Something seems fishy about this..
http://www.csmonitor.com/Business/Latest-News-Wires/2012/0814/Social-Security-8.6-trillion-deficit-134-trillion-Both
Over the next 75 years, after Social Security drains its trust funds, the massive program is scheduled to pay out $134 trillion more in benefits than it will collect in tax revenue, according to agency data. [...] — $30.5 trillion in 2012 dollars. We all know that $134 trillion won't buy nearly as much in 2086 as it would today. Social Security's number crunchers project that annual inflation will average 2.8 percent in the long term, after a short period of slightly lower inflation. When the annual shortfalls are discounted for inflation to 2012 dollars, they come to $30.5 trillion.
[...]
— $30.5 trillion in 2012 dollars. We all know that $134 trillion won't buy nearly as much in 2086 as it would today. Social Security's number crunchers project that annual inflation will average 2.8 percent in the long term, after a short period of slightly lower inflation. When the annual shortfalls are discounted for inflation to 2012 dollars, they come to $30.5 trillion.
This part is particularly odd, but I'm having trouble forming a criticism of it. Is it not just an admission that they're going to inflate away their obligations (lol)? It seems like the author literally concedes reduced benefits without even knowing.
bumpity
Inflation has a lot of political advantages and attractions, reducing debt obligations like this is just one of them.
I'm more worried that they will start to use inflation more aggressively to combat rapidly expanding obligations. Imagine an economy with more like 6% inflation yearly.
I saw today Obama saying that he wants to use the tax code to punish companies exporting jobs.
It's never a good sign when a government uses one policy to combat the effects of another of their policies. That's when things can have disastrous and unforeseen various effects.
Inflation policy is one of those things.
Goddamn Keynesians :|
He is not saying they are inflating away benefits (even though they are in reality) because SS payments are indexed to inflation. The problem, of course, is that what the governement uses to calculate inflation is bogus.
Aren't Social Security benefits adjusted for inflation though? They're under-adjusted but it is still correct to adjust them to somewhere closer to the 30.5 trillion figure. Regardless, you're still talking about an average of 350 billion in deficit spending every year for the next 75 years...Which is absurd.
Edit: I did not see Prime's post but I agree with him.
Social Security are adjusted; person I live with got something in the mail saying their benefits will be increased by 1.7% next year to cover the increased cost of living. That's some nice (fictional) low inflation there!
Theres the rate of inflation which the FED states to be like 2% ( or Quantitative Easing, Operation Twist, Nominal GDP Targeting, liquidity injection, Stimulus, Pump Priming, Money Shock or what ever else they want camouflage it as) then we have real rate of inflation which I'm sure is north of 5%.
What I am deeply worried about is the fact that all those USD's sitting outside the country idly by, stored by foreign central bankers. If or when all that fiat were to suddenly enter the U.S market then it would be a very nasty day indeed.
An added bonus to Obama's threat to punish employers is the fact that yet even more foreigner employers will turn down American potential employees and clients lest they give up their citizenship. This makes it extra vexing towards anyone whom wants to leave the country.
Goddamn statist =l
The other trick when they really can't afford the entitlement anymore is raising the retirement age.
Increased retirement age, or just giving greater promised benefits (backed by the full faith and credit of government!) if someone waits longer before they start their SS benefits. Illusion of choice and all...
Don't forget about means testing. What's that? You have 1 million worth of assets when you retire? Sorry, you don't qualify for social security anymore. Only those most in need are entitled to it. This will be the next solution after they raise the age by a year or 2.
Gee, why can't I just keep my own SS contributions and invest them how I see fit? Why do I need the government middle man?
What a novel-fricking-idea.
Ponzi scheme!
shackleford: Gee, why can't I just keep my own SS contributions and invest them how I see fit?
Gee, why can't I just keep my own SS contributions and invest them how I see fit?
Because you aren't responsible enough to save for retirement. Only government officials are.
Because you aren't responsible privileged enough to save make others pay for retirement. Only government officials are.
Fortunately for me I'm going to invest heavily in precious metals. I don't like government restrictions and penalties a la IRA, 401(k), etc.