[Sp5]

This comes from a couple of comments on the 10/19 debate thread. Trump has pledged to keep the U.S. Social Security retirement system as it is. Some commentators in the thread said SS is a Ponzi scheme.

I've done propaganda work for the USG, and the theories of Bernays and later "persuaders" are an interest of mine. I know propaganda when I see it.

The "Social Security is a Ponzi scheme" and its sister "Entitlement reform" are particularly pernicious propaganda themes which have grown in the USA over the last 20 years, in a campaign to eventually produce benefits for Wall Street, in obvious ways I will explain.

Social Security retirement works through a system of worker and employer contributions. These special taxes paid under the Federal Insurance Contributions Act (FICA) are divided into components for old age retirement, disability retirement and Medicare. In this case, I am only talking about the old age retirement, which is able to be rigidly applied according to a person's age and level of contribution. Other components, like Disability and Medicare have problems due to the difficulty to control for things like fraud and medical costs. But old age is pretty controllable predictable according to actuarial principles - you can collect when you're 62, or wait for higher benefits later on. You collect according to how many years and how much you paid in, up to a maximum.

The money paid through FICA for SS retirement goes into a trust fund for Old-Age & Survivors Insurance. https://www.ssa.gov/oact/progdata/describeoasi.html

This money is accounted for by the US Treasury as a special debt instrument backed by the "full faith and credit" of the US Government. https://www.ssa.gov/oact/progdata/fundFAQ.html
In this, these securities are, or should be, no different than US Treasury bonds and T-notes traded on the market and bought by the likes of China, Saudi Arabia, and European countries, as well as many private banks and investment institutions around the world. This debt to American workers should no more be "worthless IOUs" than a $100k Treasury bond held by JP Morgan or China, or a $100 bill held by you, for that matter.

Yes, the "transfer" of FICA/OASDI contributions to the SS Trust Fund is an accounting device - so it most money moving in the world today. The Federal Reserve bought billions of US Treasury securities to boost the economy -with money it created out of thin air, not earned by workers and businesses, all as accounting devices done on computers. Are those US Treasury securities now void?

US government debt owed American workers is no different than debt owed JP Morgan, Fidelity Investments, or China. And who is it better for the US Government to be borrowing from, the American worker or Saudi Arabia? So why are we getting this bullshit?

You don't have to be a financial genius to be able to imagine the trillions to be earned by Wall Street in trading fees, fund loads, and commissions, not to mention higher asset prices, in a mandatory system of employee and employer contributions to a 401k-like portfolio of stocks, bonds, ETFs, and mutual funds. That is the main reason for this propaganda theme - shifting the American retirement system from a defined benefit government system based on one asset class (US government securities) to a Wall Street market-based defined contribution plan.

Aside from the usual transaction fees involved in trading securities, funds administered by the Federal employees Thrift Savings Plan are managed by Wall Street entities like Blackrock securities. A bonanza for Wall Street if EVERYONE has to invest in Wall Street.

There are a couple of good reasons cited for a defined contribution plan into the private markets. The best argument is that defined contributions into private equities and debt would provide huge amounts of investment capital which would produce growth and jobs. However, central banks around the world have been printing and pumping money into these markets, without much effect.

There is also the argument that more diversification is safer. But US debt is recognized world-wide as the "safe haven," and if US treasuries collapse in value, how well do you think AAPL, F, T, XOM, or MSFT will be doing in the market?

Obviously, investment in the markets is only as good as the investment manager's judgment and the course of the business cycle. God forbid you have to retire at the beginning of Great Depression III.

It may be that US government debt is too high - it is generally accepted as still less than 100% of national annual GDP, which is recognized as the danger zone. In the debate, US debt was mentioned to be at 86% of GDP. Japan's debt is 174% Italy is around 130%. Singapore is around 109% But Social Security is not the only contributor to government debt. We fought a couple of trillion dollar wars, for example, where a lot of money was pissed into the sands of Southwest Asia. If SS is a "Ponzi scheme," the whole US Government is a Ponzi scheme, based on borrowed money. I would rather we don't borrow money for foolish things like the war in Iraq, or war on Russia, than fuck American workers.

Tell me how I'm wrong, but I just see this a a long-term effort to cash in on American workers and make them poorer in old age.

[Sp5]

[quote] (10-20-2016 02:04 AM)Adonis Wrote:  

[quote='Sp5' pid='1423119' dateline='1476944555']
<snip>
You could have a debate as to whether a defined-benefit government funded plan or defined-contribution plan based on Wall Street markets is better, but "SS is a Ponzi scheme" is misleading.[/quote]

Its not misleading at all, it is a ponzi scheme that is about 1/2-3/4 of the way to imploding.

A ponzi scheme is one that takes new investments to pay prior investors can we agree?

Which is exactly what SS does. It just hasn't reached the 1:1 ratio yet.

SS.gov beneficiary ratios

The link above tells us the following ratios of workers:beneficiaries:
1940 159.4
1945 41.9
1955 8.6
1965 4.0
1975 3.2
1985 3.3
1995 3.3
2005 3.3
2013 2.8

So we can see that there is still enough "skim" from new investors to pay the old ones off and keep a little kickback (which goes right into the general fund). Thats why they are desperate to pass amnesty and get millions of new citizens on the tax rolls to bring that number back up. Also the securities are not marketable debt instruments like another nation would purchase, they are "special-issue" strictly for the SSA. That is to say there is no "cash" in the SS Trust Fund, just more debt. Which in order to redeem, the US Treasury would have to issue a marketable debt instrument.

So to paint a picture of what Social Security really is:

[quote]Quote:

It's a slow day in some little town........
The sun is hot....the streets are deserted.
Times are tough, everybody is in debt, and everybody lives on credit.
On this particular day a rich tourist from back west is driving thru town.

He stops at the motel and lays a $100 bill on the desk saying he wants to inspect the rooms upstairs in order to pick one to spend the night.
As soon as the man walks upstairs, the owner grabs the bill and runs next door to pay his debt to the butcher.
The butcher takes the $100 and runs down the street to retire his debt to the pig farmer.
The pig farmer takes the $100 and heads off to pay his bill at the feed store.

The guy at the Farmer's Co-op takes the $100 and runs to pay his debt to the local prostitute, who has also been facing hard times and has had to offer her services on credit.
She, in a flash rushes to the motel and pays off her room bill with the motel owner.
The motel proprietor now places the $100 back on the counter so the rich traveler will not suspect anything.

At that moment the traveler comes down the stairs, picks up the $100 bill, states that the rooms are not satisfactory, pockets the money & leaves.

NOW,... no one produced anything...and no one earned anything...however the whole town is out of debt and is looking to the future with much optimism.[/quote]

Sure, demographics are an issue. Age of eligibility and SS benefits have been adjusted over the years, and will continue to be adjusted based on population ratios. That will be an issue under ANY plan, as consumption and growth will slow along with population growth.

It does not change the legitimacy of the SS debt instruments or the problems with the alternatives.

The big question is, what is a government for? Some people would be ok with old ladies begging in the streets like in the Philippines, but if you have a big enough economy, and a government which preserves public order and the enforcement of contracts, no reason why you shouldn't have a decent retirement system for old people or even a guaranteed minimum income. I've seen enough money go down the toilet for stuff with a lot less value.

[The Beast1]

Trump plans on fixing social security through two honest means:

1.Improving the birthrates of those that matter (IE high income earning individuals).

2.Improving job opportunities by lowering taxes and regulations.

I hope that he forces the government to stop double dipping FICA funds and general government revenue.

That's the only way to keep the SS ponzi scheme afloat.

[Leonard D Neubache]

Australia has a forced superannuation program. Apart from propping up the markets it also serves a very important purpose for the elites.

It forces people to put a dog in the fight on the side of the big banks and investment firms.

We now have millions of people retired or approaching retirement who will vote for anything and everything that will keep the markets up. No freedom too precious. No future for their children too sacred. Toss it all on the bonfire of the markets, because that's where all their compulsory superannuation contributions are.

And as the new generations work they too become beholden to the same beast. Economically chained to it as it were.

Pure, evil genius when you think about it.

[Paracelsus]

This will be an interesting discussion.

The one issue I see with it is this: because no civilised nation on the Earth is on the gold standard anymore it means that those securities, bonds, and notes traded on the market rest solely on the promise of the US government that it will not inflate its debts away. Moreover, those instruments rest largely on there being no credible safe alternative to US fiat currency at the present.

I know at this point people will say "But Federal Reserve is independent of government" and "That's not how it works." To that I would say the Federal Reserve has been madly inflating debts away already. That's what Quantitative Easing is. There are no actual funds with which to purchase the bonds the government has been issuing; they are created essentially out of thin air by the treasury. In addition, the federal government has a budget deficit that has been in place since Cigar Bill and is simply not stopping. The Fed is obviously a political player since it refuses to raise interest rates while Obama is still in office, but the blame cannot be placed on it alone, because the need to inflate debt away only arises when you have too much debt in the first place.

I don't think you can make the assumption that at some point, a rational group of Congressmen is actually going to look at the debt and say, "Whoa, hey, this shit is getting real now, time to start thinking about getting the budget under control and reduce the debt." Obama has been in office eight years. The Republicans have control of both houses. They have not dropped the debt one iota. It's doubled. In many parts of the US an implicit living wage is in place: even back in 2011 The Last Psychiatrist was making the not-funny joke that everything in a picture he took of a low-socioeconomic area strip mall was paid for by the government. The US's massive debt has turned from discretionary spending -- which was pretty much World War 2 -- to structural in nature, and social security seems the largest element of the budget. There's no need to debate whether the US should be a welfare state, or whether it should introduce a living wage. That point passed sometime before the subprime crisis. And the problem is that the longer the debt rises, the harder and more brutal the spending cuts have to be to get it under control. Remember the Ryan Plan? 24 years to just balance the US budget -- that was the hardest plan the Republicans could stomach taking to the American welfare state in 2012!

I don't think US debt is seen as fundamentally safe on its own merits. I think it is seen as safe only in comparison to the other high-volume bond options around it. You'd have to be insane to buy a bond off the state of Eurabia, er, the EU, right now. If China were more open about the real state of its budgets, its bonds might be a real competitor to the US dollar, but, well, China's real economic state is a Ponzi scheme as any conservative investor will tell you when no reporters are around. But relative assessments of risk are always in motion. I don't think the US is going to be able to trade off the "Buy our bonds, because we suck less than anyone else right now" forever. Yes, maybe it'll last for another ten years. Or maybe five. Or maybe two. Who knows.

I believe the US is at grave risk of going into hyperinflation. I don't think even Trump can stop that, at best only delay it -- because the problem of deficit spending fundamentally lies with the American people, who do not ultimately want to live within their means. Not to mention that, with a government that is conjuring money out of thin air, they don't have to ... until interest rates rise.

The welfare system itself is not a Ponzi scheme, but the state of the US's debt is. That Ponzi scheme historically has only one end: what happened to the American South by the end of the civil war, and what's happening in Venezuela right now.

[Paracelsus]

(10-20-2016 03:55 AM)Leonard D Neubache Wrote:  

Australia has a forced superannuation program. Apart from propping up the markets it also serves a very important purpose for the elites.

It forces people to put a dog in the fight on the side of the big banks and investment firms.

We now have millions of people retired or approaching retirement who will vote for anything and everything that will keep the markets up. No freedom too precious. No future for their children too sacred. Toss it all on the bonfire of the markets, because that's where all their compulsory superannuation contributions are.

And as the new generations work they too become beholden to the same beast. Economically chained to it as it were.

Pure, evil genius when you think about it.

The real estate market in Australia does a far better job of putting everyone's dog in the fight. Both the fact that every Baby Boomer has a house and that superannuation funds are invested heavily into the Big Four banks, which constitute the overwhelming majority of mortgages in Australia.

[Leonard D Neubache]

As usual it falls to the wise investor to suffer what they absolutely must and put what they can where it will be safe.

We in the west still have the ability to see to our own future, despite the government and the welfare parasites hanging off of our right and left legs respectively. Gather assets that can be kept off the books, hidden, and easily traded.

If it all falls to shit you're better off than most of the population. If the centre holds then you're at least beating inflation.

[Adonis]

Sp5 Wrote:

Sure, demographics are an issue. Age of eligibility and SS benefits have been adjusted over the years, and will continue to be adjusted based on population ratios. That will be an issue under ANY plan, as consumption and growth will slow along with population growth.

It does not change the legitimacy of the SS debt instruments or the problems with the alternatives.

The big question is, what is a government for? Some people would be ok with old ladies begging in the streets like in the Philippines, but if you have a big enough economy, and a government which preserves public order and the enforcement of contracts, no reason why you shouldn't have a decent retirement system for old people or even a guaranteed minimum income. I've seen enough money go down the toilet for stuff with a lot less value.

There are several facets to the Social Security question.

1. Is it a ponzi scheme?
2. Is it a sustainable program?
3. Does govt have a moral/social imperative to provide it?
4. Is it moral for the govt to compel citizens to provide for others?

Lets focus on question #1, since thats the thread topic. You didn't address that part of my post.

Is Social Security a ponzi scheme?

A ponzi scheme is one that takes new investments to pay prior investors can we agree?

Wikipedia Wrote:

A Ponzi scheme is a fraudulent investment operation where the operator, an individual or organization, pays returns to its investors from new capital paid to the operators by new investors, rather than from profit earned through legitimate sources. Operators of Ponzi schemes usually entice new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent.

Ponzi vs. Pyramid?

Wikipedia Wrote:

A pyramid scheme is a form of fraud similar in some ways to a Ponzi scheme, relying as it does on a mistaken belief in a nonexistent financial reality, including the hope of an extremely high rate of return. However, several characteristics distinguish these schemes from Ponzi schemes:

A pyramid scheme typically collapses much faster because it requires exponential increases in participants to sustain it. By contrast, Ponzi schemes can survive simply by persuading most existing participants to reinvest their money, with a relatively small number of new participants.

Which is exactly what SS does in that the US Gov compels initial and continued reinvestment. It just hasn't reached the 1:1 ratio yet. I would also posit that all defined benefit plans are ponzi schemes and are doomed to failure by any objective mathematical standard.

SS.gov beneficiary ratios

The link above tells us the following ratios of workers:beneficiaries:

1940 159.4
1945 41.9
1955 8.6
1965 4.0
1975 3.2
1985 3.3
1995 3.3
2005 3.3
2013 2.8

So we can see that there is still enough new investors (workers) to pay the old investors (beneficiaries) off and keep a little kickback (which goes right into the general fund). The Baby Boomer generation is just now reaching retirement age so the ratio will trend toward 2:1 or lower. But thats only half the puzzle, not only do you have demographic shifts there are economic shifts as well. As we have shifted away from a manufacturing based economy and towards a financial/service economy, large numbers of well paying jobs have disappeared to be replaced by lower paying jobs, a trend which is only accelerating into the foreseeable future.



This is the second half of a 1-2 punch and will have an effect of cratering gross tax receipts just when they're needed most. Of course the easy thing for people with a gov mindset is to "tax something!" and "raise the FICA threshold", "put a transaction tax on Wall Street", or "tax the rich" when they should be thinking "how do we put 10,000,000 people to work?" Enter the God Emperor.

As to the sanctity of the trust fund we agree, social security benefits will be paid in nominal dollars, of that there is no doubt. Taking one look at the unfunded liabilities however makes me question what those benefits would be worth in real terms. This presupposes there will be no tax revolt where the young generation realizes that the GI Generation and the Boomers saddled them with debt bondage from which they will never benefit and gives the middle finger to the old. Young healthy people are not signing up for Obamacare to subsidize the old/sick, welcome to Generational Warfare.

FACT: Social Security is a ponzi scheme at gun point.

[Paracelsus]

(10-20-2016 02:37 PM)Adonis Wrote:  

Of course the easy thing for people with a gov mindset is to "tax something!" and "raise the FICA threshold", "put a transaction tax on Wall Street", or "tax the rich" when they should be thinking "how do we put 10,000,000 people to work?" Enter the God Emperor.

I would offer a clarification here: government mindset is not to tax something. It's to tax something that can't vote them out of office. Especially now, with what seems like half the US drawing welfare benefits from the government, you will not see politicians asking for a broad-based tax which directly affects more than a small slice of the population.

When a politician announces a tax on "the rich" or "Wall Street", I'm in two minds about whether said politician is either stupid or has very intelligently judged the public as stupid.

Taxing only the rich is stupid because the rich are not without resources, and are better-placed than anyone else in our society to use the power of the word "if". You can say "If you earn more than $250,000, you will be taxed at 30% of your income." The rich have a much greater capacity to say "Okay, I'll only earn $249,999." Or say "Very well, I'll move to a jurisdiction where I won't be taxed at those rates." There's also the "killing the goose that laid the golden egg" thing, which I won't get into here.

Announcing that you're taxing the rich, however, is an intelligent political move mainly because the politician knows full well the rich will never pay an extra dollar in tax and that the politician will not lose a single vote in becoming Robin Hood. The politician understands full well a rich man who becomes subject to higher taxes will reorient his affairs so as not to pay any higher tax, or will simply shift the cost on to the consumers of his goods. Ultimately, everyone but the rich pays for raised taxes. But because most people in the US don't understand the concept of downstream consequences (as evidenced by the fact most people in the US are in serious private debt) it's a safe bet politically because the politician can look like a man of the people while actually fucking those people over even harder.

As Last Psychiatrist so memorably put it in his not-interview with Michael Bay:

Quote:

Look, we're all being raised by TV. Do you think as 4 year olds we really understood what the hell was going on on Batman or Scooby-Doo? You think your kids can really follow the plot of anything by Pixar? Since we've been able to enjoy movies anyway, without following the story, there's no incentive to follow it anymore. And since we have no incentive, we don't get no practice-- and now we can't follow a story, story gets distracting. Just like a porno. Fucking the most confusing movie ever made was voted to be... Vanilla Sky. WTF, you're confused by Vanilla fucking Sky? These lunatics aren't confused just by B plot, they're confused by B roll. So we cut that shit right out and replace it with something on fire. ... In real life, too. President Bush knew we were fucked by history, right? He got there day 1, opened the Book, and was like, fuck me, this is what's really going on...? And then he looked at America and said, these fucktards couldn't find Iraq on a map of Iraq labeled 'Iraq', no way are these Raymond loving motherfuckers going to understand anything about labor costs and the inevitability of falling foreign reserve accumulation. Let's go with 'WMDs.'" A decade of historical analysis later and the deepest anyone's been able to go is, "they lied, it's really about oil!!!!!!!!!!!!!!!!!!" Jesus, what asshats. Now every time poor Obama looks over his speeches he has to say, "no good, too many syllables."

[Peregrine]

(10-20-2016 09:16 PM)Paracelsus Wrote:  

(10-20-2016 02:37 PM)Adonis Wrote:  

Of course the easy thing for people with a gov mindset is to "tax something!" and "raise the FICA threshold", "put a transaction tax on Wall Street", or "tax the rich" when they should be thinking "how do we put 10,000,000 people to work?" Enter the God Emperor.

I would offer a clarification here: government mindset is not to tax something. It's to tax something that can't vote them out of office. Especially now, with what seems like half the US drawing welfare benefits from the government, you will not see politicians asking for a broad-based tax which directly affects more than a small slice of the population.

When a politician announces a tax on "the rich" or "Wall Street", I'm in two minds about whether said politician is either stupid or has very intelligently judged the public as stupid.

Taxing only the rich is stupid because the rich are not without resources, and are better-placed than anyone else in our society to use the power of the word "if". You can say "If you earn more than $250,000, you will be taxed at 30% of your income." The rich have a much greater capacity to say "Okay, I'll only earn $249,999." Or say "Very well, I'll move to a jurisdiction where I won't be taxed at those rates." There's also the "killing the goose that laid the golden egg" thing, which I won't get into here.

Announcing that you're taxing the rich, however, is an intelligent political move mainly because the politician knows full well the rich will never pay an extra dollar in tax and that the politician will not lose a single vote in becoming Robin Hood. The politician understands full well a rich man who becomes subject to higher taxes will reorient his affairs so as not to pay any higher tax, or will simply shift the cost on to the consumers of his goods. Ultimately, everyone but the rich pays for raised taxes. But because most people in the US don't understand the concept of downstream consequences (as evidenced by the fact most people in the US are in serious private debt) it's a safe bet politically because the politician can look like a man of the people while actually fucking those people over even harder.

As Last Psychiatrist so memorably put it in his not-interview with Michael Bay:

Quote:

Look, we're all being raised by TV. Do you think as 4 year olds we really understood what the hell was going on on Batman or Scooby-Doo? You think your kids can really follow the plot of anything by Pixar? Since we've been able to enjoy movies anyway, without following the story, there's no incentive to follow it anymore. And since we have no incentive, we don't get no practice-- and now we can't follow a story, story gets distracting. Just like a porno. Fucking the most confusing movie ever made was voted to be... Vanilla Sky. WTF, you're confused by Vanilla fucking Sky? These lunatics aren't confused just by B plot, they're confused by B roll. So we cut that shit right out and replace it with something on fire. ... In real life, too. President Bush knew we were fucked by history, right? He got there day 1, opened the Book, and was like, fuck me, this is what's really going on...? And then he looked at America and said, these fucktards couldn't find Iraq on a map of Iraq labeled 'Iraq', no way are these Raymond loving motherfuckers going to understand anything about labor costs and the inevitability of falling foreign reserve accumulation. Let's go with 'WMDs.'" A decade of historical analysis later and the deepest anyone's been able to go is, "they lied, it's really about oil!!!!!!!!!!!!!!!!!!" Jesus, what asshats. Now every time poor Obama looks over his speeches he has to say, "no good, too many syllables."

Fuckin' nailed it.

[Paracelsus]

Further to my proposition that the US dollar's dominance only rests on it being the best of a bunch of bad alternatives, and that this status is not assured, I give you one of the latest articles from Zero Hedge.

Quote:

The world monetary order is changing. Slowly but steadily, global trade and currency markets are becoming less dollar-centric. Formerly marginal currencies such as the Chinese yuan now stand to become serious competitors to U.S. dollar dominance.

Could gold also begin to emerge as a leading currency in world trade? Over time, it certainly could. But the more immediate implications for gold’s monetary role center on its increasing accumulation by central banks such as China’s.

As of October 1st, the Chinese yuan has entered the International Monetary Fund’s Special Drawing Right (SDR) basket of top-tier currencies. It now shares SDR status with the U.S. dollar, euro, British pound, and Japanese yen.

Before the yuan officially becomes an SDR currency, the World Bank intends to sell $2.8 billion in SDR bonds in Chinese markets. The rollout of SDR bonds in China began August 31st. According to Reuters, China’s promotion of SDR bonds “is part of a wider push in China to… boost demand for Chinese yuan and diminish reliance on the U.S. dollar in global reserves.”

King Dollar won’t be dethroned overnight. But the place of prominence the U.S. dollar enjoys as the world's reserve currency will indeed diminish over time.



China and Russia have mutual geostrategic interests in helping to promote de-dollarization. Toward that end, the two powers are engaging in bilateral trade deals that bypass the dollar. Annual bilateral trade between China and Russia has surged from $16 billion in 2003 to nearly $100 billion today. When China hosted the G20 summit in September, it will make Russian President Vladimir Putin its premier guest of honor.

U.S. officials are none too pleased. They fear Putin aims to expand his global reach by forging stronger ties with China.

According to the South China Post, “Some Western analysts have viewed the recent, rapid enhancement of such collaboration as the beginning of a partnership set on destabilizing the U.S.-led world order and diminishing Washington’s capacity to influence strategic outcomes.”

Some in the Hillary Clinton campaign even fear that Russia will interfere in the upcoming U.S. election to try to block Hillary’s path to the White House. Russian hackers have been implicated in a number of recent “leaks” that damaged the reputations of U.S. banks and the Obama administration. Wikileaks founder Julian Assange has hinted at further releases. Hillary’s allies openly speculate that these Wikileaks hacks are being sourced from Russia.

But the Russians and the Chinese aren’t counting on cyber warfare to dethrone King Dollar. In addition to bilateral trade deals and strategic plays for regional economic dominance, the two powers are bulking up on gold. Over the past several years, Russia and China have each been adding massively to their gold holdings.

Since 2009, China’s officially reported gold holdings have jumped by 60%. The enlarged gold stockpiles held by the People’s Bank of China helped China win ascension into the IMF’s elite SDR currency basket.

It’s part of a larger trend of world central banks becoming net gold buyers. They were net sellers throughout much of the 1990s and early 2000s. That helped keep gold prices suppressed. But since 2010, central banks have been net buyers of gold — to the tune of 500 tons per year.

Russia alone added 172 tons of gold in 2014 and 208 tons in 2015. By swapping some of its U.S. Treasury securities for bullion bars, the Russian central bank has become the world’s seventh largest gold holder. Yet gold makes up just 16.2% of Russia’s monetary reserves, which is a lower proportion held by its Eurozone neighbors.

Russia likely isn’t done accumulating. As the world’s third largest gold producer, Russia can readily supply itself with more.

A similar scenario figures to play out in China, perhaps even more dramatically so. China’s “official” gold hoard of 1,823 tons as of August 2016 gives it the world’s sixth biggest gold reserve. Yet relative to the size of China’s economy and currency supply, its gold stash doesn’t amount to much — just 2.3% of total monetary reserves.

Unofficially, China likely has additional gold reserves that it doesn’t report. But even if China’s real gold stash is double or triple what it actually reports, as some analysts suggest, that still leaves the country of 1.3 billion people with far less gold backing than Russia, the United States, Europe, and some of its Asian rivals. China has a lot more gold accumulating to do in the years ahead.

Chinese leaders aim to be regionally dominant. In order to secure that position they are moving to own and control greater shares of the gold market. The recently opened Shanghai Gold Exchange gives China a direct mechanism for controlling the physical gold market in Asia.

It’s a way for China to take at least some control away from Western governments and banks that have traditionally dominated the gold trade out of London and New York.

Z-Hedge is always bearish, and this article was fed to them by the Mises Institute which is about as libertarian as you can get, but it does illustrate the point. In particular the prospect of Russia and China linking arms economically was the great US strategic nightmare of the past sixty years or so, so much so that Nixon was basically sent to China in part to break the prospect of an alliance between the two powers.

That is perhaps the most significant element of Obama's failure to "pivot to Asia"; he's failed to stop something that generations of Cold War US diplomats and strategists knew was essential to the US remaining dominant as a superpower.

[puckerman]

If social security is such a great program, then people would happily pay into voluntarily. The fact that it isn't voluntary is all I need to know.

Ponzi scheme? Pyramid scheme? I don't feel like arguing semantics. It's definitely a scam that never should have been enacted.

[SlickyBoy]

(10-20-2016 03:25 AM)Sp5 Wrote:  

The "Social Security is a Ponzi scheme" and its sister "Entitlement reform" are particularly pernicious propaganda themes which have grown in the USA over the last 20 years

That's unfortunately an accurate description of what SS is now.

Quote:

Social Security retirement works through a system of worker and employer contributions.

No, the use of the word "contribution" is the language of the left, and you don't even realize it. Contributions by definition are voluntary. Even if you decide to opt out of SS payments, you are still required to "contribute" a percentage of your check to the SS scheme. It is a tax which you cannot avoid, not even while working overseas. And the amount of income that is taxable keeps going up.

Quote:

The money paid through FICA for SS retirement goes into a trust fund for Old-Age & Survivors Insurance. https://www.ssa.gov/oact/progdata/describeoasi.html

Did you ever bother to find out how much money is in this supposed "trust fund"? You will be surprised to learn that it is zero. What gets paid into SS, gets paid out in SS checks. If there is any leftover amount it is saved until the next payout period, but this is rare and as you mentioned, an accounting gimmick. Something like CALPERs represents a trust fund with nearly 300 billion in assets under management, yet they still have their problems. The continued use of the term trust fund to describe SS is patently dishonest.

Quote:

This money is accounted for by the US Treasury as a special debt instrument backed by the "full faith and credit" of the US Government. https://www.ssa.gov/oact/progdata/fundFAQ.html

So? That just means it is the official system. The dollar bills in your pocket are backed by the same clause, but there is nothing effectively preventing their rise and fall in value.

Quote:

US government debt owed American workers is no different than debt owed JP Morgan, Fidelity Investments, or China. And who is it better for the US Government to be borrowing from, the American worker or Saudi Arabia? So why are we getting this bullshit?

Because there is no privity of contract between US citizens and the SS system. That is, congress can change the laws any time they want and there is shit-all anyone can do about it other than bitch to their congressman and vote. SS payments used to be untaxed, then that changed and they are now taxable. SS used to be only for workers and not small businesses, since small businesses did not need the safety net as they were considered small businessmen - not wage earners - who by definition had more and often better control over their financials. That changed, and now a businessman pays the self employment tax - both halves of the SS tax versus only one for the fat, dumb & happy wage earner who thinks he's getting a free ride when his "employer pays half."

Don't forget, the government can raise the age of retirement, the amount paid out in COLA adjustments (which they control at the other end, by using a false metric to calculate inflation), and as discussed before, they determine threshold as to how much of your income gets taxed by SS. The government can decide to add or subtract entire classes of people to the SS rolls - such as refugees and illegal immigrants - by giving them a cut regardless of them not paying one cent towards it.

If one day the government decides to means test you out of the equation because they decided you earned enough money to take care of yourself in your old age, well good luck winning that one in court.

Quote:

It may be that US government debt is too high - it is generally accepted as still less than 100% of national annual GDP, which is recognized as the danger zone.

Uh, no - it IS way too high. SS and other entitlement programs to include federal and state retirement programs are living on borrowed time. You are on your own.

This entire thread feels like it was started by a dedicated government troll of some kind.

[Sp5]

Yes, taxes, laws, police, courts are all intolerable impositions on your freedom. I get it.

For those who prefer limited government providing some limited services, Social Security is not a bad program.

Yes, Social Security is a tax-funded transfer payment system. The purpose of the program is income security for the elderly and the disabled. What's wrong with that?

The taxes are accounted for as loans from Americans to the government in the SS Trust Fund. That creates a political imperative to "pay back" to the taxed. In fact, as long as we do have voting, SS is a popular program and cuts to benefits which are immediately imposed would create a huge reaction.

There are a few numbers which are significant. One is US GDP per capita, which is around $55,000 per person. That includes children, the retired, and the disabled. It shows that US GDP can sustain the SS systems' modest payments. Another is government spending in the US, which is only 38% of GDP, compared to Japan at 42%, Germany at 44%, and Finland at 58%. Social Security is included in that percentage, along with a lot more foolish stuff like missile bases in Poland and sugar and corn subsidies. It means there is a lot of room for Social Security in the US economy.

Out of all of the replies, I have not seen one serious proposal for an alternative retirement system. Wall Street wants to replace the SS tax with a forced contribution to Wall Street.

[Bear Hands]

Faceless charity is one more drop in the bucket for the destruction of social cohesion. The elderly have had long lives to cultivate a family, become part of a local community like a church, or just to save the money themselves they would have paid into Social Security. Implicitly we do not trust our families and communities to be able to care for us in old age and we do not trust people to do what's best for themselves with their own money. Today's elderly who are spending our Social Security payments have lived through some of the easiest times in the history of the world to save money for themselves. Additionally, they still vote and their vote is easily controlled by whoever promises to protect the goose that lays the golden eggs.

I have seen enough people in my line of work who I would feel no sympathy for if Social Security went away because they piss away money thoughtlessly and wonder why they're broke all the time. If someone lives in rent-controlled housing, they do not need a new smartphone every year, new video game consoles bought at their release price, a pack or more of cigarettes everyday, sacks of weed, or a new sound system. I realize Social Security is not what's allowing them to live that way, but these people do not need to be subsidized in old age because they were too involved with consumption to plan for the future.

People who send away their children to college to get a useless degree and then subsidize their unemployed children after paying for that useless crap are doing their children no favors. The generational wealth that should be accumulating gets pissed away and the children are not becoming net producers of wealth, two more reasons people think Social Security is a necessity.

In the search for a fix or an alternative for Social Security, how many of us ask if we need Social Security or an alternative? Social Security now just treats a symptom of a sick culture that has lost community spirit and a forward-thinking mindset in favor of consumerism and rootless individualism, a golden shackle happily accepted by the unwitting.

[Adonis]

(10-24-2016 07:26 AM)Sp5 Wrote:  

Yes, taxes, laws, police, courts are all intolerable impositions on your freedom. I get it.

For those who prefer limited government providing some limited services, Social Security is not a bad program.

Yes, Social Security is a tax-funded transfer payment system. The purpose of the program is income security for the elderly and the disabled. What's wrong with that?

The taxes are accounted for as loans from Americans to the government in the SS Trust Fund. That creates a political imperative to "pay back" to the taxed. In fact, as long as we do have voting, SS is a popular program and cuts to benefits which are immediately imposed would create a huge reaction.

There are a few numbers which are significant. One is US GDP per capita, which is around $55,000 per person. That includes children, the retired, and the disabled. It shows that US GDP can sustain the SS systems' modest payments. Another is government spending in the US, which is only 38% of GDP, compared to Japan at 42%, Germany at 44%, and Finland at 58%. Social Security is included in that percentage, along with a lot more foolish stuff like missile bases in Poland and sugar and corn subsidies. It means there is a lot of room for Social Security in the US economy.

Out of all of the replies, I have not seen one serious proposal for an alternative retirement system. Wall Street wants to replace the SS tax with a forced contribution to Wall Street.

So far out of all your posts you have not disproven or even argued against that SS is in fact, a Ponzi scheme as classicaly defined, made worse by the fact that participation is compelled by the govt. You're making a moral argument for the idea that society and govt has a duty to provide such to its citizens.

So again, what are we talking about here?

1. Is it a ponzi scheme?
2. Is it a sustainable program?
3. Does govt have a moral/social imperative to provide it?
4. Is it moral for the govt to compel citizens to provide for others?

[SlickyBoy]

(10-24-2016 07:26 AM)Sp5 Wrote:  

Yes, Social Security is a tax-funded transfer payment system. The purpose of the program is income security for the elderly and the disabled. What's wrong with that?

Because the "disabled" is a hell of a lot more people in that category than what you probably think of as disabled. SSI (supplemental income) and DI (disability insurance) have not only grown from the original intent of the program in 1935, but the rolls have exponentially expanded. Classic case of more takers than makers. The linked report is from 1995. Even then there were problems with out of control growth. Now? It's predictably even worse:

"The federal government spends more money each year on cash payments for disabled former workers than it spends on food stamps and welfare combined. Yet people relying on disability payments are often overlooked in discussions of the social safety net. The vast majority of people on federal disability do not work.[1] Yet because they are not technically part of the labor force, they are not counted among the unemployed." Convenient, eh? No wonder it's easier than ever to qualify:

"The remaining 44 percent to 57 percent of the rise in DI beneficiaries—roughly 3 million beneficiaries—remains unexplained.[8] Among other possible causes, this unexplained increase may stem from broadening of disability definitions and qualifications and an increase in the value of benefits."

Quote:

The taxes are accounted for as loans from Americans to the government in the SS Trust Fund. That creates a political imperative to "pay back" to the taxed. In fact, as long as we do have voting, SS is a popular program and cuts to benefits which are immediately imposed would create a huge reaction.

Again, there is nothing stopping them from continuing to tweak the system as they have over the years, and not always for the better.

Quote:

That includes children, the retired, and the disabled. It shows that US GDP can sustain the SS systems' modest payments.

See above links - the definition of disabled has expanded so much that it no longer includes only those who truly require a safety net. It's more like a hammock for a lot of recipients. And as for affording it, again, see links - they simply cannot for much longer, especially as the 77 million boomers continue to retire as we speak

Quote:

There are a few numbers which are significant. One is US GDP per capita, which is around $55,000 per person....

...and it was about $47,000 in 2008. Most of the "growth" has been from inflation, which in and of itself is a managed statistic put out by the government using a metric many argue is wildly out of date and skewed (ex: it does not include the price of food and fuel - I guess that is ok if you don't drive, heat your house, or eat). The point is the GDP isn't necessarily means what you think it means and the economy is barely limping along.

Quote:

...Another is government spending in the US, which is only 38% of GDP

Hard to tell, since the way government measures GDP keeps changing with the wind[/quote] in an effort to paint the picture of a great economy. But the economy simply can't be doing so well with so few people in the work force, and/or collecting disability payments.

Quote:

Out of all of the replies, I have not seen one serious proposal for an alternative retirement system. Wall Street wants to replace the SS tax with a forced contribution to Wall Street.

I'm not saying something like it could never exist, but there needs to be some fundamental changes.
You could start by making it fully optional - only those who want it could participate. Next, roll back the law that required self employed people to pay into it - they're getting fucked and by the nature of being self employed accept the risk of fending for themselves. Unless they truly want to participate, this should be optional. Finally, you could perhaps keep social security as a safety net program for those truly in need, but the SSI and DI portions need to be fully overhauled and brought back from the disguised welfare programs they have become.

[Paracelsus]

(10-24-2016 07:26 AM)Sp5 Wrote:  

Yes, taxes, laws, police, courts are all intolerable impositions on your freedom. I get it.

All due respect, but no. Freedom requires the rule of law to operate: thus laws, police, courts. There are very, very few libertarians who say that these are not required for a civilisation. You will also find few libertarians who insist that no tax should be payable, mainly because you cannot have the rule of law without someone paying that bill.

Laws, police, courts are not in the same category as social security. They are primarily enforcement bodies - that is, reactive and dependent on fixed standards of behaviour specified by the government with the consent of the people.

Social Security is proactive. It is, ultimately, giving people money without having done anything to earn it. And its existence calls into question whether, just as church is separate from state, charity ought be separate from state as well.

Quote:

The taxes are accounted for as loans from Americans to the government in the SS Trust Fund. That creates a political imperative to "pay back" to the taxed. In fact, as long as we do have voting, SS is a popular program and cuts to benefits which are immediately imposed would create a huge reaction.

How they are accounted for in the SS Trust Fund is meaningless. It's no different to taking a shitpile of subprime loans and calling them CDOs.

Is this a loan? All right: show me the loan contract you signed wherein you agreed to give the government this money for this purpose. Show me that contract's legally enforceable terms wherein you can demand back the real value of that loan. Show me wherein you may consider that the US is unlikely to repay that loan and therefore allow you to foreclose on the loan.

If this arrangement could ever be regarded in law as a loan, it would be also regarded as an unconscionable contract -- a deal that a court would have a right to strike down because it was so blatantly unfair to one party the law could not stomach its continued existence as a matter of basic fairness to both parties.

The most horrible term of this "loan" is simply that you are not entitled to get paid back the same value as you put in. There might be a "political" imperative to pay back something on these "loans", but the problem is that the something you get back will not match in real terms what you loaned, and sure as fuck not a market rate of interest on it. That is what inflation is designed to do: because the US dollar is legal tender for all debts, you cannot object when the government inflates the dollar and then pays you back in shitty, worthless currency. You cannot throw the US dollar back in Treasury's face and say "Fuck that, that's not worth a Continental, I want you to pay me back in gold." Again and again, when a government runs out of money to pay for its promises, it always resorts to inflation, and eventually hyperinflation, to try and pay them out -- and blaming the private sector for the meteoric rise in prices that occurs. You are seeing precisely this play out in Venezuela right now, just as it played out in Zimbabwe a few years ago.

Just saying that SS is a popular program does not excuse it. The practice of cliff diving by lemmings is a popular program for them, too. Governments have a responsibility not to run up public debt.

[Sp5]

I laugh at those who compare SS to a private contract, saying a private contract can't be changed. Most private contracts allow the larger, more powerful party to change essential terms at will. Do you negotiate the interest rate on your credit card? Can't the bank change it to 30% if they wish? Can your boss cut your salary if you're not in a union or special contract? Are you an "employee at will," a "tenant at will?" At least the government is somewhat accountable to the voters. With Chase you get no redress if they hike rates to 30%.

When the median household income is $56,000 for a family of 4, where are the savings to retire going to come from? Let's say the FICA tax is abolished, and you get to save your FICA contribution. 6.2% is $3,472 per year at the median. Add the employer contribution and it's $6,944. Now the median is the average - half of households are earning less. Where is the slack in their budgets to save? Where do you invest that money to get a guaranteed, secure return?

The idea of charity is laughable, too. People are greedy and will not contribute to charity to the extent necessary to support a retired population with the longevity we have now. It's not like before SS, when the male life expectancy was 58 and the female at 61 (1930). Sure, back then people worked til they died, or stayed with family for their (short) dotage until death.

I am only talking about retirement here, disability is another issue which is subject to fraud. With retirement, you are either 62 or you're not.

Talking about SS as an "unfunded liability" different from any other future government expenses is a bit disingenuous. Does anyone speak of the Defense budget for 2025 as an "unfunded liability?" The National Park Service, the FAA? Yet we know that these agencies will exist. But is the DOD budget for 2025 part of the "national debt?' Nahhhhh.

The truth is that given a reasonable degree of economic growth (in part fueled by SS recipients' spending), demographic balance, and adjustments to the system, there is no fundamental reason why SS can't keep going forever.

Here is a chart showing different ways that the reported SS shortfall of 0.6% of GDP could be made up. The adjustments are not major and can be done over time.



The irony of this debate is that most of you young guys will become socialists, or at least in favor of large-scale taxation and redistribution programs eventually.

With robots, AI, and outsourcing, the West and the world faces more and more of a surplus labor problem. When the only jobs available are either super-expert professional and technical, sales, or bespoke cleaning and service jobs robots can't do, you will be fucked.

The balance between labor (human workers) and capital (robot workers) will have shifted decisively to capital. If you don't own capital, you will have no income.

If capital and expert labor is not taxed for your income, you will starve. There will be a lot of unrest along the way if these things are not thought through. Perhaps the owners of capital will engineer mass deaths or enforced birth control to keep as much of the wealth as possible.

[Paracelsus]

(10-25-2016 08:28 AM)Sp5 Wrote:  

I laugh at those who compare SS to a private contract, saying a private contract can't be changed. Most private contracts allow the larger, more powerful party to change essential terms at will. Do you negotiate the interest rate on your credit card? Can't the bank change it to 30% if they wish? Can your boss cut your salary if you're not in a union or special contract? Are you an "employee at will," a "tenant at will?" At least the government is somewhat accountable to the voters. With Chase you get no redress if they hike rates to 30%.

Dude, you've said it's accounted for as a "loan" from the American people. I say it doesn't have anywhere near that level of legal effect or legitimacy, any more than a show trial does to an actual trial.

And staying with the metaphor for a moment: at least with a bank you have the capacity to change providers, even if it costs you a penalty to pay out and some holding costs otherwise. Try changing countries and taking your paid-in taxes with you.

And while most private contracts do allow the more powerful party to change essential terms at will, they do not force -- at the point of law -- the party to enter into the transaction. Fail to make payments on your home loan (non-recourse, as most US housing loans are) and you likely just lose the house. Fail to make payments on your taxes and you can be thrown into prison, even if the amount you fail by is infinitesimal.

[Adonis]

You persist in deflecting from the topic of the thread with feel good arguments and a bit of math in an attempt to justify the ponzi scheme that is Social Security by taking the position "we can afford it" instead of proving that it is not, as classically defined, a ponzi scheme. Unbelievable.

(10-25-2016 08:28 AM)Sp5 Wrote:  

I laugh at those who compare SS to a private contract, saying a private contract can't be changed. Most private contracts allow the larger, more powerful party to change essential terms at will. Do you negotiate the interest rate on your credit card? Can't the bank change it to 30% if they wish? Can your boss cut your salary if you're not in a union or special contract? Are you an "employee at will," a "tenant at will?" At least the government is somewhat accountable to the voters. With Chase you get no redress if they hike rates to 30%.

You are absolutely able to to "negotiate" by getting a multitude of credit card offers and picking the one with the best rate. Whats so hard about that? Also, you can call your bank and tell them: "I got an offer of XX% from Bank Y, beat it or I move". I don't pay interest on my cards but I'll play along with you here. If my CC hikes my rates to 30% I close my account and transfer my balance. Done deal. Now if the govt inflates the currency by 30% can I opt out of SS? Can I get a 30% discount on my FICA taxes? What is 2% annual inflation over 30+ years?

Sp5 Wrote:

When the median household income is $56,000 for a family of 4, where are the savings to retire going to come from? Let's say the FICA tax is abolished, and you get to save your FICA contribution. 6.2% is $3,472 per year at the median. Add the employer contribution and it's $6,944. Now the median is the average - half of households are earning less. Where is the slack in their budgets to save? Where do you invest that money to get a guaranteed, secure return?

The solution to this is simple: to have full employment and a currency that has stable value. The solution should be towards people to be independent of govt, not dependent. The graph below is not irrelevant to the discussion at hand.

Sp5 Wrote:

The idea of charity is laughable, too. People are greedy and will not contribute to charity to the extent necessary to support a retired population with the longevity we have now. It's not like before SS, when the male life expectancy was 58 and the female at 61 (1930). Sure, back then people worked til they died, or stayed with family for their (short) dotage until death.

I am only talking about retirement here, disability is another issue which is subject to fraud. With retirement, you are either 62 or you're not.

People aren't greedy, they're tribal. Why should I have money taken from me to subsidize someone else's retirement when I could use it to secure my own?

Sp5 Wrote:

Talking about SS as an "unfunded liability" different from any other future government expenses is a bit disingenuous. Does anyone speak of the Defense budget for 2025 as an "unfunded liability?" The National Park Service, the FAA? Yet we know that these agencies will exist. But is the DOD budget for 2025 part of the "national debt?' Nahhhhh.

The truth is that given a reasonable degree of economic growth (in part fueled by SS recipients' spending), demographic balance, and adjustments to the system, there is no fundamental reason why SS can't keep going forever.

No its not disingenuous, and won't be unless and until there is a special "tax" to directly fund those enterprises. Social Security's unfunded liabilities are not part of the national debt, and I don't think anyone here said they were. However they do effect the solvency of the program.

Sp5 Wrote:

Here is a chart showing different ways that the reported SS shortfall of 0.6% of GDP could be made up. The adjustments are not major and can be done over time.

So raise taxes and cut (or maintain) benefits is the answer? Done over time? How much time? Because we don't have much of it, 2017-2018 is the event horizon. And this is from 2010? And takes into account decreasing worker:beneficiary ratios? Where is this study?

Sp5 Wrote:

The irony of this debate is that most of you young guys will become socialists, or at least in favor of large-scale taxation and redistribution programs eventually.

So you're telling me that most of the people on this forum - one that places value on being location, market, economy independent - are going to be socialists and welfare-statists? For such a senior high repped member here, I expected better from you than this.

Sp5 Wrote:

With robots, AI, and outsourcing, the West and the world faces more and more of a surplus labor problem. When the only jobs available are either super-expert professional and technical, sales, or bespoke cleaning and service jobs robots can't do, you will be fucked.

The balance between labor (human workers) and capital (robot workers) will have shifted decisively to capital. If you don't own capital, you will have no income.

If capital and expert labor is not taxed for your income, you will starve. There will be a lot of unrest along the way if these things are not thought through. Perhaps the owners of capital will engineer mass deaths or enforced birth control to keep as much of the wealth as possible.

So robots and AI are now relevant as to whether SS is a ponzi scheme? Fantastic. You're right though, in that there will be unrest among the way. The entire govt enabled global economy is a ponzi scheme that will fail. There is no currency in history that hasn't. So when it does fail, who will pay for these robots and AI and with what? We're simply too far along the monetary debt continuum to pay for that on the scale you're suggesting.

Thread should be retitled: "Social Security Propaganda Thread"

[Samseau]

Quote:

With robots, AI, and outsourcing, the West and the world faces more and more of a surplus labor problem. When the only jobs available are either super-expert professional and technical, sales, or bespoke cleaning and service jobs robots can't do, you will be fucked.

Sure, with robot slaves anything is possible. We'll both be dead before that happens.

[262]

^ Even if it does happen:

1) There'll be demand for entertainment.

2) Decreasing birth rates may lessen the impact.

[Sp5]

(10-25-2016 01:43 PM)Adonis Wrote:  

You persist in deflecting from the topic of the thread with feel good arguments and a bit of math in an attempt to justify the ponzi scheme that is Social Security by taking the position "we can afford it" instead of proving that it is not, as classically defined, a ponzi scheme. Unbelievable.

(10-25-2016 08:28 AM)Sp5 Wrote:  

I laugh at those who compare SS to a private contract, saying a private contract can't be changed. Most private contracts allow the larger, more powerful party to change essential terms at will. Do you negotiate the interest rate on your credit card? Can't the bank change it to 30% if they wish? Can your boss cut your salary if you're not in a union or special contract? Are you an "employee at will," a "tenant at will?" At least the government is somewhat accountable to the voters. With Chase you get no redress if they hike rates to 30%.

You are absolutely able to to "negotiate" by getting a multitude of credit card offers and picking the one with the best rate. Whats so hard about that? Also, you can call your bank and tell them: "I got an offer of XX% from Bank Y, beat it or I move". I don't pay interest on my cards but I'll play along with you here. If my CC hikes my rates to 30% I close my account and transfer my balance. Done deal. Now if the govt inflates the currency by 30% can I opt out of SS? Can I get a 30% discount on my FICA taxes? What is 2% annual inflation over 30+ years?

Sp5 Wrote:

When the median household income is $56,000 for a family of 4, where are the savings to retire going to come from? Let's say the FICA tax is abolished, and you get to save your FICA contribution. 6.2% is $3,472 per year at the median. Add the employer contribution and it's $6,944. Now the median is the average - half of households are earning less. Where is the slack in their budgets to save? Where do you invest that money to get a guaranteed, secure return?

The solution to this is simple: to have full employment and a currency that has stable value. The solution should be towards people to be independent of govt, not dependent. The graph below is not irrelevant to the discussion at hand.

Sp5 Wrote:

The idea of charity is laughable, too. People are greedy and will not contribute to charity to the extent necessary to support a retired population with the longevity we have now. It's not like before SS, when the male life expectancy was 58 and the female at 61 (1930). Sure, back then people worked til they died, or stayed with family for their (short) dotage until death.

I am only talking about retirement here, disability is another issue which is subject to fraud. With retirement, you are either 62 or you're not.

People aren't greedy, they're tribal. Why should I have money taken from me to subsidize someone else's retirement when I could use it to secure my own?

Sp5 Wrote:

Talking about SS as an "unfunded liability" different from any other future government expenses is a bit disingenuous. Does anyone speak of the Defense budget for 2025 as an "unfunded liability?" The National Park Service, the FAA? Yet we know that these agencies will exist. But is the DOD budget for 2025 part of the "national debt?' Nahhhhh.

The truth is that given a reasonable degree of economic growth (in part fueled by SS recipients' spending), demographic balance, and adjustments to the system, there is no fundamental reason why SS can't keep going forever.

No its not disingenuous, and won't be unless and until there is a special "tax" to directly fund those enterprises. Social Security's unfunded liabilities are not part of the national debt, and I don't think anyone here said they were. However they do effect the solvency of the program.

Sp5 Wrote:

Here is a chart showing different ways that the reported SS shortfall of 0.6% of GDP could be made up. The adjustments are not major and can be done over time.

So raise taxes and cut (or maintain) benefits is the answer? Done over time? How much time? Because we don't have much of it, 2017-2018 is the event horizon. And this is from 2010? And takes into account decreasing worker:beneficiary ratios? Where is this study?

Sp5 Wrote:

The irony of this debate is that most of you young guys will become socialists, or at least in favor of large-scale taxation and redistribution programs eventually.

So you're telling me that most of the people on this forum - one that places value on being location, market, economy independent - are going to be socialists and welfare-statists? For such a senior high repped member here, I expected better from you than this.

Sp5 Wrote:

With robots, AI, and outsourcing, the West and the world faces more and more of a surplus labor problem. When the only jobs available are either super-expert professional and technical, sales, or bespoke cleaning and service jobs robots can't do, you will be fucked.

The balance between labor (human workers) and capital (robot workers) will have shifted decisively to capital. If you don't own capital, you will have no income.

If capital and expert labor is not taxed for your income, you will starve. There will be a lot of unrest along the way if these things are not thought through. Perhaps the owners of capital will engineer mass deaths or enforced birth control to keep as much of the wealth as possible.

So robots and AI are now relevant as to whether SS is a ponzi scheme? Fantastic. You're right though, in that there will be unrest among the way. The entire govt enabled global economy is a ponzi scheme that will fail. There is no currency in history that hasn't. So when it does fail, who will pay for these robots and AI and with what? We're simply too far along the monetary debt continuum to pay for that on the scale you're suggesting.

Thread should be retitled: "Social Security Propaganda Thread"

a Ponzi scheme is defined as :

Pon·zi scheme
ˈpänzē ˌskēm/
noun
a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.

Social Security retirement is founded on a belief in the "enterprise" of the US economy and the government, which is hardly "nonexistent." It's been going for 80 years now. Like any "investment," returns will vary according to market conditions, and have in fact been varied, by raising the retirement age and raising the limit on taxable income.

The significant quality of a Ponzi scheme is that it is unsustainable. Unless the US economy totally collapses because of something like nuclear or civil war, SS is sustainable.

Your monetary graph shows a big spike in the value of the US dollar- during the Great Depression - and a long decline during the years of the post-war boom. The issue is not the value of a dollar, it is whether individual purchasing power grows over time, measured by wages and returns on capital.

Again, except for some belief in mythical charity, or unrealistic amounts of savings for lower-middle-class people, I have not seen any alternative other than the mandatory contributions to Wall Street. And here is a story indicating that Hillary is planning just that:

Quote:

Hillary Clinton And Wall Street: Financial Industry May Control Retirement Savings In A Clinton Administration
BY DAVID SIROTA @DAVIDSIROTA AND AVI ASHER-SCHAPIRO ON 10/19/16 AT 12:50 AM

While Hillary Clinton has spent the presidential campaign saying as little as possible about her ties to Wall Street, the executive who some observers say could be her Treasury Secretary has been openly promoting a plan to give financial firms control of hundreds of billions of dollars in retirement savings. The executive is Tony James, president of the Blackstone Group.

The investment colossus is most famous in politics for its Republican CEO likening an Obama tax plan to a Nazi invasion. James, though, is a longtime Democrat — and one of Clinton’s top fundraisers. The billionaire sculpted the retirement initiative with a prominent labor economist whose work is supported by another investment mogul who is a big Clinton donor. The proposal has received bipartisan praise from prominent economic thinkers, and James says that Clinton’s top aides are warming to the idea.

It is a plan that proponents say could help millions of Americans — but could also enrich another constituency: the hedge fund and private equity industries that Blackstone dominates and that have donated millions to support Clinton’s presidential bid.

The proposal would require workers and employers to put a percentage of payroll into individual retirement accounts “to be invested well in pooled plans run by professional investment managers,” as James put it. In other words, individual voluntary 401(k)s would be replaced by a single national system, and much of the mandated savings would flow to Wall Street, where companies like Blackstone could earn big fees off the assets. And because of a gap in federal anti-corruption rules, there would be little to prevent the biggest investment contracts from being awarded to the biggest presidential campaign donors.

http://www.ibtimes.com/political-capital...nt-savings

(10-26-2016 07:35 AM)Samseau Wrote:  

Quote:

With robots, AI, and outsourcing, the West and the world faces more and more of a surplus labor problem. When the only jobs available are either super-expert professional and technical, sales, or bespoke cleaning and service jobs robots can't do, you will be fucked.

Sure, with robot slaves anything is possible. We'll both be dead before that happens.

It will be gradual. For example, what happens as warehouses and logistics are totally automated, and online retail gets more targeted, replacing brick-and-mortar stores? I go to stores to buy shoes and clothes rather than ordering online because I want to try them on before buying. What happens when there is an app which measures my feet and promises delivery of bespoke shoes and shirts, all made and delivered without human touch?

[Adonis]

(10-28-2016 10:52 PM)Sp5 Wrote:  

a Ponzi scheme is defined as :

Pon·zi scheme
ˈpänzē ˌskēm/
noun
a form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors.

Social Security retirement is founded on a belief in the "enterprise" of the US economy and the government, which is hardly "nonexistent." It's been going for 80 years now. Like any "investment," returns will vary according to market conditions, and have in fact been varied, by raising the retirement age and raising the limit on taxable income.

The significant quality of a Ponzi scheme is that it is unsustainable. Unless the US economy totally collapses because of something like nuclear or civil war, SS is sustainable.

Your monetary graph shows a big spike in the value of the US dollar- during the Great Depression - and a long decline during the years of the post-war boom. The issue is not the value of a dollar, it is whether individual purchasing power grows over time, measured by wages and returns on capital.

Again, except for some belief in mythical charity, or unrealistic amounts of savings for lower-middle-class people, I have not seen any alternative other than the mandatory contributions to Wall Street. And here is a story indicating that Hillary is planning just that:

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?

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.

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