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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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Wed, 01/09/2013 - 15:43 | 3137703 Stuntgirl
Stuntgirl's picture

It is EXACTLY like arguing religion.

These days I check first what non-negotiable premises the other person is using as a basis for everything else.

Because arguing with people who believe in invisible father figures and manna is tiring.

Wed, 01/09/2013 - 15:53 | 3137753 homersimpson
homersimpson's picture

"Because arguing with people who believe in invisible father figures and manna is tiring."

You can say the same about arguing with people who put their faith in cows, physical objects, and humans, too.

Wed, 01/09/2013 - 17:05 | 3138181 Stuntgirl
Stuntgirl's picture

And in general about arguing with people who "put their faith".

 

Wed, 01/09/2013 - 17:13 | 3138223 Panafrican Funk...
Panafrican Funktron Robot's picture

Here's the shitty thing though.  Humans have an essential need to trust.  It's a fucky thing in our wiring.  

Wed, 01/09/2013 - 16:01 | 3137811 MayIMommaDogFac...
MayIMommaDogFace2theBananaPatch's picture

...and let's not forgot the good 'ole, Almighty Dollar.

Wed, 01/09/2013 - 15:33 | 3137630 TerminalDebt
TerminalDebt's picture

The Gold is falling

Wed, 01/09/2013 - 15:32 | 3137622 Joe Davola
Joe Davola's picture

You go Bruce, only a dunce would think that $117b interest income materialized out of thin air.

Wed, 01/09/2013 - 15:38 | 3137621 Omen IV
Omen IV's picture

Bruce

first  - debt is not a problem with a reserve currency - they issue greebacks at will and it is not debt - issue more greebacks and stop the accounting charade. Interest rates are lower than 100 years ago and lower than the post WWII rates when debt as % of GDP was higher - without effect on either inflation or rates or buyers for bonds

second - SS actuarial forecast were know by 1965 when the post war baby boom was over - 1946-1965 - they had calculators then that were accurate of what would happen in 40 years - 2011 - there are no surprises to the US government nor insurance companies that wrote policies in 1965 ( i have a policies from 1965 as well as 1969)!

third - the SS earnings cut off is completely arbitrary as are the tax rates - what is NOT arbitrary is the certain knowledge of what the obligations are to those that bought the SS ANNUITY - insurance companies sell annuties and life policies for more than 300 years - so the idea that SS is crowding out other discretionary application of use of funds is about propaganda politics not obligations which are as much of the full faith and credit obligation of the US federal government as Treasury Bonds

Fourth - the DoD & CIA at $ 1 trillion is completely discretionary should be reduced to comparable nations our size - germany / japan / china / russia and stop the MIC profit and death machine ! the budgets for years were paid for with BONS not current income from tax receipts - if it was good for Bush and the republicansto run up debts to make money for the MIC  its good for retirees

solve the problem this time on the backs of the scumbags (Banks & MIC) not the client......... this one time !

 

Thu, 01/10/2013 - 12:24 | 3140723 cranky-old-geezer
cranky-old-geezer's picture

 

 

first  - debt is not a problem with a reserve currency - they issue greebacks at will and it is not debt - issue more greebacks and stop the accounting charade.

Correct, debt isn't a problem when you control the reserve currency.  Like you said, print more currency to fund more debt.

But what happens when they print more and more currency?  It starts losing value?  Like Bernanke himself said in 2002?

Sure, they can keep the SS ponzi going with printed currency.  They can keep all the ponzis going with printed currency.  Pick any one you want.

But the dollars in those SS checks keep losing purchasing power.  The "inconvenient truth" nobody wants to discuss.

Yes, Fed can print all the currency needed to fund more govt debt, part of which goes make up the cashflow deficit in SS.  Paying SS benefits out of the general fund, because there's no cash in the SS trust fund, just govt bonds ...and they're yielding way less than actuarial models assumed years ago (when SS trust fund was declared "solvent" and "healthy"), meaning the cashflow deficit will get worse.

SS trust fund has the same problem private pension funds have, way lower yield than actuarial models assume.   1% - 2%  vs  8%.

Even a caveman can see what that will do.  Severe cashflow deficits that have to be made up from somewhere.  With SS it comes from the general fund, and its cashflow deficit is made up from borrowing, which is funded with more printed currency, slowly debasing the currency, taking more purchasing power out of those SS checks.

You talk like currency printing is free, just like everybody else thinks currency printing is free.

It's not free.  The cost is debasement, reduced purchasing power, THE thing nobody wants to talk about.

Thu, 01/10/2013 - 11:44 | 3140649 DosZap
DosZap's picture

Social Security DOES add to the DEBT of the country.

The only reason it does is we have a major SPENDING PROBLEM,and theft from the fund by Congress.

Thu, 01/10/2013 - 05:18 | 3140049 Andy Lewis
Andy Lewis's picture

Forget it, Jake,  It's Dumbfucktown.

Wed, 01/09/2013 - 17:54 | 3138446 Tall Tom
Tall Tom's picture

"If there were no debts in our money system, there wouldn't be any money."
Marriner Eccles. Govenor of the Federal Reserve, Testimony to the House Banking Committee, 1940.

 

You wrote, "...they issue greenbacks at will and it is not debt." I stopped reading at that point as it is obvious that you are clueless. I have too many better actions to do with my time, Douchebag.

 

I think that the Former Governor of the Fed has a bigger grasp of the issue than you, Douchebag. Get a clue. Currency is Debt

Wed, 01/09/2013 - 18:34 | 3138640 Omen IV
Omen IV's picture

Yhoo douche -  for my amusement and your edification -  eccles said that;  when the dollar was convertible into GOLD - wake up - it went away in 1971 - if you hand in $100 dollars to the treasury they will give you a $100 and ONLY $100 ....endlessly no matter how many dollars go out or come in - debt isnt necessary !

get a clue!

Thu, 01/10/2013 - 10:40 | 3140412 phalfa5
phalfa5's picture

wow....   hold on a mintue here people.  I need to get another cup of coffee and settle in for the show....

Wed, 01/09/2013 - 18:39 | 3138650 akak
akak's picture

Earlier you were spouting half-truths and disingenuous bullshit about the long-term "value" received by Social Security recipients, but now you are simply babbling nonsense.  Or, perhaps I should say, slightly more obvious nonsense.

Wed, 01/09/2013 - 18:17 | 3138444 Tall Tom
Tall Tom's picture

Duplicate removed.

Wed, 01/09/2013 - 17:47 | 3138422 BorisTheBlade
BorisTheBlade's picture

first  - debt is not a problem with a reserve currency - they issue greebacks at will and it is not debt - issue more greebacks and stop the accounting charade.

Reserve currency hurr durr, why pay any taxes or contribute to SS at all, just issue more greenbacks and pay for everyone's free lunch. Sounds like another Nobel prize in economics, right after nomination for trillion dollar coin of course that will fix any problem. Brilliant.

Wed, 01/09/2013 - 19:33 | 3138840 hooligan2009
hooligan2009's picture

just wait...the trillion dollar coin will havea half life of 2 years, so the debt is getting smaller every day..same will apply to bank notes..."wear and tear" will turn them into pulp fiction in only 3 months.

Wed, 01/09/2013 - 16:41 | 3138047 negative rates
negative rates's picture

Our reserve currency is becoming more reserve every day. It's basicly just the euro and us, and the suckers are beginning to see the light too. China, Japan, and probably soon Saudi Arabia have bowed out from buying our debt and are now selling it and threating to make it easier to purchase gold world wide. Our paper ponzi will simply collapse under it's own weight, once the truth about reserve currency's is let out the bag.

Wed, 01/09/2013 - 15:56 | 3137781 homersimpson
homersimpson's picture

If this guy doesn't scream "I'm fully dependent on social security", I don't know who or what does.

Wed, 01/09/2013 - 15:58 | 3137802 Omen IV
Omen IV's picture

i do not collect SS nor will for some time and  - at that point it will represent less than 5% of my income

there are a few people who are intellectualy honest left

Wed, 01/09/2013 - 22:15 | 3139388 Cosimo de Medici
Cosimo de Medici's picture

Even if you are completely serious, don't take the flack personally.  Most people actually like having guys like you around.  Without your kind of blasphemous anti-group think, the Comments just become a contest to see who can sound most cynical, most disgusted, and closest to the edge of going postal against the PTB (without ever actually doing it).  Every once in a while they like to have someone on the scene---as opposed to the usual targets of abuse who are unreachable and ensconced behind Secret Service or Blackwater/Xe/Academi-type private security---they can attack directly and without running the risk of doing time at Guantanamo.  You also have to remember that Armageddon is getting a little long in the tooth, as are many of the posters here, and when "sooner-than-most-people-think" starts to become "longer-than-anyone-ever-expected", a certain amount of frustration sets in and has to be let off.  You do a public service by providing that outlet.

Welcome, and help yourself to drinks and hors d'oeuvres.

Thu, 01/10/2013 - 03:09 | 3139967 akak
akak's picture

Cosimo, you are an arrogant ass.

If monetary and financial awareness, and blatant truth, passes in your mind for "groupthink", then there is little of any value that an honest or intelligent member here can say to you --- and more to the point, would want to hear from you.

Wed, 01/09/2013 - 23:33 | 3139592 Omen IV
Omen IV's picture

Cosimo - thanks and i agree with your comments - shaking it up is fun! as far as i am concerned - if they hate me all the better - people love to have their opinions reinforced - im the opposite i like to see if i can shred the system

i visited your ancestors tomb some time ago in Florence - they really did it right!

Thu, 01/10/2013 - 04:30 | 3140014 Cosimo de Medici
Cosimo de Medici's picture

My ancestors knew how to do the Illuminati schtick. And come on, the Borgias? Nothing at Bohemian Grove or any Bilderberg get together can hold a candle to that bunch.  No, these latter day Illuminati are mere poseurs.  We had the Pope, the money, and the babes.  The original Super Tuscans, too.

By the way, I've often speculated that in Zerohedge households all across America and around the world, here's a typical dinner table conversation:

"You know, Honey, maybe we should start eating some of those beans or somethin'.  I mean, we're sixty-five years old, and I ain't seen even one zombie trying to steal your liberty.  Maybe they're not coming.  We could clear out that storage room and put in a pool table or something.  Have some fun for once.  Try to enjoy our Golden Years, you know, instead of you just gettin' shitfaced every night with that bourbon and tellin' me how your going to cap somebody's ass or guillotine some banker.  And we're not even having sex anymore, 'cause you think it will take your edge off.  How about taking my edge off once in a while?  I tell ya, you're not making me feel like much of a woman, you know?  And always having you look at the Lauren Shyster lady on RT, like you even understand a thing she's sayin'."

"That's just what they want you to think, woman.  That they're not coming.  Let your guard down and poof!  Liberty and freedom gone in friggin New York minute.  You don't think they're watching?  I bet they know exactly how many cans of Spam I've got back there, and if I open even one, they'll know they've got me by the short hairs.  No, I'm not going Blue Pill now, 'cause any second this whole thing's gonna blow.  Mark my words.  And fuck the Zombies. I'd even cap that White House Kenyan in his fat ass if he dares step into my castle.  And by the way, Lauren Lyster is a financial genius.  I'd give up one of our Monster Boxes just to hear her speak in person.  And I swear I couldn't even tell you what she looks like, for crissakes.  I couldn't pick her out of a crowd of two even if the other one was Hillary Clinton.  Get me another bourbon!  I gotta rip that Max Fischer troll a new butthole on The Hedge.  You should see the shit he's posting!"

Fri, 01/11/2013 - 01:55 | 3143492 dogbreath
dogbreath's picture

Cosimo,

That was worth the cost of admission.  That was the best post i have read here in awhile.  Too funny.

 

Wed, 01/09/2013 - 19:31 | 3138830 RockyRacoon
RockyRacoon's picture

A lot of the old-timers will be pleased that Johnny Bravo has graduated and moved out of his mom's basement finally.  We had a grand old time with that piñata.

Wed, 01/09/2013 - 17:16 | 3138242 Panafrican Funk...
Panafrican Funktron Robot's picture

I wonder how an intellectually honest person can seperate "the dollar is a reserve currency" and "military spending".  I presume you're not completely fucking stupid, so clearly you're bullshiting yourself and the people you are talking to.  

Wed, 01/09/2013 - 17:08 | 3138195 NotApplicable
NotApplicable's picture

Honest? Yet you come here echoing the latest BIS line about "government debt is about the supply of safe assets."

Riiiiight.

Wed, 01/09/2013 - 15:46 | 3137715 earnyermoney
earnyermoney's picture

You should thank the scumbag MIC. It's the reason the dollar has it's reserve status. Gotta coerce people around the world to accept a piece of green toilet paper as a medium of exchange.

Wed, 01/09/2013 - 16:02 | 3137815 Omen IV
Omen IV's picture

nonsense - in spite of the MIC and DoD the dollar stands - check out the integrity of the domino theory and see how well it went in 1969 - the dollar survived after Nixon abandoned the gold standard which was necessary BECAUSE OF THE VIETNAM WAR AND THE MIC FUCKED THE COUNTRY THAT TIME!

Thu, 01/10/2013 - 00:05 | 3139677 californiagirl
californiagirl's picture

Don't you read?  The Dollar's status as THE reserve currency is being eroded continually as more and more countries enter into agreements with each other to bypass the Dollar for an increasing number of their international transactions.  Or maybe your "logic" concludes that this is a strengthening of the Dollar's position as the reserve currency.

Wed, 01/09/2013 - 23:30 | 3139583 Curiously_Crazy
Curiously_Crazy's picture

"the dollar survived after Nixon abandoned the gold standard"

Erm, only due to the Petrodollar making Arab nations trade their oil in said $US. Oh of course, Iraq had weapons of mass destruction and never intended to start trading oil in Euros.

Wed, 01/09/2013 - 23:38 | 3139606 Omen IV
Omen IV's picture

not true !

 

oil was less than $14 Bbl in 71' the petro dollars started in earnest in 1974 - ABANDONMENT OF GOLD STANDARD DUE TO VIETNAM AND USELESS mic WAR!!!!!

Wed, 01/09/2013 - 16:17 | 3137889 earnyermoney
earnyermoney's picture

LOL. Keep shanking your creditors with printing and see what happens to the dollar's reserve status. Saddam and the Quack were toppled the moment they attempted to price oil in something other than the U.S. dollar.

Wed, 01/09/2013 - 16:52 | 3138114 Omen IV
Omen IV's picture

"keep shanking your creditors"

standard banking practice - try the MBS market, foreign exchange market, municipal market, libor market, pension management market, IPO market and many more ---all fraud all the time - check the fines!

there are no clients there are only victims!

Wed, 01/09/2013 - 17:36 | 3138358 earnyermoney
earnyermoney's picture

Like I said, it takes a big gun to keep the victims in line.

Wed, 01/09/2013 - 17:17 | 3138251 akak
akak's picture

Did your keyboard come with the manure shovel, or was that an add-on?

Wed, 01/09/2013 - 15:41 | 3137688 MachoMan
MachoMan's picture

cant.read.past.your.first.statement

Do you think the Dollar is the world's first reserve currency?

Wed, 01/09/2013 - 15:40 | 3137685 Bruce Krasting
Bruce Krasting's picture

Oh my! This sounds like Paul Krugman.

Bond yields today are meaningless as a measuring stick. You're way-off comparing 2013 to any other period in history. Do I need to remind you that we are now in full gear QE4? $85b is being sucked up by the Fed every month.

When you talk of interest rates today, you are either spinning the facts, or ignorant of them.

Wed, 01/09/2013 - 15:55 | 3137763 Omen IV
Omen IV's picture

Krugman is a nobel laureate and a serious editorial writer for the NYT --  so im in good company - thank you!

"You're way-off comparing 2013 to any other period in history" - your knowledge of history nor the future is not "definitve" - just because YOU want to make it unique point in time doesnt make it so - im sure every time you open your mouth you believe it is profound and unique! that is all delusional -  no one can cure that but you

"$85b is being sucked up by the Fed every month."  -  SO WHAT? go fuck the MIC and the banks - get a three pager from Paulson for $715 Billion and it's solved  -  pay the debt down

"When you talk of interest rates today, you are either spinning the facts, or ignorant of them." interest rates are public record that is "not" spin! - the fact is the rates have nothing to do with SS - they have a lot to do with funding the MIC with debt  - go pick on them and then MAYBE you will some marginal credibility

 

Wed, 01/09/2013 - 20:25 | 3139020 css1971
css1971's picture

Krugman is a nobel laureate and a serious editorial writer for the NYT --  so im in good company - thank you!

Good troll, good troll. Bravo!

Just on the off chance you're serious, you're with him on the space aliens and platinum coin thing as well?

Wed, 01/09/2013 - 23:41 | 3139611 Omen IV
Omen IV's picture

fuckin A !

Wed, 01/09/2013 - 16:46 | 3138073 malek
malek's picture

If you want to hand over your personal decision making to Krugman, go ahead!

But don't try to persuade other people to join in to your stupidity, and don't come whining later.

Wed, 01/09/2013 - 16:31 | 3137991 Bruce Krasting
Bruce Krasting's picture

Your Nobel Laureate is out with a big opinion piece. He is 100% behind minting a $2T platinum coin.

He thinks this is no problem at all, and we should just get on with it. Screw any opposition at all.

I think he is out of his mind, and he will regret it. PK just crossed over to the Tin-Hat side.

And you want to be like him?

Wed, 01/09/2013 - 18:27 | 3138600 Winston Churchill
Winston Churchill's picture

I have suspected for some time now that Krugman is an alien.

Seems like the only explanation for his outlandish ideas, that or

he is self medicating with bath salts ,LSD, and tequilla..

Thu, 01/10/2013 - 11:46 | 3140659 tip e. canoe
tip e. canoe's picture

i was thinking SSRIs combined with an extremely liberal nightly intake of red wine.

actually, it would be interesting to know the % of fedguv employees on prescription meds.

USA = United State of Antidepression

Wed, 01/09/2013 - 16:59 | 3138158 Omen IV
Omen IV's picture

Bruce - be serious -  prove he is wrong ??? make my day -  issuing currency happens all the time for 100 years

tell me the right amount of currency to issue - pleeeeease show me the formula

Thu, 01/10/2013 - 10:35 | 3140397 phalfa5
phalfa5's picture

OMG  OMEN!?!   IT'S MY EX   .....    RUN FOR THE HILLS !!!!

 

Wed, 01/09/2013 - 20:29 | 3139028 css1971
css1971's picture

People like you, Krugman and the cheating lying, fraudsters in charge are the reason I'm so long gold. :)

 

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