Ben Stein: Entitlements ‘Bankrupt’ U.S. Today

Ben Stein: Entitlements ‘Bankrupt’ U.S. Today

Ben Stein, the economist, commentator, and one-time Nixon speechwriter, also well known for film and TV roles, says the cost of Medicare is already completely out of hand.

In fact, the future cost is beyond our ability to pay — period.
“Medicare is such a crisis you can hardly imagine,” Stein said in a video commentary for Fortune magazine. “Actuarially, the U.S. is bankrupt right now.”
He isn’t speaking theoretically. Stein says that the locked-in, required spending — figures not up for debate — simply overwhelm not only the potential income from taxes, but the actual value of the assets themselves.
“The liabilities foreseeable up until the year 2050 discounted back to present value exceed the total wealth of the nation,” Stein said.
“Every building, every warehouse, every K-Mart, every Wal-Mart, every Target, every Sears, every ship, every plane, every acre of wheat or corn, every oil well, put them all in one big bond, it would not equal the liabilities of Medicare,” he said.
According to the American Academy of Actuaries, Medicare spending in 2006 hit 3.1 percent of gross domestic product (GDP). That figure will jump to 6.5 percent of GDP by 2030 and rise to 11.3 percent by 2080.
Remember, too, that Medicare is not 100 percent coverage, so these estimates are not the total cost of health care, just the government’s liability.
Add Social Security entitlements, and things at first blush don’t seem so bad. Social Security payments added on are projected to total 12.7 percent of GDP by 2030, rising to 17.6 percent in 2080, according to the actuaries.
It can be easy to presume that the economy can potentially grow its way out of the entitlements mess — until you realize that GDP is the whole economy and not the federal budget.
Consider, for a moment, that federal revenues average 18 percent of GDP. This means that in 2007 — this year — 40 percent of federal revenues already goes to entitlements.
All things remaining equal, the Medicare and Social Security “bite” climbs to 80 percent of the budget by 2040.
Entitlement spending consumes the entire federal budget by 2080, bankrupting the government. Education, security, defense, disaster aid, housing, environment, science, transportation — everything else — gone.
“So it’s a real serious problem,” Stein said. “The solution to this problem is extremely difficult to figure out.”
Means-testing — simply put, requiring wealthier Americans to pay more out of pocket rather than rely on Medicare — is probably inevitable, Stein said.
That puts people who are doing the right thing and saving in a bind, since it adds an inestimable new cost to retirement: health care.
“As a close friend of mine says, this is the joker in the deck: What are your medical costs going to be when you retire?” Stein said.
“It could be much, much larger than you think. That means you have to save even more,” he said.
Scarily enough, the U.S. personal savings rate fell below zero in 2005 and is now a couple of points below zero.
Critics point out that such figures from the U.S. Department of Commerce mislead. For instance, the figure only counts after-tax savings. Your 401(k) and the value of your home are not added in.
Don’t look for a silver lining there, though. Home values in the third quarter fell 4.5 percent, following a 3.3 percent decline in the second quarter, according to the latest S&P/Case Shiller home price index.
And the massive number of adjustable-rate mortgages due to reset have not yet begun to kick in. That will add to the already large numbers of unsold homes on the market with no buyers to buy them — pressuring prices that much more.
Meanwhile, retirement research from Boston College shows that nearly three-quarters of Americans who are eligible to participate in 401(k) plans do so. Nevertheless, less than one in 10 of them contribute the maximum amount allowed under the plan.

Dollar Drops to Record Low Against Euro

The treason against our salaries and our fixed incomes continues.

Dollar Drops to Record Low Against Euro
Friday November 23, 9:04 pm ET Dollar Drops to Record Low Against the Euro Amid Speculation of Another Rate Cut NEW YORK (AP) -- The dollar hit a new low against the euro in thin trading Friday as speculation continued that the American credit crisis will lead to another cut in interest rates in the U.S.

The 13-nation European currency spiked early to hit $1.4966, breaking the previous record of $1.4873, set the day before.

"Once again the message ... coming through is that with further rate cuts expected from the Fed, the dollar is struggling to find any serious supporters," said James Hughes, an analyst at CMC Markets.

In late afternoon trading, the euro had retreated to $1.4838, up from the $1.4833 it bought late in Europe the day before, but down from the $1.4848 it bought in New York late Wednesday.

The dollar fell to purchase as little as 107.56 Japanese yen, dropping below the 108-yen level for the first time since 2005. It recovered slightly to purchase 108.18 yen, down from 108.62 yen late in Europe on Thursday and 108.68 yen in American trading Wednesday.

The British pound, meanwhile, fell to $2.0612 from $2.0634 the day before in Europe and $2.0644 in New York Wednesday.

The Thanksgiving holiday weekend kept many players on the sidelines, while Japanese financial markets were closed Friday for the Labor Thanksgiving Day holiday.

The euro, the pound and other currencies have been climbing steadily against the dollar since August amid fears for the health of the U.S. economy, stoked by the subprime credit crisis.

The euro is on track to trade in a $1.50 to $1.60 range over the coming months, Norbert Walter, chief economist at Deutsche Bank, told Dow Jones Newswires on the fringes of the European Banking Congress.

In that range, it is overvalued by about 30 percent, he said.

Earlier in the day, Commerzbank AG Chief Executive Klaus Peter Mueller said he expected the euro to trade in the $1.50 to $1.60 range over the next 12 months.

The dollar has been further weakened by interest rate cuts, which can be used to jump-start an economy, but can also weaken a currency as investors transfer funds to countries where they can earn higher returns.

The Federal Reserve has already cut rates twice and speculation is growing that as the subprime fallout continues, it will be forced into another cut.

In other New York trading, the dollar rose against the Canadian currency. The Canadian dollar was worth $1.0108 Friday, down from $1.0160 late Thursday, according to Dow Jones' Interbank foreign-exchange rates, and from $1.0126 late Wednesday in New York.

The dollar's decline: from symbol of hegemony to shunned currency

By Andy McSmith Published: 17 November 2007

The decline of the dollar, symbol of US global hegemony for the best part of a century, may have become so entrenched that some experts now fear it is irreversible.

After months of huge and sustained turmoil on the money markets, lack of confidence in the world's totemic currency has become so widespread that an increasing number of international traders are transferring their wealth to stronger currencies such as the euro, which recently hit its highest level against the dollar.

"An American businessman over here who is given the choice would take anything but the dollar," David Buik of Cantor Index said yesterday. "I would want to be paid in yen, and if not yen then the euro or sterling."

Matthew Osborne, of Armstrong International, added: "The majority would say sterling. There are a few dealers in the City who may take the view that they'll take dollars now, while they're cheap, and hold on to them for 12 months.

"But the problem is so serious that there are people who in July or August might have been thinking, 'I'm paid in dollars, how annoying' for whom it's now a question of, 'Do you have a job; do you have a bonus?' "

The collapse of the sub-prime mortgage market in the US, which is fuelling the dollar unrest, has already brought down one British bank, Northern Rock, and has forced others to declare vast losses. Yesterday, just as it appeared that the dollar might have finally reached its floor, there was another warning that the sub-prime crisis is going to get worse. The US Treasury Secretary Henry Paulson, warned an international business summit in South Africa: "The sub-prime market, parts of it will get worse before it gets better." Huge numbers of US homeowners are still cushioned by introductory interest rates set when they took out loans in 2005 or 2006, he said. When these introductory offers run out, their interest payments will increase, setting off another wave of defaulting and repossessions. And the dollar is enduring its rockiest spell in recent memory.

Kenneth Froot, a Harvard university professor and former consultant to the US Federal Reserve, warned yesterday: "Part of the depreciation [of the dollar] is permanent. There is no doubt that the dollar must sink against periphery currencies to reflect their increase in competitiveness and productivity."

Professor Riordan Roett, of Johns Hopkins University in Baltimore, told Bloomberg News: "There is a loss of confidence in the dollar and the US. It may only reflect the widespread dismay with the Bush administration, but it is obvious that the next administration, of either party, will have a steep uphill struggle." As well as reaching its lowest level against the euro, which has been trading at more than $1.47, the dollar has also fallen to its lowest level against the Canadian dollar since 1950, sterling since 1981, and the Swiss franc since 1995.

Its plight was made still worse by a jarring signal from China that it was switching to other currencies. Cheng Siwei, vice-chairman of the Standing Committee of the National People's Congress, told a conference in Beijing: "We will favour stronger currencies over weaker ones, and will readjust accordingly."

The warning was reinforced by a Chinese central bank vice-director, Xu Jian, who said the dollar was "losing its status as the world currency".

China has stockpiled £700bn worth of foreign currency, and has only to decide to slow its accumulation of dollars to weaken the currency further. Last month, in a humiliating turn of events, the central bank in Iraq, four years after the United States invaded, stated that it wished to diversify reserves from a reliance on dollars.

Korea's central bank has urged shipbuilders to issue invoices in the local currency and take precautions against the weakened dollar, and three of the world's big oil exporters, Iran, Venezuela, and Russia, are demanding payment in euros rather than dollars. Iran insisted that Japan should make all its payments for oil in yen, rather than dollars.

Warren Buffet, who is reputedly the richest man in the world, was asked on the US network CNBC last month what he thought was the best currency in the world to own now. He answered: "Not the US dollar."

The Wall Street Journal ran an online poll asking people which currency, they would prefer to be paid in. The euro came top, ahead of sterling, with others such as the Canadian dollar, yen and Swiss franc trailing far behind. One respondent wrote: "Being an expat in Europe with a European employment contract, I am paid in euros, and happy to get paid in euros, and shop in the US, just as long as the cycle lasts through my retirement, so I can pick up pension in Europe and retire in the US."

The Federal Reserve has cut interest rates twice since September to revive the US economy, but the cuts – combined with the possibility that more were on the way – made the dollar less attractive to investors. Yesterday, it recovered slightly when one Federal Reserve banker, Randall Kroszner, dampened speculation about further interest rate cuts, saying that rates were low enough to get the economy through a "rough patch".

Problems with the greenback, combined with cheap air fares, have encouraged more Britons to go shopping across the Atlantic. British tourists spent £785m in New York last year, the city's marketing and tourism organisation said yesterday. There were 1,169,000 visitors to New York from the UK in 2006, with 54 per cent going for four to seven nights and 31 per cent staying for two to three nights. They spent an average of £112 a day. The average age of the UK visitor is 40.

Christopher Heywood, director of tourism PR for NYC & Company, said he expected the dollar crisis to attract yet more British shoppers. "The savvy traveller who's coming here for the shopping can really get a bargain. They're coming with one suitcase and leaving with two or three," he said.

"We have people coming over here even for weekend trips to shop for the famous brand names. People are coming for the department stores that everyone around the world knows, but also for the boutique stores out of the centre of Manhattan, anything from Madison Avenue and Fifth Avenue to Bleecker Street in the West Village and SoHo."

How the government is stealing from you with inflation, again.

Say you are on a fixed income, e.g., pension or social security.

If you inflate the currency but there is not adjustment or an insufficient adjustment for this inflation, this is the administrator of the currency stealing from you.

The commodities Price Index published each week clearly shows the theft going on and how radical it has been for the past two years, see:

Sept 27 2007
http://www.economist.com/images/20070929/TAB3.gif

Sept 24 2005
http://www.economist.com/images/20050924/TAB3.gif

CPI from 131 to 216.

Did your salary go up 66% in the last two years? No. You were just stolen from. The fed lowered interest rates and increased the money supple (They stopped publishing the M3 to hide this, so to see it, look here:
http://www.nowandfutures.com/key_stats.html
)

If you hold dollars or are paid in dollars then you were stolen from.

Now, if your salary does adjust upwards, you get hit with a higher tax bracket for the same of less purchasing power, meaning tax revenue goes up, but you purchasing power does not, or goes down. You were just stolen from again.

If your salary hasn't doubled since 2000. You lose.

Now, try to convert your money say to Swiss francs and hold them in a Swiss account and earn a lowly 2% interest. This terrorist government will try and ding you for income on the 2% interest! YOU JUST WANT TO KEEP THE VALUE OF YOUR MONEY STABLE! They have the nerve to track and tax your earnings in a foreign currency! They only reason I want to hide my wealth in Swiss Francs is to keep it from getting inflating to hell and they want to charge me for that?!?! Also, it is common for the USDOJ to seize and freeze accounts held by US citizens in foreign tax havens because you are "funding terrorists" and bull like that, they want to keep us bank slaves to the dollar.

This is INSANE, and the Boston Tea Party was over some measly less than 10% VAT on tea.

We are being taxed at about 50% [all said and done] (Sales, fed income, state income, tollbooths, interest, capital gains, etc), and now they want to keep in you dollars and dilute you position out from underneath you!

It is *so bad* right now as a worker paid in dollars its insane.

They say CPI is not core inflation, wrong, see the fed itself saying the two are supposed to be the same:

See here:
"Analysis by the Federal Reserve Bank of New York indicates that this measure is no better than a moving average of the Consumer Price Index as a predictor of inflation."

http://www.newyorkfed.org/research/staff_reports/sr236.html



The fed has been known to substitute steak for ground beef in the basket of calculations they use ( but reveal to no one about how core is actually calculated) to get the number they want.

You'll notice when reading Fed documents they are often vague, voodoo or self contradictory. They have to be. They are selling you bullshit. If you ran your household like them, you would be in default and homeless and garnished. If you ran your company like the Fed, you would be out of business. Its that simple. They are running our country's currency into the ground trying to keep Wall St. aloft, and trying to keep the housing and credit card crisis from imploding, but are making things far worse.

Kuwait just de-pegged the dollar, not in the news, but it happened:
"Kuwait pegs dinar to basket of currencies"
http://www.forbes.com/markets/feeds/afx/2007/05/20/afx3739653.html
Note: used to be pegged to the US dollar.

"Gulf economies 'may shun greenback peg' "
http://www.gulf-daily-news.com/Story.asp?Article=199669&Sn=BUSI&IssueID=30237

Ben Bernanke is a criminal and should be jailed forever.

Ben Bernanke's moves to satisfy Wall St. have failed. Commodities prices are sky high. Salaried, hourly and fixed income employees everywhere are being SCREWED by inflation.

Try to exit dollars to Swiss francs or offshore your money, and you'll realize you might be labeled a terrorist and your money seized in an investigation. Also the banks and other colluders to exiting the US dollar position heavily load the transaction.

Realize that the Swiss Banks , even on numbered accounts, will let the US know of interest you get (This is new since 2002)! This was traditionally not the case, but know this, even if you legally change your post tax money into another currency and then get interest which is at or slightly below CPI-inflation, you can be thrown in jail for not reporting that "income." Even though this income offsets the fucking brutal inflation going on.

The real thief is this occupying force known as the US Federal Government. They undermine the states and the people, they arbitrarily ask for large taxes and they inflate the shit out of the money debasing everything you own! Then when the appraiser comes and values your house at some asinine inflated price, you pay skyrocketed property tax, and with inflation the salaries that did go up (not many did), you get subjected to AMT and other "rich guy" taxes!

They are literally STEALING your money by printing more of it. Ben Bernanke should be put to jail as a traitor. This guy is worse then Julius Rosenberg, and he was electrocuted. Ben Bernanke - the worst traitor against America alive today.

Sept 27 2007

http://www.economist.com/images/20070929/TAB3.gif

Sept 24 2005

http://www.economist.com/images/20050924/TAB3.gif

Your money purchasing power was halved in 2 years. Your salary didn't go up. Get it? You are not only being lied to, you are being fleeced and stolen from, and every paycheck over the last two years has been less money than the previous one.