…Here’s the troubling part: “The projections and analyses in this year’s
report do not reflect the potential effects of the Covid-19 pandemic on
the Social Security program,” the Trustees stated in the annual report.
Social Security’s plight has been obvious for decades and the longer Washington procrastinates, the more difficult the solutions. The Trust Fund Trustees state that ensuring solvency over the next 75 years would require a 3.1- percentage point rise in the 12.4% current payroll tax that is split between employees and employers. Even less politically attractive would be an immediate 19% across-the-board cut in benefits. Waiting for the Trust Fund money to run out in 2035 would require a 4.1-percentage-point rise in the combined payroll tax or a 25% cut in benefits, the Trustees calculate.
If self-funded Social Security benefits are an entitlement that is no longer affordable, so too are state pension fund benefits. Decades of lush retiree benefits, overly-optimistic investment return assumptions, insufficiency pension fund contributions and lengthening retiree life spans have resulted in the liabilities of public pension funds exceeding assets by $1.2 trillion in 2018, according to the latest data and Pew Charitable Trusts. The pandemic will surely worsen the mismatch.
Comment by tonytran2015: Any game can go on as long as there are players. Same reasoning applies to any bubble market.
Public debt is normally nothing to fear, especially if it is financed within the country itself (but even foreign loans can be beneficent for the economy if invested in the right way). Some members of society hold bonds and earn interest on them, while others pay taxes that ultimately pay the interest on the debt. The debt is not a net burden for society as a whole since the debt ‘cancels’ itself out between the two groups. If the state issues bonds at a low-interest rate, unemployment can be reduced without necessarily resulting in strong inflationary pressure. And the inter-generational burden is also not a real burden since — if used in a suitable way — the debt, through its effects on investments and employment, actually makes future generations net winners. There can, of course, be unwanted negative distributional side effects for the future generation, but that is mostly a minor problem since when our children and grandchildren ‘repay’ the public debt these payments will be made to our children and grandchildren.
Covid-19 Humor: Why do Australian people stock up toilet paper on the news of lockdown ?
They worry that America also enters similar lockdown and American Federal Reserve Banks may rescue rich Amrrican corporations by printing about 5.3 trillions of American dollars. That will certainly use up a lot of paper and there may be no paper left for Australian industry.
The coronavirus pandemic has popped a quadrillion-dollar financial bubble and we can expect a very deep and prolonged period of adjustment, RT’s veteran business commentator Max Keiser believes.
The financial crisis, which many believe we have just entered, stems from the times of Ronald Reagan and Margaret Thatcher, with the establishment of ‘neoliberal’ policies “that enriched bankers and destroyed workers by giving bankers free reign to borrow and speculate without oversight or accountability,” Keiser told RT. Now, governments will have to adjust to a new reality, and having a low debt and massive reserves could be the trump card, according to the former Wall Street stockbroker.
“Russia has the best hand at the geopolitical poker table. The Kremlin, for 20 years, has been doing the opposite of everyone else by reducing their national debt to near zero, and buying thousands of tons of gold while simultaneously raising living standards,” he said.
The Federal Reserve has printed trillions of dollars without generating runaway price inflation through the use of a neat trick.
The privately owned bank cartel shovels the bulk of the money to Wall Street banks and not to the public at large. Instead of millions of Americans rushing out to bid up prices on consumer goods, a relative handful of bankers is using the free money to bid up asset prices and then pay themselves huge performance bonuses.
It’s quite the racket. Fed officials have been able to point at stock prices as “proof” of how they successfully engineered an economic recovery.
Wall Street is the true beneficiary of all the largesse and Main Street doesn’t ask too many questions as long as the stock market is roaring higher.
- Entitlements (budget geeks sometimes use the term “mandatory
spending”) are programs that automatically give people money if they
meet certain requirements (such as reaching a certain age or having
income below a certain level).
- Since these programs automatically give people money, they are not part of the annual appropriations process
(the “discretionary spending” parts of the budget that are determined on a yearly basis).
- Some entitlement programs are “means tested” and designed to funnel
money to low-income individuals. This type of spending is sometimes
referred to as “unearned benefits.”
- Some entitlement programs are “social insurance” since people pay
specific tax in exchange for specific benefits. This type of spending is
sometimes referred to as “earned benefits” (though in many cases recipient receive much more than they paid).
By the way, there’s one additional thing to understand…
5. Entitlement programs are a slow-motion fiscal train wreck.
…by the early 1960s, two-thirds of all spending continued to require
approval by the House and Senate appropriations committees each year,
and less than a third was spent on entitlement programs. … By 2019,
nearly two-thirds of all spending in the budget was for entitlement
programs, and less than a third went to annually appropriated accounts.
FOREIGN ‘Investment’ Companies like these are operating in a space that seeks to gain ownership dressed up as ‘investing’… the customers for these purpose built student accommodation are with little doubt from the same origins … so profits are designed to leave our shores along with the Title Deeds!
HOW do they do this? By setting up a business trust in Australia to acquire property …
These developers are long term planners … they are looking for ownership over a long period of time in Australia.
An opportunity to accommodate their students in a closed environment where they control it!
Our universities had a proposal to begin flying in small groups of international students from July …
… those pushing this are those that have the most to lose in their business model based on fee paying foreign students
It is a worry, just goes to show what depths these Edu-entrepreneurs will go to … to have tax payers subsidise foreign students even though they say the student pays, every other cent spent by the University is ultimately sourced from the public purse.
Tyrannical mayors and governors that shut down their economy and kept it close for far too long are now looking to Washington to pay for their inane actions. I say no. Why should Republican states that were acting responsibly pay for the mistakes of the Democratic-run states?
Their death tolls were much higher than they needed to be due to the fact they were sending DTMNBN (Disease That Must Not Be Named ) to nursing homes where they could infect the elderly and infirm who are most at risk from the virus. 40% of all DTMNBN deaths were at nursing homes.
And tax revenue collections mare way down because states have remained closed for way too long. Whitmer claims lost revenue will amount to $6 billion dollars over the next two years. Michigan is still mostly closed for business.
Some states are even demanding money to bail out their pension systems that were terribly mismanaged. I doubt that Republicans are willing to spend up to a trillion dollars to bail out those states that are in trouble not relating to DTMNBN.
Mark E. Jeftovic
After the 9/11 terror attacks, … Bush II proclaimed “They hate us because of our freedoms”.
… If you looked at the United States as a global empire, and that the freedoms “they”
hated were not actually the ones to assemble, or worship or to vote, as Bush intimated, but rather the ones where America acted unilaterally in
its own interest observing American Exceptionalism as a type of infallible axiom, then Bush would have been closer to the substance of the matter.
Here was world hegemon who claimed the freedom to overthrow governments, the freedom to bomb or invade any country it pleased, the freedom to support brutal dictators, assassinate enemies, interfere in
elections and basically do whatever it wanted. …
… The recurring theme throughout a lot of my writing has been echoing some criminally obscure writers (such as Stepehen Zarlenga and Vincent LoCascio) who have documented in their works how whoever controls a society’s monetary system, controls the society….
As long as the USD is the global reserve currency, the USA will enjoy “freedoms” that enable it to impose its own rules based order on the entire world.
And it is that structure that affords every single American, a type of systemic, structural, unearned, privilege…
All of that is privilege, all of those unearned advantages and perks, that entire, elevated standard of living is derived from being citizens of a country who gets to mint the world reserve currency out of thin air, as much as they want, in ever escalating amounts…
The US military enforced the dollar supremacy globally and the rest of the world essentially traded their wealth and labour for US debt.
After the end of Bretton Woods, when Nixon closed the gold window
(temporarily) in 1972 (it’s still closed), the Privilege Perimeter began an inexorable process of constricting.
It crossed a kind of Rubicon after the Dotcom crash, when the policy choice was to blow up a housing bubble, and then it entered the endgame
after the 2008 GFC, when the banksters were bailed out…
The result is that now, in the USA, the middle class is finding themselves for the first time outside
of the Privilege Perimeter. This is especially acute now that policy makers are literally picking economic winners and losers, with the
winners usually being well connected, albeit often insolvent zombies,
and the losers being small businesses, independents, and anybody who
works for one.
The Cantillon Effect, which I’ve talked about before,
of newly created money benefiting those who are closest to the spigot,
turns out to have a reciprocal effect of constricting the circle of
beneficiaries over time. It’s like a black hole for economic value.
Once all the economic value has been leeched away from everybody outside the Privilege Perimeter, once all future prospects have been
monetized in the here and now, the blackhole of financialization begins
to collapse in on itself… it may present as civil unrest, internecine fighting amongst
competing factions of elites and external brinksmanship reminiscent of early 1914 Europe….
It means the vast majority of Americans are going to have to endure a massive reduction in their standard of living. At the same time, as
long as “The Establishment” holds together, they will continue their breakaway trajectory of opulence, and wealth accumulation, plundering the last of the privilege to go around.
Eventually it will break, but it won’t be just, it won’t be fair, it won’t be inclusive or equitable.
It’ll just be ugly.