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Mon Nov 19, 2012, 01:37 AM

 

Before greenspan's turn to debt scare-mongering

Stephanie Kelton provides two video clips to underscore the point that until quite recently, Greenspan made the point that MMT types do: that the US as a currency issuer, can always pay its debts (it might incur too much inflation, but with the economy having as much slack as it does, thatís far from a pressing worry).

What I found striking was the clip of Paul Ryan pressing the man formerly known as Maestro when he was still the Fed chairman to agree that private retirement accounts would be more stable than a government sponsored program. Thatís such a Big Lie Iím amazed anyone can peddle it with a straight face.

#t=23s

#t=29s

http://www.nakedcapitalism.com/2012/11/greenspans-switch-to-debt-scaremongering.html

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Reply Before greenspan's turn to debt scare-mongering (Original post)
HiPointDem Nov 2012 OP
JDPriestly Nov 2012 #1
HiPointDem Nov 2012 #2
JDPriestly Nov 2012 #3

Response to HiPointDem (Original post)

Mon Nov 19, 2012, 03:05 AM

1. 401(K)s have not yet been adequately tested.

It isn't just a matter of whether they weather fluctuations in the economy. So far they haven't. So far when the stock market or economy goes into a downward spin, so does income from 401(K) investments. When the stock market declines in value, then money invested there fails to produce income and also loses value. The 401(K) provides no security for retirement. It is a crap game. When you are young you think you are making money, but suddenly the bottom falls out and you are pretty helpless to find investments that you can rely on to supplement Social Security.

When the Federal Reserve and banks reduce the interest rates then the millions of middle class and low-income Americans who have placed their 401(K) money in banks and bonds and other conservative investments have no income. That is the case right now. And those conservative investments are the ones that are recommended for older seniors -- those who are retired -- and need income the most.

But the real test for 401(K)s is yet to come, and it is with this future test that the horrible inappropriateness of the 401(K) substitutes for fixed pension plans or Social Security will become painfully evident. That test is when people who saved in 401(K)s start becoming senile or incapable of making their own financial decisions. Rich people can afford financial counselors, lawyers, trust funds, etc. But ordinary working people who are senile or simply too tired to do the math will be utterly exasperated and easily taken advantage of. This goes for some very, very bright people who may have handled their financial affairs independently and very capably until they are in say their late 80s or their 90s.

There is a tragedy ahead. These people will be so vulnerable to cheats.

I have already seen a woman in her 90s exasperated with having to handle a small inheritance although she had built that small inheritance into a fair-sized nest egg when she was young. I also know a woman maybe in her 80s who trusted a financial adviser and ended up not only in trouble on her taxes but losing most of her money.

The 401(K)s are a stupid idea for most people. They are the brainchild of the cheats on Wall Street, created to be profitable for the financial sector. There was never really any realistic thought behind the idea. Like so many Republican ideas, the 401(K) concept is great of millionaires like Romney, but not good for working people.

This makes me so mad because I have seen the wretched results of these plans.

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Response to JDPriestly (Reply #1)

Mon Nov 19, 2012, 04:13 AM

2. their equivalent was tested in chile (test ground for neoliberalism): big fail.

 

N]ow that the first generation of workers to depend on the new system is beginning to retire, Chileans are finding that it is falling far short of what was originally advertised...

Dagoberto SŠez, for example, is a 66-year-old laboratory technician here who plans, because of a recent heart attack, to retire in March. He earns just under $950 a month; his pension fund has told him that his nearly 24 years of contributions will finance a 20-year annuity paying only $315 a month.

http://www.nathannewman.org/log/archives/002107.shtml

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Response to HiPointDem (Reply #2)

Mon Nov 19, 2012, 10:49 AM

3. Yes. No compromise on Social Security.

The congressmembers who are suggesting this are out of touch with the reality of many of their own elderly constituents.

One problem is that elderly people who are without means stay under the radar. You will find them in your local dollar store or at trash cans on collection day. They are the ones with the huge bags. They try to find free meals when they can.

I am seeing more and more elderly homeless people in my residential neighborhood. Cutting Social Security even a little will add to this silent crisis.

To be fending for yourself on the street when you are over 60 is a horrible fate.

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