If a nation prints more money,
like cutting a 16 inch pizza into 12 slices instead of 8,
is each slice worth less?
This has been held as self-evident truth in modern monetary policy.
What if the pizza shrinks while the number of slices rise?
But this will quickly become antisocial as the entire west goes through a structural change in demographics caused by babyboomer retirement. BoJ seems to have realized this early and well; they have managed their social transition with remarkably success, despite much sneering from western economists (I argued here that the Japanese lost decades is in fact a great achievement that US will only wish to match in 10 years).
If Bernard Madoff
distributed money received from new investors to older investors
until there wasn’t enough money to continue,
does Social Security operate under the same structure
with mandatory participation?
ECB seems to have realized this judging from their proclaimed resolve for austerity as opposed to unlimited simulus.
Create a higher likelihood of a better present
by securing need and achieving want,
in the shortest time with the least risk, for as long as possible,
by thinking of what and when relative to what was,
and what may happen after what could happen next.
The big question is: when will Fed and US government realize this?
Our Social Security system
is the very definition of a Ponzi, or pyramid scheme.
Congressman Ron Paul
Constitutionalist Libertarian
The reason for this fundamental shift is simple: soon-to-be retirees need to save but inflationary policy sacrifices savers for the sake of stimulating economic growth.
What does a 70 year old on a fixed income do,
when faced with a 0.05% return, intead of a 4% return?
In normal demographics..., most people get to participate in the growing economy by staying employed or employing; even though everybody's savings get eroded by moderate inflation, there's a good chance that most will be more than compensated by increasing earnings. Retirees are net payers for inflation because they can't replenish with inceasing earnings, as is always the case...
Should costs exceed incoming revenues sooner,
if millions of Boomers involuntarily retire
and apply for early Social Security benefits during an economic decline,
as average income falls and debt and medical costs to income ratios spike?
Starting from right now, however, as babyboomers go into retirement or start deligently (perhaps belatedly) saving for retirement, inflationary policy will cause much more pain than ever seen before.
Are Baby Boomers going to get more or less than they think,
if the supply of what they want to sell exceeds demand
as they exchange assets for needed goods and services
in the same era?
Even under "moderate inflation" scenario, it's still a significant erosion of buying power and living standard over 10, 20, 30 years...
If workers earn, pay taxes, spend, save and invest,
while retirees divest, downsize, budget
and draw income and healthcare benefits,
what’s going to happen when more retirees want
what fewer workers may not be able to deliver?
...Japanese style stagnation is the best possible outcome during this transition...
Should interest rates and financial markets rise or fall,
if the rest of the world becomes less able or willing
to finance American lifestyles?
Do we cope with it or fight a losing battle in which everyone loses?"
Bo Peng
Via Tyler
If you found the present negatively affecting the future,
should you try to fix it?
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