I thought I’d rerun this rant from November 2011.
I have been thinking about a couple of progressive concepts that the Obama regime is likely to employ as a temporary way to feed its spending addiction. (I say “temporary” because the Obama regime, like other “progressive” regimes, has no ability to produce wealth, only to take it and spend what has been produced by others.) These concepts are:
- seizure of nongovernmental retirement accounts, and
- graduated currency re-valuation.
Both are time-honored redistributionist tricks. Once the seized money is gone, of course, the Obamites will be looking for other sources of wealth to raid.
Let’s look at this in some detail.
1. Non-governmental retirement accounts are a very tempting target for seizure and redistribution because they currently contain about $15 trillion, or fifteen thousand billion, in cash.
Imagine that Obama apparatchiki decide that they know better how to invest your money for retirement (in fact, they already know so – just ask them). Imagine, further, that they do nationalize all non-governmental retirement accounts. Of note, this is happening now in some European states, not to mention all socialist states of years past and present. It is also the dream of greedy American leftists, and has been seriously proposed by quite a few, including one Teresa Ghilarducci from the aptly named Institute of Shared Prosperity. (“Shared” here means that you put everything you have on the table and they decide what if anything you get to keep.)
This institute has the ear of the Democratic Party and, therefore, the pathologically redistributionist Obama regime. Of course, Obama apparatchiki think that changing a thing’s name (a) makes it okay and (b) will fool those stupid Bible-thumping and gun-toting American rubes, so they have labeled the thing “lifetime income options for retirement plans.”
Once the money is securely in the hands of the spending-addicted Obama regime, some crumbs will be allotted to you by your friendly neighborhood community organizer who surely knows your needs better than you, and who can and definitely will tell you if you have more than “your fair share.”
You laugh? Well, go ahead and reëlect Obama, or else replace him with an Obama ideological clone like Clinton, and then we’ll talk again. If we’re still allowed to talk freely, that is.
2. Graduated currency re-valuation is not just a useful way to “liberate” funds from people. It is also great for flushing out “reactionary fat cats” like little old ladies who might have been “hoarding” their money in their cookie jars or mattresses (or in their private jets). When “unmasked,” the fat cats can be marked for further punitive redistribution measures.
I hear that giggling again…
But look. It’s not like it hasn’t been done before. As always, when it comes to creating and sustaining economic disaster, the former Iron Curtain countries, which lived and died by socialism, provide a useful example.
Take socialist Czechoslovakia. By the end of the centrally planned, centrally managed First Five-Year Plan (1948-53), the country’s economy lay in ruins. The peccant Party, namely the Czechoslovak Community-Organizers-in-Chief, were desperately looking for more cash. In 1953, they therefore decided to replace Czechoslovakia’s currency. With typical community organizer mendaciousness, they called it “currency reform” and announced with great fanfare that the Czechoslovak crown would now be decoupled from the “unstable dollar-based” international system and tied forever to the rock-solid Soviet ruble standard. Incidentally, the currency reform would also do away with the ration coupon system, but the stated primary goal was class warfare. To quote the Minister of Finance, Comrade Jaroslav Kabeš: “The postwar reform in 1945 didn’t deal a severe enough blow to the inflationary and speculator elements of the war years…Our financial reform is a tool of class warfare…It is structured such that all speculator and enemy elements will be deprived of their economic strength…”
The currency was re-valuated in a graduated manner. The preparations for this shenanigan (let’s call it CZ-53) were made in secrecy; indeed, only the top Party echelons knew about it. The new currency had been minted and printed in Moscow, with the able help of Soviet designers who ensured that the appropriate socialist themes were displayed. A Soviet banking “expert,” one Nikolai A. Ivanov, came a-visiting to take over the Czechoslovak national bank and to run the show.
The announcement that there was to be currency reform was made on Saturday, May 30th, 1953. It was made after 5PM; all banks and stores were closed and there wouldn’t be a run on the banks and, more important, people who had any significant amounts of money could not get at it and spend it. All security organs – police, the people’s militia – were notified ahead of time and were standing by to suppress disorder. (There was some, but what are you going to do without weapons?).
There had been rumors for weeks before CZ-53 began, and people were rightly concerned. Those who had any money took it out of the banks and tried to spend it, but the Community-Organizers-in-Charge had anticipated this and cut off deliveries to all stores two weeks before. In other words, there was almost nothing to buy. People who then quietly returned their money to the bank had their accounts frozen and subject to especially punitive exchange rates.
Of note, I asked my mother how much money she and Dad had lost during CZ-53. She laughed and said: “Nothing, because we had nothing. But [our friends] the Démants had just gotten some money, so they took us out to dinner on the evening of May 30th and we spent it all.”
On Sunday, May 31st, the Communist paper Rudé Právo (Czechoslovak version of the Soviet Pravda) explained what would happen. Currency exchanges would operate only between June 1st and 4th, 1953. Only one member of the family could go. If you had, say 100,000 crowns in the state savings bank, you would receive new money as follows:
- old amount exchange rate new amount
- first 5,000, or 5% 1:5 1,000
- next 5,000, 0r 5% 1:6.25 800
- next 10,000, or 10% 1:10 1,000
- next 30,000, or 30% 1:25 1,200
- next 50,000, or 50% 1:50 1,000
If you had any significant amount of money at home, you were labeled a “reactionary hoarder” and you were in deep trouble. You would get the 1:5 five exchange ratio only for the first 300 old crowns, yielding 60 new. Anything over that would be re-valued at 1:50.
Of note, 300 old crowns was enough to live on frugally for 3 weeks or so.
People who had any useful amount of money were impoverished. Lifetime savings disappeared with the wave of a community organizer’s well-manicured hand. Those who had more than the redistribution apparatchiki thought was healthy for a progressive resident of a socialist country were blacklisted as “hoarders” and “capitalist reactionaries,” often even as “agents of the West.” Many who didn’t desire such exposure to “progressive justice” often burned or flushed what extra they had down the toilet.
Of course, in keeping with genuine socialist ideals of equality, members of the Party, police, border guards and other elites got waivers.
Here’s how things would turn out if the Obamites decided to pull a CZ-53 on Americans’ non-governmental retirement funds. The pretense may range from concern over counterfeiting to the putative need for currency devaluation to improve competitiveness. Or maybe they think it’s time to decouple the dollar from the unstable, capitalist dollar and tie it to the “rock-solid” PRC yuan. Or simply just because – after all, since when does a real community organizer need a reason to manipulate people?
To preserve secrecy, this the most transparent administration ever would conduct all CZ-53 deliberations in closed sessions and in faraway places, protected by Obama’s private armies. We’ve already seen this with Obamacare and other high-level discussions. The Obamites might even get the Chinese in on the act by having them print and mint the new U.S. currency. (Now I’m laughing – can you imagine the hilarious typos?)
This is how things would look if you had, say, a $100,000 in old dollars in your retirement kitty, after CZ-53 exchange ratios are applied:
- old amount exchange rate new amount
- first 5,000, or 5% 1:5 $1,000
- next 5,000, or 5% 1:6.25 $800
- next 10,000, or 10% 1:10 $1,000
- next 30,000, or 30% 1:25 $1,200
- next 50,000, or 50% 1:50 $1,000
In the end, you’re left with $5,000 in new dollars instead of the $20,000 that a straight 1:5 exchange rate would have yielded. And, you would have no access to what was left because the government knows better how much you may have, and when (if ever). On the other hand, the government recovers $15,000 in new dollars – 75% of what used to be yours – that can then be redistributed any way Obama apparatchiki desire.
As for your private stash of cash… If you had, say, $10,000 at home, you would get $60 in new money for the first $300 in old money (1:5) and, in keeping with the spirit of CZ-53, you would get $190 for the remaining $9,500, at 1:50. That’s $250 in new dollars for your private stash, instead of the $1,800 had you kept the money in a bank. Socialist fairness, that.
Now, let’s look at America’s non-governmental retirement accounts and subject them to CZ-53-style re-valuation. The $15 trillion in non-governmental retirement accounts would fare as follows:
- old amount exchange rate new amount
- first $750 billion, or 5% 1:5 $150 billion
- next $750 billion, or 5% 1:6.25 $120 billion
- next $1.5 trillion, or 10% 1:10 $150 billion
- next $4.5 trillion, or 30% 1:25 $180 billion
- next $7.5 trillion, or 50% 1:50 $150 billion
After CZ-53, what’s left in the accounts is $750 billion in new money. Had the re-valuation been a straight 1:5, it would have been $3 trillion. From the $750 billion, the government will finance the retirement of those who had non-governmental retirement plans – or else redistribute the funds yet again. The government has recovered the other 75%, or $2.25 trillion in new money, which they can use any way they want.
$2.25 trillion’s a lot of play money that can be used to enrich a great many Obama faithful, not to mention plenty of cash to cover up the failures of an awful lot of Solyndras, making them look like thriving concerns.
As happened in Czechoslovakia, a lot of folks and organizations would get waivers, as is the case with Obamacare. What comes to mind right away are the usual Democratic Party stalwarts, the unions, GE, GM, various national and international financiers, the race hustling concerns, and other conglomerations of Obamite foot soldiers.
Now, I’m not saying that any of this is going to happen. I’m just saying that we have an administration that:
- a. is run by people who have no clue about real economics and wealth creation (taking what belongs to others ain’t economic policy, just highway robbery),
- b. has already practically spent the country beyond bankruptcy,
- c. is dying to find more cash to finance more of its harebrained schemes,
- d. anxiously keeps track of all significant amounts of money that change hands. (Banks already must report all withdrawals of $10,000 or more under the Bank Secrecy Act; moreover, Section 9006 of the Obamacare monstrosity (!) requires that as of 01/01/2012, all purchases of $600.00 must be reported on a separate Form 1099.)
- d. is dedicated to punitive redistributionism, and
- e. has a stated contempt for the U.S. Constitution and a very limited notion of human liberty, economic freedom and the rights of individuals.
And so I wouldn’t be at all surprised if CZ-53 did happen here.
Oh, after your retirement money is gone, it’ll be time for your savings and checking accounts.
Primary reference on CZ-53: Zdeněk Jirásek and Jaroslav Šůla. Velká peněžní loupež v Československu 1953, aneb, 50:1 (The Great Financial Robbery in Czechoslovakia in 1953, or 50:1). First Czech edition published in 1992 by Svítání in Prague.