Posted on 03/14/2004 5:05:12 AM PST by ReleaseTheHounds
Edited on 07/12/2004 3:41:27 PM PDT by Jim Robinson. [history]
The chairman of the Federal Reserve ruffled political feathers when he stated the obvious: The government can't pay all the benefits it has promised under Social Security.
In coming weeks, the Social Security Board of Trustees will release an annual report echoing Mr. Greenspan's warning. This is old news: For years, the trustees' report has warned looming Social Security deficits must be addressed.
(Excerpt) Read more at washingtontimes.com ...
Exactly why what our society does as a whole is so important to us as individuals, those who say things like I'm personally against abortion but don't want to impose my beliefs on others, are the biggest and most dangerous morons of all.
Bush formed his bi-partisan Social Security Commission (remember Senator Moynihan? He was one of the Co-Chairmen?) that began the work of looking at the problem, conducting public forums, etc. All at great political risk because everyone know this issue remains the "third rail." 9-11 came along and all attention turned to the war on terror.
And that "Social Security Agency" you refer to isn't "The Clinton Administration's Social Seucrity Agency." There never was a lockbox -- it was always a Ponzi-scheme. President Bush is the first president since Reagan willing to talk about this and put steps in place to do something about it. Just look John Kerry's reaction to Greenspan's remarks: "he would never consider any reductions in social security benefits." Kneejerk liberal reaction learned in the Clinton Administration.
Workers would invest in bonds and stocks and accrue a significant nest egg throughout their working lives, which could be drawn upon at retirement. In addition to giving workers the chance to accrue savings, this reform would prefund future benefits, making Social Security sustainable over the long run. Instead of relying on taxes from future workers to pay benefits, retirees would draw upon assets built up over decades. That's a bunch of nonsense caused by the money illusion. Having a bunch of "money" does no good if the generation producing the goods and services is not large enough to produce what they and their children need, plus enough to supply what retirees want to buy with "money." This would become apparent when people tried to "draw down their nest egg" at retirement. How do you draw down a nest egg? By selling it. If there are more people trying to do that than there are people saving for their own retirement (those are the people who are available to buy these financial assets) you end up with the same problem we have now. It's just that instead of the government defaulting on its promises, you experience the 'default' as plummeting stock, bond, and housing prices caused by too many people trying to sell at once into a market that is thin on buyers. The "nest eggs" decline in value by the same amount that the government would have 'defaulted' on. The people who say, "Let's not forget that 28% of the generation that should be paying into the system now was aborted by women" have the best handle on what will cause this default. That's not just an abortion rant; it goes to the heart of the problem, which is the declining ratio of workers to retirees. No retirement program of any kind can work if the ratio of workers to retirees gets too low. The working generation has to feed themselves and the nation's children. Whatever resources the working generation has to support dependents have to be apportioned among young dependents and old dependents. For the old to use governmental force to take more for themselves at the expense of children is just plain wrong. |
Sarcasm
So, Nick, the solution is always going to be: pull more suckers into the Ponzi Scheme. Without that there is no hope! Talk about a bunch of NONSENSE! Why are you addressing that to me? I said no such thing.
Nor did I say anything about a burden on Gen-X.
I didn't say that, either. I don't think anyone sane believes that's going to happen. That's just accountants saying what would have to happen if benefits were not reduced. Greenspan was guilty here of speaking Ugly Truth to politicians: it ain't gonna happen. Benefits will be reduced.
That is not a new finding. I've known that this was going to happen to me for 30 years. Alas, there is a sufficiently large number of economic illiterates running around that a voting majority has continued to believe the "trust fund" nonsense for all my life. It would probably happen to you too, except that those awful Boomers will illustrate the problem very clearly, by having to commit suicide in large numbers in order to prevent something even worse.
You didn't understand a word I said, did you? Did you even read it? Here's what I think happened: I think you read about 5 words, jumped to the conclusion that I am some big fan of Social Security, and proceeded to type your standard-issue rant about Social Security. Now that you have that off your chest, please go back and read what I actually said. |
I don't see a mass liquidation of assets when the boomers retire. People aren't going to automatically downsize their homes and move away from family and friends in mass.
I don't see stocks and bonds plummeting from senioritis either. From what I've read, most retires will rely on SS and some additional funds such as a pension or maybe a 401K From what I've read, contributions to 401K type plans are nothing to retire on..
Those who take the time to raise their kids to be part of the solution, rather than part of the problem, to the social chaos engineered by liberals also benefit society by teaching the next generation the value of work, do their own "menial" work such as lawn mowing, child care, etc. rather than diluting the fabric of our society by helping turn us into another third world nation.
One cannot claim that private retirement accounts are "the answer" because retirees will be able to draw on them for income (as this author describes), and then simultaneously claim that the amount of "drawing down" will be insignificant. That's trying to have it both ways.
The "drawing down" does not affect prices only so long as there are younger people coming along who are saving for their own retirements at about the same rate as the retired are selling. Then we have wealth being put on the shelf at roughly the same rate that wealth is coming off the shelf. So far as the economy is concerned, that's a wash.
The demographic problem we have is that for several years, more wealth will be coming off the shelf than going on. That is an increase in the supply of assets for sale, with no corresponding increase in the demand for retirement assets. That most certainly will affect prices. It will drive them down.
This issue is not about "money," or "funds," or any of that. It's about the human condition, and the fact that for almost all of history, the elderly were supported by a generation that was significantly larger than the generation turning old. "Zero population growth" means that doesn't happen anymore. There is nothing one can do with "money" or "assets" to fix that. Without significant growth from one generation to the next, working adults cannot produce enough actual stuff to meet the needs of both the young and the old. One or the other is going to suffer. I think it's clear what the correct moral choice is here. When my time comes, I will make it. I refuse to be part of a "conspiracy of the old" to beggar children. It's not my call, but I hope that the Lord sends the people who do that straight to Hell, when they do finally die.
I've read the opposite.. With projected longer life spans, seniors won't be able to stay out of the job market or the stock market unless they manage to hit critical mass.
That is a solution we will have to use to some extent. "Work 'til you drop" is a realistic answer to what's wrong. The whole notion of "retirement" is actually a rather new idea among human beings. So long as people are producing at least as much as they consume, they are not a drag. At least, not on the economy. I'm not sure what the social effects are of having a generation that does not "get out of the way." We've never had that issue before. In George Washington's day, the average life expectancy was 45. Imagine if Corporate America was run by guys like Strom Thurmond and Robert Byrd. I don't think it would be good.
This would become apparent when people tried to "draw down their nest egg" at retirement. How do you draw down a nest egg? By selling it. If there are more people trying to do that than there are people saving for their own retirement (those are the people who are available to buy these financial assets) you end up with the same problem we have now. It's just that instead of the government defaulting on its promises, you experience the 'default' as plummeting stock, bond, and housing prices caused by too many people trying to sell at once into a market that is thin on buyers. The "nest eggs" decline in value by the same amount that the government would have 'defaulted' on.
The people who say, "Let's not forget that 28% of the generation that should be paying into the system now was aborted by women" have the best handle on what will cause this default. That's not just an abortion rant; it goes to the heart of the problem, which is the declining ratio of workers to retirees.
This is exactly right. Moreover, this is one of the reasons why so-called "gay marriage" is wrong. Society gives certain privileges (automatic inheritance, inclusion in health insurance, guarantee against forced court testimony, etc.) to married couples, precisely because they bear and raise the children that everyone, married or unmarried, will depend on when they are retired.
Unmarried people don't help perpetuate society as married people do, but at least they're not demanding that the privileges of marriage be extended to them.
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