Bad Investment

August 16, 2012

Turns out Social Security may not only be an unwise investment for new and future retirees, it may not be an investment at all. A recent Associated Press report noted that today’s new retirees are part of the first generation that has paid more into the Social Security system than they will actually receive after retirement.

One such example from a 2011 Urban Institute study was given in the AP article:

“A married couple retiring last year after both spouses earned average lifetime wages paid about $598,000 in Social Security taxes during their careers. They can expect to collect about $556,000 in benefits, if the man lives to 82 and the woman lives to 85 …”

Though Medicare has come back into the spotlight with the media attention toward Mitt Romney’s new VP pick and his now infamous proposal of remaking the single-payer healthcare system into a “premium support” system (something Romney also supports), reform of the other big entitlement elephant in the room, Social Security, has rarely been discussed since the failed attempts by the last presidential administration to partially “privatize” it.

Perhaps Social Security reform deserves new attention. After all, the program’s own trustees state in their latest annual report that after 2033, “tax income would be sufficient to pay only about three-quarters of scheduled benefits…”  At that point, one could just as well literally hide their money under their mattress and guarantee a more secure retirement. Assuming they remember where they hid it, they at least would not lose any of their money. Not to even mention the problem of inflation.

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Government v. Private-Sector Compensation

November 3, 2009

Earlier this year I wrote about government employee benefits in Florida outpacing private-sector benefits — particularly noteworthy in a time of recession. Now comes an interesting analysis comparing average federal government wages and total compensation to those in the private sector.

 In an update from a previous post, the Cato Institute‘s Chris Edwards notes the following:

The new data show that average federal compensation is now more than double the average in the private sector.

Here is his graph displaying the average difference since 2000:

He also created a graph comparing just the average wages. He used data from the U.S. Department of Commerce’s Bureau of Economic Analysis.

In a time of economic downturn, the stark contrast between the government and the private sector is a bit worrisome — especially to those recently experiencing pay cuts or a layoff. But government doesn’t often face the same pressures as the private sector. It isn’t required to be competitive in order to stay in business; it can simply raise taxes or print or borrow money.

Ironically, all of that taxing, printing and borrowing in one way or another reduces private investment in things like jobs and higher compensation packages. Taxing takes that money directly. Printing reduces the value of that money. Borrowing diverts that money and eventually leads to higher taxation or more printing.


Inflation Calculator

March 26, 2009

A Web site called “Shadow Government Statistics” offers an inflation calcutor where you can view what a certain amount of dollars was worth in the past. For example, a dollar today is worth around 47 cents back in the year I was born, 1982. One can only imagine the amount of astronomical inflation that will result from the current fiscal policies being practiced by our government and the Federal Reserve. Given the future prospects of the dollar, if I had any money to invest, I’d put it into gold.


The Printing Press Working Overtime!

March 25, 2009

Here is a a chart showing the level of money printed from 1910 to this year. Notice the dramatic upswing recently — thanks to the bailout craze!

moneyprinting

Now here’s a video from Glenn Beck on the same subject: