[Homestead] Morning thought

Clansgian at wmconnect.com Clansgian at wmconnect.com
Thu Feb 3 11:28:59 EST 2005


> I read this morning that the 
> trust fund T-bills receive three percent interest. That interest accrues 
> until it is needed and when the trustees need it, the government must pay 
> it or default. Default equals revolution. No president, senator or 
> congressperson could risk it.
> 

Right, that 3% interest  means essentially that the $100 billion due to the 
SS through 2042 is actually $150 billion.  And you are also right that just as 
for any other  credit holder, default means insolvency.   

I've read a lot too in the past couple of weeks on the whole SS issue and I 
find that almost (but not quite everyone) sidesteps the real issue.  That is, 
there is a limited percent of the population that can be on some stipend (be it 
SS, pension, stock yields) and there still be goods and services provided at 
a reasonable cost.  When 50% of a population is consuming goods but not 
producing them, does it not stand to reason that those who DO produce goods will 
have to produce twice as many to get an equal exchange for their enterprise?  One 
in exchange for someone else producing something and one for the people not 
producing anything.  The supporters of the president's plan point out the 
mathmatics of where SS is headed, that soon (say they) one of three things must 
happen 1) benefits are cut    2)  taxes increased  3) government borrows more 
money.    None of the three is acceptable.  But what everyone seems to ignore is 
what will inevitably happen:  Retirees and pensioners and SS recipients will 
get what they are promised, sure enough, but inflation must surely set in 
caused by more money pursuing fewer goods and services until what the pensioners 
receive buys nearly nothing.  COLA, you say?  Changes in the COLA definition 
have been uderway for some time ... quietly, of course.  At one time they figured 
what the avereage retiree would need for breakfast, what eggs, bacon, milk, 
bread, and coffee costs (as an example).  When the cost of those things went 
up, it would trigger and automatic increase in SS benefits.  Realizing this 
would block the only safety valve the system had, inflation that is, the rules 
where changed to allow for 'alternate' goods to be referenced.  For example, 
instead of eggs and toast and coffee, they figured the retirees could have tripe, 
castor oil, and kraut juice ... which, hey, DIDN'T go up in price like eggs 
and bread did.  No problem, and no COLA.

Gene, you talk about lynching Congress if SS is much mucked with.  What do 
you think will happen when a young worker is told that they must support their 
immediate family AND two retired people they don't know off his/her income?  
Because of SS and such, many people have become cynical of family and community 
that used to look out after the elderly.  This alienation of the younger 
generations, thinks I, may have a backlash effect.  The outrage you think would be 
forthcoming if great-aunt Myrtle's SS is diminished (or just not raised) might 
be met with apathy after Myrtle has been careless of family knowing all along 
she could count on SS.

James



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