Dr. Jerome Corsi joins Mike Siegel on the Boss Business Brief to discuss ways the government is looking to regulate the retirement industry to make retirement plans invest in government annuities.

Why would the Government do it? Pay me a dollar now and I will pay to an annuity back that includes that dollar along with interest. Sounds great, except the government will spend the dollar. There is nothing left unless others pay in or tax revenue is generated to pay it back.

Listen to this interview and Dr. Corsi explains who is behind this push, where it has been done before, and what the likely outcome will be.

Transcript:

Siegel: Well folks, welcome in. Good to have you with us right here at the BOSS Business Brief. We are joined today by a gentleman that has some great insight into an issue that is going to affect possibly every one in America, and certainly small businesses across this country – Dr. Jerome Korsi is with us. He is a major financial player. He is with World Net Daily and does great work there as a person who has done a whole n umber o f columns about a whole variety of issues. He wrote a book about Barrack Obama and has, as I said, been involved in the financial industry for several decades. It is good to have him with us. He is only 28 years old, but he has been in the business several decades – figure that one out. Good to have him with us. Dr. Korsi, how are you today?
Jerome: Great, Mike. Feel like 28 not any longer. It is a nice thought, but I'm not anxious to go back to 28.
Siegel: Well, a lot of these things that have happened are so astonishing in terms of politics that I suppose, and business, that it keeps one young and vibrant to keep fighting for the values that you believe in. But let's talk about this.
Jerome: No question about that.
Siegel: Exactly. Let's talk about this 401K situation, and I think IRAs are included as well in this conversation, are they not?
Jerome: Yes. I have been writing a lot about this in my Red Alert Newsletter following this, and also at World Net Daily. The Obama administration is taking a serious look at getting their hands on people's private retirement savings accounts – IRAs and 401Ks. Specifically what I mean is there are trillions of dollars here in assets and the Obama administration and treasury cannot figure why they can't grab some of these trillions of dollars in private retirement accounts and put them into the treasury debt at low interest yield to finance the deficit. So they come along, of course, with a plan through the Department of Labor which regulates _____ plan, a workplace-based retirement plan, and the Department of Treasury, which of course is "we are the federal government; we are here to help you" and the idea is we will put a government guaranteed annuity within your 401K or your IRA and make it necessary to be there by regulation. Of course, that annuity will have to be invested in treasury debt at whatever yield the government wants to sell it. You will then be required to buy treasury debt to fund this government annuity portion of your 401K and IRA. The idea will be, you know, if we leave you to invest your own money, you could put it somewhere irresponsible like the stock market and they could go down in value. But with the government annuity, you would be guaranteed a lifetime payment, because treasury bills are guaranteed by the US government to pay out forever. The problem is that this is the kind of thing that country like Argentina has done when they were going bankrupt. They confiscated private retirement accounts and filled them with Argentinian bonds. When it comes time to cash them in, you find out your retirement account is filled with worthless bonds, or bonds that pay off in pesos that aren't worth anything. This is just another scheme to ______ the debt. People today can buy treasury debt, if they want to put it in their IRA or their 401K, but this plan would be to force you to do so.
Siegel: So, what we have then is a form of coersion. It is confiscation of funds. It is a different vehicle, I realizes, but you can make the analogy that when the government basically does a transfer of wealth by raising taxes on the rich and maybe lowering t hem on the poor, I guess the way Barrack Obama wants to do it, and then really it is a false dichotomy because small businesses that might earn over 250,000 have to put a lot of that money back into the business. So, they get hit with not getting the Bush tax cuts extended, if they are extended for so-called middle class people, but they don't get the benefit with it. The same thing here with small business and this 401K idea, is that they have put money into that because they as a business owner, you know, you have the opportunity to put your own money away. Now, they want to turn around and take it. If the dollar goes down the drain, they are in big trouble. In other words, the government has confiscated money and maybe cannot repay it. I say that not that that is on the horizon necessarily, but the fact is that when Russia and China said they are no longer using the dollar as their trade currency but now are going to trade Rubles and Yuan, that is an indicator that the dollar is losing its value in the international community, and it is troubling. So, why would somebody want to invest in the dollar now, especially if they are forced to do it?
Jerome: Well, exactly, and see all of what the treasury is doing is essentially debasing the currency. Confiscating through the methodology, 401K and IRA accounts, to fund the deficit would just be another form of what the federal reserve is doing with quantitative easing. We are going to spend 600 billion dollars of made up money in the federal reserve to buy treasury debt, and of course Russia and China are objecting because that debases the dollar. The federal reserve doesn't even bother to print the money anymore, just makes a few computer notations. You know, whoa la, there is 600 billion dollars and they buy treasury debt with it. We are using the Mastercard to pay the Visa bill, and a result we are probably going to debase the dollar by as much as 20%. The average American is going to look at like 20% inflation. You know, 20% drop in value in the purchasing power of the dollar over some period of time, but not too long a period of time. Now, here the federal government comes along and says, "ah, aha, another pool of hard assets in retirement savings accounts maybe several trillion dollars, why don't we grab some of those and put them into the treasury debt and redistribute them to the poor?" That is what it amounts to. It amounts to a cheap way to keep funding federal budget deficit with ultimate purpose of redistribution of income.
Siegel: Well if you have that kind of redistribution, you a re not really giving small business the role that it is supposed to be playing in this country, which has played, which is to drive the economy. It is t he engine of the economy, 70% or more of t he economy is driven by small business. Now, these folks are going to wind up with their own personal situations hammered because what they depended on for retirement, and maybe would use if they so chose to do it, you know, when they get to the age, say, 59 1/2 and they can take the money out without a penalty, maybe they would have put it back into the business. Now, it is going to have to be in a context that is not going to give them that kind of freedom or manipulation of their money to use it in the best way. That takes away the choice of how you spend your money, doesn't it?
Jerome: No question, and whether the money is going to be valuable when you get it. In other words, right now you c an invest your IRA and your 401K in, say, mutual funds and then put the money back into the economy. You then should be gaining the equity gained, which historically has been quite good, especially compared to the yield on government security. So, we are hurting private business in a couple of different ways. One is that if the government takes any significant portion of IRAs or 401Ks and demands they go into treasury debt, that money comes right out of mutual funds. It also comes right out of the private economy, where that money is savings going to work as capital building businesses. Secondly, when it comes time to cash in your retirement count in, the purchasing power that retirement account could be significant diminished by the quantity of treasury debt you end up holding, because the treasury debt, if we continue to debase our currency, is going to be worth less and worth less all the time, which is why China and Russia are so reluctant to continue holding dollars. If China and Russia don't want to hold dollars, why should US retirement savers in their private retirement savings accounts want to hold US dollar debt?
Siegel: And that really comes back to the point of, if they were to do this. We are not talking about congress, by the way. This theoretically could be done by the administration, could it not? Under the present laws that exist?
Jerome: Hearings have already been held. See, this is what I have been writing about and warning people with Red Alert and World Net Daily. About two months ago the treasury department and department of labor held two days' worth of hearings on this idea. They could just promulgate rules, put them in the federal register, and implement them. There would be no legislative change whatsoever. They could bypass congress altogether.
Siegel: Which would mean that they are just doing it by execute order. . The problem with that would be if they promulgate those rules through the agency and then through Treasury and Labor, let's say, and then the president obviously would instigate that, then you have the problem of even if he is unelected in 2012 and if the congress and the president wanted to change it, then they would have to go through the process of reversing that either by the president ordering the agencies to do it or congress having to pass another law about this.
Jerome: That is correct. Once this is put into place, it will have to be reversed. Once the regulations requiring a government annuity in your private retirement account, 401K or IRA, are put into place, it is permanent until reversed by a new executive order or a new act of congress. Now, people shouldn't immediately, should not immediately, run out and cash in their IRAs as a 401K. These rules have not yet been promulgated, they are being discussed. The reason I am bringing it up now and trying to alert people is because I believe the Obama administration is so desperately looking for ways to finance continued spending that when Treasury and Labor under the Obama administration hold these hearings, it is serious and it means that that is where they are going unless somebody blocks them. The way they are going to get blocked is with an informed public that says essentially to, you know, through the congress, tells the White House to keep their hands off our private retirement savings.
Siegel: What is going to be the impact? And we're talking with Dr. Jerome Korsi who is a major senior writer for World Net Daily, has done a lot of work in a lot of areas, has been involved in the financial industry for several decades as an investment counselor. But what would be the impact, do you think, if this went through and all of a sudden the United States government said, " We're putting a percentage of your 401K into these treasuries." What's the impact on small businesses?
Jerome: Well, I am a managing director at Gilford Securities in New York City. I have been in the securities business 25 years, Gilford has been in business for 30 years, and the impact would be dramatic on small business because… let's say you had a trillion dollars pulled out of the private economy where people were forced to put that trillion dollars in their 401Ks and IRAs into treasury debts, I mean that would be a huge impact on the mutual fund industry and on the investments funded by the mutual fund industry, which are capitol building. I mean all of the money you put into mutual funds goes into the market and that's private savings that builds the capitol base and wealth accumulation of private enterprise. You can't just simply pull a trillion dollars out of the stock market and expect it not to have major repercussions on not only the stock market, but the small business and investment in the United States as a whole. It would be a dramatic move and it would be very negative for job creation and very negative for wealth accumulation in the United States. But when countries get to this desperate stage of debt, and remember now our national debt is approaching fourteen trillion dollars, our gross domestic product is about 14.6 or 14.7 trillion dollars. When a national debt gets to the point of being 100% of our gross domestic product, all of the goods and services we produce every year, I mean to me that is a tipping point. It is an alarm bell because nations which exceed their national debt, more than 100% of the gross domestic product, are headed down a very slippery slope to bankruptcy.
Siegel: Well, and by the way, I need to emphasize this. If we get to that point, and it's possible next spring we could get to that point, of being at 100%, you're talking about going down the path possibly of Greece, Ireland, Portugal, Spain, countries in deep trouble, partially because of having huge debt against their gross domestic product. Is that not the case?
Jerome: Yes, now, of course, our economy is much larger than any of those European economies. We've got more latitude because of that. Before we get into their kind of crisis stake, which is a tiny economy compared to the United States. But, the trend is no good and it's not going to be positive for a nation like the United States. I've seen studies done by former heads of the congressional budget office that have projected by 2050, if we continue spending in the social welfare program, open ended entitlement program, including now Obama care, that we could be at 600% debt to gross domestic product by 2050. Well, long before then we would be completely bankrupted and in Greece's situation. We would not be able to afford the continued debts that we would need just to service the debt we already have. It would be completely self-defeating and we would be into an austerity position imposed probably by an international monetary fund or some international control We would lose, just like Greece and Spain and Ireland are risking losing control of the soveigrnty of their own economy. If the United States becomes a debtor nation to that extent, we are headed down the same path where international forces, the international market, will limit the control we as a nation state have over our own economy. It's a very frightening point.
Siegel: Well, and it is. And, look, I don't want to be the doom sayer, but since we've had this crash, I think people have woken up that anything could happen. And it certainly has in the last couple of years. But, Dr. Korsi, if you look at what you're describing in terms of the debt of the country, the national debt being 100% or more of gross domestic product, that's a huge problem. If, in fact, the dollar continues to erode as the national currency, which it has already started doing because now officially Russia and China are trading in their own currencies, not the dollar. If the brick countries, Brazil, Russia, India, China decide along with the rest of the world. The international monetary fund has talked about the fact that there needs to be a different default currency internationally than the dollar. Ron Paul, a member of congress, who’s going to chair a sub-committee in the House dealing with these matters has already said he would like to see an alternative to the dollar, like gold. He loves the gold standard. He would like a hard currency as a competitor of the dollar. If all those things were to take place and take form and shape in that way, is it not possible that we could become, as an economy, kind of on the outside looking in at some point down the road. Not tomorrow, not next week, but some point down the road.
Jerome: It is. The book I wrote, "America For Sale," describes the aglobulism we're headed for where countries like China are going to say, "we'll continue lending you debt, but we want assets. We want to manage ports. We want to manage highways, etc." China has already started down that path. China has just bought a major position in oil fields in Texas, a huge oil field outside of San Antonio, and just a few years ago in the Bush administration we blocked China from buying UNICAL, which was a California oil company, because the Bush administration said it would violate national security purposes to sell a California oil company to China. Today, we just do it without considering it. I'm not trying to alarm people, but what I want people to understand is that probably, the way I look at the economy with the tea party and the concern people have that we've got to quit spending. They need to take a hard look at entitlement programs. The welfare state we've built and need to scale it back. This is probably one of the most important realignments of voters in my lifetime. We can't become like the European states where there's rioting in the streets because students are losing some of their university privileges or tuition subsidies. Or, like in France, the retirement age is extended to 62 and that causes major trauma in France. We can't get to that point. And with Ron Paul taking over the leadership of the House monetary sub committee, and I've interviewed Ron Paul, written about his views, I think again it is going to be a major positive force for saying "what do we need to do to protect the dollar?" And protecting the dollar is going to have to do a lot with controlling our out of control spending. Because we just can't keep taxing without destroying the economic base of the country to support this elaborate social welfare state that largely the democrats have built, but not exclusively democrats. Republicans have bailed it and helped since the age of FDR.
Siegel: Well, it's something that we need to watch closely and I would think that the small business organizations, people listening right now with small businesses, should be involved in letting the members of congress know to keep this from happening would be crucial. Even if congress would have to pass a law which would override a presidential edict or a regulatory rule from an agency. Congress can trump those processes. And organizations like the American Small Business League, the National Federation of Independent Business, and so many of the others that deal with small business, need to be able to get out there and do their lobbying to stop this from happening. You have put out the so-called Red Alert, which we appreciate. Where can people see you when they want to sign up for your Red Alerts, by the way?
Jerome: Red Alert is free. It's a newsletter I write every week for World Net Daily. Go to wnd.com. One of the grey tabs on the side says Red Alert. You've got to subscribe. We send it out by email. You can also go to Gilford Securities- gilfordsecurities.com. That is where I am managing director. If you click the tab FINANCIAL SERVICES GROUP, you'll see a page with my picture. That's the group I had. Fill out that form and we'll also, that way, get you Red Alert free.
Siegel: That sounds fantastic. I thank you very much. Always a pleasure to talk to you, Dr. Korsi, and I look forward to talking to you again real soon.
Jerome: Thanks Mike. Its' a great honor and pleasure to be with you today.
Siegel: Have a great one. Dr. Jerome Korsi and that 401k possibility of the government telling you that you're going to have to put some of that money already there or new money you put in into treasury bonds is very troubling to say the least about the confiscatory nature of that . Mike Siegel at the BOSS business brief. Stay with us!



Who is Dr. Corsi?

For 25 years, Corsi worked with banks throughout the U.S. and the world developing financial services marketing companies to assist banks in establishing broker/dealers and insurance subsidiaries to provide financial planning products and services to their retail customers. Corsi developed three third-party financial services marketing firms that reached annual gross sales levels of $1 billion in annuities and equal volume in mutual funds. Corsi received his Ph.D. in political science from Harvard University in 1972.