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Social Security to Bernanke – “You’re Killing Us!”

Bruce Krasting's picture

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Sat, 10/15/2011 - 20:19 | 1777949 PrintButtonMoney
PrintButtonMoney's picture

Haven't we known 'social security' is going to collapse before people my age (let's just say the 24-30 block) even come close to seeing benefits, let alone benefits that match up with the costs of living given Ben's stated goal of 2-3% inflation (which will probably manifest as like 4-6% inflation, increasing..)?  It seems like the numbers have been crunched outside this particular community of ours, and even the most optimistic forecasts show the baby boom population decimating social security before 2025...


This is why welfare in general fails.  Government trying to force people to save is a joke.  Especially when government issues fiat currency and then basically falsifies the balances of their own accounts (via paying those various accounts interest income from various others of those accounts in amounts that the market simply doesn't support)..

How about, end social security, give a lump sum to those who have paid into it reflecting how much they've paid in..

I know its more complicated, but damn.



Sat, 10/15/2011 - 20:08 | 1777936 malek
malek's picture

I'm not so sure imaginary interest paid on imaginary SSTF holdings are going to help in any way - today or 'til 2014.

I mean why doesn't gov't just raise the debt ceiling by another $10 T, and add that money to the SSTF? Then SS would be pretty much fixed indefinitely...

Sat, 10/15/2011 - 19:03 | 1777816 technovelist
technovelist's picture

This is exactly as important as deciding how many angels could fit on the head of a pin.

Bruce, I guess no one has told you that there is no Social Security trust fund. Money owed by one part of the government to another part of the government is not an asset.

Hope that helps.

Sat, 10/15/2011 - 18:05 | 1777701 SwingForce
SwingForce's picture

Nice work Bruce bringing us the Solyndra Scandal first, its building steam:


Sat, 10/15/2011 - 17:59 | 1777689 jhcullen
jhcullen's picture

Will this turn violent already... Im sick of going to class

Sat, 10/15/2011 - 16:20 | 1777505 Hedgetard55
Hedgetard55's picture

I hope Bernanke burns in hell for eternity.

Sat, 10/15/2011 - 16:38 | 1777541 binky
binky's picture

That's not long enough.

Sat, 10/15/2011 - 15:51 | 1777411 Hedgetard55
Hedgetard55's picture

" The % that the TF earns on this hoard is substantially above the current market rates."


Meaningless. They could receive zero percent or 100 percent, it would make no difference, the Treasury will always make up the cash flow difference, and no more. Accounting shenanigans, as if I paid myself an above average interest rate out of my own savings. Cash flow is all that counts, and whether the Treasury can make up the shortfall.

Sat, 10/15/2011 - 15:43 | 1777389 PulauHantu29
PulauHantu29's picture

Ben & Barry are Whacking Seniors pretty hard.  Food, energy, and many of the items they need to survive are soaring as B & B wanted, i.e., to inflate "stuff."

However, Ben & Barry are essentially cutting SS payments due to zero rise in the CPI which is supposed to "protect" seniors from the destructive effects of inflation.

I'm glad Barry declared, "No more Bank Bonuses!" two years ago.

Sat, 10/15/2011 - 15:23 | 1777352 dlmaniac
dlmaniac's picture

You cannot find a worse candidate to manage your retirement money than USGovt whose track record is managing everything into insolvency.

Sat, 10/15/2011 - 15:17 | 1777337 Escapeclaws
Escapeclaws's picture

Krasting on Social Security. Always scary stuff for those of us whose net worth is under seven figures. I can't even read it anymore. He is so smart, you know that whatever he says about SS will be implemented.

The only solution: Increase the Defense budget, Homeland Security budget. We also need more wars--perhaps a long drawn out ground war in Iran. At the same time, make the Bush tax cuts permanent.

Sat, 10/15/2011 - 15:12 | 1777324 Don Levit
Don Levit's picture

The 2% refund from general revenues is the same way the trust fund interest  (and soon to be principal) is redeemed.

SS is entirely pay-as-yo--go.

The only cash is what Bruce pointed out.

The entire trust fund will be paid with general revenues  -  the same way the government pays all expenses.

The trust fund balance simply provides the draw on the Treasury without an appropriation.

The benefits would be paid the same way - with general revenues - even if the trust fund did not exist!
I can provide governmental excerpts and links for anyone who is interested.

Don Levit

Sat, 10/15/2011 - 14:14 | 1777239 Fake Jim Quinn
Fake Jim Quinn's picture

Bruce: do you know of anyone who has calculated the loss of purchasing power of savers due to ZIRP? I am going to guess the ChairSatan never ran any numbers comparing the presumed extra borrowing/investment companies would do (and thus spending stimulus), and subtracted the offsetting consumption loss by people who one time could live decently on savings, creating a contra-stimulus. Companies are sitting on hoards of cash and not borrowing, despite ZIRP, but there is most certainly consumption destruction by strangling savers

I wish someone would perform this calculation. Then savers can do their own version of OWS, and hopefully showing the bearded schmuck the door before he can continue his merciless vendetta with elderly and savers

Sat, 10/15/2011 - 14:15 | 1777235 FinalCollapse
FinalCollapse's picture

Timmay is working on his brand new 9% growth model. Don't you love these Keneysian clowns?

Indirectly they take money of the people's (future) retirements benefits and give it to the moronic banks now. We will worry about in future. Don't you love these Keynesian clowns at Fed and Treasury?

Sat, 10/15/2011 - 14:09 | 1777227 Money Squid
Money Squid's picture

Bruce, The SS surplus chart shows SS in the red beginning 2014 - if I recall incorrectly just before Peter Orszag left the OMB the SS numbers were revised for the previous year (2009?) to show SS was in the red by $25b and that SS would be in the red from 2009 on out increasing exponentially. Although Benernake is causing inflation he is removing the inflation from the CPI via hedonic pricing, so he can have inflation yet allow SS to claim no COLA is needed via the manipulated CPI. If SS is in the red now, then any COLA will have to be funded through borrowing and the deficiet must increase by that amount, correct?

Thanks, really appreciate your work.

edit: Looks like fiat2zero beat me to the same question. Must learn to type faster.

Sat, 10/15/2011 - 13:44 | 1777187 Fiat2Zero
Fiat2Zero's picture

Bruce, social security went cash flow negative last year in March 2010.  How do you square this with your projection of negative in 2014.  Aren't we already there?  More accounting shenanigans?

Sat, 10/15/2011 - 15:57 | 1777428 Bruce Krasting
Bruce Krasting's picture

Two different things. One is cash, the other is accounting. They are both important.

In 2010 SS had a cash deficit of $49b. But the total surplus rose by $69b. This is because % income is not cash but part of the total assets. In 2011 there will be a cash deficit of $55b, but total assets still wil rise by ~59b.

I'm looking at the timing of the next axe to fall. The year at which the SSTF reaches its peak. I think it is much closer that anyone thinks it is.




Sat, 10/15/2011 - 22:24 | 1778152 Money Squid
Money Squid's picture

I am mildy retarded so I may not be following the point. The best I could do is find a brief mention of this on seekig alpha.....

"Two important sources have “explained” this drop. Both the SSTF and the CBO have confirmed that somehow there was a miscount over at Treasury for $25-29 billion.

The explanation from the CBO yesterday:

Receipts from social insurance taxes are also expected to decline this year—by $29 billion (3.2 percent) from last year, mostly because of an adjustment by the Treasury to correct for the allocation of receipts in earlier years.

The explanation from the SSTF in their August report to Congress:

The estimated decline in trust fund income from 2009 to 2010 is due to the economic recession and to an expected $25billion downward adjustment to 2010 income that corrects for excess payroll tax revenue credited to the Trust Funds in earlier years."


It is my slightly retarded understanding that the "receipts" they are talking is cash...no? Like I said I am slighty retarded and do not work in the financial sector, obviously.

edit: and what is really strange is the position of my post keeps moving around from location to location. hmm.....

edit 2: Oh chit, the seeking alpha peice I stole is written by.........Bruce Krasting.

Sat, 10/15/2011 - 13:27 | 1777158 Marco
Marco's picture

Major restructuring? You increase payroll taxes and reduce pensions until you balance the receipts and costs ... done.

Sat, 10/15/2011 - 13:20 | 1777146 FMR Bankster
FMR Bankster's picture

You can see where this thing will go with Herman Cain's tax plan. Politicians will love it. End the SS tax and replace it with a national sales tax. Write off the SS debt which reduces our stated public debt. (not our real debt of course)That's the main essence of his plan, to substitute a consumption tax for social security tax and widen the base (undergound economy, tax cheats, drug sellers) and don't forget making retires pay for their social security twice. Once while they worked and payed FICA tax and now after they retire and pay a national sales tax.

Sat, 10/15/2011 - 18:24 | 1777741 Thisson
Thisson's picture

A national sales tax is unconstitutional.

Sat, 10/15/2011 - 20:04 | 1777925 dexter_morgan
dexter_morgan's picture


Article 1, section 9

No Capitation, or other direct, Tax shall be laid, unless in Proportion to the Census or enumeration herein before directed to be taken.

Then the banksters and their enablers, the early statists and banker cabals, gave us the 16th fucking amendment ENABLING income tax. 


Passed by Congress July 2, 1909. Ratified February 3, 1913.

Note: Article I, section 9, of the Constitution was modified by amendment 16.

The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration.

Thats when all the shit we have happening today started. That combined with the establishment of the Federal Reserve Banking system enabled and protected the banksters and elites and got Uncle Sams hands in all our pockets.Until then the governement revenues came primarily from ad-valorem taxation, i.e. property and or sales taxes.




Sat, 10/15/2011 - 13:34 | 1777173 Marco
Marco's picture

What official measure of public debt includes potential future SS payouts?


Not saying that exchanging one regressive tax for another regressive tax isn't just playing dancing chairs ... but as far as I know it won't affect official debt either way.

Sat, 10/15/2011 - 13:19 | 1777145 Georgesblog
Georgesblog's picture

The moment that Social Security moved from an annuity trust fund to a tax on wages, it became fraud. The separations that protected the public in both investment and privacy were discontinued.  This is the invasion that is accomplished by government fiat. It doesn't end there. When government seizes property and assets, it seizes life and liberty. This is what is coming.


Sat, 10/15/2011 - 13:40 | 1777181 Marco
Marco's picture

When was Social Security ever an annuity trust fund?

Sat, 10/15/2011 - 18:26 | 1777743 Thisson
Thisson's picture

It's an insurance scheme.  Emphasis on scheme!

Sat, 10/15/2011 - 19:40 | 1777879 Marco
Marco's picture

Social Security is pay as you go, not an insurance. Never was either, unlike what Georgesblog suggested.


People look at the trust fund and get a fundamentally wrong idea ... the trust fund is peanuts, just there to smooth over short term variations in receipts, anything beyond that horizon is supposed to be fixed at the political level (increasing taxes or reducing benefits).

Sat, 10/15/2011 - 13:19 | 1777142 pasttense
pasttense's picture

While Social Security is going to be a problem sometime in the future there are other big problems which are going to hit sooner:

1. Medicare/Medicaid cost explosion

2. the 1.5 trillion dollar/year continuing budget deficit.

Sat, 10/15/2011 - 12:59 | 1777103 High Plains Drifter
High Plains Drifter's picture

wait a damn minute. i paid into that thing all my life. they owe me money. i want my damn money.  let the next bunch worry about that stuff. we want our money and we want it now..........

Sun, 10/16/2011 - 00:44 | 1778322 StychoKiller
StychoKiller's picture

"You fscked up -- you trusted us!"

Sat, 10/15/2011 - 22:37 | 1778173 cranky-old-geezer
cranky-old-geezer's picture



wait a damn minute. i paid into that thing all my life. they owe me money. i want my damn money

YOUR money?

Boy have they got you buffaloed. 



Sat, 10/15/2011 - 16:33 | 1777532 falun bong
falun bong's picture

in Australia we have two systems, the basic pension that everyone can get, enough to rent a tiny flat in a bad neighborhood and eat canned dog food. The second is a scheme whereby employers are mandated by law to put 9% of your pay in a separate account that you own and can invest and add to yourself. Great system, and it has been really good for Australian capital and real estate markets.

Sat, 10/15/2011 - 18:27 | 1777746 Thisson
Thisson's picture

Let's see if your opinion on that changes after Austrialia's real estate market crashes (which I expect it will).

Sat, 10/15/2011 - 19:42 | 1777882 Marco
Marco's picture

If the rent collapses too maybe the people on basic pension will be able to upgrade to tv-dinners.

Sat, 10/15/2011 - 14:17 | 1777245 FinalCollapse
FinalCollapse's picture

Suck it Up - message from your friendly Keynesians. /sarc

Sat, 10/15/2011 - 18:02 | 1777697 topcallingtroll
topcallingtroll's picture

What hpd is saying is that he paid into it and now he wants money from the younger generation to be given to him. This younger generation having a fucked up econony, lower wages, and lower living standards.

But boomers dont care. They think it is their right to take money from their struggling children and the children of their boomer friends.

Wed, 04/18/2012 - 00:05 | 2353653 James
James's picture

TCT - That's just not true.

You are projecting your anger to the wrong group.I'm not telling you to do anything.

Your problem for your generation is THE BANKS and THE FEDERAL RESERVE.

As it has been my whole life for me and others.

Look, i've ran my own for 35 years and bitched constantly on these issues.

Your problem, as everybody else, is FRACTIONAL RESERVE BANKING.


Sat, 10/15/2011 - 18:28 | 1777748 Thisson
Thisson's picture

The younger generation is about 2 steps away from lynching the baby boomers, so I don't think they'll be too smart to keep pressing their demands.  We shall see.

Sat, 10/15/2011 - 22:03 | 1778134 High Plains Drifter
High Plains Drifter's picture

the boomers want our money. its just that simple.   


out of the shade in heat, 


off your ass and on your feet.....


these lazy gen x and gen y pricks have to suck it up and do it now...........we want our damn money.............

Sat, 10/15/2011 - 12:55 | 1777091 Pure Evil
Pure Evil's picture

Not to worry, some kleptocrat in D.C. has come up with a solution.

Unemployed Payed $40 Grand/Year

Now the unemployed can continue to pay their fair share of payroll taxes and we'll reduce the number of people collecting SS early.

It's a win-win, now how do I get laid off from my job?

Sat, 10/15/2011 - 12:19 | 1777042 benslawyer
benslawyer's picture

"A "hold-harmless" provision in the law, applicable to most Part B enrollees, limits the premium increase to the dollar amount of the beneficiary’s Social Security COLA increase." http://www.ssa.gov/oact/trsum/index.html Since there were no COLA increases the past 2 years, any increase this year will probably be offset by Part B premium increases. The old in-and-out...

Sat, 10/15/2011 - 12:12 | 1777030 the grateful un...
the grateful unemployed's picture

Question is in the new world order, do some old institutions have a place.

The first change of magnitude is jobs, there aren't enough. That doesn't mean people don't work, in fact people work far more than they ever did, (which is reflected in the percentage of employed, or employable people relative to the population. Everyone has a job, or wants one, mom, dad and the kids. This is not your Leave It To Beaver, nuclear family with a single bread winner - SOCIETY.)

People are working, they just don't have a paycheck. People work with the sick and elderly, they volunteer. People just don't sit around and watch TV. (even a video game is work though the fruits are dubious, it's not casual or passive entertainment.)

The government chooses to define work in terms of jobs, and that's wrong of course. SSN and the other welfare programs make sense. The economy is just as productive, we just have a problem sharing the wealth, because we believe in rewarding people according to the old rules (see Robber Barons, industrial revolution)

Its unfortunate that the US spends more than it takes in in taxes, but it doesn't need to be that way, but the rich bitch like hell when they have to pay for DOD, public works and public health. Drive on your own toll road! Hire your own security! Pay for your own medical care!

If you believe this new world order is a planet without borders, then we have a problem. People in the US don't want to live according to Chinese living standards. (That's going back 100 years in terms of health and happiness) Unfortunately the previous President was a globalist, (and the one before him) and the current President is me-too. The next President should be about American exceptionalism.

Then let's recognize the truth, Americas are well educated hard working compassionate people. (or would you rather take your chances in Somalia, or Argentina?) Americans are mad because they've been thrown under the bus, and Wall Street has left its hand prints all over their backs.

Now save SSN, if you have to tax everybody and give the money back to them. It evens the playing field.

The other institution is the post office, while UPS and FedEX cherry picked the easy package delivery business away from them, and left them with the crummy mail delivery business. But according to Wall Street government exists to help them.

Right now we have inverse inflation, wages and income falling faster than assets and commodity prices. Thats' relative inflation, and it should also hit the equivalent rent component of CPI. I think TIPS are a great deal but so does the market, and the Fed front runs those auctions anyway to fix prices. Fire all of them and let the market decide.

and if Bernanke is meddling in FISCAL policy he will find himself in over his head.

Sat, 10/15/2011 - 12:11 | 1777029 apberusdisvet
apberusdisvet's picture

the over/under date for martial law in the US is July 4th, 2012.

Sat, 10/15/2011 - 11:51 | 1776984 Schmuck Raker
Schmuck Raker's picture

The sooner SS collapses the better, IMO.

Then we, as a nation, will(may?) be forced to face reality.

Sat, 10/15/2011 - 11:46 | 1776976 I am Jobe
I am Jobe's picture

Ben wants people to fie to save SS and then they can loot what is left of it and see if they can start another war.

Sat, 10/15/2011 - 11:38 | 1776937 Bob Sacamano
Bob Sacamano's picture

I have a great idea to help said BHO.  Why don't we reduce employee SS contribution by say 20% (2% of 7.65% contribution) AND employer contributions by say 20% (2% of 7.65%).  That should help fan the flames of SS crisis and create the need for a bold leftist solution that will need to be done urgently. 

BHO is an idiot.  Or he really is trying to destroy the US.  Seems it can only be either one.

Sat, 10/15/2011 - 17:34 | 1777641 Translational Lift
Translational Lift's picture

BHO is an idiot.  Or he purposely is trying to destroy the US.  Seems it can only be either one.

He is NOT an idiot!!

Sat, 10/15/2011 - 11:32 | 1776933 centerline
centerline's picture

Social security is toast.  I knew this decades ago.  The writting was on the wall then that it was a ponzi scheme.  Watching the government swell while the private sector slowly collapses was tell tale.    Watching our industrial base disappear spoke only of the dismantling of a nation in the name of greed and power.  Watching it blow bubbles like the housing market and now college debt just shows how desperate it has become to keep the system alive.

The cold, hard reality is the SS is already toast.  So are all the pensions.  Why?  Because it is all based on a system that will collapse once true inflation cannot be maintained, even artificially, across critical segments of the world economy.  What is keeping the system "looking" like it is still alive is nothing more than vapors at this point... government intervention using tools of last resort... artificial inflation.

But, the indebtedness problem is not cured.  Nothing at the core of the problem has been fixed.  In fact, indebtedness has been increased! 


Sat, 10/15/2011 - 17:56 | 1777685 Seer
Seer's picture

Living beyond our means...  That is, the planet's means.  Perpetual growth was always going to collide with the finite planet*.  TPTB (who should know this) didn't plan for this (like they want to paint bulls-eyes on their chests/backs?), nor can the do a thing about it (to paraphrase Einstein, those that created the mess aren't likely able to fix it).

* Expecting the producing countries (and those with raw resources) to not apply earned money toward their own "betterment" (increase personal resource consumption) and just funnel it back into the black hole that is US Treasuries, well... at some point reality strikes, that point is clearly becoming NOW.

Sat, 10/15/2011 - 19:55 | 1777905 Marco
Marco's picture

Whether they have bullseyes on their chest or are about to own half the country really depends on what happens next ... if the society goes the anarcho capitalist route they're sitting pretty. A decrease in government will remove their surest way of stealing more wealth ... but as half the country defaults they will mop up all the collateral and make do ... their dynasties can live off rent seeking in perpetuity, neofeudalism ahoy.


If we break out the guillotines (real or fiscal) then sure, they're fucked ... but I kind of doubt that will happen.

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