Social Security Will Pay Out More Than It Takes In This Year!

[Joe Miner]

My Butt + Your Lips = a match made in heaven.

 

3rd grade insults and homosexual references.

 

Good to see you going back to what you know.

[GG]

And that makes a practical difference, how? (i.e. if I collected 50 million in tax revenue in 1967, and that 50 million bought 50 M-1 Tanks, and I collected 50 Billion in 2007 and that bought 25 M-1 Tanks, how am I better off?)

 

You're the one who threw out inflation as the reason for the difference, and I'm asking you to explain that difference. You can use apples, tanks or oranges to explain it to me.

 

How does inflation account for the actual cost being much higher than the $16 billion original estimate (which I assume also factored in some kind of inflation estimate)?

[RI Bills Fan]

3rd grade insults and homosexual references.

 

Good to see you going back to what you know.

 

Just bringing it down to a level where you needn't worry about being confused by the big words.

 

Particularly after your opening post made it perfectly clear what level of sane and rational discourse you were interested in engaging in.

[Alaska Darin]

Gold Star for Darrin. He caught a typo.

Which was way funnier because you were chiding him about his lack of reading comprehension.

[Joe Miner]

Which was way funnier because you were chiding him about his lack of reading comprehension.

 

Chalk reading comprehension and irony up there with inflation as more topics he doesn't understand.

 

But please ignore me RI, and get back to explaining to GG about how inflation works. He's trying his best to have a sane and rational discourse with you. I'd hate for you to miss out on this fabulous opportunity to showcase your deep understanding of inflation and government spending. It should be quite educational for us all.

[RI Bills Fan]

You're the one who threw out inflation as the reason for the difference, and I'm asking you to explain that difference. You can use apples, tanks or oranges to explain it to me.

 

How does inflation account for the actual cost being much higher than the $16 billion original estimate (which I assume also factored in some kind of inflation estimate)?

 

You're still trying to get me to argue a position I never took in the first place. All I said was factor in inflation then compare the numbers. Certain poster are throwing 1967 Projections up against 2009 Actual Costs. That doesn't work unless you adjust for actual, not projected inflation.

 

If the projections were off by 300% fine, that means that the projection of 1 million spent turned into 3 million actually spent. That's pretty damming in and of itself.

 

But by not adjusting for inflation, the projection of 1 million spent appears to turn into an actual expendature of 30 million. Why does it need to be distorted? Why won't the simple truth do?

[GG]

You're still trying to get me to argue a position I never took in the first place.

 

Who said this:

 

Yeah, Damm them for getting that inflation factor wrong. How could that possibly happen with inflation being such a huge problem from 1950 to 1970?

 

Then, who said this:

 

Reading comprehension is not your strong suite is it?

 

 

All I said was factor in inflation then compare the numbers. Certain poster are throwing 1967 Projections up against 2009 Actual Costs. That doesn't work unless you adjust for actual, not projected inflation.

 

If the projections were off by 300% fine, that means that the projection of 1 million spent turned into 3 million actually spent. That's pretty damming in and of itself.

 

But by not adjusting for inflation, the projection of 1 million spent appears to turn into an actual expendature of 30 million. Why does it need to be distorted? Why won't the simple truth do?

 

Answer the question. How much of that difference in the actual cost vs projected was a different inflation forecast?

 

That is your point, isn't it?

[IDBillzFan]

Answer the question. How much of that difference in the actual cost vs protected was a different inflation forecast?

 

That is your point, isn't it?

He was only joking in 3...2...1...

[Joe Miner]

He was only joking in 3...2...1...

 

 

My bet says he comes back with the apples to zebras crap because he doesn't have the slightest clue as to what he's talking about.

 

He'll say the numbers are still bad, but not nearly as bad as they would be if you accounted for inflation. Which he'll never actually do to prove himself, because he doesn't understand wtf he's talking about.

[John Adams]

Now I don't know if this is an immediate harbinger of things to come, but over the last few days, treasury auctions have been pretty damn weak, of course sovereign debt issues with Greece and now most recently Portugals bonds rating downgrade are certainly playing into investors minds, but the fact that the Chinese have reduced holdings for three straight months, the tough rhetoric thats coming out of their homeland and the admission of the worlds largest bondholder in the world (Bill Gross) telling investors to stay away from certain US bonds, we could end up seeing rates rise higher than monetary policy makers would like to see, knowing that rising rates in this sort of environment would be very bad for our economic recovery.

 

Then what? I suppose the Federal reserve would have to consider expanding their balance sheet further and buy even more treasuries. Afterall, there is a tremendous amount of debt that is to be offered this year and thereafter for quite some time, someone is going to have to buy it. Which of course has inflationary implications.

 

The point being, what many people don't understand is the threat that we are facing regarding our debt. Yes we all know, Bush was NOT fiscally responsible, but that still doesn't exclude the fact that we are signficantly closer to facing a REAL DEBT CRISIS. The fact that Bill Gross, who has no agenda other than to make money for his investors is telling us that this health bill will put the US in deficit by more than half a trillion dollars in the first decade alone speaks volume, and when you couple that with warnings from GROSS, BUFFETT, ROUBINI and GREENSPAN regarding losing our AAA rating, I think it may not be a bad idea to start addressing this issue.

 

I got my MBA from the WSJ so forgive my question. This is for the GG/MAgox crew. I know Tom will answer because he thinks he knows everything.

 

The implications of the Fed buying treasuries is what? Higher inflation as we have too many dollars on hand that no one wants? Is the best inflation bet TIPS (too lazy to look up the acronym...inflation...protected (?)treasuries).

[RI Bills Fan]

Who said this:

I did. I was pointing out that the inflation rates in the 50's and 60's were much smaller than they became in the mid 70's and later, so the rates built in to the calculations were undoubtedly way off.

 

Then, who said this:

I said that also. To someone else who misrepresented what I said in my post. Why do you care?

 

Answer the question. How much of that difference in the actual cost vs projected was a different inflation forecast?

 

That is your point, isn't it?

I'll give you a hint: I don't know, nor do I care enough to do the math. What I challenged was the use of a 1967 forecast in direct comparison to actual 2009 expendatures without adjusting for inflation.

 

But apparently that has a pile of panties in a wad.

[RI Bills Fan]

He was only joking in 3...2...1...

 

 

My bet says he comes back with the apples to zebras crap because he doesn't have the slightest clue as to what he's talking about.

 

He'll say the numbers are still bad, but not nearly as bad as they would be if you accounted for inflation. Which he'll never actually do to prove himself, because he doesn't understand wtf he's talking about.

 

Ahhh... The peanut gallery has spoken! I shall now consider myself properly chastized for the next five seconds or forever, whichever is shorter.

[Joe Miner]

Ahhh... The peanut gallery has spoken! I shall now consider myself properly chastized for the next five seconds or forever, whichever is shorter.

 

And yet I think I was closest without going over:

 

He'll say the numbers are still bad, but not nearly as bad as they would be if you accounted for inflation. Which he'll never actually do to prove himself, because he doesn't understand wtf he's talking about.

 

I'll give you a hint: I don't know, nor do I care enough to do the math. What I challenged was the use of a 1967 forecast in direct comparison to actual 2009 expendatures without adjusting for inflation.

 

Keep talking, you're making great points and definitely don't look like an idiot.

[Magox]

I got my MBA from the WSJ so forgive my question. This is for the GG/MAgox crew. I know Tom will answer because he thinks he knows everything.

 

The implications of the Fed buying treasuries is what? Higher inflation as we have too many dollars on hand that no one wants? Is the best inflation bet TIPS (too lazy to look up the acronym...inflation...protected (?)treasuries).

Well, that's where the confusion lies. Yes, expanding the money supply can lead to inflation, however, if the money isn't circulating than it's effects are felt nearly as much as they could. Then again, by keeping rates depressed, which is what one of the functions of the purchase of MBS and Treasury bonds was suppose to do, and it did, that people were able to buy and refinance homes at much lower rates, which in turn means more money they get to keep because of the lower payments, which will have an inflationary impact due to the extra money that they now have to possibly spend.

 

But, when you look into the numbers, it only impacted a small sector of the economy, because of well you know, lack of jobs, depreciating homes, consumer sentiment, rising savings rates, restricted credit etc. etc.

 

The way I see it is a battle of the natural laws of induced inflation vs. the massive deflationary **** storm that we are still experiencing. At the end of the day, my guess is that the debt load will be too high, rates will go significantly higher due to lack of treasury demand and the dollar will suffer, which of course is inflationary.

 

Treasury Inflation Protected Securities.

 

Is it the best way? I don't believe so, but it will appreciate in value if inflation takes hold.

[John Adams]

Treasury Inflation Protected Securities.

 

Is it the best way? I don't believe so, but it will appreciate in value if inflation takes hold.

 

Thanks--and by the way, I was trying to cogitate on what is good inflation insurance.

[DC Tom]

Actually that would be better than reality. The government has been taking and spending that money for ions and issuing IOU's.

 

They're not IOU's, they're government bonds.

 

And if they put the money in an "interest-bearing account" (as though they can drive up to the local Key Bank and open one ), the money would be invested in...government bonds.

 

So you're basically suggesting that, instead of doing what they're doing, they should instead do the same thing?

[GG]

So you're basically suggesting that, instead of doing what they're doing, they should instead do the same thing?

 

That, and maybe instead of putting it into a big savings account and come up with a catchy name for that account, like a "lockbox?"

[finknottle]

Is the best inflation bet TIPS (too lazy to look up the acronym...inflation...protected (?)treasuries).

 

TIPS are not the hedge they seem, owing to the peculiarities of tax law. While the monetary value of your holding is increased to keep pace with inflation, you are taxed immediately on that increase.

 

So the bottom line (I think) is that they are better as a short term hedge, not so good long term. (But I'm not sure.)

[Magox]

Thanks--and by the way, I was trying to cogitate on what is good inflation insurance.

Ever seriously consider hard assets?

[GG]

I did. I was pointing out that the inflation rates in the 50's and 60's were much smaller than they became in the mid 70's and later, so the rates built in to the calculations were undoubtedly way off.

 

 

I said that also. To someone else who misrepresented what I said in my post. Why do you care?

 

 

I'll give you a hint: I don't know, nor do I care enough to do the math. What I challenged was the use of a 1967 forecast in direct comparison to actual 2009 expendatures without adjusting for inflation.

 

But apparently that has a pile of panties in a wad.

 

If you don't know or don't care, why bring it up? Don't you think that someone may ask you to back your point?

 

I'll give you a hint, the difference in initial inflation assumption is minor compared to the actual costs incurred.