I wanted to share my thoughts on an interesting perspective formed after the last State of the Union speech by President Bush. Basically, at first I
felt uncomfortable when he began to layout his suggestions for the Social Security system.
But now that I have thought about it for a bit, I'm convinced that the 'problem' isnt the whole story.
What do we know?... I guess that it appears anyone under 55 as of 2005 is going to assume a certain loss when they retire, as opposed to their
predecessors. What really tweaked my gourd was the tactics I 'felt' being used.
Stay with me for a sec,...
The best way to sell something is thru fear. "Who will pay the bills? What will the children do?!!"
Yes you've heard the commercials selling
life insurance to old people, using fear of being a burden on the family as the 'lever'. I had that same gut feeling when the President was
describing the future 'un-adjusted'. Suggesting the insolvency and using the proper key words to describe a crumbling arm of the government.
"What will we have then?!! How will we pay for it?!! Who will do without?!!"
Well the obvious answer is to change it, or suffer the forcast....
(I found this a decent general description, and an interesting read,..)
The C-Word: Say It
Right now the Social Security program collects more in taxes — both FICA taxes from current workers and income taxes on benefits from current
retirees — than it pays out in benefits to retirees. That surplus goes into Social Security trust funds, where it is used to buy Treasury
bonds that are held as an investment toward the payment of future benefits.
that is an article you should read to the bottom. A bit oversimplified, but self-explanatory after you read my following thoughts ,...
Now, I have posted here as many others have also from time to time about the economy, foreign currencies and international exchanges, the currency
called the Dollar, and how it is used in the oil industry to buy oil, which is primarily IMO the reason that approximately 60% of US Treasury Bonds
are purchased by foreign entities. (mostly countries governments. Japan, China, and a host of others soak them up at the moment.)
But wait!!, if foreign entities buy about 60 percent of all sold t-bonds for investment and petro dollar's, and the Social Security Administration
loans the US gov it's proceeds by purchasing T-bond's with ALL it's income surplus's, then they are THE Primary Players in the T-bond market.
See where I'm starting to go yet? (good time to go back and re-read again the above link)
Is it just me? or do all the petro dollar, currency exchanges, China economy, crumbling Social Security Admin, all tie together? If the SS ceases to
buy T-bonds, and then even begins to redeem them, then there will be a 30%(?) drop in T-bond demand, leaving the currency precariously perched even
moreso, and any threat of any other change would seemingly push it over the edge. "Who will pay the government deficit?!! What will our
So, what will dumping a portion of the SS benefit burden back onto the shoulders of common working people, do to help?
Well, it seems to me that that just delays the insolvency. Maybe a few more years. But just the same, until the cycle begins to pull itself up again
by population growth and many years and maybe even some semblance of SSA recovery. But now it seems it helps to get some cash circulated out there.
Some 'taxable' cash, being used to buy some 'taxable' products and services. That and along with the Baby Boomer 'trickle-down' taxable incomes.
Maybe so there may be enough increase in tax revenues, to help compensate for the lack of cash generated to power government by selling t-bonds to the
SSA, and also to help to begin to payoff those danged S.S.A. guys who are already sitting on a ton of t-bonds and wanting to cash them out..
Interesting to say the least, but I am tuned into this SS thing,... as the President all but denied his suggestion of those 55 and under. But it kinda
looks like the SSA could be the first crumb on the crumbling currency cookie-domino.