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[quote=”DavidCMurray”]And if you go to
and search on “krugman stockman”
you’ll find a series of columns and blogs by the Nobelist which pretty thoroughly discredits Stockman’s work.
[/quote]And while you’re at it look up http://en.wikipedia.org/wiki/Ant%C3%B3nio_Egas_Moniz
Another Nobelist that the future wasn’t kind to.
Krugman seems to think that that debt isn’t a problem. But what he fails to see is that credit is! When the world’s confidence in the US gets hammered and the extenders of our credit (buyers of our bonds) lose their appetite for our paper our credit dries up.
The Chinese and the Middle East know full well where this is headed.
[quote=”sweikert925″][quote=”imxploring”]…where does the money (be it electronic in nature and magically transferred with the push of a button)come from that the federal reserve uses to purchase bonds and thus “inject” liquidity (M1) into the economy?[/quote]
Where does money come from? Well let me put it this way. I receive a shiny brand new credit card in the mail from JPMorganChase with a $10,000 credit limit. Holding that credit card in my hot little hand, I trot over to Best Buy and purchase a new LCD 46″ TV which costs $1,000.00. Now Best Buy has $1,000.000 – actual money – which they can use to restock their merchandise, pay their staff, etc., etc. So where did that $1,000.00 come from? Did I “print money” as the Fed is often accused of doing?
[quote=”imxploring”]…not open market treasury bills as you previously stated, but special issue securities that are issued at face value, redeemable at any time, and unique to the trust fund.[/quote]
I stand corrected, but I’m not sure why you consider this special class of bonds so drastically different than the ordinary treasury bonds offered to the general public.
[quote=”imxploring”]Yes my friend…. sounds a lot like an IOU! [/quote]
When I buy a house and take out a mortgage loan, that’s an IOU. When I buy something using a credit card, that’s an IOU. When you order raw materials for your manufacturing business for which you will later get a bill, that’s an IOU. If I work at my employer over the next 2 weeks, there is an implict IOU that they will deposit money in my checking account a week from Friday. When I write a check to pay my condo assessment, that’s an IOU. EVERY SINGLE TRANSACTION in our modern economies is based on implicit trust that the seller will be paid eventually, which means there are trillions of IOUs floating around out there. Why some people are so aghast that the Social Security system uses that aspect of economic activity is something I find extremely odd. The whole point of money is nothing but a formalized way of keep track of IOUs. Money itself has no intrinisic value.
[quote=”imxploring”]There will come a time in the near future when then promise is nothing more that what it sounds like, a promise.[/quote]
There won’t “come a time” because that time is now. All economic transactions are based on promises.[/quote]
There won’t “come a time” because that time is now. All economic transactions are based on promises.[/quote]
And the PROMISE that was made to all of us forced into Social Security is once again being broken isn’t it with the newest “change” (reduction in promised benefits) with the introduction of chained CPI. As if the current method of calculating CPI isn’t a joke!
Other promises that were broken.
Up to 85% of your social security can be taxed (hence a reduction of your net social security earnings in retirement) if you were a good steward of your life and took personal responsibility for your future and saved and invested.
An ever increasing full retirement age which further reduces your benefit if you take your social security at the age prior retirees did.
So what promise is next to be broken?
I’ll stand by my statements that social security is now a month to month general obligation of Uncle Sam and that he’s broke. You’ve pointed out that he has 3 trillion dollars coming in annually….. that sounds get if it weren’t for the fact that he has 100’s of BILLIONS more than what’s coming in going out! He’s running in the red big time. He also owes about $15 trillion in acknowledged public debt. Add to that the amounts he owes Social Security, Medicare, and other programs that are unfunded but promised and his real debt is closer to $100 TRILLION dollars.
When normal folks like us go to buy a house or apply for a credit card, as you’re pointed out, we make a promise to pay. However, before the bank issues that mortgage or puts your name on that credit card they look at your credit history and your ABILITY TO REPAY the loan. While Uncle Sam may have enjoyed a nice credit history all these years I really don’t think you can make an argument that he has the ability to repay all that is owed.
Much like a person that gets into financial trouble and is bouncing credit card balances from card to card… or using credit to live day to day and is kicking the can (repayment) down the road. Uncle Sam has mastered that act. But at some point it’s time to pay. Unfortunately I think the music has stopped that time is going to occur during our lifetime.
Be prepared!
[quote=”sweikert925″][quote=”pixframe”]
Pixframe replied:
Untrue. Corporations issue bonds but they don’t have the power of the printing press, as the Feds do, to create more money to purchase their bonds.[/quote]No, that’s not correct. If by “The Feds” you mean the Federal Reserve, they don’t simply whip up a batch of currency. The purchasers of Treasury bonds pay for them just exactly as they do if they purchase a corpoate bond.
No silly the Department of printing and engraving prints money…. not the Federal Reserve. But me puzzle this… where does the money (be it electronic in nature and magically transferred with the push of a button)come from that the federal reserve uses to purchase bonds and thus “inject” liquidity (M1) into the economy? And while we’re at it how has the money supply been increased (almost doubled) in the last 5 years? Where is the money coming from for QE1, Q2, and so on if dollars are not being “created”.
The FR does not create and market bonds. They control the money supply. Where were all these dollars sitting prior to being used to engage in quantitative easing? Sitting in a shoe box for an emergency perhaps?
I’ll reply to your statements about the Social Security Trust fund after your answer as we’ve already established your misunderstanding as to what is actually in it…. not open market treasury bills as you previously stated, but special issue securities that are issued at face value, redeemable at any time, and unique to the trust fund. Yes my friend…. sounds a lot like an IOU! 🙂
[quote=”sweikert925″][quote=”imxploring”]
People keep throwing out numbers telling us how long the trust fund is secure for and able to continue making it’s promised payments to those that paid in. But keep in mind that’s ONLY if Uncle Sam can make good on the IOUs the fund is full of.
[/quote]What you don’;t understand is that the trust fund is invested in treasury bills that are bought periodically, those bonds mature and are then redeemed and new ones issued. It is NOT like a collection of IOUs that someday have to be redeemed all at once. This has been going on for decades. There has never yet been a case where treasury bills issued by the federal treasury go unsold. Is it possible that someday that will happen? Well, yes, I suppose, but it is also true that someday I may win the Powerball jackpot.
Read more about how SS funds are administered here:
http://www.ssa.gov/oact/progdata/fundFAQ.html#n6
[/quote]You better take your time and re-read the Social Security Facts sheet you provided a link to. IT’S SCARY!
I guess the double speak term for an IOU is “Special-issue security”….. something ONLY available to the SS trust fund and created ONLY for use in the relationship between Uncle Sam and the trust fund. NOT an open market treasury bill as you stated. Seems, if you read the “facts” as they present them that they pretty much “redeem” these special-issue securities at will as needed…. in other words they just electronically “print” money in the form of a deposit placed in the bank account of the retiree getting his social security payment each month.
Once you get past the idea and accept that Uncle Sam and the Social Security administration are the same person…. the whole scheme becomes pretty easy to understand.
Anyone with any sense can see right through the dribble on that facts sheet. But more people are researching which flat screen TV to buy right now than reading up on how Social Security is funded.
[quote=”sweikert925″][quote=”imxploring”]
People keep throwing out numbers telling us how long the trust fund is secure for and able to continue making it’s promised payments to those that paid in. But keep in mind that’s ONLY if Uncle Sam can make good on the IOUs the fund is full of.
[/quote]What you don’;t understand is that the trust fund is invested in treasury bills that are bought periodically, those bonds mature and are then redeemed and new ones issued. It is NOT like a collection of IOUs that someday have to be redeemed all at once. This has been going on for decades. There has never yet been a case where treasury bills issued by the federal treasury go unsold. Is it possible that someday that will happen? Well, yes, I suppose, but it is also true that someday I may win the Powerball jackpot.
Read more about how SS funds are administered here:
http://www.ssa.gov/oact/progdata/fundFAQ.html#n6
[/quote]So Uncle Sam created a built in market for his borrowing at the same time he created the positive cash flow that Social Security was for the federal government for so many year. A treasury bill is nothing more than an IOU that pays interest when it comes due. And as those treasury bills that Uncle Sam “sold” our retirement plan (Social Security Trust fund) come due and must be repaid with interest on the loan…. who pays the interest and the principal back? THE SAME FOLKS THAT THE MONEY WAS BORROWED FROM…. YOU AND ME AND EVERYONE ELSE FORCED TO PARTICIPATE IN THE GREATEST PONZI SCHEME EVERY CREATED.
As for using the word NEVER. Be very careful. Most schemes like to use that term. It seems to placate people into believing a lie.
[quote=”imxploring”]Newsflash folks….. The Social Security Trust fund and Uncle Sam are one in the same. And since as we know Uncle Sam is broke so is the “Trust” fund!
People keep throwing out numbers telling us how long the trust fund is secure for and able to continue making it’s promised payments to those that paid in. But keep in mind that’s ONLY if Uncle Sam can make good on the IOUs the fund is full of. Currently, and for the foreseeable future according to the GOA, the fund is taking in less each month than it pays out. So the positive cash flow Uncle Sam enjoyed, borrowed, and spent all these years is now a monthly bill he gets and has to pay to the SSA to make it’s payments. So the next question is where is he getting it….. answer…. he borrows it!
Social security payments have become nothing more than a general monthly debt of Uncle Sam. For those that remember the battle over the debt ceiling a year and a half ago…. the President told us that if the ceiling wasn’t lifted that the government wouldn’t be able to make next month’s Social Security payments. That should clear things up. The Trust fund is nothing but a bunch of debt that was created by the same entity that we now hope pays us back what was borrowed and spent. Your 6.2% and your employers 6.2% was borrowed by the administrator of your retirement account without your knowledge or permission.
If this was your 401k plan and you put in your 8% and your employers matched it and sent it off to Fidelity Investments and they borrowed and spent it and now couldn’t come up with the cash, or wanted to change your payout, you’d be screaming bloodly murder. So how is what Uncle Sam pulled any different?
[/quote]
Just one other thought on the topic. Besides borrowing to now pay back what he (Uncle Sam) took from us and used for God knows what…. there’s two other options. The first is he just “creates” money as the Fed has been doing…. and devalues your currency. Or increases taxes to pay back the IOUs he stuffed the Social Security fund with. So think about it folks. Your wages and your employer contributions (6.2% from each) were sent to Uncle Sam. He used it. Gave your retirement account an IOU and now when he has to pay you back he raises your taxes to pay you back!
If that isn’t the grandest of Ponzi schemes I don’t know what is!!!!
Newsflash folks….. The Social Security Trust fund and Uncle Sam are one in the same. And since as we know Uncle Sam is broke so is the “Trust” fund!
People keep throwing out numbers telling us how long the trust fund is secure for and able to continue making it’s promised payments to those that paid in. But keep in mind that’s ONLY if Uncle Sam can make good on the IOUs the fund is full of. Currently, and for the foreseeable future according to the GOA, the fund is taking in less each month than it pays out. So the positive cash flow Uncle Sam enjoyed, borrowed, and spent all these years is now a monthly bill he gets and has to pay to the SSA to make it’s payments. So the next question is where is he getting it….. answer…. he borrows it!
Social security payments have become nothing more than a general monthly debt of Uncle Sam. For those that remember the battle over the debt ceiling a year and a half ago…. the President told us that if the ceiling wasn’t lifted that the government wouldn’t be able to make next month’s Social Security payments. That should clear things up. The Trust fund is nothing but a bunch of debt that was created by the same entity that we now hope pays us back what was borrowed and spent. Your 6.2% and your employers 6.2% was borrowed by the administrator of your retirement account without your knowledge or permission.
If this was your 401k plan and you put in your 8% and your employers matched it and sent it off to Fidelity Investments and they borrowed and spent it and now couldn’t come up with the cash, or wanted to change your payout, you’d be screaming bloodly murder. So how is what Uncle Sam pulled any different?
[quote=”DavidCMurray”]And I was right about your hyperbolizing. If you want to make a convincing case, you’re going to have to do much better.
[/quote]Perhaps a quick look at the problems GM crops (and the legal issues) have created for Soybean farmers vs Monsanto in the US will give our Tico coffee growers a good idea what happens when the big companies start jumping into your business. Best to stay as far away as possible.
Just another law intended for the few REAL offenders that will only scare the hell out of the sheep, and make so many run in fear to give up more information about themselves! After all it’s been the sheep keeping the system afloat all these years! The bulls always seem to have a way of avoiding the cost of any new tax scheme!! Fear is the mind killer! Thru fear and intimidation so many folks give up all kinds of information that the government has no right, reason, or legal mandate to demand. And now, as Scott has sited… in an article in the NYT that I read yesterday as well…. it seems you’re guilty and must prove otherwise. That’s not what the guys that put together the Constitution intended.
I have to agree that unless you place yourself on the radar, intentionally by filing… or unintentionally by drawing attention to yourself…. it’s best to leave the issue be! Make them work for it! Seems trying to chase someone that simply failed to file a form that even if they had would have resulted in no tax liability would be a MAJOR waste of time and resources! If they’re as efficient at finding you as they are with everything else they do… you’ll be fine!
Having dealt with a number of agencies in Costa Rica as most folks on this board have… can you imagine the IRS having much luck looking for you or your inactive S.A. holding a 14 year old Toyota with a bad muffler? The one you failed to disclose with your tax return?…. You’d have to be a REALLY big fish for them to spend the time and effort to go after! But they like to scare people… it’s the main tool they have in seeking compliance.
Providing any information to the IRS about NON income producing assets only places them on the radar, not only for the government but anyone else interested in what you have, where it is, and how THEY can get their hands on it!
So if I rented an apartment my whole life in the US… and therefore nothing to “sell”… then moved to CR I can’t vote in the US? I think you’re mistaken on this one… as a US citizen… and a TAXPAYER (not required to vote by the way!)… you have the right to vote! Not that it matters much… nor should you really care much if you were smart enough to escape! LOL
Start by stockpiling ammunition and canned tuna! Or in Scott’s case… canned salmon! 🙂
We’re going to need much bigger wallets when the world currency become canned goods and ammo… the ThunderDome is not really looking much like a fantasy anymore…. Damn that Mel Gibson… he’s always ahead of the curve…
BTW… Who bought a big ranch in Costa Rica… yep… that Mel Gibson guy! LOL
We might care what’s going on… but can we really change it? I think the path to ruin was set upon MANY years ago, and those choices are now coming home to roost! Nothing is going to stop it… not a business surge… green economy.. or the second coming of Jesus! 🙂
Wars and conflicts are just a distraction from the real root of the problem in the US.
No need to look at what politicians are doing today… they’re dead men walking… they’re just too stupid to know it! The current economic disaster is the the result of social engineering started 60 years ago with the new deal and every other social program that rewarded folks for not talking responsibility for themselves and the mouths they brought into the world!. It’s created a “lifestyle” and sense of entitlement that has expanded to the point of taking our system down!
Want to know why the middle class can’t pull us out of this mess this time? Because the lower class has expanded at a rate twice that of those paying the bills! And their demands have now overwhelmed our system. No I’m not talking about the middle class talking the one two punch into poverty…. nope… just the birth rate of those least able to support themselves or contribute to the tax base!
In New York… 51% of the children born have their birth paid for by Medicaid… and you can only guess where the expenses go from there. What does that tell you? Is this a sustainable business model? And please don’t say it all the more reason we need Obamacare… seems if you can’t afford to have children you should perhaps NOT until you’re able to afforded to! And if you can’t pay for the birth, I’m guessing the expenses of raising a child will be well out of reach as well! But have no fear… you have a rich Uncle… his name is Sam… or at least he WAS rich… seems that extended family have put a real drain on his finances! Heck… he’s always bailed us out before… but I think his accounts are empty and his ability to borrow is now in question!
The well published fact that 44%-47% of folks don’t pay ANY Federal tax has been around for a while. But did you know that a large percentage of folks that don’t pay ANY tax get a “refund” from Uncle Sam when they file their “tax return”…. yep… The Earned income credit… which is nothing more than another hand out which REWARDS those of limited income that choose to bring more mouths into the world and expand the lower class (no dig… but if I’m middle class and Warren Buffet is Upper Class then the term does seem correct)… that’s right… have another kid you can’t afford and your “refund” goes up!
Every society makes mistakes… look at what’s going on in China right now with the one child policy… besides all the evils we’ve seen since it started… children murdered, abortions forced on women, girls abandoned or “given” away for adoption, parents punished for breaking the rules even when they could afford a second child…
Suddenly the great thinkers in China are confronted with an aging population where there is only one child to support a pair of parents and grand parents… all this “engineering” coming home to make for a real mess of Chinese society in the next two decades!
We in the US and other “advanced and progressive” counties are now paying the price (and will crash eventually) as a result of the tolerance of a society that refuses to place personal responsibility on those that chose not to contribute yet feel entitled to take and expand society’s obligations.
Margaret Thatcher said it best…. and I’m para-phasing since the quote has taken many forms over the years but you’ll get the idea. It goes something like this… “The problem with socialism is that at some point you run out of other people’s money!”
In the US we’re paying the price now… besides trying to be the world’s voice of “freedom”… and police at the same time. We’ve created our own path to ruin with a lot of folks that think they have a RIGHT to everything… and they have insured those rights by bringing a bunch more folks into the world that were born into, and raised with this same belief! Much like a Ponzi scheme, this one has run it’s course… time to run…
Come on folks! We all know there are more big changes coming in this world. It’s a slow process with lots of bumps and bends. But it’s been accelerating in last two years and will continue to do so from my read on things. We’ve seen the changes taking place in the middle east in countries like Egypt where the change has been much quicker. Much like the perfect storm Scott and others saw coming. Those of us that were smart enough to see this mess and to make the moves required to safeguard our assets and loved ones will be fine… completely safe… never… but in a much better situation to ride out what will be a VERY difficult decade!
The whole FEAR thing is nothing new. The stock market has been running on it for years, to hell with supply and demand… P/E ratios be damned… fundamentals are out the window. All manipulation… we all know it. So why should the political process and governing be any different. That sound bite or press release that sways public opinion or attitude is the what rules the day today! No matter how incorrect or concocted it is!
Take the time to look beyond the spoon fed information the media puts out. See what’s going on. It’s pretty darn scary! Five years ago when I was spouting off about what I saw coming in this world to friends and family they thought I was nuts! Then the whole building a house and investing in properties in CR… I must have lost my mind… “that’s a third world banana republic… what happens when the army overthrows the government?”…but now… I can’t tell you how many people ask for my opinion about where things are headed and are interested in CR. And not because they saw some overpriced condo being sold on House Hunters International.
I’m no smarter than the average bear, just willing to read and form my own opinions and conclusions as most of the folks are in this forum. What we’re seeing out of the mouths of our “elected” (Scary in itself) officials is nothing more than more manipulation! And to those seeking political office… that’s a whole other rant!
I call it my Titanic analogy… referring to all those seeking to get elected to office in the states these days!
Imagine for a moment you’re on the Titanic… we’ve just struck the iceberg… the Captain and the engineers have gone below deck and have assessed the damage. The captain returns to the main deck with a stone cold face. The engines have stopped, the ship is starting to list… slowly sinking deeper into the water… there’s this foreboding feeling slowly overcoming you… and suddenly the captain, standing on the main deck in the crowd of passengers shouts out… “Who wants to be captain” as he jingles the keys to the ship over his head… quickly 5 or 6 people come forward raising their hands fighting through the crowd to grab at the keys and their chance be captain… I ask you… are these the folks that you’ll be confidently standing by as the ship sinks… or will you be headed for a lifeboat? The folks seeking office today in the US are no different then those grabbing at the keys… and that should scare the hell out of everyone~!
[quote=”waggoner41
The point that most Americans are missing is that Social Security, as the name implies, was enacted as a safety net not a savings program. As such I have to wonder why a person with a $100,000 retirement income feels that he is owed Social Security.[/quote]Spoken like someone that doesn’t have a pension or any real savings in a 401k… LOL
Since it was a system I was FORCED into I feel I am entitled…to the return I was promised! It’s not just an insurance (death/disability) program. It’s a base retirement program. It’s bad enough that TAXING it reduces my real return! If, as you seem to imply, that SS is another WELFARE program… just call it that! Uncle Sam is good a creating welfare programs that it likes to call something else, just look at the tax system… the earned income credit is nothing more then another welfare program. And since when do we PUNISH folks that work hard, save towards retirement, and provide for themselves? No wonder folks don’t want to work for a living!
Remember… someone making $100,000 in retirement has worked hard, saved, invested, and most likely maxed out Social Security contributions for a long time!
It is becoming class warfare, those that have it and those that don’t! No insult intended, just an opinion!
I’d have to agree with Scott… even if things were bad in the Costa Rican real estate market… running back to the US where things are even worse (and are going to sink even lower) would not be the move! Seems CR is weathering he storm pretty well. Sure things are not like they were a few years back… but was that reality anyway?
As for the far east…. good luck… that’s more of an adventure than I’m up for…
