Social Security Discussion

[Rshermr]

Yeah, but then these programs are left to the whims of reactionary economic illiterates who froth-at-the-mouth over record keeping for God's sake. I think the whole Koch Brothers/Monetarist axis is a ruse to dupe Americans into giving up their economic rights.

It's like Whac-A-Mole.

The problem is that there has been such a large and sophisticated effort by the well to do to "educate" people to believe that they should vote against their own self interest. It looks to me as though we got to a point where the populace was getting pissed, but then the Occupy movement managed to shoot itself in the foot. Along with a massive effort by the aforementioned to make the movement look evil.
Unless people wise up, all but the wealthy are doomed. And yes, indeed, the wealthy have proven their complete disinterest in what happens to anyone except themselves. Hell, if the us tubes, they can simply move to their home in Singapore.

Why should I be interested in giving a worthless pos like you the time of day.

A. I was not posting a response to you at all.
B. You keep posting responses to what I say to anyone that I post a response to.

Get it yet, me boy. You obviously value my beliefs greatly.

 

[Toro]

Stan Druckenmiller makes an unlikely class warrior. He's a member of the 1%—make that the 0.001%—one of the most successful money managers of all time, and 60 years old to boot. But lately he has been touring college campuses promoting a message of income redistribution you don't hear out of Washington. It's how federal entitlements like Medicare and Social Security are letting Mr. Druckenmiller's generation rip off all those doting Barack Obama voters in Generation X, Y and Z. ...

For three decades until 2010, Mr. Druckenmiller ran the hedge fund he founded, Duquesne Capital. Now retired from managing other people's money, he looks after his own assets, which Forbes magazine recently estimated at $2.9 billion. And he wonders why in five years the massively indebted U.S. government will begin sending him a Social Security check for $3,500 each month. Because he earned it?

"I didn't earn it," he responds, while pointing to a bar chart that is part of his college presentation. Drawing on research by Boston University economist Laurence Kotlikoff, it shows the generational wealth transfer that benefits oldsters at the expense of the young.

While many seniors believe they are simply drawing out the "savings" they were forced to deposit into Social Security and Medicare, they are actually drawing out much more, especially relative to later generations. That's because politicians have voted to award the seniors ever more generous benefits. As a result, while today's 65-year-olds will receive on average net lifetime benefits of $327,400, children born now will suffer net lifetime losses of $420,600 as they struggle to pay the bills of aging Americans.

One of the great ironies of the Obama presidency is that it has been a disaster for the young people who form the core of his political coalition. High unemployment is paired with exploding debt that they will have to finance whenever they eventually find jobs. ...

When the former money manager visited Stanford University, the audience included older folks as well as students. Some of the oldsters questioned why many of his dire forecasts assume that federal tax collections will stay at their traditional 18.5% of GDP. They asked why taxes should not rise to fulfill the promises already made.

Mr. Druckenmiller's response: "Oh, so you've paid 18.5% for your 40 years and now you want the next generation of workers to pay 30% to finance your largess?" He added that if 18.5% was "so immoral, why don't you give back some of your ill-gotten gains of the last 40 years?"

He has a similar argument for those on the left who say entitlements can be fixed with an eventual increase in payroll taxes. "Oh, I see," he says. "So I get to pay a 12% payroll tax now until I'm 65 and then I don't pay. But the next generation—instead of me paying 15% or having my benefits slightly reduced—they're going to pay 17% in 2033. That's why we're waiting—so we can shift even more to the future than to now?" ...

The Weekend Interview with Stanley Druckenmiller: How Washington Really Redistributes Income - WSJ.com

 

[Norman]

Yep, it is a "Pay as you go plan". Meaning there is really no difference to a wellfare scheme, except maybe in intent.

Anyway I wish the plan was at least partially funded like it is in most nations. Paying almost 30% of taxes just for retirement is going to be problematic. The negative effects on savings rate are not good for the long term progress of an economy either - especially when combined with other methods that favor spending over investments. Plus the state pensions are very underfunded as well.

I don't believe people are voting against their self interest if they vote against SS. After all it's a tax to elderly people, in other words everyone who is not nearing retirement is voting in his self interest by and large.

 

[RKMBrown]

The problem is that there has been such a large and sophisticated effort by the well to do to "educate" people to believe that they should vote against their own self interest. It looks to me as though we got to a point where the populace was getting pissed, but then the Occupy movement managed to shoot itself in the foot. Along with a massive effort by the aforementioned to make the movement look evil.
Unless people wise up, all but the wealthy are doomed. And yes, indeed, the wealthy have proven their complete disinterest in what happens to anyone except themselves. Hell, if the us tubes, they can simply move to their home in Singapore.

Why should I be interested in giving a worthless pos like you the time of day.

A. I was not posting a response to you at all.
B. You keep posting responses to what I say to anyone that I post a response to.

Get it yet, me boy. You obviously value my beliefs greatly.

And your first and last post in this thread was to make personal attacks on me. Uh huh... yeah that's what I thought.

 

[RKMBrown]

Yep, it is a "Pay as you go plan". Meaning there is really no difference to a wellfare scheme, except maybe in intent.

Anyway I wish the plan was at least partially funded like it is in most nations. Paying almost 30% of taxes just for retirement is going to be problematic. The negative effects on savings rate are not good for the long term progress of an economy either - especially when combined with other methods that favor spending over investments. Plus the state pensions are very underfunded as well.

I don't believe people are voting against their self interest if they vote against SS. After all it's a tax to elderly people, in other words everyone who is not nearing retirement is voting in his self interest by and large.

How is pay as you go welfare?

It's a stupid retirement ponzi designed to screw our children out of their income for our personal benefit. Worse it forces everyone to participate. But that's ok because we'll eventually pick the generations that get left holding the bag. Never, NEVER, ever let government have access to your income or assets. NEVER The only thing worse is giving them access to your children's income.

 

[SteadyMercury]

Hah you're still too stupid to understand what a ponzi scheme is.

 

[RKMBrown]

Hah you're still too stupid to understand what a ponzi scheme is.

It's a ponzi by every measure. The only thing keeping it alive is the fact that it is being run by the law, thus making it legal for them to operate it. Any private financier or corporation would have been run over the coals for what they have done. Just look at what the government did the last 5months with "extraordinary measures" robbing 360b from retirement accounts. You think a company would get away with that?

To stupid? You have no clue who you are talking to dumb ass.

 

[expat_panama]

...a ponzi by every measure...

Not every measure.

A typical 'ponzi scheme' is usually something that's outside the law, but in the case of Social Security it actually is the law. As it collapses and millons are bilked out of their life savings (that's the only way these things can end up) we're not going to see the crooks thrown in jail --they're going to just blame everything on Bush and get another Nobel prize.

 

[Toro]

It's not a Ponzi Scheme. A Ponzi Scheme is when there is nothing of substance at the end. In the end, the last people don't get paid. SS is a claim on the assets and economic growth of the nation. SS is no more of a Ponzi Scheme than Treasury Securities.

Ponzi Schemes also claim to offer very high returns at little risk. They don't offer 3% a year as SS currently compounding at.

SS is a poor system IMHO and should be changed, but long as the economy keeps growing and claims aren't exorbitant, it doesn't resemble a Ponzi Scheme.

 

[RKMBrown]

It's not a Ponzi Scheme. A Ponzi Scheme is when there is nothing of substance at the end. In the end, the last people don't get paid. SS is a claim on the assets and economic growth of the nation. SS is no more of a Ponzi Scheme than Treasury Securities.

Ponzi Schemes also claim to offer very high returns at little risk. They don't offer 3% a year as SS currently compounding at.

SS is a poor system IMHO and should be changed, but long as the economy keeps growing and claims aren't exorbitant, it doesn't resemble a Ponzi Scheme.

How many times has SS been "saved?" Hint it started as a 2% tax and is now at 15%.

How many millions of Americans will loose their jobs when we save SS again? What will the new tax rate be?

Not a ponzi becuase they can force every generation of Americans to pay twice (even after inflation is factored in) than their parents had to pay? How is that not a government mandated ponzi?

They have what 3.5t in assets and 50t in liabilities? How is that not a ponzi?

 

[Toro]

It's not a Ponzi Scheme. A Ponzi Scheme is when there is nothing of substance at the end. In the end, the last people don't get paid. SS is a claim on the assets and economic growth of the nation. SS is no more of a Ponzi Scheme than Treasury Securities.

Ponzi Schemes also claim to offer very high returns at little risk. They don't offer 3% a year as SS currently compounding at.

SS is a poor system IMHO and should be changed, but long as the economy keeps growing and claims aren't exorbitant, it doesn't resemble a Ponzi Scheme.

How many times has SS been "saved?" Hint it started as a 2% tax and is now at 15%.

How many millions of Americans will loose their jobs when we save SS again? What will the new tax rate be?

Not a ponzi becuase they can force every generation of Americans to pay twice (even after inflation is factored in) than their parents had to pay? How is that not a government mandated ponzi?

They have what 3.5t in assets and 50t in liabilities? How is that not a ponzi?

When you say there are $50 trillion in liabilities, one must similarly capitalize future tax revenues to normalize the balance sheet.

This argument misunderstands the nature of a Ponzi Scheme. A Ponzi Scheme is a very precise thing. A Ponzi Scheme is characterized by high promised returns backed by nothing that invariably collapses because of the law of large numbers. Every inability to pay, bankruptcy or default is not a Ponzi Scheme. Low returns backed by liabilities that are growing faster than the economy is not a Ponzi Scheme.

Promised SS payments are unsecured liabilities of the government, no different than most government bonds. Government liabilities are a claim on future economic activity. Ponzi Schemes are not. To say that SS is a Ponzi Scheme is tantamount to saying that every government bond not secured by physical assets is also a Ponzi Scheme. To take it to the logical conclusion, one would also say that every unsecured corporate bond or unsecured consumer credit instrument is also a Ponzi Scheme. Every government default, or every corporate or personal default for that matter, is not the result of a Ponzi Scheme.

Also, unlike Ponzi Schemes, government programs can be changed by legislative fiat. We can change how SS is structured tomorrow if we wanted. In a Ponzi Scheme, if the promised returns are lowered, then the scheme collapses because it won't be able to generate enough funds to pay off the prior claimants. That is not the case in SS. SS will not collapse if future benefits are reduced.

 

[expat_panama]

...When you say there are $50 trillion in liabilities, one must similarly capitalize future tax revenues to normalize the balance sheet. This argument misunderstands the nature of a Ponzi Scheme...

Words mean things only when people agree on definitions. This is what the world outside this thread means with the term:

Pon·zi scheme (pnz)
n.

A fraud disguised as an investment opportunity, in which initial investors and the perpetrators of the fraud are paid out of funds raised from later investors, and the later investors lose all funds invested.​

Originally, Social Security had been presented as a plan where people would 'contribute' to their retirement savings with the understanding that their money would be returned to them with investment interest when they retire. What then happened is deposits were spent instead on NPR, pottery classes in Morocco, etc., early retirees were paid by new enrollments, and the there will not be any money left when more people retire because SSA income is falling way behind its outgo:

No matter how SSA defenders may want to rationalize the problem, the fact remains that this has been an intentional fraudulent deception.

 

[RKMBrown]

It's not a Ponzi Scheme. A Ponzi Scheme is when there is nothing of substance at the end. In the end, the last people don't get paid. SS is a claim on the assets and economic growth of the nation. SS is no more of a Ponzi Scheme than Treasury Securities.

Ponzi Schemes also claim to offer very high returns at little risk. They don't offer 3% a year as SS currently compounding at.

SS is a poor system IMHO and should be changed, but long as the economy keeps growing and claims aren't exorbitant, it doesn't resemble a Ponzi Scheme.

How many times has SS been "saved?" Hint it started as a 2% tax and is now at 15%.

How many millions of Americans will loose their jobs when we save SS again? What will the new tax rate be?

Not a ponzi becuase they can force every generation of Americans to pay twice (even after inflation is factored in) than their parents had to pay? How is that not a government mandated ponzi?

They have what 3.5t in assets and 50t in liabilities? How is that not a ponzi?

When you say there are $50 trillion in liabilities, one must similarly capitalize future tax revenues to normalize the balance sheet.

This argument misunderstands the nature of a Ponzi Scheme. A Ponzi Scheme is a very precise thing. A Ponzi Scheme is characterized by high promised returns backed by nothing that invariably collapses because of the law of large numbers. Every inability to pay, bankruptcy or default is not a Ponzi Scheme. Low returns backed by liabilities that are growing faster than the economy is not a Ponzi Scheme.

Promised SS payments are unsecured liabilities of the government, no different than most government bonds. Government liabilities are a claim on future economic activity. Ponzi Schemes are not. To say that SS is a Ponzi Scheme is tantamount to saying that every government bond not secured by physical assets is also a Ponzi Scheme. To take it to the logical conclusion, one would also say that every unsecured corporate bond or unsecured consumer credit instrument is also a Ponzi Scheme. Every government default, or every corporate or personal default for that matter, is not the result of a Ponzi Scheme.

Also, unlike Ponzi Schemes, government programs can be changed by legislative fiat. We can change how SS is structured tomorrow if we wanted. In a Ponzi Scheme, if the promised returns are lowered, then the scheme collapses because it won't be able to generate enough funds to pay off the prior claimants. That is not the case in SS. SS will not collapse if future benefits are reduced.

It's a bond? Cool where can I sell my bonds? Telling me that my SS "bond" (snicker) is tied to my children's income (sigh) makes it a ponzi. It is a ponzi because it only works if people let the government steal their income by force. The next time they save SS my children will probably have to pay 25% of their income for it. That's up from 2% when it started. An order of magnitude more than when it started. Not only is this a ponzi, it is a ponzi that has been going on for many decades, by force.

 

[Toro]

How many times has SS been "saved?" Hint it started as a 2% tax and is now at 15%.

How many millions of Americans will loose their jobs when we save SS again? What will the new tax rate be?

Not a ponzi becuase they can force every generation of Americans to pay twice (even after inflation is factored in) than their parents had to pay? How is that not a government mandated ponzi?

They have what 3.5t in assets and 50t in liabilities? How is that not a ponzi?

When you say there are $50 trillion in liabilities, one must similarly capitalize future tax revenues to normalize the balance sheet.

This argument misunderstands the nature of a Ponzi Scheme. A Ponzi Scheme is a very precise thing. A Ponzi Scheme is characterized by high promised returns backed by nothing that invariably collapses because of the law of large numbers. Every inability to pay, bankruptcy or default is not a Ponzi Scheme. Low returns backed by liabilities that are growing faster than the economy is not a Ponzi Scheme.

Promised SS payments are unsecured liabilities of the government, no different than most government bonds. Government liabilities are a claim on future economic activity. Ponzi Schemes are not. To say that SS is a Ponzi Scheme is tantamount to saying that every government bond not secured by physical assets is also a Ponzi Scheme. To take it to the logical conclusion, one would also say that every unsecured corporate bond or unsecured consumer credit instrument is also a Ponzi Scheme. Every government default, or every corporate or personal default for that matter, is not the result of a Ponzi Scheme.

Also, unlike Ponzi Schemes, government programs can be changed by legislative fiat. We can change how SS is structured tomorrow if we wanted. In a Ponzi Scheme, if the promised returns are lowered, then the scheme collapses because it won't be able to generate enough funds to pay off the prior claimants. That is not the case in SS. SS will not collapse if future benefits are reduced.

It's a bond? Cool where can I sell my bonds? Telling me that my SS "bond" (snicker) is tied to my children's income (sigh) makes it a ponzi. It is a ponzi because it only works if people let the government steal their income by force. The next time they save SS my children will probably have to pay 25% of their income for it. That's up from 2% when it started. An order of magnitude more than when it started. Not only is this a ponzi, it is a ponzi that has been going on for many decades, by force.

It's not a bond. SS is liability. All bonds are liabilities but not all liabilities are bonds.

 

[Toro]

...When you say there are $50 trillion in liabilities, one must similarly capitalize future tax revenues to normalize the balance sheet. This argument misunderstands the nature of a Ponzi Scheme...

Words mean things only when people agree on definitions. This is what the world outside this thread means with the term:

Pon·zi scheme (pnz)
n.

A fraud disguised as an investment opportunity, in which initial investors and the perpetrators of the fraud are paid out of funds raised from later investors, and the later investors lose all funds invested.​

Originally, Social Security had been presented as a plan where people would 'contribute' to their retirement savings with the understanding that their money would be returned to them with investment interest when they retire. What then happened is deposits were spent instead on NPR, pottery classes in Morocco, etc., early retirees were paid by new enrollments, and the there will not be any money left when more people retire because SSA income is falling way behind its outgo:

No matter how SSA defenders may want to rationalize the problem, the fact remains that this has been an intentional fraudulent deception.

SS is not a fraud.

Negative cash flows does not indicate a fraud.

Nor do investors lose all their money.

Thus, its not a Ponzi Scheme.

 

[expat_panama]

...SS is not a fraud. Negative cash flows does not indicate a fraud. Nor do investors lose all their money. Thus, its not a Ponzi Scheme.

We hear that a lot these days, just as scheme perpetrators from Bernie Madoff back the original Charles Ponzi insisted even on the way to prison that investors did not lose all their money and that the negative cash flow did not indicate fraud.

We're not talking about lack of sincerity. We're talking about behavior that includes promises of future profits from investment, where profits in fact are paid out of income from new enrollments, and where the bulk of the principle has been converted to other uses.

 

[RKMBrown]

...SS is not a fraud. Negative cash flows does not indicate a fraud. Nor do investors lose all their money. Thus, its not a Ponzi Scheme.

We hear that a lot these days, just as scheme perpetrators from Bernie Madoff back the original Charles Ponzi insisted even on the way to prison that investors did not lose all their money and that the negative cash flow did not indicate fraud.

We're not talking about lack of sincerity. We're talking about behavior that includes promises of future profits from investment, where profits in fact are paid out of income from new enrollments, and where the bulk of the principle has been converted to other uses.

Ding ding... ponzi. The only thing left is the default when some future generation decides it does not want 100+ % of it's income to go to supporting the theft of their ancestors.

 

[Toro]

...SS is not a fraud. Negative cash flows does not indicate a fraud. Nor do investors lose all their money. Thus, its not a Ponzi Scheme.

We hear that a lot these days, just as scheme perpetrators from Bernie Madoff back the original Charles Ponzi insisted even on the way to prison that investors did not lose all their money and that the negative cash flow did not indicate fraud.

We're not talking about lack of sincerity. We're talking about behavior that includes promises of future profits from investment, where profits in fact are paid out of income from new enrollments, and where the bulk of the principle has been converted to other uses.

It may be a bad system - and it is - but it's not a Ponzi Scheme.

Terminology matters. Calling the system a Ponzi Scheme allows opponents of SS reform to label reformers as extremists and discredit them. Comparing SS to Madoff and Ponzi gives further credence to the opponents on the Left that reformers are wild-eyed nutters.

 

[oldfart]

How many times has SS been "saved?" Hint it started as a 2% tax and is now at 15%.

How many millions of Americans will loose their jobs when we save SS again? What will the new tax rate be?

Not a ponzi becuase they can force every generation of Americans to pay twice (even after inflation is factored in) than their parents had to pay? How is that not a government mandated ponzi?

They have what 3.5t in assets and 50t in liabilities? How is that not a ponzi?

When you say there are $50 trillion in liabilities, one must similarly capitalize future tax revenues to normalize the balance sheet.

This argument misunderstands the nature of a Ponzi Scheme. A Ponzi Scheme is a very precise thing. A Ponzi Scheme is characterized by high promised returns backed by nothing that invariably collapses because of the law of large numbers. Every inability to pay, bankruptcy or default is not a Ponzi Scheme. Low returns backed by liabilities that are growing faster than the economy is not a Ponzi Scheme.

Promised SS payments are unsecured liabilities of the government, no different than most government bonds. Government liabilities are a claim on future economic activity. Ponzi Schemes are not. To say that SS is a Ponzi Scheme is tantamount to saying that every government bond not secured by physical assets is also a Ponzi Scheme. To take it to the logical conclusion, one would also say that every unsecured corporate bond or unsecured consumer credit instrument is also a Ponzi Scheme. Every government default, or every corporate or personal default for that matter, is not the result of a Ponzi Scheme.

Also, unlike Ponzi Schemes, government programs can be changed by legislative fiat. We can change how SS is structured tomorrow if we wanted. In a Ponzi Scheme, if the promised returns are lowered, then the scheme collapses because it won't be able to generate enough funds to pay off the prior claimants. That is not the case in SS. SS will not collapse if future benefits are reduced.

It's a bond? Cool where can I sell my bonds? Telling me that my SS "bond" (snicker) is tied to my children's income (sigh) makes it a ponzi. It is a ponzi because it only works if people let the government steal their income by force. The next time they save SS my children will probably have to pay 25% of their income for it. That's up from 2% when it started. An order of magnitude more than when it started. Not only is this a ponzi, it is a ponzi that has been going on for many decades, by force.

Hate to tell you this sport, but every financial asset you have is by your definition a Ponzi scheme. They all depend on someone to pay you in the future. And that someone will have to pay you out of their income, whether its the federal government, a state or local government, a corporation or other business entity, or an individual. What financial (as opposed to tangible) assets do you have that are NOT contingent on the future economy in this way?

 

[Toro]

When you say there are $50 trillion in liabilities, one must similarly capitalize future tax revenues to normalize the balance sheet.

This argument misunderstands the nature of a Ponzi Scheme. A Ponzi Scheme is a very precise thing. A Ponzi Scheme is characterized by high promised returns backed by nothing that invariably collapses because of the law of large numbers. Every inability to pay, bankruptcy or default is not a Ponzi Scheme. Low returns backed by liabilities that are growing faster than the economy is not a Ponzi Scheme.

Promised SS payments are unsecured liabilities of the government, no different than most government bonds. Government liabilities are a claim on future economic activity. Ponzi Schemes are not. To say that SS is a Ponzi Scheme is tantamount to saying that every government bond not secured by physical assets is also a Ponzi Scheme. To take it to the logical conclusion, one would also say that every unsecured corporate bond or unsecured consumer credit instrument is also a Ponzi Scheme. Every government default, or every corporate or personal default for that matter, is not the result of a Ponzi Scheme.

Also, unlike Ponzi Schemes, government programs can be changed by legislative fiat. We can change how SS is structured tomorrow if we wanted. In a Ponzi Scheme, if the promised returns are lowered, then the scheme collapses because it won't be able to generate enough funds to pay off the prior claimants. That is not the case in SS. SS will not collapse if future benefits are reduced.

It's a bond? Cool where can I sell my bonds? Telling me that my SS "bond" (snicker) is tied to my children's income (sigh) makes it a ponzi. It is a ponzi because it only works if people let the government steal their income by force. The next time they save SS my children will probably have to pay 25% of their income for it. That's up from 2% when it started. An order of magnitude more than when it started. Not only is this a ponzi, it is a ponzi that has been going on for many decades, by force.

Hate to tell you this sport, but every financial asset you have is by your definition a Ponzi scheme. They all depend on someone to pay you in the future. And that someone will have to pay you out of their income, whether its the federal government, a state or local government, a corporation or other business entity, or an individual. What financial (as opposed to tangible) assets do you have that are NOT contingent on the future economy in this way?

Exactly.

All financial assets are claims on future economic activity. The government is just another entity, albeit a big and largely inefficient one.