Excerpts from the chapter Failure By Design in Barking With The Big Dogs

Here is where the smoke and mirrors start to filter onto the scene. Word on the streets says people could possibly have a forced retirement.127 (I thought we already had forced savingsSocial Security. Hmmm). Taking over 401(k) accounts is a possibility too.128 The hearsay information is all over the internet, radio and other media like plaster on a sculpture. Therefore, the talk is worth mentioning and here is the reason why. If retirement accounts and bank controlling events take place, the government would pay a very small return; (I will explain the actual rates in just a moment), and, is an additional savings such as a new forced retirement where part of the money would come from to do low cost loans by government controlled banks? If the prior scenario sounds farfetched, hang on for a minute and see. Workers and employees would loan the government money, not by choice, but force. If we pay taxes, commonly called a savings and investment account, and Uncle Sam pays interest back to us; therefore, what happens is we make a loan to the government. Then, as an article from National Public Radio states, Uncle Sam can turn around and make mortgage loans.129 Would making mortgage loans by the government be the way to earn the profits in order to pay us back on our forced savings? Would the government engage in price fixing? Consider private companies next. What bank would want to loan at a set price? What company would want to have set prices for the products and services provided and sold? What business would like to have its contracts altered? Contemplating the questions just asked, take the cost of business for example. If costs go up, the prices for goods and services would have to rise in order to maintain profitability provided sales do not increase is some proportion. If the price is constant, business needs subsidies to offset losses. Without subsidies, business cannot keep going. Would subsidies come from more taxes to cover the losses? With an idea about control of industry and interest rates, look at a practical side to what might actually happen. Taking into account investment rates of a new forced retirement, what would those rates be? Maybe we can earn 3% as mentioned in the article by The U.S. News & World Report.130 Wait just a minute, the official inflation rate might be the 3% range.131 Add taxes on the earnings. We would actually lose money due to governments control and price fixing.

Moving right along, hype is a big part of this chapter. Did you notice the words used quite often, such as forced, subsidies, taxes, control and socialism? The idea behind the hype is fear. Did the hype work? Are you laughing at the outrageousness, or are you getting scared of your own shadow? The main suggestion of Failure By Design is to show how interest rates and investments can work. If the government forces more savings accounts, individuals disposable income becomes more limited each month. Not only is take-home money less, investment potential is limited. The borrowed rates, known as savings accounts, might only be 3% per year in order to provide low cost, say 4%, loans.132 Low mortgage rates may be good from a borrowing standpoint, but also consider what is lost to get the low rate. In addition to investments declining, maybe our lifestyle will too. (Okay, the last sentence is hyped up as well, or was it?) Depending if the actions by greedy corporations dictate the need for more government intervention or if government is greedy and wants to take more control, one thing is for surethe rules of the game are changingread about them next!

127

Luhby, Tami. Senior Writer. Uncle Sam Can Fund Retirement - Obama CNNMoney.com. June 16, 2008. Accessed: August 2009 from http://money.cnn.com/2008/06/16/news/economy/retirement_savings/index.htm

128

Pethokoukis, James. Would Obama, Dems Kill 401(k) Plans? U.S. News & World Report. October 23, 2008. Accessed: August 2009 from http://www.usnews.com/money/blogs/capital-commerce/2008/10/23/would-obama-dems-kill-401k-plans.html

129

Arnold, Chris, Housing Fix? Republicans Push For 4 Percent Loan NPR. February 5, 2009. Accessed: August 2009 form http://www.npr.org/templates/story/story.php?storyId=100259536

130

Pethokoukis, James. Would Obama, Dems Kill 401(k) Plans? U.S. News & World Report. October 23, 2008. Accessed: August 2009 from http://www.usnews.com/money/blogs/capital-commerce/2008/10/23/would-obama-dems-kill-401k-plans.html

131

InflationData.com.

Historical

US

Inflation

Rate

1914-Present

Accessed:

August

2009

from

http://inflationdata.com/Inflation/Inflation_Rate/HistoricalInflation.aspx
132

Arnold, Chris, Housing Fix? Republicans Push For 4 Percent Loan NPR. February 5, 2009. Accessed: August 2009 form http://www.npr.org/templates/story/story.php?storyId=100259536