% chance of seeing a revolution in the United States, in average lifespan of 78.7 years.

This is pretty much exactly what I was anticipating, though I haven't seen anything come out on it. Do you have a link to the bolded section above? Trying to find the example.

Here you go...

https://www.usatoday.com/story/money/20 ... /24842705/

An act such as this would not be something that I looked kindly on.

Jeff B.

[Jusme]

The next assest forfeiture, has already taken place, and only requires a few key strokes,to grab everything. How many of us, have our "money" in anything but electronic, virtual reality? Very few people, have large amounts, of hard currency, or other commodites, such as precious metals, etc.
A recall, of funds, from banks, bailed out during the recession, would decimate, the entire wealth, of the poulace. All banks, are on the brink of insolvency, and rely on the FDIC, to cover them. Do away, with the government, guarantees, and poof, instant bank failures, nationwide. The leftist could then step in, and offer, pennies, on the dollar, for whatever, we had in deposits. Of course, it would create, a bigger, depression, than the one in the 30s but it would then allow for, the nanny state, to force everyone into relying, on the government, to sustain us. Granting them, the authoritarian Utopia, they are now seeking. JMHO

[bbhack]

If we split up the US land on a per capita basis, everyone would get about 7 acres.
Forget that.
What is the liquidated value of the US?
First, let me say that that question is the essence of a trick. But my guess is something less than $100 trillion.

[MaduroBU]

It's funny and sad that you reference Roosevelt's gold confiscation orders. The thing is, the government didn't want the physical metal; it wanted the public to not have it, more specifically to hold little gold in comparison with Federal holdings. Roosevelt didn't want the gold; he wanted pricing power to inflate the dollar.

Why would he want that over metric kilotons of gold bullion? Because it's worth more. Your initial question is extremely valuable to anyone with the power to inflate the currency. You're not a dumb guy and you're obviously on the lookout for shenanigans, but you can't see it. There is no "next" Wide scale asset foreteiture because the current wide scale asset forfeiture works EXTREMELY well and flies directly over most folks' heads.

Inflation is theft for the wealthy few from the many by their partners /debtors in government. Inflation is not "helicopter money". Helicopter money is a thought experinent conceived by Friedman in the 1960s and only seriously considered in Japan in this decade, but it's how most folks think inflation works. Basically, the mental image is a banker emptying a briefcase of freshly printed twenties out the door of a chopper overflying a populated area. Everyone gets some cash all at once; maybe in practice it's done electronically, but the helicopter makes it simpler to envision.

This situation HAS NEVER OCCURRED and is not likely to ever come to pass. What actually happens is that the FOMC decides to inflate (generally in pursuit of full emoloyment based upon the Phillips Curve, which is its own mockery of reason) by monetizing debt. In the US the Fed can directly buy new debt from the Federal government with newly created money, but it can also print money to buy assets from private (very large) banks. Further, in extreme cases the big banks are simply given money* (the Fed printed about $2.7 trillion dollars, or 3.4x the 2007 extant amount, between 2008 and 2014; forget this extreme example for now).

Price discovery for the new value of a dollar is inefficient. This means that newly created dollars hold the same value as they did before the new dollars were created until the market prices in that tiny amount of inflation. As the new dollars work their way down the food chain to the plebians, the new, depreciated value is set by the market. The extra value extracted from the holders of the old dollars by the holders of the fresh new dollars is MASSIVE.

As these institutions are essentially all banks, they mostly loan the money out. It's fairly easy to imagine arbitrage when I can lend you a dollar that I know will soon be worth $0.99 when you still think that it's worth $1. The extra penny may be small, but when you multiply it by billions and add continuouly compounded interest in, the value expands rapidly.

*I mentioned direct crediting of reserves above. That's a special case, and while egregious, isn't what we're discussing here. That event wasn't inflation, as the new "money" is kept in the Fed and can't be lent out. Basically, the Fed bought worthless MBS products from the big banks at face value and paid for them with newly created "reserves" credited to the banks' accounts at the Fed. This was essentially a shell game, wherein the loans that will never be repaid on houses worth a fraction of the loan amounts were removed from the bank balance sheets and put on the Fed balance sheet. If you think that the Fed didn't want to be audited in 2008, guess how they feel with a nominal $3 trillion on their books that is worth maybe 10% of that?

So while you're looking around for the G-man sniffing around your gun safe or the IRS taking too much from your paycheck, wealth confiscation for the 0.01% has been ongoing and abetted by both political parties since 1971.

[ScottDLS]

Great summary. In my opinion why QE didn’t work is because the market is still savvy even when there is tons of liquidity and super low rates. The problem is the regulatory drag of Dodd Frank and the Obama regulatory state resulted in very few investment opportunities even for low/no cost money. The only firms/investors that could take advantage of easy money to lever up, were big slow growth firms. There were few profitable opportunities in the “real” economy and as a result, the only people that made money were the big politically connected investment banks. They used financial engineering to take advantage of the excess liquidity. Small borrowers, investors, and home buyers were frozen out by poor job growth and limited opportunities.

[MaduroBU]

Great summary. In my opinion why QE didn’t work is because the market is still savvy even when there is tons of liquidity and super low rates. The problem is the regulatory drag of Dodd Frank and the Obama regulatory state resulted in very few investment opportunities even for low/no cost money. The only firms/investors that could take advantage of easy money to lever up, were big slow growth firms. There were few profitable opportunities in the “real” economy and as a result, the only people that made money were the big politically connected investment banks. They used financial engineering to take advantage of the excess liquidity. Small borrowers, investors, and home buyers were frozen out by poor job growth and limited opportunities.

The scary thing is....maybe that was QE working EXACTLY as intended? The crazy part is, none of this is hidden. FRED maintains great, easily configurable graphs of this in their website. The issue is that nobody even bothers to look. You can't see negative nominal interest rates and a money multiplier below 1 for YEARS and claim that things are okay.

[PriestTheRunner]

Here you go...

https://www.usatoday.com/story/money/20 ... /24842705/

An act such as this would not be something that I looked kindly on.
Jeff B.

Thank you for the link!

It's funny and sad that you reference Roosevelt's gold confiscation orders. The thing is, the government didn't want the physical metal; it wanted the public to not have it, more specifically to hold little gold in comparison with Federal holdings. Roosevelt didn't want the gold; he wanted pricing power to inflate the dollar.

Yes, I get that part. It was the gold valuation he wanted to change, and could only do so if such gold could not be turned in by the 'hoarders'. IE having gold in the 'commoner's' hands would increase the risk too much after the inflated price was posted such that he might have wound up in the exact same place he started- Without a big bag of newly printed cash to pay for the New Deal programs because that bag of cash would have to be pulled from to pay off the hoarders that decided to cash in on the new, inflated price. In other words, he needed to make it illegal for people to claim the inflated amount via gold and to do so had to remove the gold from the marketplace. I get that.

Why would he want that over metric kilotons of gold bullion? Because it's worth more. Your initial question is extremely valuable to anyone with the power to inflate the currency. You're not a dumb guy and you're obviously on the lookout for shenanigans, but you can't see it. There is no "next" Wide scale asset foreteiture because the current wide scale asset forfeiture works EXTREMELY well and flies directly over most folks' heads.

Inflation is theft for the wealthy few from the many by their partners /debtors in government. Inflation is not "helicopter money". Helicopter money is a thought experinent conceived by Friedman in the 1960s and only seriously considered in Japan in this decade, but it's how most folks think inflation works. Basically, the mental image is a banker emptying a briefcase of freshly printed twenties out the door of a chopper overflying a populated area. Everyone gets some cash all at once; maybe in practice it's done electronically, but the helicopter makes it simpler to envision.

This situation HAS NEVER OCCURRED and is not likely to ever come to pass. What actually happens is that the FOMC decides to inflate (generally in pursuit of full emoloyment based upon the Phillips Curve, which is its own mockery of reason) by monetizing debt. In the US the Fed can directly buy new debt from the Federal government with newly created money, but it can also print money to buy assets from private (very large) banks. Further, in extreme cases the big banks are simply given money* (the Fed printed about $2.7 trillion dollars, or 3.4x the 2007 extant amount, between 2008 and 2014; forget this extreme example for now).

Price discovery for the new value of a dollar is inefficient. This means that newly created dollars hold the same value as they did before the new dollars were created until the market prices in that tiny amount of inflation. As the new dollars work their way down the food chain to the plebians, the new, depreciated value is set by the market. The extra value extracted from the holders of the old dollars by the holders of the fresh new dollars is MASSIVE.

As these institutions are essentially all banks, they mostly loan the money out. It's fairly easy to imagine arbitrage when I can lend you a dollar that I know will soon be worth $0.99 when you still think that it's worth $1. The extra penny may be small, but when you multiply it by billions and add continuouly compounded interest in, the value expands rapidly.

I'll dig further in to your post soon when I have the chance to research and dig through the websites you mention. My main point, though, as it seems the FED and basically everyone are fine with inflation so long as it does not disrupt the status quo. Even on my end, while inflation sucks when your investments outpace inflation, it is less of a concern especially when inflation is a nice, predictable 3.1% +/- annually. While it would be great if the US would operate on the fiscal policy of Texas (neutral budget, rainy-day fund, lowest taxation possible (though this needs some tweaking this go round)), it is unlikely to happen. My main concern is when the fecal matter hits the air-moving oscillating device, and inflation is at risk of going to 20% or more in a year (IE hyperinflation), what bucket is the government going to use to bail out the most expensive programs?

If inflation actually hit 20% during a crises, politicians heads would roll. As such, I see it as much more likely that in their human nature, politicians (of the left and the possibly the right) would try to find something to use to get them out of the situation. Or do you think they would let inflation run rampant (as would be the free market method of balancing the budget... )? Yes, I agree that at a fundamental level inflation is theft, and the mixture of government money with a semi-accountable and semi-government fed with non-government banks is a terrible (and corrupt) system, it is what it is right now. I invest accordingly, expecting 3% +/- inflation and analyzing returns beyond that rate.

*I mentioned direct crediting of reserves above. That's a special case, and while egregious, isn't what we're discussing here. That event wasn't inflation, as the new "money" is kept in the Fed and can't be lent out. Basically, the Fed bought worthless MBS products from the big banks at face value and paid for them with newly created "reserves" credited to the banks' accounts at the Fed. This was essentially a shell game, wherein the loans that will never be repaid on houses worth a fraction of the loan amounts were removed from the bank balance sheets and put on the Fed balance sheet. If you think that the Fed didn't want to be audited in 2008, guess how they feel with a nominal $3 trillion on their books that is worth maybe 10% of that?

So while you're looking around for the G-man sniffing around your gun safe or the IRS taking too much from your paycheck, wealth confiscation for the 0.01% has been ongoing and abetted by both political parties since 1971.

Just out of curiosity, is it your opinion that the inflation rates are affecting all commerce (and investment) and as such are reducing your theoretical returns compared to a 0% inflation environment? Or do you believe the inflation only applies to holdings (which is still quite large as many companies hold massive amounts of cash, many people still use low-rate savings accounts, and there is naturally a significant amount of cash in the market at any given time)? -IE do you think inflation only applies to cash or cash equivalent holdings or to all investments? Logically speaking, REITs and real estate should increase in value at a minimum of the inflation rate, even in a hyper-inflation scenario... Thus rentals/real-estate are safer in a hyperinflation scenario as well as a government seizure scenario?

Its dang hard to quantify any of these risks, but I am coming more and more to the conclusion that I should not be 100% VTSAX after retirement.

If anything, what seems perfect would be about 33% my business (13%-25% returns +/- depending on market), 33% in rentals (I am projecting about 11% returns) and 33% in stock market (typically 10.78% or so). While I would consider a total market index (or preferably several across different firms) diversified as an asset, they are not diversified as an asset class and as such are all at risk of the same failure / government seizures / etc...

Thanks!

[MaduroBU]

The Fed primarily set money supply with reserve requirement and interest rates before the global financial crisis. It's a different world since 2009 because JPMC, BoA, probably Wells Fargo, and the big investment banks that didn't collapse were all insolvent.The Fed hid their worthless assets under the Fed by trading worthless loans for "reserves" that couldn't ever leave the Federal Reserve. Those reserves didn't cause inflation because they're locked away by capital requirements that these banks can't meet without them being....locked away. It's just a way to hide the facts that the banks are insolvent.

That didn't stop the Fed from dropping its interest rate to 0% or reserve requirements for Big Banks to 0. This produced an environment in which the entities that needed regular returns couldn't invest in bonds. It was a huge deal for the big state and private pension funds, whose already massive unfunded liabilities grew by huge strides in 2000 and 2008. They then had to make bets in the stock market and those bets are ongoing. If these bets fail in a bear market, then pension funds with 20-40% of the funds that they need assuming indefinite 7.5% growth will have no chance of meeting those obligations.

That could force the printing of money to save those pensioners, and that money WILL enter the market and cause inflation.

[PriestTheRunner]

That didn't stop the Fed from dropping its interest rate to 0% or reserve requirements for Big Banks to 0. This produced an environment in which the entities that needed regular returns couldn't invest in bonds. It was a huge deal for the big state and private pension funds, whose already massive unfunded liabilities grew by huge strides in 2000 and 2008. They then had to make bets in the stock market and those bets are ongoing. If these bets fail in a bear market, then pension funds with 20-40% of the funds that they need assuming indefinite 7.5% growth will have no chance of meeting those obligations.

That could force the printing of money to save those pensioners, and that money WILL enter the market and cause inflation.

So during the 2008 fiasco, the losers were those who typically bought bonds from the big banks, because those bonds dried up when the banks were able to get free Fed dollars. This meant that the pension admins had to either (1) hold cash with negative return and payout of that amount or (2) go into a very turbulent stock market looking for safe returns. Makes sense. To stabilize the banks the Fed sold out those who typically provide financing (eg buying corporate bonds) in order to keep the system from fully collapsing and having to print money... So essentially the pension funds at state and corporate level subsidized the whole market's stability to their detriment (and some folded) but inflation stayed at a nice predictable 3.1%.

Essentially, by drying up the bond market there was a Asset-Forfeiture in that the government took control of the entire bond market, and it has only recently started growing again since the interest rates are no longer 0% and there is a buy-in amount.

That makes sense, and since researching 2008 I was trying to string together who the 'permanent' losers of wealth were... It was anyone who had a pension fund that is still underwater or folded completely. Makes sense, unfortunately.

However, the house of cards can't go on forever. So if it was the bond market most recently that was burned at the stake, what is the next asset class?

I'm still betting 401k's / IRAs.

Thanks for the insight.