Social Security is banrupt, so why the extra bump in the rate?

[AmazonTania]

Any investment will fail if its source of revenue dries up.

That's not anywhere similar to what a Ponzi Scheme is. A Ponzi Scheme is an investment operation in which you pay previous investors with the funds you obtain from newer investors

Which is exactly how the stock market works.

In your mind, probably. The stock market is generally misunderstood. I am not surprised at all why you would think this way.

When you sell a share of stock the money comes from new investors, not company profit.

No one said it didn't, but you are still confused.

Selling a stock is no different from selling any other good or service. In this case, you are selling a portion of a company. You have somehow confused yourself to believe it is a Ponzi Scheme because there is no profit to be made. Which you are still wrong, because the profit is determined by the sellers target and spot price. It's no different from a business selling a good or service. There are profits and losses. It's not the same as an intermediary taking money from client A and using those funds as returns for Client B.

Stop confusing yourself.

http://www.sec.gov/answers/ponzi.htm

An actually organization? What the fuck is that? Originating from another person's investments? LOL! A share of stock doesn't "originate from another person's investments?"

I don't remember talking about a share of stock in that passage you quoted me on. Good to know you were paying attention, and avoiding to create strawmen.

You get paid to give financial advice? LOL! To who, 9 year olds? With folks like you giving financial advice, its no surprise at all the economy tanked a few years ago.

Good thing most of my clients followed my advice and invested into foreign/emerging markets. So these supposed '9-year-old' kids I give financial advice to will probably make enough to retire by the age of 17 or 20, while you hustle wondering when your next day off is.

All the best with that one.

Are you aware that if there are no new investors available to buy the stock that old investors purchased, the value of that stock becomes zero?

You're confusing value and price. Nonetheless, are you aware that the value of the stock is determined by earnings?

Are you aware that whether or not we, as a society, are capable of producing enough goods and services to take care of those too old to work has absolutely nothing to do with whether or not we have social security and almost everything to do with age demographics?

Not being aware and not caring are two different things. It's a Ponzi Scheme all the same, and it will eventually fail, as all Ponzi Schemes do.

 

[AmazonTania]

The individuals, major corporations, banks and funds that purchased over 9 trillion dollars in US debt through treasury auctions and the open market would dispute your claim that US debt is not asset.

That's great. And the Chinese actually assumes you'll pay them back one-day. Very few people are loaning the Government 10 years at a rate of 2.13%. Most of those investors have every intention of flipping those bonds before it matures. The question is to whom.

Majority of that demand for public debt which isn't foreign originates from the Federal Reserve. I'm not sure if you've known, but the financial community are not exactly a community which tends to think in foresight. They've adopted an 'in the moment' type of attitude.

Mom-and-pop investors, and not the Federal Reserve, have been the ones most responsible for driving the mad dash to government debt, according to newly released data.

Guess Who's Buying All the Bonds? (It's Not the Fed)

Nice outdated information, there.

What else do you have?

 

[OohPooPahDoo]

That's not anywhere similar to what a Ponzi Scheme is. A Ponzi Scheme is an investment operation in which you pay previous investors with the funds you obtain from newer investors

Which is exactly how the stock market works.

In your mind, probably. The stock market is generally misunderstood. I am not surprised at all why you would think this way.



No one said it didn't, but you are still confused.

Selling a stock is no different from selling any other good or service. In this case, you are selling a portion of a company. You have somehow confused yourself to believe it is a Ponzi Scheme because there is no profit to be made. Which you are still wrong, because the profit is determined by the sellers target and spot price. It's no different from a business selling a good or service. There are profits and losses. It's not the same as an intermediary taking money from client A and using those funds as returns for Client B.

Stop confusing yourself.

"Ponzi" Schemes



I don't remember talking about a share of stock in that passage you quoted me on. Good to know you were paying attention, and avoiding to create strawmen.



Good thing most of my clients followed my advice and invested into foreign/emerging markets. So these supposed '9-year-old' kids I give financial advice to will probably make enough to retire by the age of 17 or 20, while you hustle wondering when your next day off is.

All the best with that one.

Are you aware that if there are no new investors available to buy the stock that old investors purchased, the value of that stock becomes zero?

You're confusing value and price. Nonetheless, are you aware that the value of the stock is determined by earnings?

Are you aware that whether or not we, as a society, are capable of producing enough goods and services to take care of those too old to work has absolutely nothing to do with whether or not we have social security and almost everything to do with age demographics?

Not being aware and not caring are two different things. It's a Ponzi Scheme all the same, and it will eventually fail, as all Ponzi Schemes do.

A Ponzi scheme is in fact profitable to its investors so long as there is a steady stream of new investors willing to buy into the scheme. If there are no new investors willing to buy shares of company X from its current investors, the current investors of company X wind up losing money. That is a fact. It happened in 1929-33. Do you honestly think the fundamentals of the U.S. economy just changed complete course all of a sudden over a couple days in October 1929? Of course not. The fundamentals had already shifted. The market was just propped up by new investors stepping in willing to pay ever increasing amounts for stock. Then the market ran out of new investor money and crashed.

The stock market is thus a Ponzi scheme by your definition. Your definition leaves out an important aspect of a Ponzi scheme, however - it is dishonest. We know how social security works and we know how the stock market works. Neither are Ponzi schemes.


Selling a share of stock, BTW, is not nearly the same as selling a good or service.

When a retailer sells goods they are attempting to profit from their ability efficiently distribute goods to the consumer. The consumer is willing to pay more than the bulk rate the retailer pays because most consumers don't want 1,000 rolls of toiler paper, they only want 10 or 15 at a time and are willing to pay a premium not to have to ship 1,000 rolls and store them until needed, and the wholesaler is willing to sell to the retailer at a lower rate than the consumer is willing to pay because they'd rather get rid of 1,000, 20,000 - whatever - rolls at a time rather than 10 or 15 per customer.

When a business sells a service they are actually doing something. If you pay for labor to get your car fixed, you're actually paying for some guy to sweat and think and work.

When you buy or sell stock you aren't actually producing anything of value, you're just trading what is essentially just a contract with another investor. You aren't attempting to profit by actually doing anything other than correctly predicting what the future price will be.

 

[OohPooPahDoo]

That's great. And the Chinese actually assumes you'll pay them back one-day. Very few people are loaning the Government 10 years at a rate of 2.13%. Most of those investors have every intention of flipping those bonds before it matures. The question is to whom.

Majority of that demand for public debt which isn't foreign originates from the Federal Reserve. I'm not sure if you've known, but the financial community are not exactly a community which tends to think in foresight. They've adopted an 'in the moment' type of attitude.

Mom-and-pop investors, and not the Federal Reserve, have been the ones most responsible for driving the mad dash to government debt, according to newly released data.

Guess Who's Buying All the Bonds? (It's Not the Fed)

Nice outdated information, there.

What else do you have?

Well gee, we've got you just asserting that the opposite is true without providing any evidence whatsoever - should we go with that?

 

[OohPooPahDoo]

That's great. And the Chinese actually assumes you'll pay them back one-day. Very few people are loaning the Government 10 years at a rate of 2.13%. Most of those investors have every intention of flipping those bonds before it matures. The question is to whom.

Majority of that demand for public debt which isn't foreign originates from the Federal Reserve. I'm not sure if you've known, but the financial community are not exactly a community which tends to think in foresight. They've adopted an 'in the moment' type of attitude.

Mom-and-pop investors, and not the Federal Reserve, have been the ones most responsible for driving the mad dash to government debt, according to newly released data.

Guess Who's Buying All the Bonds? (It's Not the Fed)

Nice outdated information, there.

What else do you have?

I've got your assertion that the opposite is true without having provided any evidence whatsoever - should we go with that?

 

[OohPooPahDoo]

If someone puts a gun to your head and takes your money, that is known as a thief

If someone puts a gun to your head, takes your money and says he will pay you back in time with interest, but does not its known as the Government.

And we trust these guys with our personal and health information

BRILLIANT

The government has never put a gun to my head, nor failed to pay any interest obligations it may have with me. Not sure what your problem is.

 

[itfitzme]

Guess Who's Buying All the Bonds? (It's Not the Fed)

Nice outdated information, there.

What else do you have?

I've got your assertion that the opposite is true without having provided any evidence whatsoever - should we go with that?

Surely you must realize that some people use reason to adjust how they feel while other simply rationalize how they feel.

If my axiom is that the gov't has no right to FICA taxes, then SSI is a ponzi scheme because there is no guarantee of perpetual funds. If I accept that the gov't has the right to FICA, then the issue solved into purpetuity.

A pension fund or 401k isn't a ponzi scheme because *I choose it.

Private insurance isn't an issue, because I "choose" to buy it. *Never mind that I actually don't get to drive without it. *After all, I shopped around. *I chose my insurance company. *I have been in an accident and used it.

Never mind that the SEC site says, "A Ponzi scheme is an investment fraud". *It doesn't mean fraud by legally being defined as a fraud by the FCC. *It doesn't mean that SSI is not legally a fraud. *It means fraud as in "I don't like it."

It's a ponzi scheme if I don't like it therefor I shouldn't have to pay FICA.

 

[editec]

Social Security is banrupt, so why the extra bump in the rate?

You have been misinformed.

Social Security is not bankrupt.

SS is as secure as our government is.

ALL debts owed by the USA (debts owed to SS included) are secure as long as the USA is a sovereign government.

 

[lynn63]

Any investment will fail if its source of revenue dries up.

That's not anywhere similar to what a Ponzi Scheme is. A Ponzi Scheme is an investment operation in which you pay previous investors with the funds you obtain from newer investors

Which is exactly how the stock market works.
When you sell a share of stock the money comes from new investors, not company profit.



An actually organization? What the fuck is that? Originating from another person's investments? LOL! A share of stock doesn't "originate from another person's investments?"

There is a very obvious and distinct difference, but I'm not surprised that you do not see the difference.

But hey, someone with a nice blog probably told you SS is a "Ponzi scheme", so it has to be true.

You should have taken summer school classes.

You mean at the same place you learned economics or about investing? No thanks. My time is much better spent getting paid to give financial advice. Sort of similar to what I already do.

You get paid to give financial advice? LOL! To who, 9 year olds? With folks like you giving financial advice, its no surprise at all the economy tanked a few years ago.

Are you aware that if there are no new investors available to buy the stock that old investors purchased, the value of that stock becomes zero? Are you aware that whether or not we, as a society, are capable of producing enough goods and services to take care of those too old to work has absolutely nothing to do with whether or not we have social security and almost everything to do with age demographics?

On a state level with age demographics? Florida tops with 18% in elderly pop

 

[Pop23]

If someone puts a gun to your head and takes your money, that is known as a thief

If someone puts a gun to your head, takes your money and says he will pay you back in time with interest, but does not its known as the Government.

And we trust these guys with our personal and health information

BRILLIANT

The government has never put a gun to my head, nor failed to pay any interest obligations it may have with me. Not sure what your problem is.

So at anytime I can opt out and get all the money i put in with interest?

You learn so much on the interweb!

 

[Sallow]

Social Security, Medicare is not bankrupt and not going bankrupt and does not add one penny to the debt as the Radical Right claim so they can get the grubby greedy hands on them and cut benefits. The Radical Right use scare tactics to get people to follow them and they expect it.

Social Security has started dipping into its trust fund to cover its obligations. Furthermore, the percentage of the budget Social Security and Medicare take up is increasing every year.

So yes, they do contribute to the debt.

http://www.nytimes.com/2013/01/06/opinion/sunday/social-security-its-worse-than-you-think.html?_r=0

Federal Spending by the Numbers - 2012

No, Social Security is not adding to the debt. Like you said it is using ITS saved money from the surplus years. A bump in the retirement age (like make it a fixed percentage of life expectancy) and or bump in the tax cap limit (another number which should raise over time) fixes the math.

There's no need to bump the retirement age..and it's a dangerous thing to do.

It's extremely tough to find employment after the age of 50 much less 60.

 

[itfitzme]

Social Security has started dipping into its trust fund to cover its obligations. *Furthermore, the percentage of the budget Social Security and Medicare take up is increasing every year.

So yes, they do contribute to the debt.

http://www.nytimes.com/2013/01/06/opinion/sunday/social-security-its-worse-than-you-think.html?_r=0

Federal Spending by the Numbers - 2012

I was trying to give you the benefit of the doubt, that maybe your confusing Supplimental Security Income (SSI) with Social Security Retirement Benefits (OASDI). *But you say clearly, "Social Security has started dipping into its trust fund".

As OASDI, Social Security Benefits is a completely self funded non discressionary program, it can't add to the debt and deficit. After drawing from its past surplus, savings, trust fund, it has completely covered its expenses.

Its just simple math. Zero doesn't add anything..

Are you really that f'in dumb? *Or do you just say stupid siht because its what you want to be true?

 

[itfitzme]

If someone puts a gun to your head and takes your money, that is known as a thief

If someone puts a gun to your head, takes your money and says he will pay you back in time with interest, but does not its known as the Government.

And we trust these guys with our personal and health information

BRILLIANT

The government has never put a gun to my head, nor failed to pay any interest obligations it may have with me. Not sure what your problem is.

So at anytime I can opt out and get all the money i put in with interest?

You learn so much on the interweb!

What does that have to do with your gun fantacy?

Really, this is a problem for you, actually having the local police, FBI, IRS, or some Social Security rep draw a gun and point it at your head?

Maybe you need medication because you can't differentiate between reality and fantacy.

 

[Pop23]

The government has never put a gun to my head, nor failed to pay any interest obligations it may have with me. Not sure what your problem is.

So at anytime I can opt out and get all the money i put in with interest?

You learn so much on the interweb!

What does that have to do with your gun fantacy?

Really, this is a problem for you, actually having the local police, FBI, IRS, or some Social Security rep draw a gun and point it at your head?

Maybe you need medication because you can't differentiate between reality and fantacy.

Pot calling kettle black?

That money missing from my check is not taken voluntarily? It is confiscated.

So then I can't opt out?

 

[Agit8r]

Those of us who have had a steady paycheck during the entirety of the Obama administration will recall that our payroll taxes went down in early 2009. It was part of this $700 Billion package known as the stimulus.

This stimulus measure was repealed as part of the "fiscal cliff" agreement.

 

[AmazonTania]

Guess Who's Buying All the Bonds? (It's Not the Fed)

Nice outdated information, there.

What else do you have?

Well gee, we've got you just asserting that the opposite is true without providing any evidence whatsoever - should we go with that?

I don't know what you would like for me to tell or show you. All I can say is that your information is outdated. Not only is it outdated, but it is quite the anomaly as well as inaccurate.

Your source suggest that 'Mom-&-Pop' investors are buying majority of the the bonds, and not the Fed. This might have been true, but only for the year 2012. The housing sector averaged $370.5 Billion a quarter according to Flow of Funds Accounts in 2012. Before that, the sector averaged -$256.9B a quarter in securities purchases. Today, they average -133.9B just for the first quarter alone.

The Federal Reserve only accounted for $2.7 Billion of US Treasuries for the entire year of 2012. Much lower than the $370.5 Billion from the 'Mom-&-Pop' investors. This doesn't mean that Federal Reserve isn't purchasing all the securities. It just means they haven't purchased that many for that particular year. Regardless, the much of the demand for US Securities is very much from the Fed itself. Especially when you consider the $300 billion in US Securities in 2009 - 2010, the $600 billion from 2010 - 2011, and the $45 billion a month from the end of 2012 to the present. So far, the Fed already has $575.2 billion in security purchases for the first quarter of 2013 alone.

So yes, your source is outdated as well as misleading. If you aren't doing the proper research, you will be easily fooled.

 

[AmazonTania]

Which is exactly how the stock market works.

In your mind, probably. The stock market is generally misunderstood. I am not surprised at all why you would think this way.



No one said it didn't, but you are still confused.

Selling a stock is no different from selling any other good or service. In this case, you are selling a portion of a company. You have somehow confused yourself to believe it is a Ponzi Scheme because there is no profit to be made. Which you are still wrong, because the profit is determined by the sellers target and spot price. It's no different from a business selling a good or service. There are profits and losses. It's not the same as an intermediary taking money from client A and using those funds as returns for Client B.

Stop confusing yourself.

"Ponzi" Schemes



I don't remember talking about a share of stock in that passage you quoted me on. Good to know you were paying attention, and avoiding to create strawmen.



Good thing most of my clients followed my advice and invested into foreign/emerging markets. So these supposed '9-year-old' kids I give financial advice to will probably make enough to retire by the age of 17 or 20, while you hustle wondering when your next day off is.

All the best with that one.



You're confusing value and price. Nonetheless, are you aware that the value of the stock is determined by earnings?

Are you aware that whether or not we, as a society, are capable of producing enough goods and services to take care of those too old to work has absolutely nothing to do with whether or not we have social security and almost everything to do with age demographics?

Not being aware and not caring are two different things. It's a Ponzi Scheme all the same, and it will eventually fail, as all Ponzi Schemes do.

A Ponzi scheme is in fact profitable to its investors so long as there is a steady stream of new investors willing to buy into the scheme. If there are no new investors willing to buy shares of company X from its current investors, the current investors of company X wind up losing money. That is a fact. It happened in 1929-33. Do you honestly think the fundamentals of the U.S. economy just changed complete course all of a sudden over a couple days in October 1929? Of course not. The fundamentals had already shifted. The market was just propped up by new investors stepping in willing to pay ever increasing amounts for stock. Then the market ran out of new investor money and crashed.

I see your problem. You are basing you understanding of how stock markets work on your understanding on the cause of the market crash of 1929. That's equally flawed and dubious reasoning, as this particular period in financial history was during a speculative bubble. Crash occur when P/E ratios exceed long-term averages and the excessive use of margin debt and leverage. This was helped with the increase in the flow of liquidity provided by the Federal Reserve. Increase in liquidity increases business cost, the price of stocks increase past their true valuation, until prices go into freefall and the bubble burst. This is exactly what happened during 1929, 2000 and 2007.

Also, I don't know how you think shares work, but shareholders do not necessarily make money when they sell shares. You make money from stock by owning them, not just by selling them. A company's earning potential can go to zero, but this is not done by players moving their money out of the market. Stocks have inherent value. Ponzi Schemes only have value if someone decides to participate. Unlike Ponzi Schemes, even if one decides to participate, and there is no one to sell to, those shares will still have an inherent value. Even if the stock does reach 1 cent, it doesn't make the company any less profitable.

The stock market is thus a Ponzi scheme by your definition. Your definition leaves out an important aspect of a Ponzi scheme, however - it is dishonest. We know how social security works and we know how the stock market works. Neither are Ponzi schemes.

The Stock Market isn't a Ponzi scheme, but Social Security is. You are merely trying to rationalise how they are both similar by simply using a broad characterisation.

 

[Shoey]

Medicare and Social Security are exclusively funded with Payroll & FICA taxes and withdrawals from the U.S. Social Security Trust fund. The Social Security Trust Fund possesses about $2.5 trillion in Treasury notes. While Social Security & Medicare are solely funded by FICA/Payroll taxes, that revenue should be allocated directly to Social Security and Medicare. It's a misfortune that the U.S. government borrowed money from the Social Security Trust Fund in times past and our government established a responsibility to compensate the assets on hand back per request by the Social Security Administration/Medicare. Our American government created more debt by borrowing from the U.S. Social Security Trust fund and our Congress must enact legislation to increase the FICA/Payroll through taxation to recover the lost revenue in the Treasury notes.

 

[Agit8r]

Medicare and Social Security are exclusively funded with Payroll & FICA taxes and withdrawals from the U.S. Social Security Trust fund. The Social Security Trust Fund possesses about $2.5 trillion in Treasury notes. While Social Security & Medicare are solely funded by FICA/Payroll taxes, that revenue should be allocated directly to Social Security and Medicare. It's a misfortune that the U.S. government borrowed money from the Social Security Trust Fund in times past and our government established a responsibility to compensate the assets on hand back per request by the Social Security Administration/Medicare. Our American government created more debt by borrowing from the U.S. Social Security Trust fund and our Congress must enact legislation to increase the FICA/Payroll through taxation to recover the lost revenue in the Treasury notes.

Actually, the treasury notes represent the money borrowed from the trust fund. That is what earns the interest.

https://en.wikipedia.org/wiki/United_States_Treasury_security

 

[editec]

According to Standard & Poor, Fitch & Moody, US soverign debt is rated as investment grade. The US carries both Fitch's and Moody's highest rating. Standard & Poor rates US debt as AA+ with only 8 nations out of 140 that rate higher. I guess you consider these bond rating services like the financial community lack your foresight.

The only way these Rating Agencies can be licensed to rate securities is through government licensing. The only way these rating agencies can continue to do so is if they continue to provide good ratings.

That's a complete conflict of interest. Especially since Egan-Jones was one of the first rating agencies to downgrade the United States (twice) and was barred from providing ratings for a couple of months, and S&P was the only major rating agency to downgrade S&P and is being sued by the Justice Department.

There is no government license required to rate bonds.

Wrong.