Republican party dividing on Social Security as a "Ponzi scheme"

[mhaze]

mhaze, a nation that prints money to inflate it's wealth for a significant amount of time WILL GO BANKRUPT. There goes your bond rating.

Futures currency market? Don't lecture me when your proposition is easily falsified. If we were simply printing money our currency value would fall and eventually our rating would be downgraded and our bond value would got to hell.

I don't have to lecture. The chart I pointed explains this quite nicely. You might want to study it a bit before rashly spouting.

 

[RandFan]

I don't have to lecture. The chart I pointed explains this quite nicely. You might want to study it a bit before rashly spouting.

You might want to read a book.

• mhaze, a nation that prints money to inflate it's wealth for a significant amount of time WILL GO BANKRUPT. There goes your bond rating.
• Futures currency market? Don't lecture me when your proposition is easily falsified. If we were simply printing money our currency value would fall and eventually our rating would be downgraded and our bond value would got to hell.

 

[Minoosh]

Because obviously, those responsible for implementing Social Security just after the Great Depression - when unemployment rates were more than double what they currently are - and during a period of dramatic increases in life expectancy due to the application of germ theory, vaccines for things like tetanus, diptheria, TB (just after the discovery of penicillin as well, but that was just reaching clinical testing stages at the time) couldn't possibly have anticipated concerns like that.

Of course they could have foreseen some things and if Krugman is to believed it sounds like they did a pretty good job. But to say that the program is self-sustaining through 2037 sounds better if you're 50 than if you're 25. I'm involved in a research project and would love to hear from young fiscal conservatives who really are concerned about what happens after 2037, as opposed to people using it as a political tool.

And if it's such anathema to attack Social Security why is Perry doing it? What is his political payoff? I'm genuinely curious. The message must appeal to "social conservatives," but why?

Is it nostalgia for a time when families took care of the elderly? When you could grow your food on a farm?

Anyway I'm more concerned about Medicare. Because you can scrimp on rent, grocery shop for bargains and in general survive on government benefits - if you're also getting heavily subsidized health insurance. You can budget for paying retirees 2K a month; medical costs seem to be off the charts.

 

[Random]

And if it's such anathema to attack Social Security why is Perry doing it? What is his political payoff? I'm genuinely curious. The message must appeal to "social conservatives," but why?

He might not benefit from attacking SS, but conservatives do. By standing up and saying "let's scrap Social Security", he shifts the debate to the right. Instead of deciding between keeping Social Security as is or weakening it, it turns into a debate between weakening Social Security or eliminating it.

The purpose of politics is to advance your preferred policies, not to get elected. Even if Perry doesn't get the nomination, he is garuanteed a lucrative career giving lectures to rich people about why they should have all the money.

Anyway I'm more concerned about Medicare. Because you can scrimp on rent, grocery shop for bargains and in general survive on government benefits - if you're also getting heavily subsidized health insurance. You can budget for paying retirees 2K a month; medical costs seem to be off the charts.

Medicare is the big problem, but only because of the rising cost of health care. Medicare itself is quite cheap. It is an efficeint delivery service for an incredibly expensive product.

 

[JoeTheJuggler]

Actually, there were beneficiaries to the schemes of Charles Ponzi who were not criminals. That's the nature of such a scheme. And it is the organizer who is the person committing fraud and larceny. That would be here the US Government, not the recipients.

Good try, though.

So who are the criminals in the Social Security scam?

Are you saying Congress defrauded someone? Who?

Again, the observation that some kinds of taxes don't always immediately benefit the same people who pay in isn't fraud. Nobody simultaneously pays in and draws out unemployment. When unemployment goes up (and is protracted as it is now), you've got the same situation: taxpayers are paying into a system that benefits people who are not currently paying in.

Are unemployment benefits also a Ponzi scheme?

 

[JoeTheJuggler]

Social security can be "fixed" (made solvent for the foreseeable future) with a couple of common sense measures.

One is means testing for benefits. It is not a forced retirement account. It is a safety net, and the authority of Congress to have legislated the Social Security Administration arises from its authority to levy taxes.

Another is to make the tax flat or progressive rather than regressive as it is now. (You only pay on the first $106,800 of income. Above that, the rate drops to 0%.) Contrast this with Medicare which taxes all earnings.

 

[JoeTheJuggler]

And if it's such anathema to attack Social Security why is Perry doing it? What is his political payoff? I'm genuinely curious. The message must appeal to "social conservatives," but why?

As I said, it's rhetoric that has not been thoroughly thought through. I don't think he's aware how anathema it is to call Social Security a Ponzi Scheme rather than offer real-world solutions to the long-term solvency problem.

It could be, as Newton's Bit suggested, a negotiation ploy--going so hyperbolic that the other side is willing to give lots of concessions just to avoid throwing out the baby with the bathwater, but I really doubt that. I think the original audience of this rhetoric was his narrow base. I think his standing by that rhetoric now is just poor judgement.

 

[JoeTheJuggler]

I don't think that the recipients are scamming the country. But I do believe that the people who changed the system did. They got to promise all sorts of cool toys without having to pay for them in a responsible manner.

Even if your characterization of the establishment of the Social Security is accurate (promising "all sorts of cool toys without having to pay for them in a responsible manner"), that is still not fraud and is not a scam. In fact, it's pretty traditional politics (sort of like promising a chicken in every pot or $2 gasoline). The law was enacted according to the regular legislative process as laid out by the Constitution. Congress really does have the authority to levy taxes to provide for the general welfare in this manner.

Or is the word "scam" a metaphor as well?

 

[BenBurch]

You might want to read a book.

• mhaze, a nation that prints money to inflate it's wealth for a significant amount of time WILL GO BANKRUPT. There goes your bond rating.
• Futures currency market? Don't lecture me when your proposition is easily falsified. If we were simply printing money our currency value would fall and eventually our rating would be downgraded and our bond value would got to hell.

And in any case, he doesn't even know what money really is.

An analogy with electronics;

Money is not an electron, money is the flow of electrons. Money is a store of value that is valuable only when it is used. Which is why fossilized money in bank accounts does not help the economy one iota.

Yes, banks invest it, but they would be able to do just fine if the money were flowing, because the same amount aggregate would likely be on deposit at any time. Money basically moves from one bank to another. The amount of cash is very small. They would still invest it AND it would be in circulation AND they would get fees for that, too!

And this is why inflation below a certain level never destroyed a nation; When money is flowing, all that matters to anybody is that they move it on before it loses significant value.

And this is why stimulus, if sufficiently large, can end a recession. Money flows. People get employed and buy things and stores replace stock and...

If stimulus is insufficiently large, however, it won't help much. We've seen that.

Make money flow. When money stops flowing it stops being money.

 

[Minoosh]

I think the original audience of this rhetoric was his narrow base. I think his standing by that rhetoric now is just poor judgement.

I still don't get it. I didn't know it was possible to have a base that narrow. Maybe he is just using Social Security as a proxy for the federal government in general? Because while I don't know many rich people I know quite a few who are comfortably well-off and they're not anti-Social Security. Evangelicals? Oil barons? Who?

If he's using it as a rhetorical device he deserves to be backed into a corner on it. The more things he announces the more people he alienates, as far as I can tell.

 

[mhaze]

So who are the criminals in the Social Security scam?

Are you saying Congress defrauded someone?...

Yes, which is not illegal...

 

[mhaze]

You might want to read a book.

• mhaze, a nation that prints money to inflate it's wealth for a significant amount of time WILL GO BANKRUPT. There goes your bond rating.
• Futures currency market? Don't lecture me when your proposition is easily falsified. If we were simply printing money our currency value would fall and eventually our rating would be downgraded and our bond value would got to hell.

A) results, not predictive, is now what you argue? So you are arguing somehthing I didn't make. Has nothing to do with the correlations I mentioned.

B) I've said nothing about futures currency markets. But they are going to do what? Have an eventual and thus another non - predictive capability?

Wow. So you can't predict anything except the obvious?

 

[JoeTheJuggler]

Yes, which is not illegal...

Sorry, you're wrong. Fraud is by definition illegal both in criminal and civil courts.

 

[mhaze]

And in any case, he doesn't even know what money really is.

An analogy with electronics....

I just posted a chart with showed a 90+% correlation, M2 to inflation, extremely low correlation, bond price to inflation. Pretty simple.

Now Randfan misrepresents the arguments. Silly, really.

 

[mhaze]

Sorry, you're wrong. Fraud is by definition illegal both in criminal and civil courts.

OH? REALLY? When written into law by Congress?

No, it is not.

 

[JoeTheJuggler]

I don't think that the recipients are scamming the country. But I do believe that the people who changed the system did. They got to promise all sorts of cool toys without having to pay for them in a responsible manner.

And of course this isn't an accurate characterization of Social Security anyway.

Since 1935 it has mostly run surpluses (revenues to the trust fund exceeded expenses). The "problem" is an anticipatory one that primarily involves changing demographics in the population. As I mentioned, that issues is easy enough to solve.

So to date, Social Security has not been an example of anyone promising something that couldn't be paid for in a responsible manner. And protecting its solvency into the foreseeable future is no great problem to be solved.

So nope--not a Ponzi Scheme not even in some ill-defined figurative way.

 

[JoeTheJuggler]

OH? REALLY? When written into law by Congress?

No, it is not.

I think the illogic in your thinking would be apparent here if you stopped and thought a bit.

First, fraud is by definition always a crime.

Second, Social Security is the result of several laws that were passed in accordance with the laws regarding how laws are passed.

I think you're just trying to dress up the fact that you have some ideological objection to Social Security with rhetoric that makes it sound like a crime. Then you come up with the conclusion that it's a non-criminal crime, which is illogical.

 

[Mike!]

And in any case, he doesn't even know what money really is.

An analogy with electronics;

Money is not an electron, money is the flow of electrons. Money is a store of value that is valuable only when it is used. Which is why fossilized money in bank accounts does not help the economy one iota.

Yes, banks invest it, but they would be able to do just fine if the money were flowing, because the same amount aggregate would likely be on deposit at any time. Money basically moves from one bank to another. The amount of cash is very small. They would still invest it AND it would be in circulation AND they would get fees for that, too!

And this is why inflation below a certain level never destroyed a nation; When money is flowing, all that matters to anybody is that they move it on before it loses significant value.

And this is why stimulus, if sufficiently large, can end a recession. Money flows. People get employed and buy things and stores replace stock and...

If stimulus is insufficiently large, however, it won't help much. We've seen that.

Make money flow. When money stops flowing it stops being money.

In simpler terms, it's just paper till you spend it.

 

[RandFan]

A) results, not predictive, is now what you argue? So you are arguing somehthing I didn't make. Has nothing to do with the correlations I mentioned.

B) I've said nothing about futures currency markets. But they are going to do what? Have an eventual and thus another non - predictive capability?

Wow. So you can't predict anything except the obvious?

• Our currency is doing relatively well.
• Bonds are doing well.

People don't invest in a losing proposition. Therefore, investors don't perceive we are printing money with nothing to back it up.

I rest my case.

 

[Newtons Bit]

Even if your characterization of the establishment of the Social Security is accurate (promising "all sorts of cool toys without having to pay for them in a responsible manner"), that is still not fraud and is not a scam. In fact, it's pretty traditional politics (sort of like promising a chicken in every pot or $2 gasoline). The law was enacted according to the regular legislative process as laid out by the Constitution. Congress really does have the authority to levy taxes to provide for the general welfare in this manner.

Or is the word "scam" a metaphor as well?

The money has already been spent. The trust fund is full of IOU's that has to be redeemed by the taxes of a future generation. That's irresponsible.