I was listening to C-SPAN radio the other day when one of their typical complainers called in with a gem of a complaint. He said that it was unfair that us rich middle class folks got to stash our savings in a tax-free account, the ever-popular 401K. His reasoning? That it’s not fair for those that are better off to hide their money from taxation, while those in need of that tax money (in the form of entitlements) can’t do the same. Never mind that the poor don’t pay any taxes at all. The point the caller was making was that the poor don’t have 401K’s so it just ain’t fair that anyone has them.

Now at first, I dismissed this loon as a professional whiner, but after some thought, I realized that this caller was actually predicting the future. A socialistic future, that is. Socialism, the darling of the poor and the left, does not create any wealth – it merely redistributes it. And so, assuming that America becomes ever more socialized, they will indeed take all private wealth, starting with your 401K. Know why? Government will go broke. Entitlements and pork spending will bankrupt our federal government and it will no longer be able to borrow to stay afloat. Social Security and Medicaid alone represent trillion dollar obligations that government cannot pay.

Consider this from USAToday:

The federal government keeps two sets of books.
The set the government promotes to the public has a healthier bottom line: a $318 billion deficit in 2005.

The set the government doesn't talk about is the audited financial statement produced by the government's accountants following standard accounting rules. It reports a more ominous financial picture: a $760 billion deficit for 2005. If Social Security and Medicare were included — as the board that sets accounting rules is considering — the federal deficit would have been $3.5 trillion.

Congress has written its own accounting rules — which would be illegal for a corporation to use because they ignore important costs such as the growing expense of retirement benefits for civil servants and military personnel.

(see here for more): http://www.usatoday.com/news/washington/2006-08-02-deficit-usat_x.htm

Trillions of dollars sitting in 401k's will start to look pretty good – too good – as an easy solution to the coming fiscal crisis. The federal government will give ample reasons as to why they are using a financial eminent domain to take your property. Here are some:

Reason 1 - You aren't using it right now anyway. Since this money isn’t needed by you to pay bills right away, it only makes since for the government to ‘borrow’ it (will all promises to pay it back eventually.)

Reason 2 - It was never taxed. Of course, ‘Phase 1’ of their confiscation plan will simply be to 'pre-tax' the money under the excuse that you would have to eventually pay taxes anyway. ‘Phase 2’ will be to simply take the rest when ‘Phase 1’ doesn’t solve the crisis.

Reason 3 - It's only fair. After all, poor people don't have 401k's, and besides, it's just a scam for rich (middle class) folks to hide their money from taxation.

There is precedent. US and other Governments have appropriated individual financial property countless times when corruption and incompetence have necessitated it. It has happened during the Great Depression in the US and recently in Argentina, formerly the seventh richest nation on the planet.

Consider this: Government intrusion is increasing exponentially. The government wants to tell you what to eat, where to spend money, and how to think (political correctness). It is reasonable to assume they will tell you that they know best what to do with your money (in the name of common good) and that holdouts are just ignorant and selfish people. Look at the resistance to individual social security accounts; Democrats called it ‘irresponsible’ to allow personal accounts, but what they were really afraid of was putting your name on the money they have already spent.

But what if the money is invested in stock? How can the government take that? Trifles, mere trifles. The government could facilitate mass ‘cash outs’, that is, they will simply sell the stock and convert to cash. After all, corporations like Wal Mart are evil, right, so why invest the public’s money in them? More likely, they will use the value of the stocks and bonds as collateral to borrow even more money from the global market.

So what can we do?

Fight socialism. It is under the banner of the left that these events will come to pass. Only if we embrace free markets, personal responsibility, and respect for private property, will we ensure that our savings will not be redistributed to others.