Fed Chairman Speaks, No one listens

[chickenhead]

Fed Chairman spoke to Congress yesterday -- his message in short is that the US is screwed. Medicare, Medicaid, and SS are soon going to bankrupt the government, it's borrowing needs becoming so excessive, and the required interest rates so high that it will crash the economy -- or, it's tax rates becoming so high as to cripple the economy.

But the real scary thing is...that it isn't even news! You would think that when the chief economist tells us something like that we might notice?

What can we do to keep this from happening?

Balance the budget now, and keep it balanced.
Substantially Reduce SS and MC benefits going forward.
Substantially Increase SS and MC taxes going forward.

all three of these are necessary.
The last two are coming, and there is no way around it. SS benes are going to get slashed, AND SS taxes are going to be raised. The first one is necessary, it needs to happen.

A balanced budget is not a partisan idea. We can argue about what size the government should be, but whatever size it is...we need taxes to pay for it.

[chickenhead]

ps -- I shouldn't say no one listened. I am quite sure that Russia and China are highly aware of our impending disaster, and are planning accordingly.

[Indulto]

ps -- I shouldn't say no one listened. I am quite sure that Russia and China are highly aware of our impending disaster, and are planning accordingly.Are you suggesting a parallel to the demise of the Soviet Union? Lets see, what would they have in common? Afghanistan adventures, excess military expenditures, corruption in politics, fear of anti-missle system development by the enemy, ...

[Dick Schmidt]

Trust me, every word was examined and reflected upon in exhaustive detail. The politicians may not appear to be listening, but all the financial markets were. Whenever the Fed speaks (not just the chairman, but any on the board) they have a very receptive audience who immediately take action based on what is said. Though this speech was hardly new news (everyone with any understanding of economics has known this for years) it still pushed the dollar a bit lower in trading against the other major currencies.


Dick

The cost of living hasn't affected its popularity.

[chickenhead]

it seems like it's been noted that one of the biggest problems in getting things done politically is precisely that the market is not geared for incorporating something that happens 15 or 20 years out...it has a weak effect, even if it's gonna be a total train wreck.

So the fact that the market moves at all based on something so far out IS really meaningful, but it gives the average joe a false sense of security, as if it is not that big of a deal. If the markets were crashing, we might actually generate some political will.

jmo

[PlanB]

My take on this is this: Bush43 has done NOTHING. Appointing Paulson is just another smokescreen. Even Paulson will NOT see beyond his financial NOW. Bernanke talks too much. Greenspan was brilliant only when no one understood what he was saying. Then, when his Eg0 got rubbed, he downplayed the tax cuts as "stimulative" . (Confession, I'm not sure about the net effect of the tax cuts, but that's a separate issue.) This may sound very biased, but 43 has blown so much money away --- YES SKATE AWAY --- that the mere mention of reducing gov't spending on social programs will make me & my wife protest for his impeachment. And yes, I hope the next president, if a democrat, will dump Paulson, enabling him to bird watch in Central Park. YES the situation is urgent & NO, outsourcing / privatizing is NOT the answer.

[Bala]

Why should anyone listen, they are all compulsive spenders.

This is long overdue. It is about time “Obe One” Ben Bernanke stepped up. He has been unusually quite for such a high profile chair.

Former Fed. Charmain “The Maestro” Alan Greenspan, continually stressed a pay as you go (http://www.cbpp.org/3-14-05bud.htm) plan for congress. Adjusted for hurricane Katrina and the Iraq war, our national debt stands at 9 trillion dollars. {$9,000,000,000,000} Ruffly 80% of GDP (http://en.wikipedia.org/wiki/Gross_domestic_product). Nancy Pelosi's proposed pay as you go is so watered down – it is essentially useless.

The first six years of the Bush administration would be equivalent to 10,000 Enron (http://en.wikipedia.org/wiki/Enron)s of steroids.

We, the American sucker {taxpayer} will pay.


Now, we must all wait with bated breath as poster Skate will educate us on the positive attributes of overwhelming debt.






_________________________________________
“Money is not the most important thing in the world. Love is. Fortunately, I love money.”

“So you think that money is the root of all evil. Have you ever asked what is the root of all money?” ~ Ayn Rand

“The art is not in making money, but in keeping it” ~ "Iron" Mike Tyson

[JustRalph]

Where the hell were all you worry warts when Bush was screaming that we needed overhaul Social Security last year?

Amazing......... I can't wait for the economic collapse. I can take care of mine. Can you take care of yours?

When we go to guns..........some of us will be rich beyond belief! :lol:

[Bala]

No serious economist (even worse case scenario) projects another great depression. Rather, an economic slowdown until this accumulated debt works it way through our system. Consumers will pay down their credit card debt. (most Americans are responsible.) Same cannot be said about our elected officials. Although, this may mean increases in the overall unemployment rate.

To offset the projected ease in consumer spending, corporation are brimming with capital. It has been projected corporation will increase spending throughout 2007.

In order for a worse case scenario to occur, the next administration would have to increase taxes and reinstate trade tariffs. If the dems win in '08 it could get ugly.

American capitalism just plain works.






___________________________________________
The inherent vice of capitalism is the unequal sharing of blessings; the inherent virtue of socialism is the equal sharing of miseries.” ~ Winston Churchill

“Under capitalism man exploits man; under socialism the reverse is true” ~ Polish Proverb


“Despite a voluminous and often fervent literature on "income distribution," the cold fact is that most income is not distributed: It is earned.” ~ Thomas Sowell

[Tom]

Where the hell were all you worry warts when Bush was screaming that we needed overhaul Social Security last year?

Amazing......... I can't wait for the economic collapse. I can take care of mine. Can you take care of yours?

When we go to guns..........some of us will be rich beyond belief! :lol:

I've always felt like I was a BROTHER to you, Ralph!:eek:

[chickenhead]

Hey Ralph, I don't remember Bush asking me for help or anything? Pretty sure it's not my fault his plan failed, and failed miserably. But certainly points directly at the problem -- I really don't think meaningful reform is politically feasible. If no one over the age of 30 was allowed to vote, then it could probably get reformed. Otherwise, no chance.

And we're not even talking about Medicare, which is a much much bigger problem.

Bala- The majority of economists never predict a massive depression...no one expects the Spanish Inquisition! Humans, by nature, are optimists. Highly paid analysts on Wall St. as a group routinely overestimate stock returns for the following year by about 9% on average.

And not sure what you're talking about accumulated debt being paid down...all projections show the deficit continuing to grow faster than GDP, obviously unsustainable. There will be some sharp corrections. No goldilocks for this one.

[JustRalph]

Hey Ralph, I don't remember Bush asking me for help or anything? Pretty sure it's not my fault his plan failed, and failed miserably. But certainly points directly at the problem -- I really don't think meaningful reform is politically feasible. If no one over the age of 30 was allowed to vote, then it could probably get reformed. Otherwise, no chance.

And we're not even talking about Medicare, which is a much much bigger problem.

Bala- The majority of economists never predict a massive depression...no one expects the Spanish Inquisition! Humans, by nature, are optimists. Highly paid analysts on Wall St. as a group routinely overestimate stock returns for the following year by about 9% on average.

And not sure what you're talking about accumulated debt being paid down...all projections show the deficit continuing to grow faster than GDP, obviously unsustainable. There will be some sharp corrections. No goldilocks for this one.

you are right.

[skate]

My take on this is this: Bush43 has done NOTHING. Appointing Paulson is just another smokescreen. Even Paulson will NOT see beyond his financial NOW. Bernanke talks too much. Greenspan was brilliant only when no one understood what he was saying. Then, when his Eg0 got rubbed, he downplayed the tax cuts as "stimulative" . (Confession, I'm not sure about the net effect of the tax cuts, but that's a separate issue.) This may sound very biased, but 43 has blown so much money away --- YES SKATE AWAY --- that the mere mention of reducing gov't spending on social programs will make me & my wife protest for his impeachment. And yes, I hope the next president, if a democrat, will dump Paulson, enabling him to bird watch in Central Park. YES the situation is urgent & NO, outsourcing / privatizing is NOT the answer.


aha

yup, sure looks like an armadiilo.

actually, i think it is funny that anyone took the time to notice uncle ben.

i should have the spwech in front iof me, i do not (watching SA, now).
but you know, im gonna bees nright back, for the kill.

food for thought? unclebenny was talking about entitlements. they have been put into the economy years ago.
my other uncle (george) tried to save S.S. , but Nobodty would go along, S. S. would be long on its way to recovery, since, on average, the market increased 25%(dow average) (which is ENOUGH to have brought Social Security completly under control).

one other, SINCE, for the Dow (market) it has NEVER (ask uncle Benny) never never never gone down.
you'll not here that, cept from the Skate.

look look look, that was a show you saw.

i sahall return

[Bala]

Skate, baby, what took you so long?

Getting slow on the draw.






______________________________________________
“Reason is the slow and torturous method by which those who do not know the truth discover it” ~ Blaise Pasca

[skate]

chicken;


money equals debt.

turning on the money supply, causes growth. taxes destroy growth.

the economy (you) is the creditor and for a creditor, debt is an asset.

social security can not go bankrupt, they are federal. feds print money when they need money.
oh, i do understand, people are not told "what i just said", does not mater.

money is either in the hands of the fed gov., or in the hands of people.

when the economy (you) gets more money from the gov. than it receives from the economy (you), you have a surplus.

Economic growth is impossible without a growing debt.

back to the races

[chickenhead]

my other uncle (george) tried to save S.S. , but Nobodty would go along, S. S. would be long on its way to recovery, since, on average, the market increased 25%(dow average) (which is ENOUGH to have brought Social Security completly under control).

Your uncles (daddy?) plan was to allow people to divert up to $1K per year to the market...I don't think $250 per person would save much of anything.


one other, SINCE, for the Dow (market) it has NEVER (ask uncle Benny) never never never gone down.
you'll not here that, cept from the Skate.



'cause it's not true? :D
you;re gonna have to explain that one..never gone down, ever, even for a minute? It goes up every minute?

[Bala]

President Bush’s vow to balance the budget will ring hollow. The president will make a pledge to eliminate the deficit by 2012 in his State of the Union address this coming Tuesday. (january 23)

For starters, he won’t count the cost of fixing the AMT (http://en.wikipedia.org/wiki/Alternative_Minimum_Tax), the alternative minimum tax, which effectively raises the tax rate for millions of families. It was enacted decades ago to keep the rich from dodging taxes. But because it wasn’t indexed for inflation, the middle class is also hit. A fix will cost Uncle Sam billions.

Bush’s five-year budget will also underplay war costs for Iraq, while overstating likely revenue from more-moderate economic growth. And it’ll leave tough spending decisions to the next president and the next Congress. They won’t like them any more than Bush does.

But don’t take the Democrats’ budget plan any more seriously. Their plan will consist of as many bookkeeping tricks as Bush’s, just different ones. They won’t account for higher domestic spending. And while the Democrats have promised to "pay as they go" with higher taxes or offsetting spending cuts, the rules they adopted have legislative loopholes large enough to pilot a 747s through.








_______________________________________
“The market is not an invention of capitalism. It has existed for centuries. It is an invention of civilization.”

“This American system of ours, call it Americanism, call it capitalism, call it what you will, gives each and every one of us a great opportunity if we only seize it with both hands and make the most of it” ~ Al Capone

“Capitalism is Man Exploiting Man; Communism is just the opposite” ~ Eastern Europe Proverb

[skate]

Your uncles (daddy?) plan was to allow people to divert up to $1K per year to the market...I don't think $250 per person would save much of anything.




'cause it's not true? :D
you;re gonna have to explain that one..never gone down, ever, even for a minute? It goes up every minute?


well the plan was 'to get things in motion' and if things were put into motion, we would have to be congratulation unclegeorge.

oh oh oh, come on, well if you are gonna be into 'counting every minute'. ok yea sure games over because somebody 'just died'.
come on now ,hey look, ive got the low end on the IQ board, and im sure you can figure out certain things when itr come s down to adding things up.

now, as for explaining things, dow started way back (1800 something ?) at $95 dollars, now its up from there, easy, so simple, even i , 'the skate' see that. hey, don't make things any tougher than they appear.

[Bala]

Chickenhead -- you'll get no argument from me. No doubt the talking heads on Wall St. have their own economic interests in mind. {BTW: Jim Cramer is as fake and phony as the rest.}

When I stated the majority of economists I am also referencing renegade theorists. I addition I look at the “I hate America crowd” at Colombia, Princeton, Yale, etc....

Noam Chomsky's {MIT} left crusaders - “American Capitalism is dead” - are seriously misguided. Under American capitalism the pessimists have almost always been wrong. Witness the sharp drop in oil prices since a peak of $77 post hurricane Katrina.

As a group, Americans are responsible with their money. The federal govt. is prodigal. A certain segment called “sub prime” will tarnish their credit and impair future borrowing needs by an economic slowdown. Most however are in a position to weather any hardship.

This unsubstantiated and silly notation that Americans do not save is nonsense. The statistics are plainly clear. Hedge funds {generally for the wealth} are replete with cash. Mutual funds {generally for the middle class} are awash in a sea of capital. The same holds true for Bond funds and city/state pension funds. Monitoring services such as S&P and the Federal Reserve report almost daily increased in all fund categories.

The real concern is drunken spending at the Federal level. This is cause for great consternation. This is my money, your money the Feds are wantonly whiling away.





_____________________________________________
"History suggests that Capitalism is a necessary condition for political freedom." ~ Milton Friedman

"Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone." ~ John Maynard Keynes

[Suff]

Social Security is solvent until 2042. Its right on thier web site.


http://www.ssa.gov/

Social Security, Medicade and Medicare are programs the conservatives hate.

They want to get rid of them. That's all this is.

Ben Bernanke is a water boy for thier agenda. Nothing more.

[chickenhead]

skate -- there have been a multitude of times, when an investment made in the Dow would have had a negative return over ten and even twenty year periods, with the period following 29 and following the nifty fifty being the most prominent.

Now, I certianly won't disagree that investing in the American economy has been a VERY good idea, but, back to my underestimation of risk point, it's far from a risk free investment, even over reasonably long periods of time. Not generally because of the economy, but because of the ridiculous speculative behavior of investors that can cause so much pain.

It's also probably also worth a point, that America is like the say MSFT of the market...our economy is HUGE, all of those years of obscene monster growth are behind us. Doesn't mean we can't grow, but we are not primarily growth oriented anymore. Our challenge is to hold onto our gains.

Or at least it is rational to expect that, as a conservative viewpoint.

[chickenhead]

Social Security is solvent until 2042. Its right on thier web site.


Word games Suff. This is from the trustees report:

Annual cost will begin to exceed tax income in 2017

Solvency really has no meaning here...all that matters is that SS goes into the red in 2017. Either taxes will be raised to cover it, or benefits will be cut, or deficits will expand. And the red numbers get BIG, really really BIG, really really FAST.

Those are the only three possible outcomes, come 2017.

[skate]

Dear Creditor;

hey, thats you.

debtors are liable for debt. you are a creditor.

the fed gov. pays its debt by printing (creating) money.

money is expressed in dollars and is debt. why would debt be bad and money good?

to spend money , you transfer debt. to transfer debt, you write a check and hence you transfer the banks debt.

to print money , the gov issues a bond. this is federal debt. which you , the creditor, buy and then transfer, just as you transfer money.

growth in the economy requires debt.

clinton ran a surplus and took away debt, which destroyed money. then we had a recession. then the gov ran a deficit, printed money, and we all made money in a strong economy.
even with high oil, just imagine, if oil keeps going down (and it will) the economy stays strong, until taxes are again raised.

[Tom]

Those are the only three possible outcomes, come 2017.

Guess who turns 65 in 2016? :mad:

[skate]

if we put any money (the amount does not mater), if we put any money into the Dow, it will increase.

to say that it only increase a small amount is not wise, since the money will get spent on your neighbor anyhow, if you do not put it someplace safe.
it will grow. in the end it does not mater, because the gov takes care of debt by printing, simple.
the only fault is to cry, when there is no problem, at least not yet, thanks to uncle george and chainsaw.

[skate]

skate -- there have been a multitude of times, when an investment made in the Dow would have had a negative return over ten and even twenty year periods, with the period following 29 and following the nifty fifty being the most prominent.

Now, I certianly won't disagree that investing in the American economy has been a VERY good idea, but, back to my underestimation of risk point, it's far from a risk free investment, even over reasonably long periods of time. Not generally because of the economy, but because of the ridiculous speculative behavior of investors that can cause so much pain.

It's also probably also worth a point, that America is like the say MSFT of the market...our economy is HUGE, all of those years of obscene monster growth are behind us. Doesn't mean we can't grow, but we are not primarily growth oriented anymore. Our challenge is to hold onto our gains.

Or at least it is rational to expect that, as a conservative viewpoint.


oh man, ok go along with your figure, and then tell me what happens.
guess what, because i have to facts the facts are all that i need, the market goes up and up and up , why, because it went down a little and up a lot, just look at the results . how can anyone ignore the results?

you say stocks have gone down, fine, but how did they end. they end up, why.? because that is whart has happened , every single time.
gee wiz, if we take your logic, then we should not do anything, just freeze, because everything has a negative, so just stop...
a multiitude of times you say, ok, people die, so the games over, what the heck.

growth continues, like no other times before, we set record GDP growth products are at an all time high and still climbing, even with high oil.

[chickenhead]

skate, those are facts I gave you. There are a whole lot of people who put money into the market, came back a long while later, and it was less than they put in (especially if you throw in inflation).

That doesn;t mean I say do nothing, all I'm saying is everyone needs to be honest. The market doesn't do nothing but go up. Sometimes it goes down, and then goes sideways for decades. Doesn't mean its bad or evil, but it does what it does.

We have been in a massive bull market for the last 30 some years. Of course, we as humans tend to think whatever is happening now, will continue forever. We forget that before the recent bull market, the market went sideways for decades. It will go sideways for decades again, at some point. That's not doom and gloom, that's just the way things go.

Look at some stock charts that are adjusted for inflation.
http://bigpicture.typepad.com/comments/2006/06/stock_prices_ad.html

Any reason to think the stock market is overvalued based on that? The maerket was basically flat until 1950, and negative from 1970-1980. That is a whole lot of years of bad returns..like the majority of them.

That said, that is still where I put my money.

[DJofSD]

You want the stock market to just go sideways again? That's easy -- abandon the current floating currency economy and go back on the gold standard.

[skate]

skate, those are facts I gave you. There are a whole lot of people who put money into the market, came back a long while later, and it was less than they put in (especially if you throw in inflation).

That doesn;t mean I say do nothing, all I'm saying is everyone needs to be honest. The market doesn't do nothing but go up. Sometimes it goes down, and then goes sideways for decades. Doesn't mean its bad or evil, but it does what it does.

We have been in a massive bull market for the last 30 some years. Of course, we as humans tend to think whatever is happening now, will continue forever. We forget that before the recent bull market, the market went sideways for decades. It will go sideways for decades again, at some point. That's not doom and gloom, that's just the way things go.

Look at some stock charts that are adjusted for inflation.
http://bigpicture.typepad.com/comments/2006/06/stock_prices_ad.html

Any reason to think the stock market is overvalued based on that? The maerket was basically flat until 1950, and negative from 1970-1980. That is a whole lot of years of bad returns..like the majority of them.

That said, that is still where I put my money.

cooooommee oooonnn;

you just can't go jumping off from one point to another. market goes up, i can say that because i have the facts right there. no refutation.

what, you are going to say that because one pecker head had a bad day , year, lifetime etc. then it makes the market no good. well i think you can figure that for every pecker head, we can come up with at least More Non- pecker -heads . and therefore it is said "the market went up". you see, and im sure you do see, that money invested in the market is averaged, and done (not by the pecker heads) by people doing such things for a living.
never , never never, has the market gone down, simple. why? because it is up. if one guy lost, two won, and the following time period would have i guy (not the same, because that would be an average) lost while 2 guys gain, and on and on...why? because that is what has happened ever since the market started....

[chickenhead]

bonus question -- since DJ said what he said. As you can see EARNINGS have not increased much in the period 1980-2007, not like the market has.

So all of those economic theories really have no bearing (Reagan tax cuts, fed spending, increase in the money supply etc. etc.)

So why is it that the market has had such a huge boom in recent years, AND was able to hang onto those gains, and go right back up after the last correction?

It's an important reason, and relates directly to SS.

What happened to kick off this boom in equities, that has moved the price vs. underlying earnings so far away from the historical averages?

[chickenhead]

no guesses....

it was the creation of the 401K. A really really good idea, that directed a whole lot of money into the market. It's basic supply and demand. Demand for equities goes up, supply is fixed, price goes up. People see the price goes up, they start to put more and more into the 401Ks. Really a genius idea.

Then phase 2, you can see on that graph the rate of market growth increases around 1996. Thats when low cost internet brokerages show up. Again, bringing more money into the market.

Now if you really want to get verticle...lets talk about diverting some SS money into the markets. Hall-e-lluya! You want to talk about the House of Pleasure (for you JC fans)...lets divert some of that money into the market and make it mandatory.

But, the main problem with all of these factors is that they are not fundamentals based, i.e. the absolute levels are probably sustainable but the growth will not be. Which is my point skate, your returns going forward (especially after SS money gets dumped in) will not be the same. All of the money at that point will be in equities...there won't be any more on the sidelines, waiting to drive up the share prices.and we'll be back to growing with our economy, which is enormous, and going to be slow growing.

But, on the assumption that SS money will find it's way into the market at some point, that makes the market a BUY BUY BUY.

[skate]

bonus question -- since DJ said what he said. As you can see EARNINGS have not increased much in the period 1980-2007, not like the market has.

So all of those economic theories really have no bearing (Reagan tax cuts, fed spending, increase in the money supply etc. etc.)

So why is it that the market has had such a huge boom in recent years, AND was able to hang onto those gains, and go right back up after the last correction?

It's an important reason, and relates directly to SS.

What happened to kick off this boom in equities, that has moved the price vs. underlying earnings so far away from the historical averages?


i do not recall what DJ said, ill check later.
the market has increased at different times, because of different reasons. the 90s, like no other , was false, people are now going to jail because of the false economy. a good reason for the recession we had 2001.

profit margins have been setting record highs, as has the Dow.
large foreign investments in the USA is likely behind much of our strong economy.
profits and being credit worthy are most likely the reason for foreign investments in the USA.

when we consider investing in the market with our SS money, it does not mater how much we will make because what we have to compare with is the gov. spending that money elsewhere, that is why the jar is empty.
but by putting the money "someplace" it at least stay "someplace". and what better place...

[skate]

no guesses....

it was the creation of the 401K. A really really good idea, that directed a whole lot of money into the market. It's basic supply and demand. Demand for equities goes up, supply is fixed, price goes up. People see the price goes up, they start to put more and more into the 401Ks. Really a genius idea.

Then phase 2, you can see on that graph the rate of market growth increases around 1996. Thats when low cost internet brokerages show up. Again, bringing more money into the market.

Now if you really want to get verticle...lets talk about diverting some SS money into the markets. Hall-e-lluya! You want to talk about the House of Pleasure (for you JC fans)...lets divert some of that money into the market and make it mandatory.

But, the main problem with all of these factors is that they are not fundamentals based, i.e. the absolute levels are probably sustainable but the growth will not be. Which is my point skate, your returns going forward (especially after SS money gets dumped in) will not be the same. All of the money at that point will be in equities...there won't be any more on the sidelines, waiting to drive up the share prices.and we'll be back to growing with our economy, which is enormous, and going to be slow growing.

But, on the assumption that SS money will find it's way into the market at some point, that makes the market a BUY BUY BUY.


ok , i do not think anything bad will come about if we keep on investing in our market.

slowly, on putting SS into the market. some lumps along the way, fine.

the debt we have now will dwindle with inflation and the market will increase with inflation.
and then we print more money, and have more debt. on and on...

nobody 'out there' is even close to the USA.

[Suff]

Word games Suff. This is from the trustees report:

Annual cost will begin to exceed tax income in 2017

Solvency really has no meaning here...all that matters is that SS goes into the red in 2017. Either taxes will be raised to cover it, or benefits will be cut, or deficits will expand. And the red numbers get BIG, really really BIG, really really FAST.

Those are the only three possible outcomes, come 2017.

Understood, but this issue can be handled as if it were a front loaded lease. The payments drop off percipitously on the tail end, when reciepts will be flat or up. More likely up. The boomer's are not infinite.

Its a simple finance equation that banks do everyday. This particular window of a lopsided P & L has a 15 year window, and only about 5 of those require heavy lifting.


I'm all for reworking and improving SSI. I shudder at letting Wall Street get thier hands on it.

In a practical sense, it was estimated that if individuals made thier own investment choices, even from a small menu of 5 or 6 vehicles; In times of market turmoil a company Like Merrill Lynch could expect upwards of 25 Million phone calls a week.

[linrom1]

Social Security is solvent until 2042. Its right on thier web site.


http://www.ssa.gov/

Social Security, Medicade and Medicare are programs the conservatives hate.

They want to get rid of them. That's all this is.

Ben Bernanke is a water boy for their agenda. Nothing more.

The upper classes have always understood economics and economic cycles far better than the average underclass citizens.They understand very well that in order to maintain future projected Social Security expenditures, their ilk will have pay back the trillions that they're manged to expropriate through imposition of higher taxation in the future.

All 401k and IRAs plans were designed to provide means to further rip off consumers as those returns in aggregate will never exceed more than the growth of money supply, while trillions are continuously siphoned off through obscene compensations, options, stock market manipulations, mutual fund corruption and various other fees and bonuses that are taken out concurrently. Privatization of Social Security is nothing different than what Wall Street does every single day--it's designed to offload a liability.

The other question to consider is do rich pay the majority of taxes? Well that depends if you compare apples to apples? You can only make a decision by looking at costs vs benefits. Do they include the $800 billion trade deficit in those figures. No? But, its a tax that you pay through lower wages and higher interest rates on your credit cards and higher future federal debt costs. Who benefits from the trade deficit---its not only the foreign manufacturers. Very few foreign companies sell directly to American consumers and some even complain that American merchants make substantially larger share of the profits.

If instead they instituted a wealth tax, most Americans wouldn't pay any tax at all.

[chickenhead]

Understood, but this issue can be handled as if it were a front loaded lease. The payments drop off percipitously on the tail end, when reciepts will be flat or up. More likely up. The boomer's are not infinite.

Again, look at the trustees report. They project out to 2080, and this SS is some of the easiest to project stuff around. Receipts do not catch up to expenditures, in fact the gap continues to widen, out to 2080.

It's all based on two things, people living longer, and people having fewer kids. So long as neither of those trends reverse, the gap will continue to increase.

There is some thought that part of the reason for the higher ups wanting amnesty for 20-30 million illegal immigrants is because they have lots of kids. Ignoring any other impact, if you brought in 20 million youngish workers in one shot, and another 5 or 6 million a year, SS would be substantially fixed.

[DJofSD]

Illegal alien workers are the cure for what ails SS? Sounds like a liberal spin to me.

Bring in workers that want to become part of what used to be called the melting pot not just exploit the opportunities here and then send cash out of the country.

[chickenhead]

no DJ, the thinking is that that is why they want to make all of them citizens (amnesty).

[DJofSD]

chickenhead -- I would believe that (follow the $$$).

[linrom1]

Again, look at the trustees report. They project out to 2080, and this SS is some of the easiest to project stuff around. Receipts do not catch up to expenditures, in fact the gap continues to widen, out to 2080.

It's all based on two things, people living longer, and people having fewer kids. So long as neither of those trends reverse, the gap will continue to increase.

There is some thought that part of the reason for the higher ups wanting amnesty for 20-30 million illegal immigrants is because they have lots of kids. Ignoring any other impact, if you brought in 20 million youngish workers in one shot, and another 5 or 6 million a year, SS would be substantially fixed.

When I first started working in finance, I would walk in into a room full of 12-13 people doing various clerical and accounting work. I remember that we needed a clerk just to process credit card payments. Now the same office would consist of not more than 4 people. So, where did those productivity profit gains go to? Social Security clearly does not capture it, but it should.

[chickenhead]

The productivity profits in part are what is allowing the current SS to still function, i.e. the retirees are eating the profits.

Current retirees put in much less than they will receive. You and I put in much more than we will receive. That's a massive transfer of wealth, from us to them. I certainly don't want to put that same burden on the next generation, I say let us pay for ourselves and our parents and be done with it.

Today's retirees who are getting back more than they put in started off paying 3% tax, and paid single-digit tax rates for decades. Today's young start off paying 12.4% for benefits that were reduced for them (but not for older workers!) by the 1982 legislation.

What a deal.

[linrom1]

Based only on demographics, Europe should be in more dire state. Are they?

[chickenhead]

about the same it sounds like, but of course they have a much much higher contribution (tax) rate.

It might be interestng to note that Sweden implemented a very similiar plan in the 90's as what was proposed here last year.

http://www.eurunion.org/partner/SocSecForumSumm.htm

The Swedish Pension Reform

Faced by largely the same demographic challenges as other OECD countries, Sweden opted in 1992/1994 for a radical reform of its national old-age pension system, a process supported by five parties and some 85% of members of Parliament.

In effect, Sweden moved from a traditional income related defined-benefit system, to two types of defined-contribution systems. The old system was financed more or less on a pay-as you-go basis. In the new system, about 14% of contributions will go into individual financial accounts under the financial defined-contribution system (FDC), while the remaining 86% will be channeled into the new pay-as-you-go system. Financial accounts are managed by a variety of private funds chosen by the individual.

The equivalent of 16% of each individual's annual pensionable income will be credited yearly to his or her notional account under the Notional Defined Contribution System (NIC). The corresponding amount is transferred on monthly installments to the system's Buffer Fund, similar to the Trust Fund of the United States' federal pension system, which finances pension payments. Recently significant liberalisation has been introduced in the investment rules for the funds, 70% of which can now be invested in equities.

[Suff]

Based only on demographics, Europe should be in more dire state. Are they?


How favorable do the numbers get when a means test is applied. Either based on Net Worth or income, or a combination.

While recognizing these are individual contributions, if an American has secured enough wealth to live 2x the standard of living. Why not exempt him from Benefits.

My understanding of SSI was that it was implemented to offset the moral & social injuires of poverty among the elderly. Its's not a Governments version of Fidelity where they just manage your money. It's a societal program.

By everybody getting a SSI check if they need it or not, while that follows the letter of the law, it violates the spirit of the law. In my view.

[Tom]

no DJ, the thinking is that that is why they want to make all of them citizens (amnesty). And bringin thier families. Any of whome have never paid a penny to SS and will begin drawing soon. Dn't swallow this line of crap - amnesty is BAD juju fo the middle class - the ral Americans. Just look at the idea - bring in millions of people who have failed miserable all thier lives i thier own country to somehow support ours?
Losers are losers - mexico is a shinning example of failure. And who do you think casues that failure? The French? :lol:

[skate]

The productivity profits in part are what is allowing the current SS to still function, i.e. the retirees are eating the profits.

Current retirees put in much less than they will receive. You and I put in much more than we will receive. That's a massive transfer of wealth, from us to them. I certainly don't want to put that same burden on the next generation, I say let us pay for ourselves and our parents and be done with it.

Today's retirees who are getting back more than they put in started off paying 3% tax, and paid single-digit tax rates for decades. Today's young start off paying 12.4% for benefits that were reduced for them (but not for older workers!) by the 1982 legislation.

What a deal.

this is the part of (so called problem) the situation, like everything else it gets only 1/2 of "the story".

people talk about debt and they never give the credit side.
a ledger has two sides, credit and debit. how come we only here about the debit?

and and and when we talk about " the others" ( retired, or children given the debt) when we refer to these people, how come we forget to mention the massive benifits they (children) are receiving and the massive gifts the older generations are giving to those that are coming into, or already into the works force.???

in others words, put simply, "the people (USA) have been given a ready made world", full of many conveniences, schools (education), hospitals, roads, victories in wars, space programs, tvs, vacation sites, pcs, others have paid for these and the $bill is small.