Where the money is....

When Willie Sutton bank robber was asked why he robbed banks he said "Because that is where the money is". How things have changed.

The banker's Bank the Federal Reserve is now robbing savers with near zero interest rates. Why? Because that is where the money is. It is a hidden tax. No law was passed. Still you are having the your money stolen through near zero interest rates to restore bank's balance sheets. If you had $300,000 in an IRA (or 401k) earning 5% in 2007 ($18,000 a year with nearly no risk) you are lucky if you earn half that today. That is a $9,000 or more of hidden taxes.

I hope to expose these types of actions and others by the FED and government. Boomers need to be vigilant - because their savings is where the money is. I will also delve into other areas of finances of interest to Boomers.

Tuesday, December 21, 2010

Is Social Security Solvent?

I'm glad I asked that question. Suppose your spouse found that $200 stash you had hidden in your sock drawer and took it and spent it and left you an IOU. Is that money good? Can you take it out and spend it? Of course you can't. The only way you can spend it is if your spouse makes good on that IOU. The only way your spouse can make good on that IOU is if they have a source of income.

What I have described above is the Social Security "lock box" on a much smaller scale. The money paid by you for future Social Security benefits has been SPENT. All that is left is a bunch of IOUs (treasury bonds and notes) issued by the government. And those bonds/notes are only money good if the government has a stream of income to pay off these IOUs. All that is in the "lock box" (your sock drawer) is a bunch of IOUs (stored somewhere in West Virginia). Those IOUs are only as good as the ability to pay them off. And to pay them off the government depends on current incoming revenue ( there is the problem).

Now the Payroll Tax (FICA) is supposed to be the source of revenue to fund the payoff of those IOUs. We are at (or fast approaching) the point where those monthly payroll taxes are less than the amount being paid out each month. This means general government revenues will be required to make up the difference. This gap will grow and grow as more and more boomers retire.

So when the government or others tell you Social Security will be solvent for the next 25-30 years they are lying. It is currently near break even (income vs payout). Evidently the politicains and spinners in Washington thinks you are an idiot and will believe their lies. Don't. Demand that the politicians fix this before it is totally out of control.

If you are a boomer (as I am) you should recall that the last time we faced this was in the early 1980s. The solution then was to increase the payroll tax and the promise was made that the money would be ther when you retired. Well, you were lied to - the money is not there.

The House and Senate are asylums populated with insane people. Unfortunately, the inmates run the asylum. Proof of this is the inmates just approved a temporary reduction in the payroll tax exactly when they should be looking at reforming Social Security and possibly increasing that tax. They are NUTS in Washington I tell you - totally NUTS.

If you agree - Email this to your Senators and Representative. Lets stop the insanity.   Provide me hundreds/thousands of comments so I can send them to my Senators and Representative.

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