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U.S. Treasury Continues to Raid Retirement Accounts

June 2, 2011, by Ken Jorgustin

us-treasury-raid-retirement-funds

As reported on zerohedge.com,

Today, very quietly, the Treasury released its latest refunding announcement, in which it disclosed it would issue another $66 billion in 3, 10 and 30 Year notes next week. The irony of course is that the US is and continues to be at its debt ceiling limit (or just $25 million short of it), at a total of $14,293,975 million.

Furthermore, as was also disclosed by the Treasury, this gross issuance will also be the net amount added in marketable debt, as upon settlement on June 15, there will be no redemptions of maturing bonds. Which simply means that the continued “dis-investing” (which is merely a polite word for plundering) from intragovernmental debt, also known as retirement accounts, is about to kick into high gear.

As a reminder, the only solution that Geithner currently has to run the government, at least until August 2 when even this runs out, is to slowly drain the debt in non-marketable accounts, in the form of Suspension of G-Fund and ESF reinvestments, as well as the Redemption and suspension of of CSRDF Investments, measure which when combined will provide a short-term buffer of $232 billion.

Yet for all practical purposes, what is happening is that retirement accounts are now being seriously plundered, and if the unthinkable were to happen, and the debt ceiling would not rise, not only would the US be in technical default, but various retirement funds, which already are underfunded, would find themselves even more severely in the Red.

The scary thing is that by the time August 2 rolls around, the current total of $4.608 trillion in various Trust Funds, will drop to well about $4.4 trillion, or an implicit 6% underfunding in 2 months merely to keep the bloated government operating for a few more months.



In summary, I’ve noted the information above from zerohedge to illustrate yet again how the main-stream-media will not report this stuff. The government and treasury are in serious financial doodoo, which in turn means that all of us are at risk to suffer consequences as something must ‘give’, sooner or later.

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