Steve Keen : Outlook 2015 (private debt trap)

[charliebrown]

Re: Steve Keen : Outlook 2015 (private debt trap)

Yes, As the SS trust fund goes from surplus to deficit, that file cabinet full of special T bonds is going to be opened and redeemed by the SS agency from the general treasury, in order to cut checks to social security recipients. The treasury does not have a vault of cash, so it will sell public T bonds to raise the cash to pay off the SS t bond. So I expect that as time moves on and more and more boomers retire, The gov. account total will fall and public debt will rise. When the SS trust is exhausted the inter-govenmental debt will approach 0. (I know there are other trusts, highway, medicare etc). There are also special series of gvt debt for states and municipalities to buy, I'm not sure where that is accounted for. Note that the Debt held by gov. accounts is no longer increasing. If I remember, the ss trust fund would be decreasing already if not for interest on the bonds. Which of course is paid by the treasury, which sells bonds into the market to get the cash.

[santafe2]

Re: Steve Keen : Outlook 2015 (private debt trap)

Yes, As the SS trust fund goes from surplus to deficit, that file cabinet full of special T bonds is going to be opened and redeemed by the SS agency from the general treasury, in order to cut checks to social security recipients. The treasury does not have a vault of cash, so it will sell public T bonds to raise the cash to pay off the SS t bond. So I expect that as time moves on and more and more boomers retire, The gov. account total will fall and public debt will rise. When the SS trust is exhausted the inter-govenmental debt will approach 0. (I know there are other trusts, highway, medicare etc). There are also special series of gvt debt for states and municipalities to buy, I'm not sure where that is accounted for. Note that the Debt held by gov. accounts is no longer increasing. If I remember, the ss trust fund would be decreasing already if not for interest on the bonds. Which of course is paid by the treasury, which sells bonds into the market to get the cash.

Nicely written. I think the flip from positive to negative may be held off for a while by throwing as many non-retired SS beneficiaries as possible under the bus while holding down SS increases for retired workers. Watch the rhetoric over the next couple of years as we approach the 2016 elections.

[vt]

Re: Steve Keen : Outlook 2015 (private debt trap)

Yes, As the SS trust fund goes from surplus to deficit, that file cabinet full of special T bonds is going to be opened and redeemed by the SS agency from the general treasury, in order to cut checks to social security recipients. The treasury does not have a vault of cash, so it will sell public T bonds to raise the cash to pay off the SS t bond. So I expect that as time moves on and more and more boomers retire, The gov. account total will fall and public debt will rise. When the SS trust is exhausted the inter-govenmental debt will approach 0. (I know there are other trusts, highway, medicare etc). There are also special series of gvt debt for states and municipalities to buy, I'm not sure where that is accounted for. Note that the Debt held by gov. accounts is no longer increasing. If I remember, the ss trust fund would be decreasing already if not for interest on the bonds. Which of course is paid by the treasury, which sells bonds into the market to get the cash.

Of course you never see any mention of the huge borrowing by Congress of the "Peoples Pension"

http://www.forbes.com/sites/merrillm...ty-trust-fund/


Meanwhile the politicians from both parties that created this problem want to cut benefits for retired seniors:

http://www.washingtonsblog.com/2014/...-benefits.html


Meanwhile Federal government pensions are far more generous, and allow much earlier retirement:

http://www.aei.org/publication/how-g...oyee-pensions/


Congressmen and Senators get an even better deal:


"The key provision: no member of Congress is eligible for any pension unless he or she has served in Congress for at least five years. (Senators serve six-year terms; House members must seek reelection every two years.)

To collect, a congressman or senator must be age 62, or be at least age 50 with 20 years of service, or be any age with 25 years of service.

Under the most recent pension program, adopted in 1984, the size of a pension is based on the highest three years of a member's salary, the number of years of service and a multiplier, which is 1.7 percent for the first 20 years of service and 1.0 percent for subsequent years.

Here’s an example, using a typical 25-year rank-and-file member who retired this year. The pension would be the sum of two calculations. First, multiply $172,443 [the average salary over the last three years] times 20 years times 0.017. Then, multiply $172,443 times 5 years times 0.01 and add that number to the first calculation. The total: about $67,250 per year.

A three-term congressman (or one-term senator) who has now reached retirement age would be eligible for an annual pension of $17,588 for six years of work. That's generous, but not close to full pay.

Federal law prevents members of Congress from getting full-pay retirement when they leave office. The report says, "By law, the starting amount of a member's retirement annuity may not exceed 80 percent of his or her final salary."

Private sector employees are being unfairly treated and this travesty needs to be corrected.