The more I study the differences between Keynesian economics and Laissez-faire economics, the better I understand why Mr. Nabors is saying what he says in his take on the Roth IRA Conversion question. The fact that our nation’s currency is no longer backed by Gold in order for it to maintain its value allows for the unencumbered printing of new money by the Fed for our government to borrow, and is, by definition, inflation. This will ineveitably lead to price inflation which reduces the purchasing power, and thus the value, of the currency.
Which would you rather use to pay your taxes? Today’s dollars, which you would use when you convert your IRA to a Roth this year, or the dollars whose value will almost certainly be worth far less when you retire?
As Mr. Nabors points out, converting to a Roth this year is definitely a good deal for the government, but will it be a good deal for you when you retire, especially when you consider inflation?
Let me know what you think!