Posted on 03/30/2011 9:48:53 PM PDT by blam
Bill Gross: Without A Gigantic Reform Of Entitlements, America Will Default
Joe Weisenthal
Mar. 30, 2011, 8:00 PM
PIMCO boss Bill Gross has been warning against Treasuries for awhile, and recently he abandoned them completely.
In his latest investment outlook, he warns that America will default, thanks to trillions in entitlement obligations:
...the only way out of the dilemma, absent very large entitlement cuts, is to default in one (or a combination) of four ways: 1) outright via contractual abrogation – surely unthinkable, 2) surreptitiously via accelerating and unexpectedly higher inflation – likely but not significant in its impact, 3) deceptively via a declining dollar – currently taking place right in front of our noses, and 4) stealthily via policy rates and Treasury yields far below historical levels – paying savers less on their money and hoping they won’t complain.
You can download the full report here (.pdf)
(Excerpt) Read more at businessinsider.com ...
I’m paying in. Been paying in, and my planning precludes the notion of SS being a viable resource if I get to retire. Choices. No smartphone. $15 for cable. Old cars. You know what, I’ll part with the money I’ve spent on SS and my company’s piece of it. And I’ll continue to give away half going forward with no expectation to ever see it.
Be nice though if I could keep it. I’d be saving nearly 50% of my income if I knew the SS was mine.
The US birthrate can’t sustain the pyramid scheme that is social security; welfare reform was passed because the highest birthrates were among people that, to put it mildly, weren’t paying into the bottom of the pyramid. As our birthrate declined, the borders had to be opened to let in more buyers at the bottom level; they were needed not just for the pyramid, but also as consumers (our unemployment rate clearly indicates they’re not needed as workers).
One simple way to increase SS revenue is to remove the cap on which people pay; I’m not sure what the current cap is, but people that earn $1 million only pay in as much as someone earning $105K.
I heard that!
“Disability like candy...”
Bingo! I guarantee there are probably thousands out there on disability for chronic back pain (or headaches or depression) getting ready to put in their spring gardens or go fishing, but they can’t hold a job.
“But we won’t. 95% of the people will not stand for seeing Social Security get reduced...and the other 95% of the people will not stand for major tax increases (and I mean major).”
There is a third option. Economic policies that allow the economy to grow again. More people employed = more tax revenue without raising taxes. As China and India are demonstrating now, and the US demonstrated from 1865 to 1990, a robust manufacturing economy will create prosperity and the strong middle class essential for a strong, free, representative government.
How to get the economy going. Very simple:
1) Less regulation
2) Higher tariffs on imported products
3) Tort reform
4) Exploit domestic petroleum resources to reduce foreign imports of energy.
5) A stock market that facilitates raising capital for long term equity investments in real tangible productive assets instead of the speculative computer driven casino we have today.
6) Tax policies that encourage investments of capital in US manufacturing.
7) Shift in business school emphasis from finance to operations.
8) End favorable tax treatment for financiers. I.e. private equity income taxed at 15% while public manufacturing companies taxed at 35%. This can be accomplished by lowering the tax rate on income derived from US manufacturing operations to 15%.
9) Make imports pay their real costs. in addition to higher tariffs (1980’s levels) levy a fee on every container brought into the country to pay for the cost of the Coast Guard, Customs, and Immigration.
10) Bring the military home from overseas adventures and bases. Let the rest of the world fight its own battles without our intervention and occupation. Put military on the southern border.
11) Fix the tax code with a flat tax for individuals (20%) and corporations 15%. End all exemptions, credits and deductions.
12) Eliminate most functions of the federal government - Departments of Education, Labor, Energy, Commerce, Agriculture, EPA should go tomorrow. Veterans Affairs should go back to Defense.
13) Privatize Amtrak, Post Office, Fannie Mae, Freddie Mac, Rural Electrification Agency, Army Corps of Engineers, FAA.
We knew when we were in college that “we were more likely to see a UFO than a Social Security check” in our lifetimes. That was FORTY years ago. Anyone who knew that and hasn’t prepared has only themselves to blame.
Do you plan to re-enslave segments of the population again?
“There is another way to separate from this morass, well at least for the better half of the country.”
You DO have a point, and it just may happen. I’m here in Texas, so of course we think about it.
My deal has always been, the federal government releases us from our portion of the national debt, in exchange for us giving back our share of the Social Security Trust Fund (LOL). We then take care of our own.
“We knew when we were in college that “we were more likely to see a UFO than a Social Security check” in our lifetimes.”
Maybe we went to college together...I remember that, I haven’t heard it in decades, but I do remember that.
Valid points...but next to hopeless given our courts and the Democrats - but still a valid approach.
There can be more than one simultaneous course.
I vote for 2 and 3 simultaneously, hoping the pressure relief will be adequate to reduce the debt by devaluation before the thing actually blows up.
My only recourse is to plan for devaluation/inflation. Finding a course ...... that is the problem
-——half of the geezers on this site are all for cutting spending-——
Us geezers don’t plan on having our SS cut. The revisions that will provide other means than pure SS for those younger will provide the necessary cuts.
You entrusted your retirement to the worst sort of people.
They stole it.
Look at the current budget situation.
Yes, you will still get the check. It might even be enough to buy you a loaf of bread.
Think about it this way: Obama is going to mint a new penny. It will have a picture of Franklin in the center with "100" in each corner. COLA? Forget about it.
here we go again.....
Ma’am, you’ve been ripped off for 36 years, and your husband for 45 years.
Everyone has - for varying amounts of time. The money you paid was spent. The money you want will have to be earned by someone else and taken from them. They may decide not to earn it afterall, because there are too many folks who want too much.
Don’t count on getting someone elses money just because your was given to someone else in the past.
“My husband would gladly opt out of the SS system and forfeit all he has put inas long as they stop taking the money from him each month out of his paycheck”
Your husband, if hes in his 40’s or early 50’s will not collect SS, despite having paid in. Unfortunately, he is unlikely to be able to quit paying. That’s my situation as well.
The government IS the problem as you stated - part of that problem is that the promises they made will not be kept.
“Us geezers don’t plan on having our SS cut. The revisions that will provide other means than pure SS for those younger will provide the necessary cuts.”
They won’t...not enough, and not nearly soon enough. But sorry for using geezers, that’s flaming and it’s wrong on my part. It’s not needed.
“Everyone has - for varying amounts of time. The money you paid was spent. The money you want will have to be earned by someone else and taken from them. They may decide not to earn it afterall, because there are too many folks who want too much.”
This statement is so true. When looking at the Unemployment demographics one will see that teens through 29 years of age carry the largest share of unemployment. If things don’t change they will not be paying for the retirements of the baby boomers but by no choice of their own.
We are quickly becoming subjects rather than citizens. How long before the subjects revolt against the plunder they face from the pirates(government)?
Bump.
“what is wrong with expecting to have SS fairly distributed to us????”
The core issue is that most people take out much more than they put in.
-——sorry for using geezers——
Sorry?
Geezer is an honoreritive signifying age and wisdom not available nor present in mere youngsters.
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