SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

[ThePythonicCow]

Re: SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

I'm young - is there some evidence that before SS old people just retired and then spent the rest of their lives wandering the streets?

Families, neighbors, communities, churches, etc. took care of one another. Fewer people had the chronic illnesses we see now, so more people could take care of themselves and make do for most of their lives. Money was less essential for the day to day tending of oneself and those close by.

[Roughneck]

Re: SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

Making people save for retirement is not a bad idea. Just let me have MY money. Imagine if everyone put 6.2%,plus your employer put 6.2% in an account which could be invested over a lifetime. Most folks would comw out way ahead of what they will get in SS benefits. The trick is having investment options where you won't get ripped off by wall street.

[cindykimlisa]

Re: SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

How about we retire it and replace it with nothing. I'm relatively young and consider my SS deductions to be a blatant robbery. Telling me "well this time it will be different, this new system will work because the politicians controlling your money won't spend it all before your retire" is simply not credible. Either let me have my own money to save or just admit that you're robbing me at the point of a gun so you can give away money to people who vote for you.

Spencer

I think you are on to something here. Perhaps this would work for you too. Just shut down the fire department in your area and replace it with nothing, Then when houses burn down as long as it is not your house everything will be fine.

Perhaps you never thought about this: I am going to have to live to be about 80 before I get back the money that My company and I have paid into SS over the years.

Youre an idiot

Cindy

[WDCRob]

Re: SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

I spent some time awhile back digging for elderly poverty stats pre- and post- SS.

Using official poverty estimates (i.e. the poverty line - extended back in time via estimates) most researches seemed to agree that in the 1930s the percentage of elderly living in poverty was between 70% and 90%, and that something between one in three and one in two were close to completely dependent on charity to survive. Obviously that's during the height of the Depression, but they're still pretty sobering numbers. And IIRC the rates in the 1910s and 1920s were still quite high.

[ASH]

Re: SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

I spent some time awhile back digging for elderly poverty stats pre- and post- SS.

Using official poverty estimates (i.e. the poverty line - extended back in time via estimates) most researches seemed to agree that in the 1930s the percentage of elderly living in poverty was between 70% and 90%, and that something between one in three and one in two were close to completely dependent on charity to survive. Obviously that's during the height of the Depression, but they're still pretty sobering numbers. And IIRC the rates in the 1910s and 1920s were still quite high.

That isn't too surprising to me. I've been (slowly) reading through The Wealth of Nations, and one of Smith's observations that struck me is that the "natural" lower bound for wages is subsistence. On the one hand this is obvious, but on the other hand, in a relatively free labor market and excepting highly skilled categories of labor for which supply is tight, it would seem that wages would naturally trend toward subsistence. Labor, trade, and immigration laws, and union organization, act to prevent the wages of unskilled labor from reaching the lower bound of subsistence; social programs supplement wages or provide food and services that could not otherwise be afforded out of wages. But the fact remains that there have always been an awful lot of workers who lack the ability to earn enough above subsistence to fund any lengthy period of unemployment (be it because of injury or retirement in old age). It isn't "natural" to retire and live for decades without working.

I'll admit that "subsistence" in America means a different set of material trappings than subsistence in sub-Saharan Africa -- and a real hard ass could point out that the poor in America could probably put something away for the future if they lived like third world poor instead of industrial world poor -- but it seems to me that the commonness of one's skills is tied directly to the paucity of one's wages, such that living hand-to-mouth while working and in poverty when retired is probably the most common condition.

[snowman111]

Re: SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

I think you are on to something here. Perhaps this would work for you too. Just shut down the fire department in your area and replace it with nothing, Then when houses burn down as long as it is not your house everything will be fine.

Perhaps you never thought about this: I am going to have to live to be about 80 before I get back the money that My company and I have paid into SS over the years.

Youre an idiot

Cindy

How about a neighborhood volunteer Fire Dept instead of nothing? How about local community based welfare programs instead of nothing? How about funding your own retirement instead of nothing?

[aaron]

Re: SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

How about we retire it and replace it with nothing. I'm relatively young and consider my SS deductions to be a blatant robbery. Telling me "well this time it will be different, this new system will work because the politicians controlling your money won't spend it all before your retire" is simply not credible. Either let me have my own money to save or just admit that you're robbing me at the point of a gun so you can give away money to people who vote for you.

Spencer

I think you are on to something here. Perhaps this would work for you too. Just shut down the fire department in your area and replace it with nothing, Then when houses burn down as long as it is not your house everything will be fine.

Perhaps you never thought about this: I am going to have to live to be about 80 before I get back the money that My company and I have paid into SS over the years.

Youre an idiot

Cindy

Cindy, you're older. You were not being squeezed quite like the current generation slaving for Wall Street. I bet you even remember a time when a man could work a "normal" job and support a wife and family. The future looks quite bleak to the workers supporting the boomers and their parents right now. The MM media makes it sound like we are completely screwed.

You may have thought you were paying into SS over the years... but at some point (perhaps when Ross Perot posted his charts 30 years ago) you must have realized SS was not quite the savings account you were led to believe.

With that said, I have little doubt that society can support the boomers' SS entitlements. For the doubters, read this (and please, shoot holes in it. I cannot find them)

[ASH]

Re: SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

For the doubters, read this (and please, shoot holes in it. I cannot find them)

For what it's worth, SS isn't responsible for the majority of the projected fiscal gap. It is more of a side show compared to Medicare. I think SS alone could be fully funded with a bearable adjustment of tax rates and benefit criteria. Even in Kotlikoff's editorial, the relative unimportance of SS is evident based upon the numbers cited ($16T out of $202T, and that spread out over many decades).

I took a quick look at the attachment; the author is careful to call attention to the limitations of what he proposes, so I think he pokes enough holes himself. Perhaps it merits a thorough reading later, but Mosler appears to (A) be advocating the classical path to hyperinflation, while (B) calling attention to the fact that if that path is trod too far, hyperinflation could result. What is your executive summary, Aaron? I apologize for skimming and then commenting without a thorough reading.

[ThePythonicCow]

Re: SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

Mosler appears to (A) be advocating the classical path to hyperinflation, while (B) calling attention to the fact that if that path is trod too far, hyperinflation could result.

We get the currency destruction either way. The question is whether we end up owing our souls, our land, our future income and our children's future income to the Corporate tyrants as well. Do we print our currency's demise or do we borrow it.

We get the currency destruction either way because we have an excessively powerful, (hence) excessively fraudulent federal government.

To do it right, we need both (1) money that is not lent into existence, and (2) a smaller honest government.

Mosler has called (1) correctly, I believe.

I have no clue how we get to (2), but I'm sure if we do get there, the path will be painful.

[aaron]

Re: SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

Rajiv's post

http://www.itulip.com/forums/showthr...72229#poststop




In researching the links in his post led me to the paper @
http://moslereconomics.com/2009/12/1...nocent-frauds/
Summary:

Deadly Innocent Fraud #1:

The federal government must raise funds through taxing or borrowing in order to spend. In other words, government spending is limited by the government’s ability to tax or borrow.

Fact:

The actual act of federal government spending is NOT operationally limited or in any way constrained by taxing or borrowing.

Deadly Innocent Fraud #2:

With government deficits we are leaving our debt burden to our children.

Fact:

Collectively, in real terms, there is no such burden possible. Debt or no debt, our children get to consume whatever they can produce.

Deadly Innocent Fraud #3:

Federal Government budget deficits take away savings.

Fact:

Federal Government budget deficits ADD to savings.

Deadly Innocent Fraud #4:

Social Security is broken.

Fact:

Federal Government Checks Don’t Bounce.

Deadly Innocent Fraud #5:

The trade deficit is an unsustainable imbalance that takes away jobs and output.

Facts:

Imports are real benefits and exports are real costs. Trade deficits directly improve our standard of living. Jobs are lost because taxes are too high for a given level of government spending, not because of imports.

Deadly Innocent Fraud #6:

We need savings to provide the funds for investment.

Fact:

Investment adds to savings

Deadly Innocent Fraud #7:

Your reward for getting this far is a look at what has become the most common criticism of federal government deficits:

Higher deficits today mean higher taxes tomorrow.

Fact:

I agree, the innocent fraud is that it’s a bad thing,
when in fact it’s a good thing!!!

[ASH]

Re: SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

Deadly Innocent Fraud #1:

The federal government must raise funds through taxing or borrowing in order to spend. In other words, government spending is limited by the government’s ability to tax or borrow.

Fact:

The actual act of federal government spending is NOT operationally limited or in any way constrained by taxing or borrowing.

Comment: The third alternative, printing and spending money, has its own limitations (which Mosler notes). Operationally, those limitations are pretty stark, and such as to make taxation and borrowing more attractive. Money is not the same thing as purchasing power.

Deadly Innocent Fraud #2:

With government deficits we are leaving our debt burden to our children.

Fact:

Collectively, in real terms, there is no such burden possible. Debt or no debt, our children get to consume whatever they can produce.

Comment: Only correct in the most general sense, in which "our children" means "all humans, considered in aggregate, who happen to be participating in the global economy at a future time slice." If the usual meaning of "our children" is applied, then repayment of debt involves consumption of what our children produce by their creditors, which include their elders (through the Trust Funds), their foreign creditors, and a relatively small group of wealthy domestic creditors.

Deadly Innocent Fraud #3:

Federal Government budget deficits take away savings.

Fact:

Federal Government budget deficits ADD to savings.

Comment: It matters whose savings, doesn't it? Considering things "collectively" obscures the transfer of wealth between groups.

Deadly Innocent Fraud #4:

Social Security is broken.

Fact:

Federal Government Checks Don’t Bounce.

Comment: The government cannot print purchasing power; only money.

Deadly Innocent Fraud #5:

The trade deficit is an unsustainable imbalance that takes away jobs and output.

Facts:

Imports are real benefits and exports are real costs. Trade deficits directly improve our standard of living. Jobs are lost because taxes are too high for a given level of government spending, not because of imports.

Comment: The latter point is not a fact, but rather an assertion.

Deadly Innocent Fraud #6:

We need savings to provide the funds for investment.

Fact:

Investment adds to savings

Comment: The point is unclear.

Deadly Innocent Fraud #7:

Your reward for getting this far is a look at what has become the most common criticism of federal government deficits:

Higher deficits today mean higher taxes tomorrow.

Fact:

I agree, the innocent fraud is that it’s a bad thing,
when in fact it’s a good thing!!!

Comment: I only read the summary, and not the pages of background supporting these points, so I may be missing something. However, Mosler appears either to be one part sophist, and one part dangerous idiot... or possibly a deliciously sarcastic comedian.

[flintlock]

Re: SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

I'm young - is there some evidence that before SS old people just retired and then spent the rest of their lives wandering the streets? The same type of make-believe is often suggested when talking about healthcare. The idea that before Medicare/Medicaid etc poor people would fall off a ladder, break their leg and just be left to die in the street.

I generally agree, but there are some major differences in the world since then. Families are not as tight. They live scattered all across the nation. Communities are not tight. People don't even know their neighbors. Medical care is vastly better (and more expensive). Someone falling off a ladder in 1875 might expect his leg to be crudely set, then stuck in a chair for a few years until he died of "consumption" at age 60. Weaker babies died in massive numbers before the advent of care that could save their lives. This made for stronger, healthier survivors. And junk food and the ability to afford to stuff oneself to the point of bursting did not exist then either. I don't see anyone volunteering to accept the 19th century medical plan option. Longer life expectancy is the biggest reason for the growth of the cost to take care of people. That and a higher standard of living which of course costs more.

[aaron]

Re: SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

You have to read it. Modern Money Theory --> there are probably other, better "books" (I am reading one now), however this book is a good primer.

Read it, and if you find it to be a waste of time (unlikely), I'll buy the beer the next time you are up in Seattle.

[ThePythonicCow]

Re: SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

You have to read it. Modern Money Theory (MMT)

If you're replying to ASH, aaron, I agree. The bullet summary points that MMT arrives at seem like dangerous nonsense from the point of view of most modern schools of economics. You have to actually take the time to read how they get there, and relax the mind to temporarily put aside ones usual criteria for economic positions.

I didn't end up thinking that the current fraudulent elites that tyrannize our national and world politics and economies should adapt the conclusions of MMT. So long as they are in power, nothing will work for the general welfare. However it did give me quite a bit more confident insight into the flaws of a debt-based monetary system.

[ASH]

Re: SS Ponzi Scheme is short $16 Trillion (w/suggested reforms): Kotlikoff

You have to read it. Modern Money Theory --> there are probably other, better "books" (I am reading one now), however this book is a good primer.

Read it, and if you find it to be a waste of time (unlikely), I'll buy the beer the next time you are up in Seattle.

Thanks. I'll withhold judgement until I have time to read the details, then.