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Gettin Ugly

Bruce Krasting's picture




 

 

I got into a bit of an Internet tussle with Marketwatch 666. This was another of those posts from the defenders of Social Security, and like most of these articles, this one fell back on an old tired line. The author quoted Ronnie Reagan: (I wanted to barf)

 

Social Security can’t add to the deficit.

 

mw

 

So I dashed off a comment:

 

Social Security does not add to the deficit. Ronnie was right.

Social Security DOES add to the DEBT of the country.

Both statements are true. Which one is the one to focus on?

In 2013 the answer is that it is the debt that matters, not the deficit, and SS is adding to the debt.

 

The author, R.J Sigmund, comes right back with: (and I’m grabbing for the wastebasket again)

 

Bruce, the debt is not a problem....the world economy is suffering from a shortage of safe assets, and the only way to alleviate the shortfall is to increase the debt

 

Then he goes on to add:

 

you've conveniently omitted the fact that it also earned more than $117b in interest on the government bonds in the trust fund....

 

I love it when this happens; folks playing “gotcha”, not even understanding the facts. I come back with my standard response:

 

Careful where you go with that interest income line. Interest is a NON CASH ITEM. SS needs cash to make benefit payments. So SS has to hock its bonds with Treasury to come up with the CASH needed. Treasury, in turn, must borrow from the public to fund the SS shortfall.

 

I told them to go to SSA, and look at the bottom line results at SS for 2011:

 

tf

 

Every penny of the $45.379B cash shortfall had to be borrowed by the Treasury. Treasury did that by issuing more Debt to the Public. I added some number about what's in store for the future with cash deficits at SS:

 

2010 SS deficit = $47B,

2011 SS deficit =$48B,

2012 SS deficit = $60B,

2013- 2023 SS deficit = ~$1T

 

Anyway, I doubt I changed RJ's views on this too much. This is an emotive topic, and I suspect it is going to become more charged in the weeks to come. It’s very hard to have a debate with someone who starts with, “debt is not a problem”. It’s even harder when the debate is ended with:

 

...so take your ranting back to zero hedge, where you might find some other chicken little types who'll buy into your theories...

 

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Thu, 01/10/2013 - 12:14 | 3140772 Sean7k
Sean7k's picture

Please point out the medicare hospital and employee doctors and nurses for me. All three are government checks- one comes to your mailbox and the other two go to the SERVICE PROVIDORS. SS goes to goods and service providors as well. 

They are government expenses, paid for originally through payroll, but now enhanced with interest and payments from the general fund. We were promised, by contract and fulfilled our end- having the government default breaks the contract and any obligation we have to fulfill it. 

Wed, 01/09/2013 - 17:27 | 3138309 goodrich4bk
goodrich4bk's picture

Bruce's "argument" misses the point.  Of course SS adds to the debt.  Until Americans pay more in taxes than their government spends, EVERY government expense adds to the debt.  The fact that a particular expense adds to the debt does not tell us whether we should cut that expense.

Here is Bruce's argument:

Careful where you go with that interest income line. Interest is a NON CASH ITEM. SS needs cash to make benefit payments. So SS has to hock its bonds with Treasury to come up with the CASH needed. Treasury, in turn, must borrow from the public to fund the SS shortfall.

SS does not "hock" its bonds, Bruce.  It REDEEMS them.  The bonds represent the money taken from my paycheck and yours every two weeks and LENT to the government.  It is EXACTLY the same as if you bought a T-bill; it is a LOAN to the government.  When your T-bill comes due, you don't "hock" the bill, you REDEEM it.

Now, if on the day your T-bill or the SS non-marketable bonds come due there is not enough revenue for the government to pay it, then the government borrows the necessary money.  Until the government decides to default on its monetary obligations, WTF does that have to do with the benefits now paid to SS recipients?


Thu, 01/10/2013 - 00:44 | 3139764 malek
malek's picture

 Now, if on the day your T-bill or the SS non-marketable bonds come due there is not enough revenue for the government to pay it, then the government borrows the necessary money.  Until the government decides to default on its monetary obligations [...]

Stupid me!
And I thought other forces could push the government to default, but as that can only happen as the government's own decision - move on, we have no problem Houston!!

Wed, 01/09/2013 - 23:35 | 3139596 disabledvet
disabledvet's picture

a true supporter of "giving back" wouldn't say "i will take no Social Security because i've been such a high wage earner therefore i will take yours" but instead say "we really need to make this thing work here's how."

Wed, 01/09/2013 - 17:25 | 3138295 linrom
linrom's picture

So Bruce how soon can we expect a one page memo telling us that unless we transfer $2 T out of Social Security Fund to "Interest to be Paid to Rich Mofos" account, tanks are going to roll in the streets?

Wed, 01/09/2013 - 17:18 | 3138230 steve from virginia
steve from virginia's picture

 

 

 

Good grief! Another tentative hatchet job on Social Social by Bruce Krasting. He's whining b/c the government is losing money on the program as if the US government is a business that needs to make (borrow) a profit.

 

Attention BK! The government is supposed to lose money. If the public sector/government doesn't lose, the private sector cannot gain.

 

Unlike the government, the private sector enterprises must show profits or die. How do these enterprises gain?

 

Either ...

 

 - some private sector businesses gain while others lose and go out of business. Eventually most of the business fail as losses are a) exponential and b) cumulative while gains are c) concentrated to a few 'winners'. Ultimately, these 'winners' lose because of key man failures and a failed macro environment -- see 'Great Depression'.

 

... or ...

 

 - There must be an increase in borrowing across the entire private sector with all businesses borrowing all the time (nobody retains earnings, nobody services or retires debts)

 

... or ...

 

 - a not-for-profit enterprise must borrow perpetually so that there are funds for private sector profits.  Since governments do not earn profits and do not expire (unlike individuals and firms) they are the economies' designated borrowers. The lenders are the private sector.

 

Arguments about the government's debts are silly. What matters is how much new debt is needed to retire/service existing 'old' debts and whether there is anything left to purchase tools/capital goods. Right now, the conditions are borderline, there is indeed too much debt, not enough spending, constraining Social does not effect the debt (some other agency will borrow in Social's place) but would cut spending and the amount of funds in the economy. 

 

Keep in mind, I hate consumption like Jeezus hates the Devil -- it destroys capital which is the centrality of our 'crisis' -- however, cutting off meager payments to retirees implies that: a) retirees will make no other claims elsewhere against the economy (c'mon Bruce) and b) families are willing or able to step in to take care of their parents. If Social is helping familes barely survive how will its absence do the same thing? I don't know what country you live in but most of Americans are broke.

 

Cutting off Social would have severe consequences:

 

 - People would work until they die ... which would impact youth unemployment: Social is a jobs brokerage.

 

 - Americans will not cut off their noses for abstractions ... 'debt', 'prudence', 'etc.' ... nobody will vote for this certainly not the kids who would kiss away any chance of getting a job.

 

 - Social is one of the few programs that puts cash in the hands of human beings rather than in giant banks' reserve accounts @ the Fed. Social is a) counter-cyclical, b) the funds remain within circulation (don't leave the economy, they cannot') and c) are an obligation the government has made to its own citizens! The Treasury and others on the 'inside' have bent over backwards to succor giant banks in Switzerland, China, Japan, Korea and elsewhere ... the government has an obligation to exercise itself for the benefit of its own citizens.

 

 - The US borrows and spends a trillion-and-a-half dollars every year to enrich defense contractors and to kill women and children overseas ... for fun ... 'nuff said!

 

 - If you wanna beat on a program ... try Medicare, a welfare program for the medical racket.

Wed, 01/09/2013 - 18:17 | 3138578 Bruce Krasting
Bruce Krasting's picture

I beat up on Medicare. The retirement funds for the military AND federal workers are on my short list.

So think of me an equal opportunity beater. I shoot in every which direction. No prisoners, sorry about that.

Thu, 01/10/2013 - 11:16 | 3140529 Vendetta
Vendetta's picture

What shape would Medicare be if it wasn't for the collusion from the 'healthcare insurance' and pharma behemoths, payoffs to politicians who pass legislation that reinforces this collusion and price fixing with such things as Obamacare and Medicare Part D?   I spoke with my cousin who is a doctor just last weekend about these very things, she isn't getting the money though she does okay slightly better than myself in another profession, it is total lack of ability for people to choose from clearly stated costs of any medical service ... all hidden behind co-pays and 'managed healthcare' plans (thanks reagan for nothing good).  Some refuse to see that it is the ultimate monopoly (with collusion) masquerading as some type of 'free market' which is bullshit.

Thu, 01/10/2013 - 01:43 | 3139872 steve from virginia
steve from virginia's picture

 

 

Bruce, the obligation of ANY government is to look to the welfare of its least citizens -- mental cases, unemployed, wounded veterans, elderly and children -- as it is they ... not the first citizens ... which determine the prosperity of the entire country.

 

This is 'Statesmanship 101'. Genghis Khan was well-known for his ruthlessness and brutality, so was Tamerlane. Are these to be the new model for 21st century America?

 

The emergent characteristic of market state is its institutionalized cruelty. Like all the other characteristics that have preceded it, cruelty is a fashion and nothing more. We fancy ourselves as 'hard-nosed' and 'independent frontiersmen' when we are at the slaves of giant corporations. These same corporations promote this cruelty fashion b/c its serves their marketing interests.

 

The bosses tell us that 'prosperity will result from the 'application of technology': the same bosses throw the children and elderly into the fire. This is what high-technology means, stealing pensions and cutting pitiful benefits to our parents so that they might disappear into convenient poverty. Supposedly, this hard-headed tough guy approach is not supposed to have any adverse consequences as if our citizens are simply objects to be shuffled from the closet to the trash can.

 

The establishment is a 'target rich environment' why not look toward the non-remunerative automobile industry? Driving a car does not earn money or pay for the car (except for a few cab drivers). What the autos cost, what the fuel costs, what the roads and infrastructure costs, the real estate, the advertizing, the industry itself ... all these things are and have been subsidized by massive amounts of debt and mispriced capital.

 

The country is $55+ trillion in the hole, this is not b/c of Social Security! The program has not run a deficit (current account) until recently. The debt is instead the matter of spending to support business enterprises that cannot pay their own way! If such enterprises could do so (they cannot) there would be no debts at all!

 

Yr not thinking through, just pulling up hate-filled demogogues' talking points that are a) cruel, b) immoral and c) incorrect.

 

 

Thu, 01/10/2013 - 13:47 | 3141174 Encroaching Darkness
Encroaching Darkness's picture

"Bruce, the obligation of ANY government is to look to the welfare of its least citizens -- mental cases, unemployed, wounded veterans, elderly and children -- as it is they ... not the first citizens ... which determine the prosperity of the entire country." followed by ....

"The debt is instead the matter of spending to support business enterprises that cannot pay their own way!"

And who did the spending, Steve? Martians? The Borg?

The government did the spending, Steve. The same government you expect to look to its' citizens welfare. It apparently thinks (if government can be said to think) that bailing out AIG, Goldman Sachs, JPMorgan Chase, Citigroup, and everyone else (*cough, CORZINE, *cough) who is TBTF is the way to look after its' citizens best. The presence of campaign contributions, revolving-door staffing between government and Wall Street is of course coincidental.

Hate-filled demogogues ARE government! Power-mad, corrupt, greedy, immoral, cruel and incorrect are in their job description! How can you call for goverment to do anything besides SHRINK as much as possible, given the events of the last century (since the establishment of the FED, income tax, direct election of Senators, and subsequent horrors)?

At least a much smaller government could do less damage, "for the children", "for the elderly", "for whatever reason we think you'll quit thinking and pay us more".

Wed, 01/09/2013 - 18:56 | 3138668 Getting Old Sucks
Getting Old Sucks's picture

Until you're one of them.

Adding that does everyone notice any PTB which BTW, I consider BK as one because he has a stage, argues for the demise of others for the greed of himself?  Are you a PTB BK?  Wealthy?  Do tell.

Adding again:  You certainly use the tactics of TPTB in divide and conquer.  Been to their school, have you?

Wed, 01/09/2013 - 19:21 | 3138799 CloseToTheEdge
CloseToTheEdge's picture

Been to their school, have you?


using zh as his personal playground, proves his motive 

confusing austirity as growth proves his ignornace

 


Wed, 01/09/2013 - 17:27 | 3138310 hooligan2009
hooligan2009's picture

you need an epiphany..perhaps this will help...the private sector creates the wealth, the government spends it on its buddies.

Wed, 01/09/2013 - 17:57 | 3138471 Chmee
Chmee's picture

The private sector is the government's buddy.  Just ask any bankster.

Wed, 01/09/2013 - 17:49 | 3138413 steve from virginia
steve from virginia's picture

 

 

 

@hooligan:

 

"the private sector creates the wealth, the government spends it on its buddies."

 

That remark is factually incorrect. It is the great myth of industrialization ... If the private sector could pay its own way it would have done so already!

 

There would be no debt at all -- the deployment of more and more productive machines would meet the machines' cost ... and all the other costs, besides!

 

Ipso Facto, Bitchez~!

 

The private sector creates wealth only when it does not borrow ... when enterprises are very small ... independent farmers and craftsmen, merchants and artisans.

 

Once high-cost capital must be a) dug out of the ground, and b) mispriced downward so that its waste is affordable ... there is need for borrowing and debt. What the private sector creates isn't wealth but debt ... and pollution. There is an added need to put debt-related costs onto others which is what Krasting is trying to do.

 

At scale private sector enterprises borrow themselves into existence, they borrow to remain. Without loans (constant subsidy) they die.  The government is the guardian of the banks and finance ... industrial cartels ... a manager of competition ... it exists to service giant private sector enterprises ... which are its true 'buddies'.

 

 

Wed, 01/09/2013 - 21:29 | 3138980 Sean7k
Sean7k's picture

Steve,

You really need to learn the distinction between private enterprise and cronycapitalism. Now, you just use whatever idea is convenient to make a point- regardless of how ridiculous.

Thu, 01/10/2013 - 00:53 | 3139785 steve from virginia
steve from virginia's picture

 

 

Sorry, your fundamental assumptions are false. There is no such thing as a 'virtuous' private enterprise ... other than the smallest iterations (which do not need to borrow capital). What this means is small/cooperative farming and horticulture endeavors, craft method artisan shops, the use of hand tools, local merchandising and small area trade.

 

All at-scale private (and public) enterprises require debt as the primary input. The debt allows mispriced capital to be wasted, the waste process is collateral for more debts in a 'virtuous' cycle.

 

We want what we want ... to get what we want we lie about them, pretend they are 'goods' rather than fails. The biggest lie is that our 'goods' are something other than waste- and waste-enablers.

 

One of these days you are going to wake up the reality will hit you like a thunderbolt ... your world will be upside-down. This awakening will probably occur after it's too late for you to do anything about it.

 

Personally, I don't care.

 

:)

Thu, 01/10/2013 - 13:33 | 3141124 Encroaching Darkness
Encroaching Darkness's picture

"Business is nothing more than a effort to gain the ends of war by other means."

You make exception for minor enterprises, such as artisans, hand tools, etc.

Suppose I am a really good small businessman. My products are sound, reasonably priced, backed by my word - and I grow. Small towns around hear about me, and some folks drive twenty miles to buy my goods. I make money.

At what point do I become a greedy, heartless bastard? When I take out my first small loan to expand, or accept my first non-local order to sell someone something they want to buy?

Thanks!

Thu, 01/10/2013 - 09:50 | 3140140 Sean7k
Sean7k's picture

Yea, Apple is borrowing hand over fist.

There is a difference between debt that is used to finance expansion of production and government debt to fund revenue shortfalls. 

You want to rail at capitalists? Get a better argument. It is the best means of producing wealth the world has ever seen. You want to rail about fascism in America? You're preaching to the choir.

Debt does not allow capital to be wasted, controlled interest rates and fiat currency that allows people to disregard the misallocation of resources and profit seeking coupled with guaranteed bailouts by the government causes waste of capital. 

If I was as off base as you, I wouldn't care either. How can the world make sense, when you see it through your eyes?

Wed, 01/09/2013 - 19:04 | 3138741 hooligan2009
hooligan2009's picture

steve,, i guess before fiat money was created..the "private sector" only grew with debt and not conquest..are you yanking my chain? democracies were set up to take taxes to pay for public works and welfare...i think you will find that the debt that keeps growing is simply a function of benefits given without the money to pay for them..either the benefits are too high..or they shouldnt have been paid at all..

Thu, 01/10/2013 - 01:13 | 3139826 steve from virginia
steve from virginia's picture

 

 

First of all, all money is 'fiat money', within that category there is debt-money and government issue (specie, 'Greenbacks', US Notes, demand notes, etc.). What matters is credit, by having credit money there is no real limit to the quantity of money that can be put to use ... enriching tycoons.

 

Second, conquest initially was the means to gain capital particularly early modern: 16th and 17th centuries. Spain conquered the West and stole thousands of tons of gold and silver, sending it to Spain. This theft caused probably the most destructive hyperinflationary episode in European history.

 

The British stole some of the Spanish gold ... which in the end financed the industrial revolution.

 

Democracies are irrelevant to credit economics: Bismarck's Reich was an absolute monarchy. Credit -- not taxes -- funds government endeavors, otherwise no country could afford to go to war.

 

Business is nothing more than a effort to gain the ends of war by other means.

 

Chris Colon could only borrow a fraction of the funds he needed to sail to the West Indies from Genoese bankers. He had to borrow the balance from the King and Queen of Spain (and surrender a large concession to obtain the funds). The king could borrow where Colon could not.

 

Colon knew there was land to the west, the Greeks knew 2,000 years earlier. It is likely the Chinese and Polynesian navigators also knew centures before the dimwitted Europeans.

 

Benefits arguments are a smokescreen b/c the claims on benefits have been modest to date. It is the 'Baby Boomers' demographic bulge that has raised the (false) alarms.

 

The US private/public has borrowed $55 trillion, this hasn't been for transfer payments but to subsidize business, mainly the non-remunerative auto industry and its dependencies in real estate, construction, insurance, finance and fuel supply. Today's government borrowing services (immense) private sector debts. Take away government borrowing and there are no funds for debt service and the private sector collapses.

 

This is exactly what is underway in Europe right now! It's a vicious cycle: the countries cannot borrow b/c they are insolvent, they are insolvent b/c they cannot borrow. What is taking the bullet? The auto industry ...

 

 

Thu, 01/10/2013 - 09:52 | 3140157 Sean7k
Sean7k's picture

First of all, specie is not fiat money. There is zero counterparty risk, where the opposite is the hallmark of Fiat. Can you even get this part straight?

Spain stole the gold and silver? This was the way mankind functioned and has continued to function. We "stole" the USof A? Morality arguments about winners and losers? Oh, cry me a river. Your understanding of history is mediocre at best. Spain experienced inflation because they dumped huge amounts of a resource into its' economy. However, its' effects were muted the farther it traveled from Toledo. More important, most of the gold and silver went to China. The Chinese didn't need any of our goods, so the only way to pay for all those silks and spices was gold and silver. 

Of course Democracies are irrelevant, what did you expect? The Elites were going to give the people a tool to lever against the wealth of the Elites? HAHAHAHAHA. 

Any Austrian economist would tell you there will be private sector collapse, but it can be extended by expansion of the money supply until the break becomes catastophic. This has nothing to do with private debt in a free market form of capitalism. It has to do with government debt and central banking. INTERVENTION. 

Humans are not kind, ethical nor moral. You may find some exceptions, you may want to have hope, but better protect yourself from those nasty jagged rocks that you're going to be crushed on. 

Thu, 01/10/2013 - 01:04 | 3139811 dark pools of soros
dark pools of soros's picture

hey kids..  create a country that hates its neighbors, pledge to defend it, give it endless taxpayer bennie bucks to spend back to your defense corporations, sit back and profit forever

 

 

Wed, 01/09/2013 - 17:20 | 3138272 Texas Ginslinger
Texas Ginslinger's picture

If interest rates stayed at 0% for a very very long time, he would be partially correct.

To say debt is not a problem is laughable.

If inflation heads north, then debt becomes a huge problem.

Wed, 01/09/2013 - 17:15 | 3138228 WhiteNight123129
WhiteNight123129's picture

SCIENCE OBSERVES EMPIRICAL EVIDENCE.

And of course debt has never never been a problem in history might it be under fiat or non fiat regimes.

 

Wed, 01/09/2013 - 17:10 | 3138202 shovelhead
shovelhead's picture

How can there be a shortage of good assets if Gov Corp is buying crap paper at par?

EVERYTHING is a good asset then.

(Good for the banks, not so for the bag holding taxpayer)

Wed, 01/09/2013 - 17:22 | 3138283 WhiteNight123129
WhiteNight123129's picture

The problem is that there is no definition of safe assets. The problem is unlike Silver or Gold where the countries producing those (Mexico, Guinea) in the old says could be absolute crappy countries, no one would doubt of the safety of Gold or Silver. Which also circular and arbitrary, but unconnected to human decisions deficit, debt. Gold and Silver are not a legal creation. So unlike those, the USD is also the currency of the United States, appart from being the monetary standard of the world. So the demand for ~safe~ assets from the USD as a monetary standard of the world, requires the United States to be ever more into debt (Triffin dilemma). Right now this internal conflict is strindently high.

The guy fails to account for the fact that the safety of the USD as a world moentary standard is being eroded by the USD the currency of the United States.

This is called split personality disorder and it is very very freaky. The opposite pulling forces keep pulling in opposite direction until the rubber band snaps, unless, unless, China accepts to share the burden of world reserve currency.

Then at that point monetary tensions ease. But that implies that the guys in Washington make a U-turn with their blind ~Asian pivot~ and let China take care of its zone. Japan is sensing this threat though and is getting agressive.  At this point US is not moving 180 degrees.

If China were to accept to share reserve currency status with US, and US gets out of Asia, then we might have a solution.

 

Wed, 01/09/2013 - 16:50 | 3138100 csmith
csmith's picture

"...the world economy is suffering from a shortage of safe assets,..."

 

HaHaHaHaHa

 

Then lets WRITE DOWN THE CRAPPY ONES till their "safe"-ly valued and go from there!!!!

Wed, 01/09/2013 - 16:49 | 3138092 malek
malek's picture

Bingo, Bruce.

Let's see how many comfortably numb folks show up here... (paging goodrich4bk )

Wed, 01/09/2013 - 16:51 | 3138108 otto skorzeny
otto skorzeny's picture

Bruce is going batshit crazy-I think it's because his govt saviors let him sit around with no electricty after Sandy

Wed, 01/09/2013 - 16:35 | 3138016 NotApplicable
NotApplicable's picture

Gee, and all this time I've been here riding you for being too conventional...

Wed, 01/09/2013 - 16:49 | 3138095 patience...
patience...'s picture

I'm not a chicken , I'm a buzzard, who will
gladly pick his bones clean. Only a matter
of time.

Wed, 01/09/2013 - 16:25 | 3137943 Hedgetard55
Hedgetard55's picture

Lots of Zimbabwe "safe assets" were created as well. This dude is a dipshit.

Wed, 01/09/2013 - 18:17 | 3138577 masterinchancery
masterinchancery's picture

"Safe" if you have an AK-47. Actually, I am surprised you bothered to answer this nincompoop.

Wed, 01/09/2013 - 16:26 | 3137931 Hannibal
Hannibal's picture

Yeah, I think it's time to rid us of soc.sec/medicare/ebt etc.. Sorry Virginia, go eat shit!

Wed, 01/09/2013 - 16:24 | 3137930 sangell
sangell's picture

How about we offer people Medicare or Social Security at age 65/66 but not both. Your choice but if you choose Social Security at 65/66, no Medicare until age 70/71 or vice versa. Besides reducing expenditures by reducing the number of recipients we can also expect a certain number of bonus savings from those who kick the bucket as a result of choosing the 'wrong' option.

Wed, 01/09/2013 - 16:38 | 3138030 NotApplicable
NotApplicable's picture

How about "we" offer nothing, eliminating the criminals' stranglehold over us in one fell swoop?

I cannot understand how anyone can expect to the mafia to run charity operations efficiently. Then again, I can't fathom voting for them either...

Wed, 01/09/2013 - 16:18 | 3137898 skipjack
skipjack's picture

All you SS lemmings need to read up on Flemming vs. Nestor.

 

In this 1960 Supreme Court decision Nestor's denial of benefits was upheld even though he had contributed to the program for 19 years and was already receiving benefits. Under a 1954 law, Social Security benefits were denied to persons deported for, among other things, having been a member of the Communist party. Accordingly, Mr. Nestor's benefits were terminated. He appealed the termination arguing, among other claims, that promised Social Security benefits were a contract and that Congress could not renege on that contract. In its ruling, the Court rejected this argument and established the principle that entitlement to Social Security benefits is not contractual right.

 

Sheep live in order to get sheared.

Wed, 01/09/2013 - 18:19 | 3138591 masterinchancery
masterinchancery's picture

Yes, actually SS DOES contribute to the deficit, but not to the debt unless it is monetized.

Wed, 01/09/2013 - 16:44 | 3138066 Panafrican Funk...
Panafrican Funktron Robot's picture

Which is why the future obligations of Social Security are not counted against the debt, because... they really, for real can terminate the program at any time.  It's funny how many people, when hearing that, either ignore it, or parrot it vs. "doomsdayers", not realizing it's obvious implications.  There's a reason young people don't expect to ever get Social Security.  

Wed, 01/09/2013 - 18:18 | 3138584 SamAdams
SamAdams's picture

"can terminate the program at any time" - This is correct and is why the SS program is an unfunded liability.  Another fact - Social Security is just another Income Tax to be used for wars, oppression and as a tribute to your bankers and Masons.  That is it, there really isn't anything else to discuss, quite simple. 

The Gov't has not segragated those taxes collected for investment.  One more thing, if all money was invested, it would be impossible to earn a return since interest must be borrowed through debt.  It is amazing to me how people think that a large fund can earn interest without creating negative interest for an equally large fund.  Remember, one dollar is actually worth less than one dollar due to the FED charging interest. 

Wed, 01/09/2013 - 17:05 | 3138182 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

OK riddle me this:

We can borrow in unlimited sums to bail out gambling banksters, or to pay for Permanent War...but something for the actual PEOPLE like Soc.Sec must pay its way from the start? I mean why can't we get the banksters to pre-fund their next bailout? Or maybe tax the Chinese for protecting their Iraqi oilfields with the US Military? Maybe a surcharge on any contractor profiting from the F-35 (or whatever the f*ck number thy're working on)

But Oh No, we've got to squeeze the money out of Grandma's Soc.Sec check

Wed, 01/09/2013 - 20:47 | 3139089 three chord sloth
three chord sloth's picture

They bail out the banksters because the banksters create money. You, me, and grandma don't.

Remember the fiat regime formula for continuing solvency: new debt = new money = growth.

It's perpetual hamster wheel of borrowing, and once you've gotten on, you cannot get off. You, me, and grandma exist in this scheme for only one reason -- to pay interest on debt; whether we borrowed it ourselves, or they borrowed it in our name.

Thu, 01/10/2013 - 12:26 | 3140817 tip e. canoe
tip e. canoe's picture

yup, with one slight addition:  compounded interest on the debt.   of course, this is a bit difficult to manage when growth reaches its limit and starts to go back down the other side.

Wed, 01/09/2013 - 17:42 | 3138395 Ned Zeppelin
Ned Zeppelin's picture

Very good point, and the answer is that they do what they do because they give a shit about banksters and the Military Industrial Complex but don't care about Grandma at all. Simple. 

Wed, 01/09/2013 - 20:58 | 3139130 Crisismode
Crisismode's picture

Unless Gradma votes.

 

And votes the scum out of office.

 

 

Wed, 01/09/2013 - 16:43 | 3138058 Bullwinkle Moose
Bullwinkle Moose's picture

Some sheep live to be slaughtered.

Wed, 01/09/2013 - 16:36 | 3138024 NotApplicable
NotApplicable's picture

And all herds are assembled for slaughter. Just because it hasn't happened yet, doesn't mean it isn't going to.

Wed, 01/09/2013 - 16:20 | 3137893 ebworthen
ebworthen's picture

The problem is that the government robs Peter to pay Paul.

If they had taken my 30+ years of SS taxes and saved them instead of blowing it on foreign aid, illegal immigrants, dead-end military campaigns, bailing out Wall Street, Corporations, insurers, and endless pork they might be able to fulfill the promises they made to me over 30 years ago instead of pulling the rug out from under me and everyone else who paid, paid, paid with every paycheck.

No allegiance to the sordid sad intentionally mismanaged kleptoligarchy of the U.S.S.A.

Of course the debt and the deficit are a problem, but until they cut the endless war spending, bailouts, CONgressional raises/free Cadillac healthcare/cushy retirement, lobbying, and other handouts to themselves and any other gravy train they hop on to get elected they and the government can go to HELL.

Wed, 01/09/2013 - 16:48 | 3138088 marathonman
marathonman's picture

'If they had taken my 30+ years of SS taxes and saved them instead of blowing it on ...'   And what exactly would have been the point of taking your 30+ years of taxes if they couldn't blow it on the stupid stuff that politicians do to buy votes?  You think they really give a shit about you?  It's only what they can scam off your back that matters.  And they can scam a lot.  And there's plenty more where that came from!  SS, Medicare, welfare, Keynesian military workfare are all political stabilizers for bankers that are sucking the life blood from an economy.  It works until the economy collapses because the currency unit gets printed to infinity to keep the hustle going. 

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