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Fiscal cliff negotiations between Senate Majority Leader Harry Reid and Minority Leader Mitch...
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Sunday, December 30, 2012, 3:31 PM ETFiscal cliff negotiations between Senate Majority Leader Harry Reid and Minority Leader Mitch McConnell hit a major snag after Republicans demand use of the "chained CPI" method for calculating entitlement benefits - which would result in lower payments for Social Security beneficiaries. Pres. Obama backed the provision previously, but Democrats now object to including it as part of a scaled-down deal. Updated 5:51 p.m.: The Senate won't vote tonight and will reconvene at 11 a.m. tomorrow, Reid says.
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This is really still just political theatre. Until Boehner is confirmed again as Speaker of the House, there is zero chance of anything passing. If Eric Cantor becomes Speaker of the House instead, then I think the chance of any deal becomes infinitely small.
The real bigger issue and bigger battleground will be debt ceiling negotiations. I suspect we will have a repeat of the August 2011 market plunge in early March 2013. Patient investors with a reasonable cash position should be able to take advantage of some buying opportunities then. I would bet that many politicians either have active short positions now, or will take advantage of a market plunge that they will cause in the near future.
Of course, cuts in Medicare could reduce life expectancy, which would be great for Social Security.
I can't imagine that if there was a national referendum on dismantling Social Security that it would have much of a chance.
The long-term gap between Social Security’s projected income and promised benefits is estimated at 1 percent of gross domestic product (GDP) over the next 75 years (and 1.5 percent of GDP in 2086). By coincidence, that only slightly exceeds the revenue loss over the next 75 years from extending the Bush tax cuts for people making over $250,000.
Like somebody said, if the people are allowed to vote themselves money from the treasury, its all over.
Also, Medicare is the even bigger elephant in the room.....
It's just a demographic math problem now, and the 45 and unders are screwed. Japan, UK, and the rest of Europe are in the same boat. At least we have friends....
I think you answered your own question. Read the last part of it. It is benefiting tens of millions of Americans. So why should the Republicans want that to go on?
Tom, it is not nice to talk of the military industrial complex this way. They are the ones securing our freedom and liberty - for a small fee of $700-750B a year.
What do you think can be done here Brian? Use force?
Like somebody said, if the people are allowed to vote themselves money from the treasury, its all over. "
So what's the solution? Dissolve the legislative process and institute a dictatorship?
You see how all of these "little" amounts of GDP add up to a whole lot of increased government taxation? ALL of these programs have to be adjusted down - we made promises to a lot of people, and we cannot afford to keep them.
Waiting for 22 years until we're in really really deep is not the answer just because we don't "like" cutting benefits.
Perhaps the small changes that Rookie talks about would help. Perhaps allowing the SS Trust Fund (mis-named) to invest in something other than loser Treasuries would benefit in a number of ways, particularly in allowing the market to assign real interest rates to those instruments.
First, our president used to support the Republican position as do numerous other experts.
Second, the 20 year estimate of solvency is, at best, questionable and probably very wrong.
If you are sincere, why don't you do some research or check Paul Ryan's web site for an explanation?
A bit:
"Beginning in 2010, Social Security started paying out more in benefits than it collected in taxes – a trend that will skyrocket as the baby boomers continue to retire. In order to pay full benefits, the government must pay back the money it owes Social Security.
Those who wish to solve this problem by raising taxes are ignoring the profound economic damage that such a large tax increases would entail. Just lifting the cap on income subject to Social Security taxes, as some have proposed, would, when combined with the Obama administration’s other preferred tax policies, lift the top marginal tax rate to over 50 percent. In reality, lifting the cap on income subject to Social Security will hurt the self employed – like many of the farmers and small business men and women in the First District – hardest as these individuals pay both the employee and employer share of the Social Security tax and further hamper the economic growth these individuals can provide.
Most economists agree that raising marginal tax rates that high would create a significant drag on economic growth, job creation, productivity and wages. This nation cannot fix its retirement-security system by leaving young families with nothing to save."
Nobody wants anything cut. See Greece and riots for more info there.
My entire point was related to one of your comments- most people, especially the younger you are, will never get a return of their principle paid in, let alone any additional return on it. Therefore, I would much rather take a buyout and attempt to invest it on my own, as opposed to continuously trying to dump sand into a pit of quicksand with the notion that it will eventually stabilize itself.
The only guarantee that Social Security really provides for solvency of itself is that it is backed up by a printing press, which will inflate my own dollars away. This will widen the size of the hole in the sinking boat as I'm trying to bail water out of it. My idea of a buyout is essentially saying that I would much rather be given a solid kayak in the middle of the Atlantic, as opposed to standing on the Titanic with a lot of other people with buckets.
So now the Republicans have decided its safe to stand on it.
But when you demand cuts to social security, while proclaiming that the rich should not be taxed, that completes the circuit. The Republicans have just fried themselves.
Tom, I'm guessing you didn't pay 15.3% to FICA and Medicare your entire working career. The rest of us have paid that rate every year since we were delivering pizzas as teenagers, yet we'll see none of it.
Can't wait for that to be bumped up to 20+% of our checks when all of the boomers are retired. Count on it....
Neither did you. Take a look at your paystub and do the math. FICA has been cut by 2% as a stimulus measure.
I disagree with your assumption that SS will not be there for you as, believe it or not, that is what everyone said in the 1960's. just don't let any group scare you into thinking it won't be there. It's all a fear game. In 1986, we got the grand fix for SS that was suppose to make it solvent forever, that didn't work. Limit will continue to increase with inflation + some to make it solvent for years to come.
As for Medicare, you are correct it will not be there in 20 years as we will have a National Health Care Program like all other nations where everyone has insurance, like it or not.
That $1,200 a month isn't that bad. In order to draw it risk free, I would need $847,000 in ten year treasuries.
I would need even more in order to draw it risk free and protected from inflation. I don't know enough about TIPS to do the math.
The only difficulty is, you have to keep breathing in order to collect it.
The record of inflation as measured by CPI-U and C-CPI-U shows the difference between the two is relative small. CPI-U is typically higher than C-CPI-U, but not always. A quick run of some numbers shows percentage changes in the index numbers as
Year CPI-U C-CPI-U
2003 2.28 2.08
2004 2.66 2.50
2005 3.39 2.90
2006 3.23 2.90
2007 2.04 2.53
2008 4.66 3.73
2009 -0.35 -0.47
The Republican proposal is to change the rate of change in future INCREASES in social security. To claim otherwise is blatant misrepresentation.
Give them an inch, and they'll take a mile.
republicans will become the whigs of the modern age...
I found something, it would be worth $214,000. I suppose the next thing would be, for me to take my social security statement and adjust my contribuations for inflation and see how I made out.
i wouldn't mind a small give back to help the system remain solvent, as that's the underpinning of democracy....everyone gives a little. but i have one big caveat, which is:
slay the sacred cow of the u.s. military. it has an enormously bloated budget, with troops in 150 odd countries in the world, dwarfing the military budgets of every other country on earth. my daughter has a young friend who joined after high school and guess where he's stationed: japan. i guess we're worried the japanese might pull another pearl harbor some day. christ, what iciocy. we have squandered trillions on pointless wars, having learned nothing from the trajedy of vietnam. what the bush/cheny team did in the name of "protecting us from terrorists" is nothing short of criminal in my view and if i had my way they'd be tried in an international court.
You think I'll ever pay less than 15.3% in the future? Be honest....
it is a cut in benefits compared to the baseline.
having said that i wouldn't object to a chained CPI if they get rid of the CPI all together and apply the chained concept to every other item in the u.s. budget. it is not just seniors who adjust their spending habits in an inflationary environment.
SA pays a penny a page view for my articles. So I get a 1099 at the end of the year, and Turbo tax tries to make me pay self-employment tax on it, which would be that 15.3% you are complaining about.
I operate under the opinion it's hobby income, subject to regular income tax but not the self-employment tax. You would think I was Tim Geithner, the software fights me so, it can take 15 minutes to get it to do what I want.
I don't know how this story ends. Apparently the younger people are afraid they'll never collect, and don't want to pay in. Meanwhile those of us who paid in for our entire working life expect to collect along the lines of what we were promised.
I would just remark that a lot of things can happen over the course of a lifetime, and none of us has half as much control over our destiny as we think we do. Social security provides a safety net, and it's a good idea.
The reason we have social security is, the financial markets speculated and manipulated and gambled until they brought on the Depression and wiped everybody out. Something had to be done, and social security was it.
So now we've come full circle, and the financialists have done it again, except they only wiped people out half way, or only half of the population. But reducing or eliminating social security is not the fix. The solution is already in place: social security.
You are wrong......Younger people are not afraid they won't collect. They also have no complaints about paying in. What we don't like is the higher rate we are and will be paying to maintain the status quo and will receive reduced benefits in comparison to current generations of collectors.
Who knows maybe over the next 30 years rates won't go up for workers (doubt it) or maybe age increases won't happen (doubt it) or maybe benefits won't be slightly cut (doubt it). I'm not a psychic but I know how to add, subtract, multiply, and divide.
It's a little sad that you try to make younger workers out to be somehow unwilling to pay their share, when I'm getting up for work tomorrow to pay directly into your pocket.
I'm not trying to put words in anybody's mouth, I'm just reflecting what I've seen or heard in comments on the topic over the years I've been active on SA.
Social Security as originally developed wasn't insurance in any proper sense, it was stricly a pay as you go scheme to take care of the victims of the Depression. And it worked, you had people who grew up during the Depression then fought WWII and meanwhile they paid for both themselves and the generation before them. Somewhere in there it was fully funded which was quite an achievement from where it started.
The financial crisis with its unemployment has cut the amount going into the program. That, and the unwillingness to welcome immigrants and make them legal citizens with a stake in social security. The powers that be were happy to have a lot of Mexicans in the country, doing all the work Americans wouldn't take, under the table with no benefits.
The problems would be less severe if our politicians would cooperate to get the economy rolling forward sustainably. That, and bringing in legal immigrants and making them part of things. This country used to be more inclusive.
In reality if you look at social security by itself, it's not in that bad shape. The Republicans conflate the results of the unfunded wars, the Bush tax cuts, the financial crisis caused by deregulation, and the demographic issues for social security, and then label social security as an "entitlement," a dirty word in their lexicon.
I say, let those who pay into social security collect. Meanwhile, let those who collected from the wars, the tax cuts, and the financial deregulation pay for that. It will all add up.
You will pay a higher rate and do so starting January 1 if your income exceeds $200K ($250K for families) even if all "Bush tax cuts" are extended. http://bit.ly/UCWWbG
If that happens, I promise I will dance naked in the Capitol. OK, you may not want to see me do that, which is a different issue.
it is a cut in benefits compared to the baseline. "
The social security "baseline" IMO is one's initial benefit amount which is computed without reference in any way to CPI. It is determined by one's own reported wage earnings and nationwide average wage changes over time. That is, in computing a benefit for someone filing for benefits at age 67 in 2013, wages earned in 1983 would be indexed higher by change in average wages between 1983 and 2012 (possibly 2006). Earnings after age 60 are not indexed in any way for purposes of computing SS benefit amounts.
I repeat, "The Republican proposal is to change the rate of change in future INCREASES in social security." Its implementation would neither reduce current federal spending in any way nor change computation of a person's initial social security benefit check.
I do not accept your judgment.
If the entire 15.2% was paid by the employer, I guarantee you salaries across the nation would drop. It all comes out of the same bucket... the worker's.
The problem is the general apathetic nature of people in the younger generation. I consider myself an exception. I follow the stock market, save money, adjust investments, and am very active well ahead of the curve in planning my financial future for retirement. Most people in my general age bracket have the careless attitude that the government will take care of them when they're older. They have this attitude because that is what they are being told. We live in a society where delayed gratification is for the suckers who don't want to have any fun. And that is exactly what is killing America.
I'm not all that worried about the immediate future. Baby boomers that are retiring at least have some sense of personal responsibility, and that is why many of them are fiscally solvent without Social Security. Many older people have financial security in the inflated values of their homes. I don't believe that will happen for the younger generations. I have a feeling that there will be too many people in 20-30 years that get to retirement and find that they have no pension, no IRA, no 401(k), and no Social Security waiting for them.
Then what will we have to become? Socialist. Totalitarian. I know, it sounds extreme. But when you look at taking a walk from New York to California, it looks awfully long. The first step seems futile. As does the second. Insignificant. Regressive even. But walk long enough, and eventually you'll find yourself at your destination. Do we not see ourselves walking this path? Government run healthcare. Social security that is on the path to fiscal insolvency. Currency inflation. Surrendering of liberty for security.
I hope I'm wrong with all of this, and I know I went on a bit of a rant, but that shouldn't detract from the ultimate point, which is I would much rather have the option of planning my own retirement, as opposed to throwing that money into the federal blackhole, where I will see little if any of it back in my pocket in my lifetime.
Couldn't be more wrong? I've been alot more wrong in my life but this isn't a case of that. I am in your age group also and have been investing for well over a decade, many people I know around my age are well aware of their financial necessities going forward and I dare to say have a HIGHER financial IQ than many baby boomers.
That being said alot of what you say is true one I don't agree with is the likelihood of SS being completely gone in 30 years. I have been paying in for almost 20 years at this point and it damn well better be there (although by then with any luck i"ll just need it for beer money)......it may be in an altered form with the days of it actually supporting someone being gone but it'll be there.
And I disagree with you on the apathetic nature of our generation. Most don't know the difference between the federal debt and deficit, unfunded obligations, the payroll tax, the Medicare tax, what an IRA or 401(k) is, what they are invested in, if anything at all. Most take the liberal mainstream view and look at government and view it as a source of free money, and then look at big business as a source of greed and disparity, yet they do that while driving their corporate owned gas guzzler and talking on their corporately produced smartphone, while drinking their corporately brewed mocha latte frappa-whatever-the-he... And then they say how poor they are. Its really sad how willfully ignorant this society has become. Very few want to have the responsibility of knowledge, because most have no personal ethics when it comes to responsibility at all!
"Most take the liberal mainstream view and look at government and view it as a source of free money"
I would argue the so-called conservative farmers, dairy producers etc. (who blatantly steal from us daily) have that same opinion....oh as well as most of the mulitnationals in this country. I wouldn't necessarily consider that a "liberal mainstream" view my friend.
We'll have to agree to disagree I couldn't possibly agree that MOST of an entire generation has no personal ethics or responsibility. Or that VERY FEW want knowledge. Let's face it we are in a stage of our lives where personal ideas are changing.....because of the difficulty in the job markets maybe more than usual some are stuck in the "save the whales" phase.
I spent my entire late teens and 20s in the military so I guess I "grew up" a little quicker and never had that phase.
Those checks will likely be there when you retire but they will be worth less AKA worthless. We will drive inflation and hit you with a hidden tax so you can't say you were screwed directly but indirectly you are a slave.
Bigger issue for you is to protect the assets you have that are not in SSA.
That was my point. I have challenged many who claim that SS won't be there for them to sell their future payments to me for pennies on the dollar. Everyone backed off. See, they all know that they will get SS. They were just parroting what they heard on right wing talk shows.
Really I negotiate for a living. Since you are a big believer I know you will want to pay the face value amount less some discount.
Now put up or shut up.
Checkmate!
Pennies on the dollar isn't worth it, merely due to the slim possibility that the money could be there. I don't have a crystal ball. I'm not 100% certain it won't be there. Nobody can give a guarantee like that. But like TVP said, it could be there but pumping out checks that have essentially no value due to the inflated nature of our currency, but that could still potentially be worth more than the pennies you give me today. That doesn't make it a valuable program, but its merely a gamble. Your pennies don't compensate for my SS being worth zero.
I have given this test to many who believe SS will not be there for them. The result has been __100%__ in favor of people declining to sell their future SS payments to me for anything less than face value (adjusted for interest rates and inflation expectations). That means they believe that SS will definitely be there.
But they are merely posturing when they say that SS won't be there.
You are a babbler.
I will throw the pennies on the floor as I don't care about immaterial amounts.
I will sell them at a NPV calculation using double the current 10 year note rate. And I make no new payments going forward.
Come on big believer. That's an annuity discounted at twice a market rate.
You are in over your head.
Well I am just valuing them as they would clear the market today according to your genius insight. And I would discount them heavily and transparently so you could benefit. My benefit is I get cash to invest and I will smoke the amount you get later if anything at all. Then I would visit you in the poor house and ROFLMAO.
If I am going to give them away I would just give them to charity.
In the meantime if there is a sucker like you that wants to buy them I am all too willing to sell them.
Down deep you know you are the sucker because you know I would have a pile of money in my hand in 15 years and complete control over my investments and you would be taking your walker to the mailbox from your double wide trailer.
I won't even bother to LMAO. I am too busy.
And Terry, I just have to say, you are a moron. Who is cutting taxes for the top 2%?
So the NPV of you future social security payments must be 0, eh? I will be happy to take those payments off of your hand. Will you sell them to me?
Putting capital into the private sector economy? That's crazy talk. We need to be "investing" SS funds in government debt to finance profligate spending that we can't afford to begin with.
I understand the point of SS- money put aside for the years that we can't work- but that money then should not be just thrown down a hole of government largesse. There is no return on investment there.
Let me ask you this Macro- would anybody buy Social Security "insurance" (as you like to call it) if it wasn't mandatory? Or is this another progressive program that is SO GOOD that it needs to be mandatory?
SSA is not insurance. Macro spin on that one.
Bush recommended accounts. The accounts would be modeled on the Thrift Savings Plan -- a 401-k type program that is already available to government employees -- and centrally administered by the government.
The accounts are up 25% since 2005.
Now what is your problem?
I am a boomer but this is grossly unfair and embarrassing. And unsustainable.
Sad
So much for the party of ideas.
The just have one idea. Screw anyone making less than $250K.
I got an idea. Why don't you explain why some people say it is the top 2% and some say it is the top 1% and others say it is less than 1% and others say it is only people over $1 million in income, etc, etc.
You have no idea what you are talking about but it is easy to repeat class envy political sound bites and we all know that tax increases will continue ongoing for everyone and Dems are happy about it because they want to control everyone.
I will flip it around for you. All young people should be branded because they are slaves for the next 50 years paying off the debt that the older generations are dumping on them.
Enslave the young!!!! Vote for more spending.
My job as a taxpayer is not to fund federal jobs so that way everybody has one. Will spending cuts hurt somebody? Obviously. But they will need to be done at some point. Its like cutting off a limb with gangrene. I could chop off the tip of my finger now, but it will hurt like hell. But if I wait just to avoid the pain, I may end up having to cut off my entire hand.
Was that a serious question or are you just playing the sociopath to screw with me?
Perfect example. Federal stimulus dollars went to build a paved bike path in my area. How does that bike path benefit somebody that is 3,000 miles away on the other side of the country?
Yes cut it. It is an inefficient use of capital.
One note. If you live in the liberal states as you do Brady, you are for sure getting less for you Federal dollars than the residents of the conservative states. That's because the liberal states get back less from the Federal govt in tax dollars than they pay in. But someone has to support the conservative states that are in general poorer. They are Americans too.
My prediction: in 4 years there will be a Clinton in the White House.
Perhaps not.
On the investment side I am both short and long. How it will net out I don't know yet.
SS would be peanuts to them, and within Medicare there is an option for "Fee for Service", meaning that they could pick and choose their 'Society (Private) Doctors' at will, even for house calls.
As for the tax rate hike, oh well, that might mean not trading in a BMW 700 Series or a Proche every 3 years. (Me not a fan of the Mercedes though).
Best for the New Year, SA folks!
P.S. In my dictionary, I define a rich as one whose liquid net wealth is greater than or equal to US$15M
Futures, = 1384.95
~~~~~~~~~
Finance, where a -* is a real #
=================
- * = bull's l o s s !!
This is EXACTLY what these criminals in Washington want. There is no 2 party system in this country. They are one group of corrupt individuals who are doing everything they can to extract every bit of life from US citizens.
I said in a previous post:
-----One thing the rich do very well, that the middle and lower classes do not.... they do not sit around waiting for bad things to happen, then cry about them.
If anyone thinks that people with real wealth, real money and real power are sitting around waiting for things to get resolved, then they are truly living in a dream world.
When are people going to wake up and realize that there is only one class that bears the brunt of every pathetic and bad decision that comes out of Washington: The middle class.
Trust me folks: in the end, the rich are not going to pay,the poor are not going to pay and those tens of millions of Americans living off other Americans are not going to pay. The middle class are going to pay. Just like they always pay and yet they keep electing the same clowns to office (regardless of political sides) year after year, decade after decade.
If you are not in self preservation mode at this point...yikes.------
I think that last sentence of my post says it all. I could care less what the outcome of the fiscal cliff is, debt ceilings, etc. It is meaningless to me. Completely and utterly meaningless. I think those that are like me, who have taken steps over the past decade to set themselves up for themselves and their family going forward know what I mean.
The writing has been on the wall since the late 90's. It is unfortunate that the 21st century has brought the complete dumbing down of the population which has led to a false sense of hope and a complete abandoning of sensibility.
I summed it up further in another previous post a couple of weeks ago:
----It is every person for themselves now. Anyone following any of these mindless politicians is going to be so far down the hole they can never climb back out.
Dividend paying stocks....check.
Physical gold and silver....check.
Multiple streams of income....check.
Self reliance......check.
Ability to think for one's self...check.
Prepared for anything....check.
Watching America implode while the 80% of American losers end up blaming each other for their own pathetic outcome....check, check and check.-----
Folks I apologize. I am not calling anyone here on SA a loser. Most people here on SA are going to be the people who are left standing while the rest of America tears each other apart blaming each other and their pathetic elected officials for not giving them their bottle and their binky.
I want all those who can recite verbatim the MSNBC and FOX mantras to step back and realize you are being used. You are exactly what they want. They want you to hate your fellow Americans, follow their cause right over the cliff and ignore the real truth:
That our government has become nothing more than a self serving enterprise bent on destroying the middle class and enslaving as many people as possible.
In the end the fiscal cliff, debt ceiling, etc will not touch the rich, it will not hurt the poor and it will not hurt the takers......it will as it has always done affect one class and one class of people alone: The middle class!!
"Trust me folks: in the end, the rich are not going to pay,the poor are not going to pay and those tens of millions of Americans living off other Americans are not going to pay. The middle class are going to pay. Just like they always pay and yet they keep electing the same clowns to office (regardless of political sides) year after year, decade after decade."
1000 thumbs up!
I will call people losers who continue to get sucked into this dysfunctional charade. Maybe sucker is a better term. They will lose if they continue to believe "my party is right and everyone else is evil."
Dumb and dumber.
Your afraid that you won't have SS to draw when you're old and ready to retire? Work and save now. Your country will thank you less. You are whining! You won't have time to whine if you work 345 days a year, 10 hours a day like I do. I am being conservative. You can too be part of the top 5% headed to the top 1% like me. I have done this since the Great Recession started and will continue to it's end. I managed this without debt. I never cry about my situation since that accomplishes nothing. Go have a conversation with your father, he would love to see your post. All of you should work more and ask for nothing. Are you too entitled to something? I have paid more in to SS than you. I don't expect to receive but a small portion of it as I know, by then, that they will have passed a law that modifies my initial take according to what I have saved. I hope to have saved so much that I will not receive a penny. What the government taketh, it will surely keep. For the elders here at this conversation, I hope all it well with you. I surely respect that "Great Generation". You children pale in comparison. Try to fill their shoes...
PLS increase vat to 15 % and use surplus
" How do they do it in Canada and the UK? "
Just like in the USA.
Missionary position mostly.
http://nyti.ms/WUokQV
You are absolutely right on!
This whole show is a set-up and a scam.
There won't be any cuts at all. From where I live, looking out of the window of a McDonald I see government and government contractor folks streaming into line. Wow, everybody is snapping up Lexus, Acura, BMW, Mercedes, Audi.
This is a sign that no cuts are coming; they the bureaucrats know best! They have a Protector-in-Chief downtown DC!
He will get his extra $3T new ceiling before the inauguration.
Welcome to the Obama Boom Town reminiscent of the Wild Wide West!
Never can be too prepared.
http://on.wsj.com/WUTYhc
Let's just hope nobody sees that the Fed is just monetizing our federal debts and all will be okay.
Brady, Never, ever, let your politics or your morality come into play when investing or choosing a course for the economy. Economy is not a morality play. It's all about money.
Money printing works great..... until the day it stops working.
Personally, I don't care what they do in Washington. I know inflation is the long-term plan and am positioned for it. Those in bonds and cash will be wiped out when inflation begins in earnest.... being led like sheep into 'safe assets'.
I do agree that the risk off guys will be wiped out under the inflation scenario. At some point they will move to equities and then watch out above.
Look the 1970s inflation was oil induced. We all know that. It was not due to expansion of the monetary base.
You best look at the numbers a bit closer.
However we are becoming a smaller portion of the world GDP and China will likely pass us inside 10 years which means we become less important and we are dictated the terms and they will be painful.
The clock is ticking.
Where do you get these baseless stupid axioms?
YOU show me where monetary expansion did not occur in the wake of the Arab oil embargo and Iranian revolution. Your statement,
"Look the 1970s inflation was oil induced. We all know that. It was not due to expansion of the monetary base" is one of the most absurd economic arguments I have encountered on Seeking Alpha.
Where do you get these baseless stupid axioms?"
Goblins.
That's not to state that comparisons with Greece are without any connection to reality. Maybe I am tough on Greece since I am German, but I have tried to understand the issues there. I also have several Greek friends, and their views make for interesting looks at the economy there. Greece has a political elite, and now with the Lagarde List we see examples of prominent Greek politicians, and those who influence politicians, enriching themselves at the expense of the common people. When we see politicians in the United States, and their families, benefiting financially from being in office, then are comparisons with Greece really that extreme?
The idea behind this is for people in the United States to try to do something now, and over the next few elections, to change the status quo dysfunction of Washington, D.C. I think that absolutely people should be concerned, on many levels. Whether one drinks Republican Koolaid or Democratic Koolaid, I think most people in the United States feel that the current make-up of politicians is unable to accomplish much of anything. That we would discuss these things on financial forums indicates to me the spill-over of the concern over the present dysfunction.
Do you live in the USA or in Germany? I doubt you live in the USA.
As to politicians and their families benefiting financially. Did you miss the recent pay raise? Ever look at Senate and Congressional expense accounts? Health care and pensions for life, regardless of how long they stayed in office? They use to be allowed unhindered insider trading, though that was rolled back after public disapproval.
Congressman Cuningham of California was an interesting case. I happened to have met him in California and he seemed like a nice enough guy. While the amount of wealth he amassed, and the real estate deals that fell into his lap were his undoing, I don't know too many people who feel that was isolated. Then there was that Senator with the bundles of cash in his freezer; now that was interesting. So no, you guessed wrong on that; my point was not that illegal activity was enriching politicians. In fact the enrichment happens quite legally.
Maybe I should not be concerned that politicians game the system to their benefit. They get a high civil service pay level, but perks beyond other civil service workers. I'm not even getting into the millions spent to put these guys in office, for that civil service pay level. No one I know in the private sector spends so much to gain employment that pays so much less than the cost of getting that position. Why is that?
Do I like politicians? No. I suppose that is my bias against them. I acknowledge the need for them, and that an orderly society requires politics to function. It might surprise you that I agree with many of your posts here, and liked some of the things you stated. However, as a few others stated, you might want to step off your high horse and listen a bit to other people, even if you disagree with them.
As far as a suggestion of how to improve the function of government, I suggest term limits. If the people of the United States want this, then they can get together and craft an amendment to allow no more than two terms in each high office. Historically the voting age amendment passed fairly quickly, so it is theoretically possible. The benefits would be some new ideas from new members, and politicians in their last term not using the time for campaigning.
For the record, chained CPI based increases for Social Security make sense to me under the condition of both higher baseline payments and fairly stringent means testing. Given that both these propositions are politically poisonous, I don't see how it's obtainable.
Very true. Still, it might be good to keep in mind that something like 40% of the population (IIRC) has savings of less than $500. For households in that financial condition any tax increase will leave them little choice but to cut consumption or delay (slow) rate of payout on existing fixed costs and debt obligations. Expiration of "Bush tax cuts" will have very little effect on them, but expiration of the 2% SS "tax holiday" will bear directly on them and reduced current federal expenditures due to sequestration will hit them indirectly. Sequestration will unquestionably result in layoffs of some federal employees and many government contractor personnel who will reduce consumption to a much greater extent than those responding to higher tax rates.
Nonsense. The only way that perspective would hold true is if "the rich" stuffed their mattresses with their savings. In reality, savings of the rich is investment capital allocated to a multitude of investment vehicles including some (charitable organizations) on which the investor expects no direct monetary return. "The rich" are creators of opportunity for others as well as themselves. Higher taxes on the rich only serve to further distort market price signals and incentivize "the rich" and others to lobby for new tax deductions and tax credits.
To answer those morons who love to bash W for his "privatizing" Social Security idea...The Dow was at 10,500 when he mentioned it. Things have not been good. It is now at 13,000. Gov't employees have a system like he envisioned and it is up 25%, I am told.
The reason I did not like it is because most people are cowards and nanny state lovers and really like floors. And it makes sense to give the pols another football to toss around like they are magic athletes and have a gift for the sheepie.
Remember..... the US Government is our dear mom and Superman -- whatever you need.