You can hack around that with policy. Think of SIPC insurance: in the event something crazy goes on with your brokerage, they step in and provide cash value of the equities at the time the insurable event took place.
I've provided the below link as an example; ignore the limits, they would not be adhered to for my example due to extraordinary circumstances.
Disclaimer: Huge fan of Chamath coming out and telling it how it is on CNBC.
I think it’s reasonable to protect retirement assets if means tested, yes.
It’d be an entirely different story if pensions hadn’t been gutted and everyone tossed to the wolves with 401ks over the last 40 years.
If you want to wipe out retirement assets and top it up with social security instead, again means tested, that’d be a reasonable approach. But you can’t tell folks their only option is 401ks and to be diligent savers, and then burn them to the ground out of moral hazard.
The goal is to wipe out investors to whom hundreds of millions of dollars means nothing to their quality of life.
So if I've been working 40 years, have a strong 401k, and am doing fine now I should get my savings wiped out?
You're arguing all sides now. I didn't propose a policy that would greatly harm retirement savings, you did. You proposed protecting 401ks with government backing. I stated that doing so would be a boon to the top 20% at the expense of everyone else.
It seems I might not be communicating my thoughts on the topic coherently. My apologies! I felt that I have, but I think I’ll have to come back with a blog post instead of ad hoc thread comments. I appreciate the rebuttals for helping me refine my arguments!
EDIT: /u/HarryHirsch's comment here [1] explains succinctly what I intended to explain but did so poorly.
[1] https://news.ycombinator.com/item?id=22835580 ("You could nationalize the pension system. Considering the fact that on average the 401(k) balance is a few tens of thousands and that there is a retirement catastrophe coming, that wouldn't be the bad idea. The downside is that the stock market would be affected negatively since demand for stock would drop.")
Actually SIPC doesn’t provide the cash value for equities. They provide you with the original shares which will be worthless if the company goes bankrupt. Its in the third paragraph of your link.
Maybe it would be better to require retirement accounts to be invested in broad indexes to be eligible for a insure for a certain amount of money value. I don’t see how it could be done fairly on single stock base without having big discussions about what kind of events will be covered.
I've provided the below link as an example; ignore the limits, they would not be adhered to for my example due to extraordinary circumstances.
Disclaimer: Huge fan of Chamath coming out and telling it how it is on CNBC.
https://www.sipc.org/for-investors/what-sipc-protects