Ponzi e previdenza - Why Should Your Children Pay for My Retirement?

[Larry Wildman]

In mezzo a tanta fuffa, chi ha voglia di leggere un articolo serio...:

WHY SHOULD YOUR CHILDREN PAY FOR MY RETIREMENT?

For the same reason that my children will pay for
yours: because the government has offered them a deal: it
will pay for our retirement.

The problem is, Social Security goes bust this year.

The government has promised to pay for my retirement
and yours. How? Congress has stuck a gun in the
collective
bellies of all of America's workers and has said, "You owe
the IRS the money to fund millions of oldsters. Your turn
will come. Trust us."

What if our children ever decide that Congress's
promises are not reliable? What if they decide that their
children - our grandchildren - will decide to stiff them?
Will they pull the Medicare/Social Security plug?

Let's think this through. If your children were to sit
down with my children and talk through this problem, is it
possible that they would come up with this conclusion? "If
we take over the funding of our parents' retirement, will
you take over the funding of yours?"

There would be some negotiating. The outcome would
depend on how old I am, how old you are, and how old the
two
sets of children are. If I am in good health but old,
while
you are in poor health but likely to survive another 20
years through constant medical care, my children would like
the new arrangement, while yours might balk.

But there is no way for them to sit down together and
negotiate a new arrangement. There are 100 million
families
in the United States. Almost all of them are either in the
Social Security/Medicare tax system, or else they have been
before their retirement. There will be no face-to-face
negotiations, family by family. Instead, there will
continue to be voting blocs. Each bloc will want its
members to pay less into the system, while pulling out
more.

It's politics, after all. It has been politics ever
since 1935, when Roosevelt's New Deal proposed this system
to my grandparents. They supported it. They did not think
about my generation. I was not even born. They did not
think about my children's generation. They thought,
following John Maynard Keynes, "in the long run, we're all
dead." Then they added, "so, before we die, we want the
government to pay us some retirement money." Initial cost:
$30 per year per worker, and $30 per year per employer,
maximum. A bargain!

It was a Ponzi scheme. They got in early.

What made this Ponzi scheme unique is that almost no
one could opt out. It would go on far longer than a
private
Ponzi scheme. In fact, there is only one way out: to tell
Congress to stop funding it.

All those retirees who are dependent on the
government's checks on the day that Congress decides to
pull
the plug on these programs will be left high and dry. They
will have become totally dependent on those checks and the
Medicare cards. Overnight, they will be abandoned.

Who will put back in the millions of plugs? Into what
plugs? With what additional sources of income?

Will this ever happen? Not the way I have described
it. Let me explain why.


MORE INCOME WILL BE NEEDED

What could finally persuade your children and my
children to tell Congress it's time to pull the plug? Only
this: a really big financial crisis. It will be a crisis
so
big that Congress raises taxes, such as a value added sales
tax on all businesses. Congress will never eliminate a
major tax. It will only add a new one.

By the time Congress pushes for another tax one more
time, which triggers a tax rebellion, it will have spent us
to the edge of Federal bankruptcy. The voters always
grouse, but they do not rebel. This is assumed by
Congress.
So, Congress will borrow until interest rates rise sharply.
It will not cut spending until then. It will increase
spending. It always has. Most voters accept this.

A tiny minority of voters knows this by now. The $1.5
trillion on-budget deficit for 2010 will get larger, year
after year, now that Social Security's Trust Fund is
pulling
out more from the General Fund to pay benefits than FICA
taxes are bringing in to the General Fund.

The average voter does not understand any of this. He
will not understand it for years. He will never understand
the difference between on-budget debt and off-budget debt.
It's Enron on a gigantic scale, and the accountants never
figured out Enron until it went bust. There was no
warning.
The voters will not figure it out.

This is why there must be a fiscal crisis for any of
this to register on the average voter. We should not
expect
a groundswell of public opposition against Social Security
and Medicare until the U.S. government is facing
bankruptcy:
no buyers of its debt at interest rates that it can pay.
Then Congress will go to the Federal Reserve for money. If
the FED responds and buys the debt, then we will get mass
inflation. If this continues, we will get hyperinflation.

Hyperinflation destroys retirees on pensions. Prices
rise faster than the government's cost of living escalators
are adjusted.

Meanwhile, physicians will be wiped out. Price
controls on Medicare payments will do that. There will be
rationing. There will be death committees. There are no
free lunches in life. Whatever is not allocated by price
will be allocated by waiting for treatment.

Think of a waiting room filled with oldsters. Think of
a system where the next walk-in or carried-in is given a
number. The number is 10,257. If there are no death
committees, then it will be strictly by the number. "Hurry
up and wait." Some of these people will die in the waiting
room. They will be carried out feet-first.

Congress pretends that it can overcome the laws of
scarcity. It can't.

So, by the time there is enough political pressure from
workers insisting that Congress default on Medicare, the
budget crisis will be out of control. At that point, the
cut-off of Medicare funding will not be part of a tax
rollback. It will be part of a desperation cost-cutting
measure, not a tax-rollback.

The money saved on oldsters will not be returned to the
taxpayers, so that they can take over the funding of their
parents. There will be no tax cuts.

So, the children will get back their parents. There
will be help from Uncle Sam for the very poor. There will
be no help for the middle class.

The scenario in which a successful tax rebellion
against Medicare and Social Security is plausible does not
make plausible additional tax cuts sufficient to enable
work-force families to take over the retirement costs of
their parents.

That will be the day of reckoning for America. That
will be the moment of truth for children and parents.

Medicare costs run about $11,000 per year per Medicare
recipient. Most taxpayers don't know that Medicare costs
this much. The government's figures reveal this.

Think of the financial burden on a typical middle-class
family of two adults and two children. Maybe one child is
in college. Medicare is then cut off. Without warning,
the
family must pony up $11,000 per aged parent. There are two
parents. So, the family must pay $22,000 a year after
taxes. This does not count Social Security payments.

Some parents will be very ill. The insurance industry
will not take them back.

What then?

You see the point. There will not be a cut-off of
Medicare and Social Security through normal default.
Politically, that is impossible. The default will come
through monetary inflation followed by price inflation,
plus
rationing of medical care. The only way for an outright
default on Medicare to take place is through default on the
entire debt: off-budget and on-budget. That would involve
a
default on all Treasury debt. The whole structure would
topple at once.

This has not happened to any modern government. Always
the default has come through inflation. The politicians
lie
about their promises. Then the central bank lies about the
future value of the currency.


MARGINAL CHANGES

In the free market, prices adjust upward when a
shortage begins. Prices allocate the shrinking supply of a
scarce resource. People adjust to the new conditions.
There is negative feedback: rising prices. There are
incentives to find substitutes or new supplies.

In government, there is no comparable system of
negative feedback. Prices do not register mentally with
elected politicians. Politicians just have the government
borrow more. They make more promises. They promise that
there will be no default. Voters and bond-buyers believe
these promises. They do not believe that there will be a
day of reckoning. They all kick the can.

Then the crisis hits without warning. The best example
is what happened to Fannie Mae and Freddie Mac in September
2008. There had been warnings that their capital structure
could not withstand a turndown in the residential real
estate market. No one paid any attention. The game went
on. Then, overnight, they were both bankrupt. It has
taken
$1.25 trillion in Federal Reserve purchases of their debt
to
preserve the illusion of solvency.

This is how government works. There are warnings by a
few people on the fringes. These warnings are ignored.
Prices do not adjust, because the government funds the
operation, or promises to, or is expected to. This turns
out to be true. The outfits really are too big to be
allowed to fail.

There is no price response at the margin to persuade
people to seek substitutes. The public accepts promises.
Then it accepts nationalization. Henry Paulson
nationalized
95% of the new mortgage market in September 2008 without
consulting Congress. Bush was a lame duck President. He
said nothing. Congress said nothing.

There was no warning, no fall-back position short of
nationalization and a $1.25 trillion bailout by the FED.

This is why Social Security and Medicare will not be
allowed to default. They will not be allowed to shut down.
The checks will still go out. Congress will see to this.

Who will tell Congress not to do this? The voters?
What power do they have? Did they want the $787 billion
bailout by Congress in late 2008? No. Did Congress pay
heed? No. Did the economics profession cheer? Of course.

There will be no default through self-conscious
legislation. The oldsters have too much clout. They vote
as a bloc.

There will be a default. There has to be. The system
is not sustainable demographically. This default will come
in the familiar form: inflation. Only if the Federal
Reserve finally refuses to buy the government's debt can
this be avoided. But if the FED refuses, Congress can
nationalize it as surely as Paulson nationalized Fannie and
Freddie. Then Congress can force the central bank to buy
its debt.

I think the FED at some point will cease buying
Treasury debt. That will be well into mass inflation, with
the CPI rising above 20% per annum -- maybe even 30%. But
the FED must put on the breaks at some point if it is to
save the dollar. At that point, if Congress intervenes, we
will get hyperinflation: prices rising at 50% per annum or
higher.

No large industrial economy has faced this except after
a defeat in a World War.

http://en.wikipedia.org/wiki/Hyperinflation

The nation of Israel went through hyperinflation in
1984. Prices rose at 450% per annum. The government froze
prices, and the central bank slowed the expansion. Prices
rose at 185% in 1985. The country's economy did not
collapse. The central bank pushed the nation to the limit,
but then sanity revived.

Israel sells into a world market. It is a very small
nation. It could recover because it did not lose its
markets. It also stopped in time. In contrast, the United
States is the world's largest consumer and largest debtor.
The dollar is the world's reserve currency. If the USA
ever
becomes Israel in 1984, the international economy will cut
off its loans to our government. The U.S. economy will
then
suffer a crisis far worse than in 2008.

Wall Street does not care about the long-term numbers.
It cares only about the marginal return next quarter. It
believes that kicking the can is a reasonable strategy. It
defers the day of reckoning.

Marginal changes are ignored. Keynesian economists
refuse to issue a warning. All schools of opinion except
the Austrians and the Marxists say that kicking is a valid
temporary solution. They do not say when this must stop.
They mumble about "one of these days," but no one in
Washington except Ron Paul takes the numbers seriously
enough to recommend biting the fiscal bullet today. No one
pays much attention to Ron Paul in Washington.

CONCLUSION

My children and your children will consent to mass
inflation. They will accept it because Congress will blame
price gougers, not the Federal Reserve System.

More voters than ever before are now aware of the FED.
But these voters are still a tiny minority. They must
learn
to identify cause and effect. Who will teach them? Not
the
public school system.

If Congress can keep the illusion of Federal solvency
only by inflation, it will inflate. This is as sure a
thing
as there is in politics.

If the FED finally balks at hyperinflation, as I think
it will, and Congress does not nationalize it, then there
will be the other kind of default: the across-the-boards
default. This will take down all of the programs. I think
this is what will happen. I think we will avoid
hyperinflation. Call me an optimist.

When the great default pulls the plug on Social
Security and Medicare, what will you do? Do you have a
plan?

[Cicala]

Bell'articolo, molto lucido.

[microalfa]

Per amor di Patria non facciamo raffronti con il nostro sistema pensionistico e con la nostra Sanità. Spero solo che si cominci già noi a pagarne l'isostenibilità senza scaricarne interamente le sempre più devastanti conseguenze sui nostri figli.

[0rigami]

sarebbe molto meglio invece renderlo sostenibile... un sistema pensionistico non deve forzatamente essere uno schema ponzi, lo si può bilanciare. in teoria, certo..... nessun politico è sufficientemente competente e onesto per farlo. e, tanto per rimanere in argomento.... eccovi il dipendente pubblico più pagato d'italia, in pensioe con 1369€ al giorno. siciliano, naturalmente, ma non perchè li tutti i politici siano corrotti eh

http://www.repubblica.it/cronaca/201...cilia-2753983/

[Andrea4891]

Originalmente inviato da Cicala

Bell'articolo, molto lucido.

su questo è facile concordare

ma tu ce l'hai un piano?

io ce l'avrei solo per l'iperinflazione, e poi non è detto che funzioni

insomma, questo piano ... e che non sia il solito: lacrime, sangue, e suicidio finale

[Larry Wildman]

un sistema pensionistico non deve forzatamente essere uno schema ponzi, lo si può bilanciare. in teoria,

In un sistema bilanciato sarebbe necessario che:

1 - i soldi annualmente accantonati dai lavoratori non debbono essere spesi ma accantonati in conti individuali e capitalizzati (quindi investiti in qualche modo)

2 - ci deve essere assoluta corrispondenza tra rendita erogata e montante accantonato durante la vita lavorativa.

Altre vie non ve ne sono, inutile cercare pasti gratis. Il sistema previdenziale dovrebbe operare come un grande fondo pensione privato. Questi sono vincoli. Il fatto che sia lo stato a gestirlo non rimuove questi vincoli.

Ora:

Il punto 1 non avviene, perché con i soldi degli attuali lavoratori si pagano le pensioni (quindi gli operatori attuali non hanno fondi accantonati). Si potrebbe fare da ora in avanti, ma le pensioni attuali chi le pagherebbe? Tutto sulla fiscalità generale? Non credo sia sostenibile.

Il punto 2 porterebbe che molti (per molti intendo la maggior parte) prenderebbero una pensione che è l'equivalente attuale di 3-400 euro mensili. Politicamente non sarebbe molto facile da dare in pasto agli elettori.

Ergo, credo che l'unica via sarà default del sistema e relativa iperinflazione. Questo ovviamente non accadra' oggi o domani ma nel lungo periodo, ma tanto nel lungo periodo saremo tutti morti, quindi che problema c'è?

[San Siro]

Originalmente inviato da Larry Wildman

In un sistema bilanciato sarebbe necessario che:

1 - i soldi annualmente accantonati dai lavoratori non debbono essere spesi ma accantonati in conti individuali e capitalizzati (quindi investiti in qualche modo)

2 - ci deve essere assoluta corrispondenza tra rendita erogata e montante accantonato durante la vita lavorativa.

Altre vie non ve ne sono, inutile cercare pasti gratis.

(...)

Il punto uno non sta in piedi, non c'è sostanziale differenza fra i regimi a capitalizzazione e a ripartizione.
E' un fatto noto e non è il caso di ripeterlo.
Le pensioni erogate dipendono dal livello di ricchezza raggiunto in quel momento.

Il punto 2 è corretto; basterebbe che anche nel sistema a ripartizione si segua lo stesso principio e si eviti di rubare (a parità di versamenti chi prende le pensioni più alte? Gli autonomi o i lavoratori dipendenti? Risposta facile...)

Articoli come questo si scrivevano negli Usa già negli anni '60.

[ramirez]

la domanda posta dall'autore E' PIU' CHE LEGITTIMA.
Io però ne avrei una di rimando.
Ad oggi e ripeto AD OGGI chi mi sa indicare
una generazione futura che ha vissuto peggio
di una passata ?
NESSUNA !!!!!!
Quindi se ne deduce (ad oggi e ripeto ad oggi)
che il debito contratto dai padri MAI HA impedito ai figli
di viver meglio dei padri.
Meditate gente meditate...

[microalfa]

Originalmente inviato da San Siro

Il punto uno non sta in piedi, non c'è sostanziale differenza fra i regimi a capitalizzazione e a ripartizione.
.....

Non sono un esperto quindi chiedo.
Facendo i conti della casalinga di Voghera, assunto che si lavori per 40 anni, che l'accantonamento equivalga ad una mensilità percepita per ogni anno lavorativo e che l'importo della pensione erogata sia del 70% dell'ultimo stipendio, con la sola rivalutazione del potere d'acquisto per riavere l'intero capitale accantonato si ha la copertura di circa 58 mensilità, pari a meno di 5 anni. Dato che la vita media si aggira sui 78 anni per gli uomini e parecchi di più per le signore, significa averne 13 o più "scoperti": se il capitale accantonato non viene reso produttivo tramite qualche investimento, il pareggio finanziario è praticamente impossibile.
Dove sbaglio nel ragionamento?

[Larry Wildman]

Il punto uno non sta in piedi, non c'è sostanziale differenza fra i regimi a capitalizzazione e a ripartizione.
E' un fatto noto e non è il caso di ripeterlo.
Le pensioni erogate dipendono dal livello di ricchezza raggiunto in quel momento.

Questo puo' essere vero in teoria, in pratica non lo è. Il sistema a ripartizione è molto precario. Eventuali crisi o recessioni possono mettere temporaneamente sotto pressione l'equilibrio finanziario, con contributi insufficienti ad onorare le prestazioni e quindi necessità di ricorrere alla fiscalità generale. Il fatto è che la ricchezza generale è finanziariamente una disponibilità teorica, non effettiva. Ad oggi questo è un problema che non si è verificato perché la demografia è ancora favorevole al sistema a ripartizione, ma il futuro puo' essere molto più rischioso.

Il discorso è molto semplice: ipotizza un'economia con soli 5 soggetti. Il primo, in pensione, ha maturato sulla base della crescita della ricchezza il diritto a ricevere 100 ogni anno.
Nel sistema a ripartizione, questi 100 vengono erogati tramite le contribuzioni degli altri 4. In questa situazione, dove la demografia è ancora favorevole, puoi ipotizzare che ogni anno ricevi da quei 4 200. 100 li usi per pagare la pensione, 100 sono accantonati o investiti nell'economia. Se in una recessione 1 o 2 sono licenziati, hai comunque fondi a sufficienza accantonati in precedenza da cui attingere. Ma se ci fossero stati 2 in pensione e 3 che contribuivano, i fondi di riserva sarebbero stati molto meno e potevano essere insufficienti. L'ente si sarebbe trovato in squilibrio finanziario e non è detto che la fiscalità generale sia sempre in grado di tappare i buchi.

Con la capitalizzazione personale, questo problema non c'è. Il lavoratore ha maturato una rendita di 100. C'è un montante accantonato che permette di pagare quei 100. Cosa fanno gli altri lavoratori e quanti sono i lavoratori che contribuiscono è sostanzialmente irrilevante.

Articoli come questo si scrivevano negli Usa già negli anni '60.

Infatti chi ha scritto l'articolo non è proprio giovane. Probabilmente non nei '60, ma nei '70 già scriveva.