riding out the coming generational storm

[Boston]

Kotlikoff focuses on the burden that payouts to baby boomers (e.g. Social Security) will place on the younger generation and he predicts "economic catastrophe." For example, 33 million people currently receive a SS check that averages $23,000 a year. Four years from now, 77 million people will be collecting a check. That increase will hold steady over the next 30 years; the older population will remain double that of today while the younger generation will increases at a modest rate of about 18%. When Medicare and other 'elder entitlements' are added on, the tax burden on the younger generation not only amounts to "fiscal child abuse" but also cannot be sustained.

His solution: the size of liabilities versus resources to pay means that catastrophe can be averted either by a 78% increase in taxes or an immediate slashing in half of all benefits to the elderly.

No politician who wishes re-election would entertain the drastic solutions offered by Walker or Kotlikoff. The only other way the government can even temporarily prop up programs like Social Security is to speed up the printing presses that issue money -- money that is worth slightly less with each dollar printed. By doing so, they are setting the stage for hyper-inflation to wipe out both savings and the decent standard of living now enjoyed by the average person.

http://www.jpfo.org/wm-beansbullets.htm

I wrote about this and the resulting ageism crimes in Molon Lab?!
The aging Baby Boomers' insistence on receiving full-value checks will be
the death sentence for any national libertarian renaissance.

Boston

[/color]

[Strider]

In addition, this is one of many reasons why the Fed will have to pursue its "inflate or die" policy, in which Federal Reserve Notes become less and less valuable. A good reason to stock up on gold, silver and ammo (for its currency value).

[Paul Bonneau]

Yes, for politicians, that is the path of least resistance; and given the particularly low standards for modern politicians, the course they almost certainly will take. Hard to imagine any other outcome.

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury.

-- unattributed

[WaywardBug]

Here's a silly question: how can we, the people, discover if and how much new money is being printed/introduced into the economy by those in a position to do so? Is there, of all things, a website or other publically-accessible source for this information, perhaps one which discloses such in a timely manner?

[Paul Bonneau]

There are measures of money in the economy, M1, M2, M3 (I think!  ). You could google for the phrase "money supply". The feds just stopped publishing the M3 supply numbers a few months ago. Guess they thought we weren't interested. 

Jim D no doubt will answer your question more satisfactorily than I can.

[Strider]

Paul is right; the Fed just stopped publishing the money supply (M3), much to the consternation of economic analysts. I think it was February. But contrary to his suggestion (facetious I assume , I think most economists think it is so they can lie, oops I mean publish statistics, about things like the inflation rate.

[Fred Rogers]

I wrote about this and the resulting ageism crimes in Molon Lab?!
The aging Baby Boomers' insistence on receiving full-value checks will be
the death sentence for any national libertarian renaissance.

Boston

How do you see it affecting an individual state?? How does Wyoming treat its elderly?? Much the same as the rest of the nation I assume?

Dire predictions have a way of awakening folk.? Perhaps the Hollywood version contains a pandemic which we have been primed for and will be too busy trying to avoid to contain the other disease that will surely accompany it.? When there's a need for 3000 resipirators and only 150 on hand, who gets thrown out of the lifeboat?? Stay healthy?? Somehow, I don't think we can rely on the comfort of strangers.

[Daveasxx]

Quote
A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury.
-- unattributed

Paul,

In case your were wondering...I'm pretty sure that it was derived from this quote...

"Democracy is a form of government that cannot long survive, for as soon as the people learn that they have a voice in the fiscal policies of the government, they will move to vote for themselves all the money in the treasury, and bankrupt the nation." --Karl Marx

It's a sad day when I have to agree with something said by him

Dave

[Boston]

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury.

This may have been uttered by an historian named either Tyler or Tytler.

Boston

[Paul Bonneau]

That's what I thought, guys. However you'll notice that "unattributed" under the quote I gave is a link - to a page that examines the attribution of this quote. Somebody obviously said it, but nobody knows who (and I don't think it's Marx either).

[ricwoz]

Anyway:  The Coming Generational Storm is well worth reading.   It shares some general ideas with "What if the Boomers Can't Retire" and "The Great 401K Hoax".   

All of these point out that the stock market doesn't throw off enough money to fund all the retirement of all the people who are depending on it to.    In 'the good old days' companies put a significant portion of their profits into funding their pension systems (or sometimes not enough, like GM and the Airlines).    The "match" portion of the 401K results in far less money, on a per capita basis, going into retirement accounts.

What happens when all the currently 50ish people decide to cash out at age 65?   Lots of sellers means prices drop, just when people expect to be able to get out of the market.

The Generational Storm adds onto this the idea of generational accounting and the problems with the multiple pyramid scheme social programs we have:  Social Security, Medicare.

Something has got to give at some point.    It will probably be a combination of  higher ages to beging drawing benefits,  benefit reductions,  benefit indexing to other income,  higher taxes and inflation.     \

Those who have saved and /or worked to have a pension will be penalized in favor of those who have not.  (Of course at this point the largest source of the old style "defined benefit (ie: 80% of last years pay) pension are government workers.   They will probably exempt there pensions from indexing somehow.

[Daveasxx]

My bad Paul.  You've obviously done more homework than I did.  I just saw it attributed a couple of times.  Thanks for the info.

Dave

[Boston]

NOTE:  I split off and moved the Social Security portion of this thread, to:

http://www.fundamentalsoffreedom.com/fswforum//index.php?topic=2950.0

Here, let's keep the discussion limited to the "generational storm" issues,
vs. SSA/IRS legalities.

Boston

[Jared]

free video download of Kotlikoff discussing his book:
http://mitworld.mit.edu/play/200/

[DC]

A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury.

This may have been uttered by an historian named either Tyler or Tytler.

Boston

Alexander Fraser Tytler made this interesting observation about democracy in 1776:  ?A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years. [Tytler describes the life cycle of civilization as from Bondage to Spiritual Faith to Great Courage to Liberty to Abundance to Selfishness to Complacency to Apathy to Dependency and back into Bondage.]?