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Old 01-03-2013, 03:21 PM
 
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Quote:
Originally Posted by Hamish Forbes View Post
You know, there's theoretical nonsense, and then there's the real world that most of us live in. What do you mean by "pound." Any numbers? Give us your prediction.

All I can tell you is the facts. We just got a 2% dead weight head wind. The money supply the economy reacts to is money supply + change in debt( Steve Keen). To reach maximum employment we were creating about 3.5 trillion in deficits and debt per year during the housing bubble. . That means we are several trillion short. A FICA increase just means that we expect the banks to crank up the lending. The only money we will see is the currency carry trade blow back from the international speculators borrowing in dollars if the BRIC countries can sustain their economies.


Money does not follow the rain cycle. Its pours over the edge into the account of a saver, typically in the 1%. You either print more, tax it, or go into a depression especially in this environment.

A prediction? The high deficit will remain as is because of "unexpected" revenue short falls.


I will be watching this:

http://www.federalreserve.gov/releases/g19/


And

PCE , Personal Consumer Expenditures.
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Old 01-03-2013, 03:25 PM
 
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Quote:
Originally Posted by Malloric View Post
I'm kind of the opposite.

Being both the employer and the employee, I'm very glad to have loopholes that let me exempt about half of my earnings from FICA taxes. I'm not big business, but social security makes very little sense to me. As a self-employed person, I pay into the unemployment but barring a complete extinction of my industry can never claim it. Even if I could get it, I'm already maxed out on California's unemployment reporting half my income as salary. Likewise, there's little benefit to exposing one's earnings beyond what keeps the audit man happy due to the regressive nature of social security.
What is the connection between unemployment insurance and Social Security?
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Old 01-03-2013, 03:28 PM
 
2,988 posts, read 3,768,075 times
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Quote:
Originally Posted by gwynedd1 View Post

A prediction? The high deficit will remain as is because of "unexpected" revenue short falls.
No. Use your knowledge of Adam Smith and John Stuart Mill to give us a real prediction, one with some numbers behind it.
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Old 01-03-2013, 03:38 PM
 
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Quote:
Originally Posted by Hamish Forbes View Post
I think that you're quite wrong. Everything changed when fossil fuel replaced human muscle power. Everything changed again when international corporations and the FIRE segment replaced farmers and craftsmen as economic drivers (in the terms of Adam Smith: unlike the town shoemaker, a modern corporation has no shame, no ethics, and no conscience). And everything is about to change again with the forthcoming arrival of artificial intelligence.

Although I disagree with you completely concerning economics, be informed that I didn't fall for any of the bubbles that you mentioned, either.

What changed in basic economics and finance? Nothing. Human mucle power was replaced long ago and machines magnified that power just like when a king of Greece used a pulley designed by Archimedes to haul in a boat. The only stores of wealth and power not subject to per unit diminishing stores of value are:


Didn't we have steam engines when Henry George pointed out ground rents just like Smith and Ricardo? Ya think?
The power of labor to produce wealth in California in 1879 is not less than in 1849 — it is greater. During these years, the efficiency of labor has increased in many ways — by roads, harbors, steamboats, telegraphs, and machinery of all kinds; by a closer connection with the rest of the world; and by countless economies resulting from a larger population.

HG
money power.
political power
land
military.

Anyone can find a way to make more widgets. Those powers can and will stifle or propel industry as they have for thousands of years. The large estate, usury, Genghis Khan, and silver tongued fops you can read in speeches all the way back to Thucydides runs the economy.

The FIRE sector is nothing but the union of 2 of those powers.
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Old 01-03-2013, 04:46 PM
 
19,304 posts, read 16,834,088 times
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Quote:
Originally Posted by Hamish Forbes View Post
No. Use your knowledge of Adam Smith and John Stuart Mill to give us a real prediction, one with some numbers behind it.

What you want me to get you a cup of coffee and rub your feet?




I gave you enough. Its a 2% head wind( per smith). If we run a trillion deficit like now, we will see unemployment like now and perhaps a little worse. If they balance the budget, it means no money printing which will cascade into another liquidity trap.


Here is what I said in 2008 during "hyperinflation mania" more or less because Schiff was the only "mainstream" personality who insisted on it. The guy on TV who called it right even if he was the most flawed of the schools who could see it like Marxists, Georgists, post Keynesian and Austrians. I refuted Schiff's hyperinflation mania.



//www.city-data.com/forum/5719546-post1.html
The personal advice threads are full of save or pay down debt while the macro economic threads debate inflation vs deflation. Hoarding cash or retiring debt is deflationary. The answer is right in front of you. Those who cannot hoard or pay debt default, but cannot take on more debt which equals deflation.

With Gold falling off a cliff , silver already hitting the side walk, oil plumetting, stock market sinking and real estate apocalypse is there anyone here to argue the inflation case anymore?
If there is a hidden bug bear of inflation concealed by ultra low velocity then I suppose it must stop at food and water because that seems to be the only thing that might pry loose a buck from someone's emaciated fingers if it continues. So perhaps the first sign of it will be a massive spike in basic commodities.

So it looks like paper in all its glory is king from dollars to.....

The Great Toilet Paper Shortage!
This is me again saying the QE band aid will work but not a QE2. Why ? Because of the simple banking fundamentals that the money runs out completely when banks panic. Then the next bottle neck is existing equity in assets they foreclose on. QE1 allowed the remaining equity to be tapped.
//www.city-data.com/forum/econo...will-rise.html



That will more than replace consumer credit from the numbers I see which was a 50 billion dollar decline from the usual 100 billion dollar growth.

FRB: G.19 Release--Consumer Credit--March 6, 2009
2004 2005 2006 2007 2008 r Q4 Q1 Q2 Q3 r Q4 r Nov r Dec r Jan p
---------------------------------------------------------------------------------------------------------------------------------------
Percent change at annual rate 2
Total 5.5 4.3 4.5 5.5 1.7 4.1 4.8 3.9 1.5 -3.2 -4.2 -3.5 0.8
Revolving 3.8 3.1 6.1 7.4 2.2 7.7 7.6 3.5 4.5 -6.7 -7.1 -9.5 1.2
Nonrevolving 3 6.4 4.9 3.6 4.4 1.4 2.0 3.1 4.2 -0.4 -1.1 -2.5 0.1 0.6

Amount: billions of dollars
Total 2191.6 2285.2 2387.7 2519.0 2562.6 2519.0 2549.0 2574.1 2583.5 2562.6 2570.1 2562.6 2564.4
Revolving 799.8 824.5 874.6 939.5 960.4 939.5 957.3 965.8 976.7 960.4 968.1 960.4 961.3
Nonrevolving 3 1391.8 1460.7 1513.1 1579.5 1602.2 1579.5 1591.7 1608.3 1606.8 1602.2 1602.0 1602.2 1603.0



So that leaves the business sector. So now the question is, will new money creation from the wretched FRB system move toward real capital or will it
restart consumer credit where we don't have a prayer at real recovery? So unless new debt rotates into productive capital this only postpones dooms day. However it was the correct thing to do given this system....finally.

....
It already has deflated. All this will do is slow it down but my question is what will absorb new debt? Who is going to take on debt and in particular bank credit?
I am not a god who sees the future, but simple economic and classical principles can make sound analysis. So can seeing things for what they are. There is no lock box or identifiable retirement asset that comes from FICA. Its just a tax on labor. This tax should be directly invested to employ people to create this infrastructure if it were. Its not . Its nothing but general obligations.


We can look back here in a few years to see if more stagflation is in order because it sure looks like it.
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Old 01-03-2013, 05:41 PM
 
2,988 posts, read 3,768,075 times
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Quote:
Originally Posted by gwynedd1 View Post


I am not a god who sees the future, but simple economic and classical principles can make sound analysis.
Indeed, you're not. Economic analysis based on three-century-old philosophy is a lot of unfocused blather, although true believers may think that it's sound when when it comports with their preconceived political religion. It seems to me that the true motivation may often be someone's burning need to express hatred for our government and just about any and all of its programs.

I think that this is the weirdest thread that I have ever participated in.
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Old 01-03-2013, 06:54 PM
 
Location: Vallejo
16,017 posts, read 17,947,032 times
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Quote:
Originally Posted by Hamish Forbes View Post
What is the connection between unemployment insurance and Social Security?
Unemployment insurance is social security. Many states also have supplemental unemployment such as is the case with California.
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Old 01-03-2013, 10:27 PM
 
1,525 posts, read 2,686,032 times
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Quote:
Originally Posted by HappyTexan View Post
Big business is behind the anti-SS bandwagon here telling people to cut it and get rid of it and convincing them that it's outdated and won't be there for them. Problem is they are not saying what will be there for them when they retire.
Win/win for them since that means they no longer have to pay FICA..probably get rid of UE as well.

One step closer in the quest for that global workforce.

I say people need to fight to keep FICA and SS and we need to increase the percentage paid into it and remove the cap.
How about people save up and be accountable for their own retirement instead of expecting everyone else to do it for them. Lack of personal accountability and increase in people expecting the government to fully provide them is part of the problem.

The ant and the grasshopper.
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Old 01-03-2013, 10:35 PM
 
4,281 posts, read 3,143,412 times
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Quote:
Originally Posted by duster1979 View Post
How is Social Security supposed to represent a "store of value" when I'm only going to get 75% of what's coming to me when I retire?

And even when it works the way it's supposed to it's not all that great. My mom is a perfect example. She lives on nothing but Social security and has no savings to speak of. She retired early (then later reentered the workforce) and is in good health at 86, so she will probably end up drawing about $250K is benefits before she kicks the bucket.

If she had been allowed to invest the earnings that she paid into FICA all the years she worked into an investment vehicle earning only average returns, she would have had close to $500K in the bank when she finally quit working; she could have lived more comfortably off the interest than she does drawing SSI and would have had something to leave behind (or she could have spent the whole wad, makes no difference to me).

Social Security was introduced to provide something for those who lost everything during the depression. It was never meant to be permanent, but unfortunately it became a sacred political football and a crutch for those who choose not to plan for the future.
"Allowed to" and actually investing prudently are two completely different things. If she had no savings after 65 years of life, why assume she would have saved anything? Or that she could have turned her meager FICA contributions into $500K without the benefit of employer contributions too? As was pointed out, that $500K would not generate anything close to what she will receive in SS benefits over an average retirement. Not even close!

Benefits will change over time due to demographics: less people paying in, more people drawing. Simple as that. Still better than nothing. While it is wise to plan for the worst and hope for the best, you are clearly operating from rhetoric, not knowledge.
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Old 01-03-2013, 10:41 PM
 
4,281 posts, read 3,143,412 times
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Quote:
Originally Posted by HappyTexan View Post
Big business is behind the anti-SS bandwagon here telling people to cut it and get rid of it and convincing them that it's outdated and won't be there for them. Problem is they are not saying what will be there for them when they retire.
Win/win for them since that means they no longer have to pay FICA..probably get rid of UE as well.

One step closer in the quest for that global workforce.

I say people need to fight to keep FICA and SS and we need to increase the percentage paid into it and remove the cap.
I would not doubt this one bit. A concerted lobbying effort to eliminate the employer portion of payroll tax by corporate America. They have been ridding themselves of pesky healthcare plans and defined benefit plans for years now. Pretty clear pattern.

Interesting how everyone thinks they would have saved millions if only they did not have to pay FICA. The numbers actually suggest 2/3 of Americans do not or can not save enough.

Last edited by shaker281; 01-03-2013 at 10:55 PM..
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