Oldster Tax

[FIRE'd@51]

I don't see why people focus on the what the Government owes SS as if it somehow different than the rest of the deficit.

Perhaps it's because the borrowings from the SS trust fund are not included in the calculation of the deficit. Even the Clinton budget "supluses" would have been deficits had the borrowings from the SS trust fund been included.

 

[Masquernom]

And you're right Donheff, our relative not only spent all of our retirement savings, but borrowed money from everyone else in town! Guess we'll have to wait and see who he decides to pay off first when it comes down to it.....

 

[Independent]

Per the following link, during the past 20 years the Fed has been the primary driver of interest rates, and in turn stock prices:

"The Federal Reserve announces what it's going to do to interest rates eight times a year at Federal Open Market Committee meetings. These are scheduled in advanced and well-publicized, so investors know exactly when the goods are coming.

"Since 1994 (when the Fed started publicizing its moves), the S&P 500 has risen from 450 to 1300. But remove the 24 hours just prior to FOMC announcements, and returns fall to almost nothing."

Who's Really Driving the Stock Market?

Over that time, the Fed certainly drove the very short end of the interest curve - that's what the FOMC does.

But, that doesn't mean that the gain on stock prices came from the Fed. It simply says that short term traders had an idea of which direction they hoped the Fed would move (sometimes up, sometimes down) and they expected the Fed to go in that direction. So they bought on the expectation that the Fed would deliver the "good" news.

 

[Nords]

The bottom line is that we (Government, banks, citizen buyers) blundered our way into a depression and things don't look rosy on the way out. At least we ERs are not worried about being laid off.

I think I'd rather have a slow recovery with lots of hiccups and worried industries/investors than to have the manic-depressive market cycles that we've experienced between 1973 and 2008.

Using the example of your relative, the relative owes lots of other people far more -- like the Chinese neighbors. I hope you don't want to give a preference to their IOUs over our SS IOUs - wouldn't that be some kind of prohibited profiling.

One can vote the incumbents out of office, and the other has nuclear weapons. Hmmm. Tough choice.

 

[LARS]

Low rates are a ticking time bomb and not just for individuals. Calpers announced today that their nominal return for fiscal year ending June 2012 was... wait for it... 1%!!! Pension funds (including SS trust fund) are getting hammered and the low investment returns are digging big holes.

By way of example Calpers projected 7.5% nominal for 2012.

 

[Animorph]

Guess they're about as good at predicting markets as anyone else. Any one year makes no difference. They need to string those 1%'s together to really cause (additional) problems.

 

[packrat44]

I don't believe there is a war on savers, just collateral damage. If the Fed wasn't practicing QE maybe we would be better off but maybe our equities would be halved instead and unemployment would be 15%. The bottom line is that we (Government, banks, citizen buyers) blundered our way into a depression and things don't look rosy on the way out. At least we ERs are not worried about being laid off.

Thank you for ending with a positive.

 

[yakers]

Maybe another facet of the 'war on savers' is a generational/demographics issue. It occurs to me that the 'value' of capital and labor is always in flux. So if, generationally, there are fewer people to support the retired then labor becomes more important than capital. If we get older and there is a shortage of nurses then they get more expensive then if there is a surplus of such labor. So somehow the financial 'system' has to devalue capital/savings compared to labor and maybe 'stuff'. Now the market is a big thing , some folks have saved a lot and some little, some labor and material production can be more efficient. But it still seems like a fundemental proposition that our savings/investments (capital) are less valuable than the scarce resources of labor needed to support us. Maybe a good thing there are a lot of younger people in third world countries, we will slowly have to sell our assets to them for necessary services as we age.