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Bernanke on the National Economy

Discussion in 'Fred's House of Pancakes' started by EricGo, Jan 19, 2007.

  1. EricGo

    EricGo New Member

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    http://www.sfgate.com/cgi-bin/article.cgi?...BUGBONL8581.DTL

    His main point as I read it, is that the federal budget has been shored up for years by raiding the SS and medicare trust funds, but that easy money is drying up real soon now. In addition, and not long after, those federal programs will start to dip INTO their trust funds which now only exist on paper, and the federal budget will then include IOU repayments.

    It is important to note that this has nothing to do with those programs inherent solvency long-term. The fat years has been squandered, and the lean years are upon us.

    Put another way: the savings were spent on Junior's war, and the bill is coming due.
     
    #1 EricGo, Jan 19, 2007
  2. Beryl Octet

    Beryl Octet New Member

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    <div class='quotetop'>QUOTE(EricGo @ Jan 19 2007, 10:55 AM) [snapback]377708[/snapback]</div>
    So, what do you all make of this?

    http://www.financialsense.com/fsu/editoria.../2007/0114.html

     
    #2 Beryl Octet, Jan 19, 2007
  3. Godiva

    Godiva AmeriKan Citizen

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    This is exactly my beef with those wanting to "reform" Social Security.

    There was nothing wrong with Social Security.

    The money was stolen. It was embezzled. Call a spade a spade.

    And "reforming" Social Security was supposed to cover the theft.

    Well, time to put up and shut up. Pay back ALL of those IOUs and shut up about how "insolvent" Social Security is and how these programs are a waste, costly, LIBERAL or whatever.

    This is major mismanagement. And it goes back to a really old thread I had about managing the household budget (which is mostly the job of the wife.)

    If you keep using your retirement to pay the mortgage and utility bill, then when you retire, you're not going to have any money. Big surprise. There was nothing wrong with your retirement plan. You just robbed Peter to Pay Paul.

    Maybe you shouldn't have bought that really big mansion and left all of the lights on.
     
    #3 Godiva, Jan 19, 2007
  4. EricGo

    EricGo New Member

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    <div class='quotetop'>QUOTE(Beryl Octet @ Jan 19 2007, 12:02 PM) [snapback]377713[/snapback]</div>
    Hi Beryl,

    Unfortunately, I am not equipped to critically analyze mchugh's opinions. I will say though that, having lived in a country where 20% MONTHLY inflation went on for years, and my savings deposits are just breaking 5% apr, that saying the US has been in a hyper-inflationary era makes me scratch my head ;-)

    This whole debate surrounding the US debt is so obscured by politics, selective data reporting, and canine braying, that it is hard to come to any reliable conclusions. Certainly some kinds of debt are good, and others are increasingly harmful. It also matters TO WHOM the debt is owed. It is my opinion that consumer debt is in general bad, and raiding home equity for further consumer debt is in general bad. I think that the US's ongoing transfer of debt to Asia to prolong the consumer lifestyle is bad, and an unpaid bill is coming due.

    Supply-side economics works some of the time, albeit not often; I think it 'worked' during Junior's era because of the housing bubble, and massive displacement of the corporate economy out of the US that registered as 'productivity gains' and increased taxes. I suspect that the corporates will soon find a weakened Ameriican consumer base from job erosion that cannot be propped up by further consumer debt, and the productivity gains will vanish in thin air, as steady-state develops.

    At that point, a de-facto shrinking of the economy will exist, not only on the ground, but in the US tax base. The federal budget will have increased obligations, less tax revenue, and no further ability to raid the SS and medicare revenue streams. The foreign debt will then be unmanageable except by dollar devaluation. Pundits like to call this state of affairs stagflation. I understand it as inflation during recession, and consider it to be a likely scenario.

    Sorry about the long post. I, like Godiva, understand a home budget. The federal budget, to the extent it mirrors the realities of a home budget, is so out of control it is pathetic. Squandering the SS and medicare savings is criminal.
     
    #4 EricGo, Jan 19, 2007
  5. MarinJohn

    MarinJohn Senior Member

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    When I was in jr. High in the '60s they were warning of borrowing against the SS trust fund. There will be many 'fixes' offered, all which affect the 'other guy'. To me, the most fair and obvious is to 'means test' whereby a retired person with a certain income should be only entitled to 'get back' their investment in SS, but no more. Over the years I have polled many of my wealthier clients on just this subject and proposal and almost to a fault, they all agree, stating they don't see why they are offered SS over and above what they have put in. They don't need it and don't particularly want it. I then ask why they continue to collect given their circumstance and the usual answer is 'it's against human nature to turn down free money'.
     
    #5 MarinJohn, Jan 19, 2007
  6. EricGo

    EricGo New Member

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    Hi MarinJohn,

    I may be mistaken, but my understanding of a 'means' test as used in everyday news and talk is a filter to disallow SS to people above a threshold income, unrelated to how much the person paid into the plan.

    I find the idea objectionable, because it penalizes the conscientious people who saved through their working years for retirement.
     
    #6 EricGo, Jan 19, 2007
  7. Pinto Girl

    Pinto Girl New Member

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    It's a fact: we're lots more like Ford than like Toyota.

    Our future as a country is foretold by the labor cost issues currently facing the Big Two domestic manufacturers.

    As I've said before, we simply don't have the means to continue on in Iraq...and 'revelations' like this substantiate my point.

    It's pretty scary.

    --------------

    And, regarding the comment above that, basically, the money was embezzled...I agree! There's simply no fiscal responsiblity to speak of in our government today; it's time to say "NO!" to new programs, based simply upon our previous financial obligations.

    No private individual in her right mind would run her household in the manner which our Country's is run! It's irresponsible and sends a message to citizens that maybe it's okay to go for that sub-prime loan after all...

    We're living beyond our means, pure and simple. You can package it any way you want, but that's the fact of the matter; all the fear messaging and sayings like "it's not about money, it's about security" are simply a bunch of hot air.
     
    #7 Pinto Girl, Jan 19, 2007
  8. Walker1

    Walker1 Empire

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    <div class='quotetop'>QUOTE(EricGo @ Jan 19 2007, 10:55 AM) [snapback]377708[/snapback]</div>
    Those SOB's should NEVER have been allowed to "borrow" funds from the SS fund. As far as I'm concerned they are no good slimey CRIMINAL coc*****ers that should be lined up against a wall and shot! ALL politicians are the same. Unless we get a 3rd party that understands the plight of the shrinking middle class 2008 will just bring in the usual as****es like Clinton, McCain, etc. Nothing will change.

    If the morons that run this country had never touched the SS fund it would be solvant long after i die. But, those people just saw all that money in the fund and could not bear to not touch it. Of course they stole it and left an IOU which you can wipe your butt with. My understanding is they do it monthly after all the SS checks are cut. They supposedly use the money for other govt. expenditures.

    <div class='quotetop'>QUOTE(Godiva @ Jan 19 2007, 11:15 AM) [snapback]377717[/snapback]</div>
    I couldn't have said it any better than you. way to go.
     
    #8 Walker1, Jan 19, 2007
  9. EricGo

    EricGo New Member

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    Walker1, I presume you know that the IOU 'toilet paper' you mention is none other than US treasury bonds, yes ?

    The three largest owners of US bonds are Japan, China, and the 'US'. Give the Asians a bit more credit not to buy such lousy butt wipes.

    This doesn't mean that your SS is secure, let alone it's future value. Only that reality is not so simple as Junior or someone of equal stature giving you the finger, and then going back to sleep.
     
    #9 EricGo, Jan 19, 2007
  10. Pinto Girl

    Pinto Girl New Member

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    <div class='quotetop'>QUOTE(EricGo @ Jan 19 2007, 04:10 PM) [snapback]377932[/snapback]</div>
    I give them a lot of credit; they know how to wage and win an economic conflict. You've proven my point; these 'buttwipes' as you call them are simply too valuable to be sold!
     
    #10 Pinto Girl, Jan 19, 2007
  11. Beryl Octet

    Beryl Octet New Member

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    <div class='quotetop'>QUOTE(Pinto Girl @ Jan 19 2007, 04:32 PM) [snapback]377950[/snapback]</div>
    And the Chinese are getting ready for space war.

    http://seattletimes.nwsource.com/html/nati...hinasat190.html

    Or it's a clever trick to make us spend even more money on a space-based weapons approach.
     
    #11 Beryl Octet, Jan 19, 2007
  12. Pinto Girl

    Pinto Girl New Member

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    <div class='quotetop'>QUOTE(Beryl Octet @ Jan 19 2007, 04:36 PM) [snapback]377955[/snapback]</div>
    A la Reagan and 'Star Wars' and that crazy B-2 bomber and stealth fighter. Weapons-race them into submission, until their economy can no longer bear up under the strain....

    Let's see, China's economy is ascending, and ours seems rather stagnant...

    It's a knife which (we may soon find out) cuts both ways.
     
    #12 Pinto Girl, Jan 19, 2007
  13. Walker1

    Walker1 Empire

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    <div class='quotetop'>QUOTE(EricGo @ Jan 19 2007, 04:10 PM) [snapback]377932[/snapback]</div>
    Well, I would never started any trading with a communist country with nukes. I am not stupid like Waaah. The Chinese can't be trusted. And to make matters worse, just about everything we buy now is made in China. I definately am dead set against ANY foreigners buying T bills, land, or anything else that the US owns. bush needs to be impeached. The only problem is Cheney would be in charge and I think he's much worse than W.
     
    #13 Walker1, Jan 20, 2007
  14. burritos

    burritos Senior Member

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    <div class='quotetop'>QUOTE(Walker1 @ Jan 20 2007, 08:23 AM) [snapback]378210[/snapback]</div>
    I didn't know that the chinese had plans to invade america? If they did, would that mean they would take over the debt too?
     
    #14 burritos, Jan 20, 2007
  15. EricGo

    EricGo New Member

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    I still remember the good old days of not so long ago, when republicans and assorted nationalists would happily proclaim at every opportunity that Communism was inherently doomed to failure, and only a capitalism based country like the US could prosper economically.

    China sure stuffed that bit of jingoism downed their throats, and more crow is to follow.

    But do they learn a lesson ? Of course not. They just turn to fascism.

    Sorry, back to topic.
     
    #15 EricGo, Jan 20, 2007
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