MediumTex wrote:
Inflating it away relative to what? Everyone is trying their hardest to inflate right now and no one is having much success. See Japan.
See, I don't think the relative to what really means what it should because of many non financial, non mathematical factors we can't quantify. Whether we like it or not, the US FRN is the premiere thingy we use for money in the world. Money is of course a shared fiction us human beings agree to abide by to facilitate a universal barter exchange medium.
What meaning this has, I really don't know.
MediumTex wrote:
Many similar arguments were made about Japan and the U.S. in the 1980s, though it didn't turn out the way anyone predicted (note, too, that the Japanese hold a gigantic amount of U.S. debt, but for whatever reason no one talks about this anymore). I'm sure the China/U.S. story will have its share of twists and turns moving forward, but I don't think there is any way of predicting what will actually happen.
Agreed, this may be completely wrong. I just think it's not improbable, if that makes any sense. It’s just one professor’s speculative research. Lots of very smart people with high levels of expertise in specialized subjects have been wrong before.
MediumTex wrote:SS benefits are indexed to inflation, so it's much harder to do what you describe than it sounds. Of course, Congress could change the COLA methodology for SS benefit increases...if they all wanted to be voted out of office in the next election. Old people vote, and they like their entitlements.
My counter to that is people are stupid and bad at simple math while politicians are very creative and prolific liars. There’s an awful lot of wiggle room here if one just messes with the structure of the program.
What they could do is continue COLA under its current formula for people already on SS, and change the formula for future beneficiaries, for example. If you were to make such a rule to affect people currently under the age of 35, well, no one affected is going to complain very much save for a few people who pay attention, and you aren’t going to lose the senior citizen’s votes for it.
There’s a million other speculative possibilities. But again, I just think they have lot more creativity and wiggle room than you do apparently.
MediumTex wrote:A phase-in of increased retirement age is already under way (it started last year and will be fully phased in in coming years). Historically, such increases in retirement age don't become effective for many years after enactment (to minimize electoral blowback), which is what happened in the last round of SS "reform" in the early 1980s.
Science is coming up with ways to make people live longer faster than the political mechanism has of realizing the structural problems longer life expectancy creates. It's not a simple problem to solve.
See I disagree slightly. I think since they have gotten away with it before, they know they can do it again, and will get bolder and make more drastic cuts. You’re right, it won’t be enough on its own and it won’t be that bold relatively speaking, but I feel between this and my previously discussed “wiggle room”? they’ll water SS benefits down to more sustainable levels.
What I think will happen is SS and other entitlements will stay. However, the politicians will find a way to make it so that the payments are so small it does no individual recipient any real good. Just to pull an example out of the air, a crafty politician might realize hey, 1 million people getting a thousand dollars a month in checks ($1,000,000,000) is something we can’t afford. So what I’ll do is offer 3 million people, including the original million people, three hundred dollars a month instead ($900,000,000). So long as the political capital gained by offering 2 million people money they didn’t have before offsets the political capital lost by decreasing benefits for the original million that came before, the politician has “fixed”? the problem.
So in other words it’s not that I think our leaders are so smart they’re going to really solve the problems, I just think they’re very very good at wealth redistribution, lying, trickery and dishonesty and will address the problem in that way, which I feel will prevent a cataclysmic disaster but it will still hurt society greatly.
MediumTex wrote:
An increase in tax rates is outright confiscation (and you will never find a more elegant form of confiscation). That's what the founding fathers were upset about as property owners.
I agree with you which is why I phrased it as I did.
MediumTex wrote:
You're just describing a system of progressively larger scales of corruption. Such systems are never able to correct structural financial problems. Look at Greece and the rampant tax evasion there. More onerous rules will simply create another set of unintended consequences--see FDR's policies in the 1930s for a wonderfully detailed example of unintended consequences.
Exactly! This is exactly what I am thinking will happen.
Some people predict a complete stock market meltdown or a sovereign debt default, and while that may happen, I see this right here as being the most probable outcome by a long shot.
The sad part is that’s optimism compared to some of the other predictions.