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

[Minoosh]

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.

Then why don't the corporations sitting on piles of money get that? Why don't they start hiring? They could create stimulus of their own by creating some jobs (low-paying is OK but make a lot of them). Then demand for their own products would increase. Why does the stimulus have to come from the government?

In theory I understand, it would eat into profits for that quarter and stock prices are driven by meeting quarterly expectations. But the status quo isn't working if consumers aren't buying.

I'd love to understand economics. I find bold statements like "stimulus, if sufficiently large, can end a recession" immensely reassuring. Then I think about how long in history we've actually had to figure that out, and I get skeptical. We're making this civilization stuff up as we go along, it's all we can do, but if there really is that loose affiliation of millionaires & billionaires why don't they step up and get the global economy humming again?

I tend to be a zero-sum kind of gal absent the production of wealth as opposed to money. The standard of living has to come from somewhere.

Just to try to bring this on topic I'm in favor of a federal pension system, means tested, finely calibrated for modest support.

 

[Varanid]

I don't really agree with some of your post, but love this:

We're making this civilization stuff up as we go

That is all...back to terribly interesting discussion I barely understand.

 

[mhaze]

• 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.

You don't have a case. None whatsoever. The graph, and the study behind it, shows that bondholders are wrong - when money supply changes rapidly.

And so, yes, people do invest in losing propositions. All the time.

You have admitted losing re predictive values.

You have no case whatsoever. You have tried to contrive an argument to argue against.

 

[RandFan]

You don't have a case. None whatsoever. The graph, and the study behind it, shows that bondholders are wrong - when money supply changes rapidly.

And so, yes, people do invest in losing propositions. All the time.

Not on purpose. Inflation will eventually catch up and investor will jump ship like rats

You have no case whatsoever. You have tried to contrive an argument to argue against.

Asserting something doesn't make it true. Fact, if we were simply printing money it would put our currency into a vicious cycle of rampant inflation. That would lead to a downgrade in our bond rating. Sorry, you can cling to your silly chart until the cows come home (and of course you refuse to address currency markets that proves you wrong). I'm not talking about simple inflation but hyperinflation inflation caused by artificially creating wealth through printing money. Obviously you know nothing of economics and must rely on brow beating. Not going to fly.

 

[MattusMaximus]

Social security is not a Ponzi scheme. what prevents Republican sympathizers from simply admitting it.

The fact that some here are even attempting to defend the "Social Security = Ponzi scheme" meme is laughable.

The GOP/Tea Party is going to give themselves a self-inflicted wound on this one. Hell, they already have, because when your front runner for the nomination (Perry) comes out so publicly with comments such as these, you have one of two choices: 1) defend him at all costs and piss off the majority of Americans, or 2) criticize him and piss off the must-have Tea Party base.

 

[mhaze]

And WHO exactly owns the narrative?

 

[mhaze]

Not on purpose. Inflation will eventually catch up and investor will jump ship like rats

Asserting something doesn't make it true. Fact, if we were simply printing money it would put our currency into a vicious cycle of rampant inflation. That would lead to a downgrade in our bond rating. Sorry, you can cling to your silly chart until the cows come home (and of course you refuse to address currency markets that proves you wrong). I'm not talking about simple inflation but hyperinflation inflation caused by artificially creating wealth through printing money. Obviously you know nothing of economics and must rely on brow beating. Not going to fly.

But WHAT are you arguing? Not against something I said. We already solved that. You were wrong in asserting that bonds signaled inflation.

And hyperinflation is not caused as you say. It is caused by changes in consumer habits, preferring hard goods and dumping cash quickly.

Neither are you arguing any specific time sequence or relation that relates to a greater issue. You've set up an argument, repeated argued on it, and then claimed a graph you don't show any evidence of understanding is silly.

In fact, the graph is not simple. And I think we will all take the opinion, data series, and statistical correlations of the European Central Bankers on money supply, inflation, and bond values over your opinion on what's silly.

 

[Ziggurat]

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.

It may be easy to find a solution. But it is not easy to implement a solution, or it would be solved. And it isn't solved.

 

[Earthborn]

So Paul Samuelson argued that it was basically a Ponzi scheme, and he did so in defense of Social security.

He also said that basically the whole free market economy is a Ponzi scheme.
If Republicans were to argue in favour of sustainability in other areas of the market, their criticism of social security wouldn't sound quite as hollow.

 

[RandFan]

But WHAT are you arguing?

That America is not printing money that is not backed by American goods and services.

1. Doing so would lead to hyperinflation.
2. Our currency isn't losing significant value.
3. If our currency had been losing value for sometime then our bond value would fall.
4. Bond values have not fallen.

By definition, hyperinflation is a rapid increase in Nominal GDP (the Money Supply multiplied by the velocity of money) without a corresponding increase in real output (see Equation of exchange). ¹ This is often caused by decisions on the part of the central bank to increase the money supply much more than markets had previously expected, often when money is printed to finance government spending. ² This results in a fall in the demand for money relative to its supply, which in an extreme case can grow into a complete loss of confidence in the money, similar to a bank run. This loss of confidence causes a rapid increase in velocity of spending which causes a corresponding rapid increase in prices. For example, once inflation has become established, sellers try to hedge against it by increasing prices. This leads to further waves of price increases.[8] Hyperinflation will continue as long as the entity responsible for increasing bank credit and/or printing currency continues to promote excessive money creation. In severe cases, legal tender laws and price controls to prevent discounting the value of paper money relative to hard currency or commodities can fail to force acceptance of the rapidly increasing money supply which lacks intrinsic value, in which case hyperinflation usually continues until the currency is abandoned entirely.[9]

^{3, 4} Much attention on hyperinflation naturally centres on the effect on savers whose investment become worthless.

 

[L.Y.S.]

The fact that some here are even attempting to defend the "Social Security = Ponzi scheme" meme is laughable.

Social security is truly a good program for taking care of the elderly and disabled, but I view social security as highly inefficient and antiquated organ in our society. Our current revenue stream can’t keep up with the ballooning cost of expenses. In most countries the vast majority of the population pays into funds through taxes in income and services which can be then reused by the government during a person’s retirement age, not much different from the states. Where the difference lies are how we tax the issue in question. We inefficiently tax here in the states and allocate it as "welfare" to the elderly and disabled instead of universally.

I don't believe social security is a bad idea. But it’s very inefficient based on its current model. Not to mention the combined Medicare and Medicaid plans- if I may liberally incorporate these subjects into the topic- could potentially drain the U.S. treasury. We need to reform our current system and make it more efficient for everyone or social security could potentially, with the stroke of a pen, be gone by 2040 (give or take).

So in lieu of your comment, the republicans have the right general idea, but the wrong method of implementation.

 

[mhaze]

That America is not printing money that is not backed by American goods and services.

1. Doing so would lead to hyperinflation.
2. Our currency isn't losing significant value.
3. If our currency had been losing value for sometime then our bond value would fall.
4. Bond values have not fallen.

....

Our currency in 2005-2006 was far stronger against CAN and AUD, something like 1.4:1.0 USD for both. Now it is roughly par. That is specifically due to money printing. That's accelerated since the 2005-2010 timeframe.

Neither #1 or #2 are quantified, and time frames for #3 and #4 are unstated. The extent of the time relationship (to which it is known) between inflation and bond values reflecting it is shown in the graph I provided, in addition to the variance.

You seem to want to argue that you can get something for nothing. Nobody will agree with what you've said here, not even Krugman. What you've got is latent, unrealized inflation sitting like a powerkeg in amounts that reflect the amount of money printed.

 

[RandFan]

Our currency in 2005-2006 was far stronger against CAN and AUD, something like 1.4:1.0 USD for both. Now it is roughly par. That is specifically due to money printing.

Now it's not. That's just two currencies. If we were experiencing hyperinflation it would be down by most if not all

You seem to want to argue that you can get something for nothing.

Nope. Not even close. I argue only one thing. There is no evidence that we are printing more money than we can back with goods and services.

It's demonstrable.

 

[shuize]

Now it's not. That's just two currencies. If we were experiencing hyperinflation it would be down by most if not all

The dollar has also fallen approximately 40% against the yen in the last four years.

 

[mhaze]

Now it's not. That's just two currencies. If we were experiencing hyperinflation it would be down by most if not all
Nope. Not even close. I argue only one thing. There is no evidence that we are printing more money than we can back with goods and services.

It's demonstrable.

The gray is M2, and it's LOGARITHMIC.



According you to that our production of "goods and services" is also expanding exponentially.

The conclusion of the Central Banker's Report on these factors reads:

....central banks should remain cognizant of monetary trends in generating longer-term inflation forecasts and then act to align forecasts with the goal of keeping the inflation trend low. Central banks should not forecast longer-term inflation trends based on longer-term interest rates (or surveys of inflation expectations), which have generally been wrong when inflation trends changed. To keep the longer-term inflation trend low, central banks need to keep the longer-term broad monetary growth trend low. If, as is frequently asserted, everyone now accepts Milton Friedman’s dictum that “inflation is always and everywhere a monetary phenomenon”, then central banks always and everywhere need to fashion policy actions to take that empirical verity into account.

This means explicitly that M2 causes inflation, and M2 increases will cause inflation.Bond market expectations correlated 0.31 with inflation; M2 correlated .92.

When monetary growth trends exceed the real growth trend, the inflation trend would be increased both directly through excess monetary growth above real growth and indirectly through the faster utilisation of money balances. This is an old story with antecedents in Irving Fisher and Milton Friedman among many others.

 

[RandFan]

When monetary growth trends exceed the real growth trend, the inflation trend would be increased both directly through excess monetary growth above real growth and indirectly through the faster utilisation of money balances. This is an old story with antecedents in Irving Fisher and Milton Friedman among many others.

That would all be fine if you withdrew your claim that our economy is simply based on printing money (a hyper-inflationary model). You are wrong and thus your graph is irrelevant since it has nothing to do with your proposed model. Inflation will always exist in a market economy. It is endemic to the system. I'm not talking about simple inflation as you are not talking about a standard model. No, you have proposed a hyper-inflationary model in which the variables and dynamics are entirely different. Now, you can pretend your model isn't hyper-inflationary but then you can pretend that monkeys fly out of you ass also.

 

[JoeTheJuggler]

It may be easy to find a solution. But it is not easy to implement a solution, or it would be solved. And it isn't solved.

Again, I'm refuting the claim that the system is a scam because it was making promises that we couldn't keep. First, even if it were true that it was an example of making promises we couldn't keep, that doesn't constitute a scam. Second, it is not true that it is an example of making promises we couldn't keep. To date, social security is solvent. Most of the years of its existence it has run a surplus.

The projected problem can be solved. That it hasn't yet been solved doesn't mean that it can't or won't be (or is too difficult). It means that so far we haven't had to solve it yet. Again, it's a problem largely related to demographic changes that will tip the balance (under current taxes and current benefits) such that revenues will fall short of payouts at some point in the future. I've already shown two common sense measures that would solve that long term future problem indefinitely.

So far--since 1935--we have indeed been able to keep the promises made wrt Social Security.

The scam, fraud, Ponzi Scheme rhetoric is wildly inaccurate.

 

[mhaze]

There is no money, except money which is printed or borrowed, to fund SS. This house of cards collapses (in terms of received benefits) at any moment when there is a rapid inflation and the payments do not match the needs.

This has happened in dozens of countries and has been well studied, and is understood. The payments can always be made. But they will not be worth anything.

BTW, there's a way for you to check, daily, for yourself to prove that you are wrong. Check the treasury bonds and futures market for US currency. If they start to plumet then you will know that our money supply has exceeded it's value. Got it?

<<more posts, withdrawal of claim by Randfan about bonds being predictive of inflation>>

<<attempt by Randfan to duck into currency values, apparently also withdrawn>>

<<attempt to divert into "hyperinflation">>

That would all be fine if you withdrew your claim that our economy is simply based on printing money (a hyper-inflationary model). You are wrong and thus your graph is irrelevant since it has nothing to do with your proposed model. Inflation will always exist in a market economy. It is endemic to the system. I'm not talking about simple inflation as you are not talking about a standard model. No, you have proposed a hyper-inflationary model in which the variables and dynamics are entirely different. Now, you can pretend your model isn't hyper-inflationary but then you can pretend that monkeys fly out of you ass also.

<<?? made up stuff about "proposed model">>

Are you making things up again?

 

[RandFan]

There is no money, except money which is printed or borrowed, to fund SS. This house of cards collapses (in terms of received benefits) at any moment when there is a rapid inflation and the payments do not match the needs.

This has happened in dozens of countries and has been well studied, and is understood. The payments can always be made. But they will not be worth anything.

<<more posts, withdrawal of claim by Randfan about bonds being predictive of inflation>>

<<attempt by Randfan to duck into currency values, apparently also withdrawn>>

<<attempt to divert into "hyperinflation">>

<<?? made up stuff about "proposed model">>

Are you making things up again?

I'm not sure but these appear to be bald face lies.

You are the one who claimed the US is propping up the economy by simply printing money. That is a hyper-inflationary model by definition.

1. I posted my premises.
2. I posted supporting information.
3. I cited my sources and provided links.
4. You rebutted none of that and are now engaging in silly rhetorical device and lies.

 

[mhaze]

I'm not sure ....

this exact statement of mine

There is no money, except money which is printed or borrowed, to fund SS.

Has been converted by you into

You are the one who claimed the US is propping up the economy by simply printing money

1. You lied when you converted my statement "printed or borrowed" into "printed".
2. You lied when you converted "fund SS" into "propping up the economy".

Please stop it.