[Sp5]

(10-29-2016 11:17 AM)Adonis Wrote:  

Now we're getting somewhere, namely the root of what makes SS inherently dishonest and a great fraud upon the people of this country.

Strike 1 - Literal definition - SS and every other multi-generational defined benefit program depends on there being more workers (aka new investors) than beneficiaries (aka old investors) to remain solvent. Instead of the normal investing timelines of MO/QTR/YR you have generations. Paying old investors with new investors' money, how is that not a ponzi scheme? Or does govt compulsion bring legitimacy to it?

The false ratio between beneficiaries and workers is at the heart of the anti-SS propaganda. The debt to American workers being repaid does not depend on the number of workers paying in, any more than cashing a Savings Bond depends on how many federally-taxed bottles of scotch are sold or how many FFLs are paid for. Debts are repaid from all sources of revenue. The Internal Revenue Code is always being tinkered with, and there are sources of revenue available today that were never imagined years ago. Those sources are all available to pay back the debt to SS retirees.

What counts is the overall output of the economy as measured in GDP. If GDP per capita grows or is sustained, then revenue will be available to pay SS retirees. It does not make any difference how many workers are employed.

Yes, there is a problem with the number of good jobs with good wages. There are a lot of reasons for that. Yet the economy has continued to grow, partly because of population growth, partly because of productivity growth and new markets.

Over time, as jobs go away, SS may transition to a Guaranteed Minimum Income program. There just might not be enough jobs - nobody will be working in factories or warehouses anymore, for example. Maybe no drivers, either. That does not mean that the economy has to tank.

(10-29-2016 11:17 AM)Adonis Wrote:  

Strike 2 - Sustainability - By your own admission, with which I concur, SS is not sustainable absent significant reforms in addition to those already enacted in the 1980's. Let us be honest here, any reform to SS would be seen as major by the public. Is the solution then to continually revise downward the benefit package (ROI) and/or increase the investment? That seems like a totally legitimate enterprise.

If GDP per capita continues to grow, the tax base is maintained, and so is the ability to pay benefits. We could probably pay more generous benefits if the myriad ways the USA wastes money went away.

(10-29-2016 11:17 AM)Adonis Wrote:  

Strike 3 - Fraudulent Returns - Real vs nominal. Avg inflation 1913-2013 was about 3.2%, which thanks to the power of compound interest equals a doubling of prices every 20 years. I would sure hate to pay strong dollars into SS from 1950-1990 and be receiving worth less (getting closer to worthless) dollars today. Value of USD = purchasing power, not sure how that is even an issue for debate. If the govt tells me I am getting a nominal $1600/mo when I reach age 70, what in real terms is the value of the benefit? Will it purchase a basket of goods worth $1600 in 40 years or will it purchase $1200 or $1000 or $800 worth? Before you throw COLA adjustments in there, the CPI (the benchmarks for which are also changed at will by the govt) doesn't even account for food or energy.

What that chart doesn't show is that incomes were rising greater than the rate of inflation during the post war period. There are many reasons for this specific period of economic growth, most importantly was the fact that the US had the only intact industrial base left standing after WWII along with suppressed demand from 20 years of Great Depression and WWII, and a demographic boom which increased the tax base. Real wages have not gone up since 1973, and we are unlikely to again find ourselves in the position we did post WWII.

So in short, what is happening here is that the govt forces you to pay into SS, then changes the rules of the game to make it last longer, then pays you back with money thats worth less than the money you paid in. Seems legit

It's true that SS does not pay a great rate of return for high earners. It is a tax on the wealthy, albeit limited due to the income cap. It is a good deal for low earners and non-working spouses in long marriages.

This table shows the real rates of return for different levels of income over time, it's interesting even if a bit dated, assuming the actuarial data holds up over time:

https://www.ssa.gov/oact/NOTES/ran5/an2004-5.html

[Paracelsus]

(10-31-2016 01:09 PM)Sp5 Wrote:  

What counts is the overall output of the economy as measured in GDP. If GDP per capita grows or is sustained, then revenue will be available to pay SS retirees. It does not make any difference how many workers are employed.

Yes, there is a problem with the number of good jobs with good wages. There are a lot of reasons for that. Yet the economy has continued to grow, partly because of population growth, partly because of productivity growth and new markets.

SlickyBoy touched on this point earlier, but at the risk of belabouring the point, I'd like to still expand on it: the 'if' in this analysis depends entirely on how you measure GDP, and whether GDP as the government measures it in reality reflects a larger tax base or a greater capability to pay for pensions.

GDP as defined by the IMF is essentially the monetary value of all goods and services produced in a country in a given period of time. The problem is that massive government spending -- especially deficit spending -- skews GDP because it injects a massive quantity of funds into the economy, which then go on to produce a big uptick in the GDP since that money has to be spent on something. But it isn't real economic activity. The activity only lasts so long as the government continues to spend. Private sector activity based on this spending is also out of all proportion to reality since it's effectively public sector activity, not people generating their own startups and income independent of government.

This is why inflation is such a crucial factor in GDP, and admittedly why I keep harping on about it. Inflation may take a while to start showing its impact. A train with multiple boxcars doesn't move all at once when the engine takes off, it takes a while for the caboose to start moving -- sometimes well after the engine is already moving, as the pulling force shifts from one car to the next. Any non-partisan Federal Reserve by now would have raised interest rates precisely because the US has a hidden inflationary problem. The high level of government spending, and then QE on top of it, has injected a massive amount of fiat money into the system, enough to devalue the dollar. The US might not be Venezuela -- the US's economy is far more complex, larger, and with a number of different sectors -- but inflation is one of those problems that, given enough time and enough economic stupidity by a central bank, eventually will overwhelm the most sophisticated financial systems and checks and balances.

It's a simple issue of trust in the currency. I don't believe the US currency can be fully trusted. Certainly not for the continuation of Social Security.

One other side note: there is a chilling thought to be had from the blatant anti-Trump campaign of the media. Given how the media can orient so completely to government propaganda, why would anyone trust the media to give us a real economic picture when and if hyperinflation does hit? The MSM can't even be trusted to dispassionately scrutinise the health of two individuals. The complexity of its discussion of political issues comes down to clickbait, at best a listicle if you're lucky. How the fuck can you expect the MSM to sound the alarm or present the facts on economic issues?