The "raiding" of the Social Security Trust. What you don't know, and why you're probably an idiot.

[JoeTheEconomist]

Seriously, you don't understand the difference between me loaning money to someone else, and me loaning money to myself. You actually mean that? Seriously?

And as a finance guy, you actually, truly didn't grasp my point that whether or not there is a trust changes zero cash flows ex-ante to anyone, ANYONE, EX-ANTE

you want to look someone in the eye who knows that that means and say you don't get it? I withdraw my statement that I believe you. You are full of shit. And I mean that in the most disrespectful sort of way. In a way that most who say that to you don't. I know what I am talking about. that you don't grasp that your arguement changes zero cashflows is pathetic. If you do what you say, you should be shit canned on the spot.

Cash flows is wall street, Holmes. You don't know that? You aren't Wall Street, you are a janitor, you are a canard:

Toro: There doesn't have to be any money for something to be an asset, WTF are you talking about? Yeah, there does

You're not loaning money to yourself. You keep repeating that mistake.

Tell me the difference between the two are

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

Tell me what the difference is?

You know nothing about finance if you actually can stand behind that a "trust fund" which effects cash flows to no one positively or negatively ex-ante is a financial asset

Assets are valued on risk adjusted expected cashflows, Holmes. Bonds, stocks, all of them. An "asset" which has zero effect on cashflows in or out of the imperial federal government therefore has a value of zero

Read a book on asset valuation and get back to me

I have. Which is why your future social security payments are an asset.

A financial asset is the value of future cash flows discounted back to the present. What is the value of your future social security payments? That's your asset. Do you understand that, "Holmes?" That's the asset that is held in trust for you at the Treasury. Then, all estimated future payments made to SS participants are pooled together in the trust, and those are the assets of the trust. These are liabilities of the government.

Now why don't you answer the question? Did you not understand it? Did you not read your book on valuation? I'll repeat it for you.

Tell me the difference between the two

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

What is the difference?

Legally, one is an obligation of the government and the other isn't. In fact, your future SS payments will be automatically reduced if future voters decide that they do not want to pay payroll taxes that are sufficient to cover them.

Yeah, that's true. I'm trying to show how cash flows move and the liabilities of the government. SS effectively mimics a defined contribution pension plan or an annuity backed by a pool of government securities. SS is constructed as if it were a pool of government bonds without actually buying and selling any securities.

It should be noted that the US government could also stop paying Treasury securities, i.e. default, like they could stop paying SS, or alter the terms of both. Of course, as I mentioned earlier in this thread, the responses to both would be dramatically different.

Actually I have no idea that the government has the ability to default since the bonds are denominated in our own currency. With all of the talk about the debt limit creating a 'default', I am not sure that Congress is Constitutionally allowed to default. My guess is that it would be a matter for the Supreme Court who would get a case from a holder of US debt. My guess is that the debt ceiling would be held unconstitutional, but that is a guess.

 

[Toddsterpatriot]

That surplus was SPENT.

The surplus was spent because ALL the money they receive is spent. Just like they do when they get funds from issuing Treasury securities. It doesn't matter if there is a surplus or not.

Perhaps this may surprise you, but it doesn't to anyone who has any idea what is going on - when the government gets money, it SPENDS it. This is what it does.

Well if they SPENT IT and didn't put a debt on the books -- how could they use the surplus to "make an investment" in the T.F?

Answer -- they never did. They left it to ANOTHER set of taxpayers to prop up SS deficits. So you got the first SS surplus dollar squandered --- and NOW the taxpayers have to fork over ANOTHER NEW DOLLAR to pay benefits while the SS fund is in deficit.. QUICK --- pull up that fancy calculator on your workstation and calculate the "return on investment" for THAT...

Well if they SPENT IT and didn't put a debt on the books

If they borrowed SS funds, that is a debt on the books.
Intragovernmental holdings. The difference between the debt and the debt held by the public.

EXACTLY -- the debt doesn't go onto the taxpayers until the SSA tries to cash those IOUs. THEN it's held by the public. So essentially what's in that big ole file cabinet that holds the SS T.Fund is a BUNCH OF DEBT.

With interest of course. Can't fool the Toddster -- can ya????

You ever see the "SS Trust Fund"?? GWBush went to visit it for a photo-op.. It's hysterical...

There it is. All those valuable $Trills of "negotiable securities" guarded by a combo lock that could be taken down in about 20 seconds. And Bush has checked every entry and assured you that it's really all there.

EXACTLY -- the debt doesn't go onto the taxpayers until the SSA tries to cash those IOUs.

When that happens, the intragovernmental debt will become debt held by the public.
Debt before, debt after.

So essentially what's in that big ole file cabinet that holds the SS T.Fund is a BUNCH OF DEBT.

Yes. Debt to the Treasury, asset to the Trust Fund.

With interest of course.

Yes, the government pays interest on their debt.

 

[Toddsterpatriot]

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself.

I apologize for yelling, but I can't seem to get this across in civil discussion.

THE POOL DOES NOT WRITE IOUs TO ITSELF!

The IOUs are from the federal government not from the pools. The assets in the trusts - the government IOUs - are held for you, for the participants. The are not held for the government. That's what a trust is.

What is the difference between the IOUs of the government and the bonds of the government? An IOU is a promise to pay. A bond is an IOU with a promise to pay. Both are unsecured promises by the federal government to pay you in the future. What is the economic difference?

It's all the Federal government, and the Federal government is loaning money to itself. There is no effect on either those receiving social security welfare checks or how much our children pay the government to write them. I still can't believe a fund manager doesn't grasp the significance of that

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
Privatization like most of us understand, would be accumulation of assets under SS totally for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com
View attachment 55055

The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

Holy bad math, Batman!!!
More like 5.24%, compounded annually.
Not counting dividends, of course.

 

[JoeTheEconomist]

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself.

I apologize for yelling, but I can't seem to get this across in civil discussion.

THE POOL DOES NOT WRITE IOUs TO ITSELF!

The IOUs are from the federal government not from the pools. The assets in the trusts - the government IOUs - are held for you, for the participants. The are not held for the government. That's what a trust is.

What is the difference between the IOUs of the government and the bonds of the government? An IOU is a promise to pay. A bond is an IOU with a promise to pay. Both are unsecured promises by the federal government to pay you in the future. What is the economic difference?

It's all the Federal government, and the Federal government is loaning money to itself. There is no effect on either those receiving social security welfare checks or how much our children pay the government to write them. I still can't believe a fund manager doesn't grasp the significance of that

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
Privatization like most of us understand, would be accumulation of assets under SS totally for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com
View attachment 55055

The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

Holy bad math, Batman!!!
More like 5.24%, compounded annually.
Not counting dividends, of course.

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets.

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself.

I apologize for yelling, but I can't seem to get this across in civil discussion.

THE POOL DOES NOT WRITE IOUs TO ITSELF!

The IOUs are from the federal government not from the pools. The assets in the trusts - the government IOUs - are held for you, for the participants. The are not held for the government. That's what a trust is.

What is the difference between the IOUs of the government and the bonds of the government? An IOU is a promise to pay. A bond is an IOU with a promise to pay. Both are unsecured promises by the federal government to pay you in the future. What is the economic difference?

It's all the Federal government, and the Federal government is loaning money to itself. There is no effect on either those receiving social security welfare checks or how much our children pay the government to write them. I still can't believe a fund manager doesn't grasp the significance of that

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
Privatization like most of us understand, would be accumulation of assets under SS totally for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com
View attachment 55055

The problem is that you would have had to pay higher income taxes to support the elderly - unless you were going to tell them to pound sand.

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets. So you are unlikely to get 6%.

I write a lot about the downfalls of privatization. Here is a piece that ran on TheHill.com if you are interested.

Bush’s plan would not have fixed Social Security

 

[kaz]

You're not loaning money to yourself. You keep repeating that mistake.

Tell me the difference between the two are

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

Tell me what the difference is?

You know nothing about finance if you actually can stand behind that a "trust fund" which effects cash flows to no one positively or negatively ex-ante is a financial asset

Assets are valued on risk adjusted expected cashflows, Holmes. Bonds, stocks, all of them. An "asset" which has zero effect on cashflows in or out of the imperial federal government therefore has a value of zero

Read a book on asset valuation and get back to me

I have. Which is why your future social security payments are an asset.

A financial asset is the value of future cash flows discounted back to the present. What is the value of your future social security payments? That's your asset. Do you understand that, "Holmes?" That's the asset that is held in trust for you at the Treasury. Then, all estimated future payments made to SS participants are pooled together in the trust, and those are the assets of the trust. These are liabilities of the government.

Now why don't you answer the question? Did you not understand it? Did you not read your book on valuation? I'll repeat it for you.

Tell me the difference between the two

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

What is the difference?

Legally, one is an obligation of the government and the other isn't. In fact, your future SS payments will be automatically reduced if future voters decide that they do not want to pay payroll taxes that are sufficient to cover them.

Yeah, that's true. I'm trying to show how cash flows move and the liabilities of the government. SS effectively mimics a defined contribution pension plan or an annuity backed by a pool of government securities. SS is constructed as if it were a pool of government bonds without actually buying and selling any securities.

It should be noted that the US government could also stop paying Treasury securities, i.e. default, like they could stop paying SS, or alter the terms of both. Of course, as I mentioned earlier in this thread, the responses to both would be dramatically different.

Actually I have no idea that the government has the ability to default since the bonds are denominated in our own currency. With all of the talk about the debt limit creating a 'default', I am not sure that Congress is Constitutionally allowed to default. My guess is that it would be a matter for the Supreme Court who would get a case from a holder of US debt. My guess is that the debt ceiling would be held unconstitutional, but that is a guess.

that whole "default" thing was bogus anyway, there was always plenty of revenue to finance the debt. The debt ceiling only would have said we can't spend more than we are taking in so net debt doesn't go up. There was always plenty of revenue to make the debt payments

 

[Toddsterpatriot]

I apologize for yelling, but I can't seem to get this across in civil discussion.

THE POOL DOES NOT WRITE IOUs TO ITSELF!

The IOUs are from the federal government not from the pools. The assets in the trusts - the government IOUs - are held for you, for the participants. The are not held for the government. That's what a trust is.

What is the difference between the IOUs of the government and the bonds of the government? An IOU is a promise to pay. A bond is an IOU with a promise to pay. Both are unsecured promises by the federal government to pay you in the future. What is the economic difference?

It's all the Federal government, and the Federal government is loaning money to itself. There is no effect on either those receiving social security welfare checks or how much our children pay the government to write them. I still can't believe a fund manager doesn't grasp the significance of that

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
Privatization like most of us understand, would be accumulation of assets under SS totally for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com
View attachment 55055

The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

Holy bad math, Batman!!!
More like 5.24%, compounded annually.
Not counting dividends, of course.

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets.

Actually, other "pooled capital of retirement savings" typically involves actual money, not IOUs the pool wrote to itself.

I apologize for yelling, but I can't seem to get this across in civil discussion.

THE POOL DOES NOT WRITE IOUs TO ITSELF!

The IOUs are from the federal government not from the pools. The assets in the trusts - the government IOUs - are held for you, for the participants. The are not held for the government. That's what a trust is.

What is the difference between the IOUs of the government and the bonds of the government? An IOU is a promise to pay. A bond is an IOU with a promise to pay. Both are unsecured promises by the federal government to pay you in the future. What is the economic difference?

It's all the Federal government, and the Federal government is loaning money to itself. There is no effect on either those receiving social security welfare checks or how much our children pay the government to write them. I still can't believe a fund manager doesn't grasp the significance of that

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
Privatization like most of us understand, would be accumulation of assets under SS totally for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com
View attachment 55055

The problem is that you would have had to pay higher income taxes to support the elderly - unless you were going to tell them to pound sand.

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets. So you are unlikely to get 6%.

I write a lot about the downfalls of privatization. Here is a piece that ran on TheHill.com if you are interested.

Bush’s plan would not have fixed Social Security

That means that statistically you are buying tops and not buying bottoms -

Why would we be buying tops, not bottoms?

 

[JoeTheEconomist]

It's all the Federal government, and the Federal government is loaning money to itself. There is no effect on either those receiving social security welfare checks or how much our children pay the government to write them. I still can't believe a fund manager doesn't grasp the significance of that

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
Privatization like most of us understand, would be accumulation of assets under SS totally for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com
View attachment 55055

The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

Holy bad math, Batman!!!
More like 5.24%, compounded annually.
Not counting dividends, of course.

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets.

I apologize for yelling, but I can't seem to get this across in civil discussion.

THE POOL DOES NOT WRITE IOUs TO ITSELF!

The IOUs are from the federal government not from the pools. The assets in the trusts - the government IOUs - are held for you, for the participants. The are not held for the government. That's what a trust is.

What is the difference between the IOUs of the government and the bonds of the government? An IOU is a promise to pay. A bond is an IOU with a promise to pay. Both are unsecured promises by the federal government to pay you in the future. What is the economic difference?

It's all the Federal government, and the Federal government is loaning money to itself. There is no effect on either those receiving social security welfare checks or how much our children pay the government to write them. I still can't believe a fund manager doesn't grasp the significance of that

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
Privatization like most of us understand, would be accumulation of assets under SS totally for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com
View attachment 55055

The problem is that you would have had to pay higher income taxes to support the elderly - unless you were going to tell them to pound sand.

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets. So you are unlikely to get 6%.

I write a lot about the downfalls of privatization. Here is a piece that ran on TheHill.com if you are interested.

Bush’s plan would not have fixed Social Security

That means that statistically you are buying tops and not buying bottoms -

Why would we be buying tops, not bottoms?

Because wages and markets are correlated.

"Proponents of personal accounts also ignore the fact that wages and market run together. This relationship means that worker’s highest earnings statistically buy the market peaks, while missing the buying opportunity at the market at the bottom. In 2009 when the market bottomed, the U-6 measure of unemployment registered more than 17 percent. U-6 did not break the 16 percent level until the market had doubled in value. Wages are weakest when workers should be buying the most."

In my case 1/3rd of my SS contributions occurred within a year of a market top.

 

[Toro]

The trust fund does not write IOUs to itself. The government writes an IOU to the trust then the trust owes you. You keep repeating that mistake.

The "real cash flows" are your FICA taxes and the SS payments you will receive in later life.

What is the difference between that and you investing in government bonds for your retirement?

Seriously, you don't understand the difference between me loaning money to someone else, and me loaning money to myself. You actually mean that? Seriously?

And as a finance guy, you actually, truly didn't grasp my point that whether or not there is a trust changes zero cash flows ex-ante to anyone, ANYONE, EX-ANTE

you want to look someone in the eye who knows that that means and say you don't get it? I withdraw my statement that I believe you. You are full of shit. And I mean that in the most disrespectful sort of way. In a way that most who say that to you don't. I know what I am talking about. that you don't grasp that your arguement changes zero cashflows is pathetic. If you do what you say, you should be shit canned on the spot.

Cash flows is wall street, Holmes. You don't know that? You aren't Wall Street, you are a janitor, you are a canard:

Toro: There doesn't have to be any money for something to be an asset, WTF are you talking about? Yeah, there does

You're not loaning money to yourself. You keep repeating that mistake.

Tell me the difference between the two are

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

Tell me what the difference is?

You know nothing about finance if you actually can stand behind that a "trust fund" which effects cash flows to no one positively or negatively ex-ante is a financial asset

Assets are valued on risk adjusted expected cashflows, Holmes. Bonds, stocks, all of them. An "asset" which has zero effect on cashflows in or out of the imperial federal government therefore has a value of zero

Read a book on asset valuation and get back to me

I have. Which is why your future social security payments are an asset.

A financial asset is the value of future cash flows discounted back to the present. What is the value of your future social security payments? That's your asset. Do you understand that, "Holmes?" That's the asset that is held in trust for you at the Treasury. Then, all estimated future payments made to SS participants are pooled together in the trust, and those are the assets of the trust. These are liabilities of the government.

Now why don't you answer the question? Did you not understand it? Did you not read your book on valuation? I'll repeat it for you.

Tell me the difference between the two

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

What is the difference?

Moving the goalposts.

I never argued that social security is not an asset, I said the trust fund isn't. The trust fund has zero to do with how much you get, that is set by congress based on politics. And it has zero to do with what your children pay, that is set by congress based on politics.

The trust fund, ex-ante, has zero affect on cash flows. That isn't an asset, and if you were a fund manager, you'd know that.

The trust fund records assets and liabilities as if it were a managed pool of capital. The trust funds unto themselves are neither assets nor liabilities. They are merely conduits through which FICA taxes and SS payments flow, and recorders of debits and credits based upon assumptions similar to pension funds. That's all they.

And what makes it more confusing is that they are virtual. There are no actual securities or people buying and selling. So people don't understand it.

It's not a good system IMO. I'd change it.

 

[kaz]

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
Privatization like most of us understand, would be accumulation of assets under SS totally for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com
View attachment 55055

The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

Holy bad math, Batman!!!
More like 5.24%, compounded annually.
Not counting dividends, of course.

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets.

It's all the Federal government, and the Federal government is loaning money to itself. There is no effect on either those receiving social security welfare checks or how much our children pay the government to write them. I still can't believe a fund manager doesn't grasp the significance of that

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
Privatization like most of us understand, would be accumulation of assets under SS totally for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com
View attachment 55055

The problem is that you would have had to pay higher income taxes to support the elderly - unless you were going to tell them to pound sand.

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets. So you are unlikely to get 6%.

I write a lot about the downfalls of privatization. Here is a piece that ran on TheHill.com if you are interested.

Bush’s plan would not have fixed Social Security

That means that statistically you are buying tops and not buying bottoms -

Why would we be buying tops, not bottoms?

Because wages and markets are correlated.

"Proponents of personal accounts also ignore the fact that wages and market run together. This relationship means that worker’s highest earnings statistically buy the market peaks, while missing the buying opportunity at the market at the bottom. In 2009 when the market bottomed, the U-6 measure of unemployment registered more than 17 percent. U-6 did not break the 16 percent level until the market had doubled in value. Wages are weakest when workers should be buying the most."

In my case 1/3rd of my SS contributions occurred within a year of a market top.

How can you argue that workers should put their retirement burden on their children instead of funding it themselves?

We do give our kids a tip though, do the same to your children...

I realize our parents did it to us, but to me that doesn't justify it

 

[kaz]

Seriously, you don't understand the difference between me loaning money to someone else, and me loaning money to myself. You actually mean that? Seriously?

And as a finance guy, you actually, truly didn't grasp my point that whether or not there is a trust changes zero cash flows ex-ante to anyone, ANYONE, EX-ANTE

you want to look someone in the eye who knows that that means and say you don't get it? I withdraw my statement that I believe you. You are full of shit. And I mean that in the most disrespectful sort of way. In a way that most who say that to you don't. I know what I am talking about. that you don't grasp that your arguement changes zero cashflows is pathetic. If you do what you say, you should be shit canned on the spot.

Cash flows is wall street, Holmes. You don't know that? You aren't Wall Street, you are a janitor, you are a canard:

Toro: There doesn't have to be any money for something to be an asset, WTF are you talking about? Yeah, there does

You're not loaning money to yourself. You keep repeating that mistake.

Tell me the difference between the two are

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

Tell me what the difference is?

You know nothing about finance if you actually can stand behind that a "trust fund" which effects cash flows to no one positively or negatively ex-ante is a financial asset

Assets are valued on risk adjusted expected cashflows, Holmes. Bonds, stocks, all of them. An "asset" which has zero effect on cashflows in or out of the imperial federal government therefore has a value of zero

Read a book on asset valuation and get back to me

I have. Which is why your future social security payments are an asset.

A financial asset is the value of future cash flows discounted back to the present. What is the value of your future social security payments? That's your asset. Do you understand that, "Holmes?" That's the asset that is held in trust for you at the Treasury. Then, all estimated future payments made to SS participants are pooled together in the trust, and those are the assets of the trust. These are liabilities of the government.

Now why don't you answer the question? Did you not understand it? Did you not read your book on valuation? I'll repeat it for you.

Tell me the difference between the two

1. You give the government taxes and you are credited with future SS payments

2. You give the government money for a bond which you are credited for future interest and principle payments.

What is the difference?

Moving the goalposts.

I never argued that social security is not an asset, I said the trust fund isn't. The trust fund has zero to do with how much you get, that is set by congress based on politics. And it has zero to do with what your children pay, that is set by congress based on politics.

The trust fund, ex-ante, has zero affect on cash flows. That isn't an asset, and if you were a fund manager, you'd know that.

The trust fund records assets and liabilities as if it were a managed pool of capital. The trust funds unto themselves are neither assets nor liabilities. They are merely conduits through which FICA taxes and SS payments flow, and recorders of debits and credits based upon assumptions similar to pension funds. That's all they.

And what makes it more confusing is that they are virtual. There are no actual securities or people buying and selling. So people don't understand it.

It's not a good system IMO. I'd change it.

Yep, they are not assets, they are internal government bookkeeping and they were set up that way for politicians to lie to the American people about what they did, conned them into believing they were saving for retirement when they didn't, and they don't even recognize the funding of this fictitious trust as deficit spending.

Though the people are not as innocent as they claim in believing that lie. What they did was clear, it could have been understood before and it wasn't. Everyone liked the lie they were saving for their retirement, so they wanted to believe it. And it's both parties

 

[Toddsterpatriot]

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
Privatization like most of us understand, would be accumulation of assets under SS totally for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com
View attachment 55055

The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

Holy bad math, Batman!!!
More like 5.24%, compounded annually.
Not counting dividends, of course.

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets.

It's all the Federal government, and the Federal government is loaning money to itself. There is no effect on either those receiving social security welfare checks or how much our children pay the government to write them. I still can't believe a fund manager doesn't grasp the significance of that

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
Privatization like most of us understand, would be accumulation of assets under SS totally for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com
View attachment 55055

The problem is that you would have had to pay higher income taxes to support the elderly - unless you were going to tell them to pound sand.

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets. So you are unlikely to get 6%.

I write a lot about the downfalls of privatization. Here is a piece that ran on TheHill.com if you are interested.

Bush’s plan would not have fixed Social Security

That means that statistically you are buying tops and not buying bottoms -

Why would we be buying tops, not bottoms?

Because wages and markets are correlated.

"Proponents of personal accounts also ignore the fact that wages and market run together. This relationship means that worker’s highest earnings statistically buy the market peaks, while missing the buying opportunity at the market at the bottom. In 2009 when the market bottomed, the U-6 measure of unemployment registered more than 17 percent. U-6 did not break the 16 percent level until the market had doubled in value. Wages are weakest when workers should be buying the most."

In my case 1/3rd of my SS contributions occurred within a year of a market top.

Because wages and markets are correlated.

Peak to trough, how much do wages drop?
Peak to trough, how much does the market drop?

 

[JoeTheEconomist]

Government stole the money, they spent it, they can't pay us back so now they want to screw us over.

LBJ, the guy who had kennedy killed, stole the $$$$$$$$$$$ to fund the Viet Nam war, he never had any intention of any "pay back"

I am sure that you have heard this before, but Social Security at the time of LBJ was a pay as you go system. So there was virtually nothing to 'steal', certainly not enough to pay for Vietnam.

 

[JoeTheEconomist]

The trust fund records assets and liabilities as if it were a managed pool of capital. The trust funds unto themselves are neither assets nor liabilities. They are merely conduits through which FICA taxes and SS payments flow, and recorders of debits and credits based upon assumptions similar to pension funds. That's all they.

And what makes it more confusing is that they are virtual. There are no actual securities or people buying and selling. So people don't understand it.

It's not a good system IMO. I'd change it.

Change it to what?

 

[JoeTheEconomist]

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
Privatization like most of us understand, would be accumulation of assets under SS totally for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com
View attachment 55055

The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

Holy bad math, Batman!!!
More like 5.24%, compounded annually.
Not counting dividends, of course.

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets.

The Federal government is not loaning money to itself, at least through the trusts. That's your misconception. You are "loaning," i.e. being taxed, money through the trusts to the government. The government will then pay you back in SS payments through the trusts in the future. The Treasury owes the trusts, which owe you. The US government "owes itself" only in that it owes the trusts, which owes you - kaz specifically, and all the other participants.

You may not get back in SS payments owed to you, that's true. I think they're going to change SS at some point. But if SS were privatized as a defined contribution pension plan that only held Treasury securities, the economics would be no different.

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
Privatization like most of us understand, would be accumulation of assets under SS totally for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com
View attachment 55055

The problem is that you would have had to pay higher income taxes to support the elderly - unless you were going to tell them to pound sand.

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets. So you are unlikely to get 6%.

I write a lot about the downfalls of privatization. Here is a piece that ran on TheHill.com if you are interested.

Bush’s plan would not have fixed Social Security

That means that statistically you are buying tops and not buying bottoms -

Why would we be buying tops, not bottoms?

Because wages and markets are correlated.

"Proponents of personal accounts also ignore the fact that wages and market run together. This relationship means that worker’s highest earnings statistically buy the market peaks, while missing the buying opportunity at the market at the bottom. In 2009 when the market bottomed, the U-6 measure of unemployment registered more than 17 percent. U-6 did not break the 16 percent level until the market had doubled in value. Wages are weakest when workers should be buying the most."

In my case 1/3rd of my SS contributions occurred within a year of a market top.

Because wages and markets are correlated.

Peak to trough, how much do wages drop?
Peak to trough, how much does the market drop?

The quote is from my article. U-6 is the best measure of people who are unemployed or underemployed. It means that 1/5th of the population is not going to be buying the bottom sufficiently.

My wages are an example. Between bonuses and job changes, I made a killing in 1999 and 2006. That means I am buying market tops disproportionately. I don't have wider job figures. I can tell you that wages and jobs lag market bottoms, though.

 

[Toddsterpatriot]

The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

Holy bad math, Batman!!!
More like 5.24%, compounded annually.
Not counting dividends, of course.

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets.

Right...if "privatized" only meant self directed to Treasury securities. BUT that's not the plan.
Privatization like most of us understand, would be accumulation of assets under SS totally for the beneficiary.
Consider that since the Dow Jones Industrial Average (DJIA) first appeared on May 26, 1896, The starting point for the DJIA was 40.94, a far cry from the 17,910 average in November 6,2015.
An average annual growth rate of the DJIA of 376%!!!

www.businessnewsdaily.com/3342-dow-jones-industrial-average.html

And so for me from when I began paying in AS WELL AS MY EMPLOYER that matched...(People forget that and they don't seem to understand 13% of gross
pay being withheld.)
Based on my excel spreadsheet and my earnings from 1967 to when I took SS in 2008 using this calculator
Dow Jones Industrial Average Return Calculator - Don't Quit Your Day Job...

I would have accumulated over the 40 years $945,242.
Now in retirement I would have taken $500,000 and bought an annuity that would pay me not the $1,739 I get but $2,525.21 tax free.
With $200,000 set up health care expense fund.
Still have $245,000 to live on.
After I die, my Annuity is part of my estate as well as what funds remain of the $445,000.
Annuity Calculator - Bankrate.com
View attachment 55055

The problem is that you would have had to pay higher income taxes to support the elderly - unless you were going to tell them to pound sand.

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets. So you are unlikely to get 6%.

I write a lot about the downfalls of privatization. Here is a piece that ran on TheHill.com if you are interested.

Bush’s plan would not have fixed Social Security

That means that statistically you are buying tops and not buying bottoms -

Why would we be buying tops, not bottoms?

Because wages and markets are correlated.

"Proponents of personal accounts also ignore the fact that wages and market run together. This relationship means that worker’s highest earnings statistically buy the market peaks, while missing the buying opportunity at the market at the bottom. In 2009 when the market bottomed, the U-6 measure of unemployment registered more than 17 percent. U-6 did not break the 16 percent level until the market had doubled in value. Wages are weakest when workers should be buying the most."

In my case 1/3rd of my SS contributions occurred within a year of a market top.

Because wages and markets are correlated.

Peak to trough, how much do wages drop?
Peak to trough, how much does the market drop?

The quote is from my article. U-6 is the best measure of people who are unemployed or underemployed. It means that 1/5th of the population is not going to be buying the bottom sufficiently.

My wages are an example. Between bonuses and job changes, I made a killing in 1999 and 2006. That means I am buying market tops disproportionately. I don't have wider job figures. I can tell you that wages and jobs lag market bottoms, though.

U-6 is the best measure of people who are unemployed or underemployed.

You said wages, not jobs.

I made a killing in 1999 and 2006. That means I am buying market tops disproportionately.

And if you buy every year, you buy more at the bottom with the same dollars.

 

[JoeTheEconomist]

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets.
The problem is that you would have had to pay higher income taxes to support the elderly - unless you were going to tell them to pound sand.

The real returns of the S&P are about 6-7% real (tax-exempt, dividends reinvested). That is not a good indicator for this application because wages and markets are correlated. That means that statistically you are buying tops and not buying bottoms - this is one reason that 401Ks underperform the markets. So you are unlikely to get 6%.

I write a lot about the downfalls of privatization. Here is a piece that ran on TheHill.com if you are interested.

Bush’s plan would not have fixed Social Security

That means that statistically you are buying tops and not buying bottoms -

Why would we be buying tops, not bottoms?

Because wages and markets are correlated.

"Proponents of personal accounts also ignore the fact that wages and market run together. This relationship means that worker’s highest earnings statistically buy the market peaks, while missing the buying opportunity at the market at the bottom. In 2009 when the market bottomed, the U-6 measure of unemployment registered more than 17 percent. U-6 did not break the 16 percent level until the market had doubled in value. Wages are weakest when workers should be buying the most."

In my case 1/3rd of my SS contributions occurred within a year of a market top.

Because wages and markets are correlated.

Peak to trough, how much do wages drop?
Peak to trough, how much does the market drop?

The quote is from my article. U-6 is the best measure of people who are unemployed or underemployed. It means that 1/5th of the population is not going to be buying the bottom sufficiently.

My wages are an example. Between bonuses and job changes, I made a killing in 1999 and 2006. That means I am buying market tops disproportionately. I don't have wider job figures. I can tell you that wages and jobs lag market bottoms, though.

U-6 is the best measure of people who are unemployed or underemployed.

You said wages, not jobs.

I made a killing in 1999 and 2006. That means I am buying market tops disproportionately.

And if you buy every year, you buy more at the bottom with the same dollars.

When you lose your job, your wages go to zero. It isn't the same dollars as I am trying to point out. Wages and markets rise together. So your highest paid years will coincide with market tops statistically. I received job offers in 1999 that included a massive raise, and a bonus in 2006 and 2007.

 

[flacaltenn]

That surplus was SPENT.

The surplus was spent because ALL the money they receive is spent. Just like they do when they get funds from issuing Treasury securities. It doesn't matter if there is a surplus or not.

Perhaps this may surprise you, but it doesn't to anyone who has any idea what is going on - when the government gets money, it SPENDS it. This is what it does.

Well if they SPENT IT and didn't put a debt on the books -- how could they use the surplus to "make an investment" in the T.F?

Answer -- they never did. They left it to ANOTHER set of taxpayers to prop up SS deficits. So you got the first SS surplus dollar squandered --- and NOW the taxpayers have to fork over ANOTHER NEW DOLLAR to pay benefits while the SS fund is in deficit.. QUICK --- pull up that fancy calculator on your workstation and calculate the "return on investment" for THAT... ,,,, from the perspective of the working taxpayer..

The SS fund is not in deficit. SS is in surplus.

It's income vs payments has been in deficit since 2010.. The happy fairy tale that "monies" in the T.F. are keeping it solvent CANNOT be true.. Because the government is forced to issue NEW DEBT today to cover those deficits.

By any rational (not Grimm, nor Hans Christian Anderson, nor Sesame Street) definition -- that debt issuance means the PROGRAM as a whole is in deficit mode about 12 years ahead of "projections".

 

[kaz]

The trust fund records assets and liabilities as if it were a managed pool of capital. The trust funds unto themselves are neither assets nor liabilities. They are merely conduits through which FICA taxes and SS payments flow, and recorders of debits and credits based upon assumptions similar to pension funds. That's all they.

And what makes it more confusing is that they are virtual. There are no actual securities or people buying and selling. So people don't understand it.

It's not a good system IMO. I'd change it.

Change it to what?

What if we change it to we pay our own bills rather than screwing our children by making them pay for our retirement? Isn't that part of being a man? Paying your own bills?

 

[flacaltenn]

That surplus was SPENT.

The surplus was spent because ALL the money they receive is spent. Just like they do when they get funds from issuing Treasury securities. It doesn't matter if there is a surplus or not.

Perhaps this may surprise you, but it doesn't to anyone who has any idea what is going on - when the government gets money, it SPENDS it. This is what it does.

Well if they SPENT IT and didn't put a debt on the books -- how could they use the surplus to "make an investment" in the T.F?

Answer -- they never did. They left it to ANOTHER set of taxpayers to prop up SS deficits. So you got the first SS surplus dollar squandered --- and NOW the taxpayers have to fork over ANOTHER NEW DOLLAR to pay benefits while the SS fund is in deficit.. QUICK --- pull up that fancy calculator on your workstation and calculate the "return on investment" for THAT... ,,,, from the perspective of the working taxpayer..

What the general fund 'squanders' the payroll tax revenue on is of no concern to SS. The government still has to pay it back, and pay interest on it. It was LOANED to the general fund, not given.

Do you understand the concept of a LOAN?

Sure do.. Do you understand that a debt cannot be booked to the Treasury for the same money that is spent elsewhere? That debt was never recorded. There was an (intradepartmental transfer note) placed in the T.F.

All that note is --- is a promise to issue DEBT in the future to cover the theft.. Why do you think Harry Reid called it embezzlement? Nothing of value was given to the working poor that were overcharged for SS for 35 years??

It's simple NYC '
Step 1 --- the taxpayers LOANED the government $1 for the future benefit of Soc Sec.

Step 2 -- the money was spent on stuff that had NO BENEFIT to the SS program. It was NOT used to defer future costs in any way. That's the embezzlement that Harry Reid referred to ..

Step 3 -- An IOU was placed in the ledger that exists in the FILE CABINET that I showed you last night. And the treasury never showed the IOU as a Debt on the US budget for that year. In fact, they used the stolen money to brag about "how the Clinton/Gringrich budget was balanced" and shit like that. WITH the stolen money hiding all their new spending..

Step 4 -- When SS income is no longer sufficient to pay benefits the SSA calls in some old IOUs and the Treasury credits their payment account for the money. HOWEVER -- in order to do that. The Treasury issues NEW DEBT and books it on the unified budget --- thus giving the burden to the TAXPAYERS to pay YET AGAIN for the same dollar stolen.

No "investment".. Fictious interest does not matter because whether it's there or not -- the Treasury is obligated to raise NEW cash to cover SS shortfalls. At least until Congress gets an angry mob or changes the rules.

Also why SS has been insolvent since 2010. Because if the Treasury is obligated to cover the yearly shortfalls by issuing NEW debt --- the whole fictitious T.F. accounting is totally irrelevant to what happens. It's the fairy tale designed to cover the crime..

 

[Toddsterpatriot]

That means that statistically you are buying tops and not buying bottoms -

Why would we be buying tops, not bottoms?

Because wages and markets are correlated.

"Proponents of personal accounts also ignore the fact that wages and market run together. This relationship means that worker’s highest earnings statistically buy the market peaks, while missing the buying opportunity at the market at the bottom. In 2009 when the market bottomed, the U-6 measure of unemployment registered more than 17 percent. U-6 did not break the 16 percent level until the market had doubled in value. Wages are weakest when workers should be buying the most."

In my case 1/3rd of my SS contributions occurred within a year of a market top.

Because wages and markets are correlated.

Peak to trough, how much do wages drop?
Peak to trough, how much does the market drop?

The quote is from my article. U-6 is the best measure of people who are unemployed or underemployed. It means that 1/5th of the population is not going to be buying the bottom sufficiently.

My wages are an example. Between bonuses and job changes, I made a killing in 1999 and 2006. That means I am buying market tops disproportionately. I don't have wider job figures. I can tell you that wages and jobs lag market bottoms, though.

U-6 is the best measure of people who are unemployed or underemployed.

You said wages, not jobs.

I made a killing in 1999 and 2006. That means I am buying market tops disproportionately.

And if you buy every year, you buy more at the bottom with the same dollars.

When you lose your job, your wages go to zero. It isn't the same dollars as I am trying to point out. Wages and markets rise together. So your highest paid years will coincide with market tops statistically. I received job offers in 1999 that included a massive raise, and a bonus in 2006 and 2007.

When you lose your job, your wages go to zero.

Okay, so employment goes from 95% to 91%.
What buys more, $91 invested at the bottom or $95 invested at the top?

So your highest paid years will coincide with market tops statistically.

So you won't be investing in the current, low-yielding Social Security system when you're unemployed.
Good to know.