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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...

 

images

 

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Wed, 01/09/2013 - 16:12 | 3137861 Omen IV
Omen IV's picture

"If so, worst fucking annuity ever sold"       prove it to me? fact is all blow no go - 80 million people believe it (and voted for it ) of which more than 50 million are receiving or about to receive it - compared to..............your "single" opinion  - which you refuse to document !

Thu, 01/10/2013 - 01:13 | 3139825 Freddie
Freddie's picture

Enjoy your social security check whilst you can.  Unless they mint a lot of magic Obam/Krugman $1 trillion platinum coins - social security is going to blow up with the rest of Amerika.

I guess you never got the memo - game over.

Wed, 01/09/2013 - 16:27 | 3137911 akak
akak's picture

It is has been repeatedly demonstrated that overall, over the long-term, SS has paid its recipients an annual 3% on their "investment" --- and that is BEFOFE adjusting for inflation, which has NEVER been less than 3% since 1971 (in real terms; to Hell with the laughably manipulated CPI), and which furthermore has been significantly if not radically MORE than 3% in virtually all of the 42 years since.  Whoop dee doo --- yeah, great fucking "investment" there buddy! 

You are an insulting, shit-spewing, pro-goverment shill.

Just kill yourself now, and do everyone involved a favor.

Wed, 01/09/2013 - 16:36 | 3138025 Omen IV
Omen IV's picture

ace  - listen up and listen well - a 3% return is comparable to thirty year treasuries - every day they are bought for risk free investment - IS A GOOD DEAL -  a SS payment with full faith and credit at 3% is a good deal especially if you could wrap your head around spousal benefits and disability benefits as incremental values - but that would mean you would have to think and run an excel spread sheet

go shoot some guns at your neighbor and cool off this may be too much for you to get into ....its arithmetic !

Wed, 01/09/2013 - 17:27 | 3138289 NoDebt
NoDebt's picture

That's a good point.  In fact it is likely to return higher than 3% in the future.

But you didn't answer the question.  What is the break-even period now vs. 20 years ago?

I can offer you an 8% compounded annualized return but if I then tell you that you have to live to be 200 years old to collect to the point you hit break-even just against the money you put in, you lose.  The monthly benefit dies with you.  And, of course, you can never ask SSA to give you a cash payout, so again, the IRR on the "investment" is of little consequence.  Only what you put in, what you get out in monthly payment and how long you live.

When my grandparents retired in 1980 it took about 3 years for them to hit the break-even point on what they put in.  Who wouldn't want that deal?  It will take me until about age 92 to collect to the break-even point if I retire at age 65 in the early 2030s.  And it keeps getting worse from there for participants.  It's a losing proposition.  Give me the 13% that's being taken out of my paycheck and let me take my chances.  Any day.  Twice on Sundays.

Wed, 01/09/2013 - 17:33 | 3138343 Omen IV
Omen IV's picture

look you can run risk adjusted returns for whatever period you want as terminal date and then add risk for disability which SS covers as well as  spousal and dependents and then you can say its not economic -

 the FICA payments from the employer would not be there for most of the population  - 98% -  without cohersion - so the alternative use of funds from that source  isnt there

the solution for SS are simple and purely political for those 22 and 62 to make all the IRR's work for everyone

Wed, 01/09/2013 - 19:24 | 3138807 Encroaching Darkness
Encroaching Darkness's picture

"the FICA payments from the employer would not be there for most of the population  - 98% -  without cohersion" {I'm assuming the word you are looking for is "coercion", the use of force to compel obedience}

 

Look, I'm gonna give you a deal, Omen. You give me x% of your salary your entire working life; I spend it any way I want to , no accounting to you for it. When you're old, I'll pay you back - in worth-less inflated dollars of the time, whatever I say, IF I say any at all. You stiff me, you go to jail; I stiff you, nothing happens. You take the deal and like it, Omen; I'm gonna take it from you and the guy that pays your salary, and if that's you (self-employed) you pay the total. Any questions?

 

Do you really want that deal, Omen? Why would you?

Wed, 01/09/2013 - 23:52 | 3139643 Omen IV
Omen IV's picture

that is a poor analogy doesnt compare - to ALL the benefits for society in a social program - across generations / types of workers and incomes -

but thanks for the spelling heads up - i was typing  too fast

Fri, 01/11/2013 - 01:33 | 3143476 dogbreath
dogbreath's picture

Evil Omen

I would rather die of starvation aggrivated by cirrosis of the liver  at 68 than to die in hospital at the age of 89 suffreing from alzheimers and pnemonia.  You are selling snake oil.

Thu, 01/10/2013 - 00:32 | 3139736 perchprism
perchprism's picture

 

Omen IV, you are a cocksucking marxist faggot.  Blow me.

Thu, 01/10/2013 - 09:04 | 3140183 Al Gorerhythm
Al Gorerhythm's picture

Well, perhaps that, but you could never accuse him of being a student of Monetary History, Fiat Currencies, Charles Ponzi or Austrian Economics.

Wed, 01/09/2013 - 18:30 | 3138630 NoDebt
NoDebt's picture

Well that's certainly the long way around the barn to get to how it SHOULD work.  Ground floor reality right now is somewhat different.  And getting worse by the year EVEN ASSUMING POLITICIANS DON'T SOUR THE SOUP FURTHER (which I am sure you will see in years not to distant).

Enjoy your SS benefits.  You will have paid for them (several times over, in all likelyhood, by the time all is said and done).

Wed, 01/09/2013 - 17:11 | 3138053 akak
akak's picture

WOW you are so completely full of shit.  You simply MUST be Paul "I never met a broken window I didn't like" Krugman himself!

a 3% return is comparable to thirty year treasuries - every day they are bought for risk free investment - IS A GOOD DEAL

Yeah, and who exactly is buying those "risk free investments" nowadays, aside from the Federal Reserve in order to monetize the federal debt? Really, can ANYONE be this much of a liar AND an idiot?

Besides that fact, if you think that LOSING 2-6% annually, in REAL terms, over the long term is "a good deal", then there is simply no point in presenting any further facts or logical arguments to you, as that makes you clearly either a pathological liar or else certifiably insane.

 

Wed, 01/09/2013 - 18:20 | 3138595 TheFourthStooge-ing
TheFourthStooge-ing's picture

akak said:

Yeah, and who exactly is buying those "risk free investments" nowadays, aside from the Federal Reserve in order to monetize the federal debt?

Risk free investments? Made me laugh.

Anyone that is a True Believer® in the existence of "risk free investments" has gone way beyond drinking the kool-aid. They've grown fins and gills and are living in the kool-aid.

Wed, 01/09/2013 - 17:25 | 3138297 Omen IV
Omen IV's picture

you are being silly - at best!

run the numbers on comaraable credit risk and add in disability, spousal, dependent options with adjusted risk for those contingencies  -  IRR is greater than any annuity out there

but that means you have to do more than call someone names  - go shoot your 55 guns dont think

Wed, 01/09/2013 - 19:53 | 3138903 phyuckyiu
phyuckyiu's picture

I love how this toad keeps bringing up guns, trying to insult us. Don't you have some EBT children to feed, you leftard, or is your 99 weeks all gone?

Wed, 01/09/2013 - 16:19 | 3137892 NoDebt
NoDebt's picture

What's break-even on that "SS Annuity" look like today vs. 20 years ago?  Do you think that trend will continue?

Don't quote "popularity percentages" in here, please.  Not directly after challenging a board member to produce facts.

Thu, 01/10/2013 - 10:00 | 3140304 Al Gorerhythm
Al Gorerhythm's picture

There is no breakeven, until thay pay you inflation adjusted $s plus the Annuity's coupon.They must take into account M3's annualized % increase  +  the % increase of OTC derivities x 2 (for the -50% slight-of-hand reduction of the total by the BIS) annualized which when calculated should compensate for the inflationary effect of Total money creation.

Wed, 01/09/2013 - 16:45 | 3138060 Omen IV
Omen IV's picture

ace - go on the SS website not that hard if you are serious about your question  - you will see that benefit calculations "coupled with" spousal, dependents and disability and other features is an incredible deal by any objective measure (use annuity contract from insurance co as proxy - which still has credit risk and requires features for disability and other options) do your homework before you speak to value!

look i recognize you guns and ammo people get fed by republican Peterson based propaganda and dont think  - especially if it requires math skills but try it out for a change - peterson will fuck you wake up!

 

Thu, 01/10/2013 - 00:00 | 3139661 boogerbently
boogerbently's picture

AH,

But is it a better "deal" than the 80+ welfare programs?

Wed, 01/09/2013 - 21:01 | 3139144 StychoKiller
StychoKiller's picture

Just because everyone "believed" that the sun revolved around the earth didn't make it true.

Wed, 01/09/2013 - 19:50 | 3138896 phyuckyiu
phyuckyiu's picture

I wasn't aware that following economics also made me a good shot. Thanks for the ignorant tip.

Wed, 01/09/2013 - 17:17 | 3138255 tenpanhandle
tenpanhandle's picture

a ponzi is a ponzi is a ponzi and a good deal for those first in.

Thu, 01/10/2013 - 08:53 | 3140171 Al Gorerhythm
Al Gorerhythm's picture

Which makes quantifying Social Security's quoted numbers a moot calculation.

Wed, 01/09/2013 - 20:58 | 3139128 boogerbently
boogerbently's picture

Pull your head out.

Wed, 01/09/2013 - 15:55 | 3137750 Stackers
Stackers's picture

Cockel-doodle-doooo -- bak-ba-bak

 

 

OmenIV has obviously never heard of something called "The Unified Budget" which flushes all the revenue vs. mandatory spending arguments down the toilet.

Wed, 01/09/2013 - 20:43 | 3139072 mt paul
mt paul's picture

the fiat is falling

the fiat is falling ....

Wed, 01/09/2013 - 16:05 | 3137833 Joe Davola
Joe Davola's picture

What is this Budget thing you speak of?

Wed, 01/09/2013 - 20:07 | 3138949 spekulatn
spekulatn's picture

Budgets?? We ain't got no budgets....we don't need no budgets......I don't have to show you any stinkin budgets.

http://www.youtube.com/watch?v=VqomZQMZQCQ

Thu, 01/10/2013 - 00:48 | 3139771 Jam Akin
Jam Akin's picture

Budgets are for wimps.

Wed, 01/09/2013 - 17:19 | 3138258 OutLookingIn
OutLookingIn's picture

I honestly think I could "put up" with stupidity.

However, when there are so many individuals around who use it as their mantra, you become swamped in a morass stupidity, as if most whom you come in contact with have contracted some virulent virus!

Stupid is as stupid does. In this case; Stupid is as stupid says!

Thu, 01/10/2013 - 05:59 | 3140068 RazvanM
RazvanM's picture

But, but, "I have a PhD diploma". What's the definition of "stupid"? Shall we go out and request a popular vote?

Wed, 01/09/2013 - 18:08 | 3138529 Dr. Sandi
Dr. Sandi's picture

More and more people seem to wear their ignorance as a badge of honor. Maybe it's just because more of us can show our ignorance to the World Wide Web of Wackos. But I really tire of people saying, usually more rudely, "I've never heard of that, so you must be wrong."

Of course, the ones who got it ass backwards from the get-go aren't adding much light to the quest for truth either.

Wed, 01/09/2013 - 19:34 | 3138843 boogerbently
boogerbently's picture

Bruce has a completely misguided "hard on" about SS.

He can not be reasoned with.

Hey Bruce, we need your help DEFUNDING any program started with my stolen Soc. Sec. funds.

Thanks.

 

Wed, 01/09/2013 - 23:07 | 3139519 qqqqtrader
qqqqtrader's picture

<--- AGREE

<--- DISAGREE

Perform an assayed public audit of all the Treasury's claimed 8,100 tons of gold and net of swaps, loans & sales.

https://petitions.whitehouse.gov/petition/perform-assayed-public-audit-all-treasurys-claimed-8100-tons-gold-and-net-swaps-loans-sales/rGyFTLwD

Do NOT follow this link or you will be banned from the site!