Bubble Bubba Isn’t Doing Fine Anymore

Let’s take a look at how the average consumer is doing. I’ll call this typical consumer “Bubba” because I just read an article that claimed “Bubba’s doing better today than at any time since before the Korean War.” It disgusted me because I found it to be such a disingenuous set of lies wrapped in half-truths, all contrived to pacify the trickle-down peasants as that philosophy continues to short-change the middle class with its fake promise.

First of all, who cares about how Bubba was doing before the Korean War? That’s going back an awful long time to find a day the present could beat. It’s before my days, and I’m a grampa now. If you have to look back that far to find a time when Bubba wasn’t doing as “well” as he is today, you’re chasing a false narrative because working-class Bubba wasn’t even alive back then. Those pre-Korean-war Bubbas retired long ago, and frankly they are much better off today in retirement than today’s working Bubba.

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Social Security Soon Will Slide Into Insolvency

By Robert Weisman – Re-Blogged From The Boston Globe

Some time next year, as the ranks of retirees swell, the Social Security system in the United States will pass an ominous tipping point and start the slide into insolvency.

For the first time in nearly four decades, the government program that provides retirement checks to older Americans will pay out more in benefits in 2020 than it takes in. That will force the program to dip into a rainy day fund that will be depleted in about 15 years.

And if the political dysfunction in Washington continues and lawmakers don’t fix the system, benefit cuts are in store for current and future retirees, most of whom haven’t socked away enough money in their personal retirement accounts.

Senator Bernie Sanders, Independent of Vermont, wants to expand Social Security, even as the program will pass an omnious tipping point.
Senator Bernie Sanders, Independent of Vermont, wants to expand Social Security, even as the program will pass an omnious tipping point.(Mark Wilson/Getty Images/File)

How US Government Debt May Impact Social Security

By Peter Reagan -Re-Blogged From Newsmax

Fiscal year 2018 wasn’t a good one for U.S. government net-worth. While that may hardly be surprising, it’s possible we’re reaching a “tipping point.”

From an official report released by the U.S. Treasury, Sovereign Man pulled out a few key highlights:

  • In fiscal year 2018, the government’s total net loss was $1.16 TRILLION.
  • … they spent over $4.5 trillion.
  • … nearly HALF went to Social Security and Medicare.
  • … spent a record $523 billion just on interest payments on the national debt!

 

How US Government Debt May Impact Social Security
(Pixelrobot/Dreamstime)

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Public Pensions Could Become Retirement Crisis for Everyone

By Peter Reagan – Re-Blogged From Newsmax

It’s become fairly common knowledge that public pensions are on the verge of either radical overhaul or extinction.

Worldwide, pensions are set to reach a shortfall of $400 trillion. This is a larger amount than 20 of the world’s largest economies, according to Sovereign Man.

It was even reported that Congress is planning for pension fund failure in the U.S. Not to mention, Philadelphia has considered tapping public utility payments to cover their shortfall.

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National Debt Is An ‘Economic Threat’ To The US

By Mac Slavo – Re-Blogged From Freedom Outpost

In an incredibly obvious statement, National Security Advisor John Bolton has declared the high level of national debt an “economic threat” to the United States. Unless you have been living under a rock for the past ten years, you know that statement is not only true but obvious.

Bolton claimed that the national debt is a big problem and tackling it requires significant cuts to the government’s discretionary spending, while most other economic experts say entitlement spending is the biggest concern. According to Bloomberg, Bolton was quoted as saying: “It is a fact that when your national debt gets to the level ours is, that it constitutes an economic threat to the society. And that kind of threat ultimately has a national security consequence for it.”

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Universal Basic Income For Everyone!

By Gary Christenson – Re-Blogged From Silver Phoenix

Several countries and cities studied and tested a universal basic income (UBI). At first glance it looks like giveaway nonsense:

  1. Who pays for the giveaways?
  2. Does the UBI discourage work and self-improvement?
  3. How much price inflation does it create?
  4. How much additional unpayable debt will be created by the UBI?
  5. The UBI should be how large? If $1,000 per month per person is good, is $10,000 per month better? Which bureaucrat defines the size of the benefit?
  6. Does it apply to everyone? Adults only? Means tested? Only those who voted and paid taxes? Only those in good standing with the “thought police?”

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States Rush to Rein In Prescription Costs, and Drug Companies Fight Back

By Robert Pear – Re-Blogged From NY Times

States around the country are clamping down on pharmaceutical companies, forcing them to disclose and justify price increases, but the drug manufacturers are fighting back, challenging the state laws as a violation of their constitutional rights.

Even more states are, for the first time, trying to regulate middlemen who play a crucial role by managing drug benefits for employers and insurers, while taking payments from drug companies in return for giving preferential treatment to their drugs.

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Twenty-four states have passed 37 bills this year to curb rising prescription drug costs, according to Trish Riley, the executive director of the National Academy for State Health Policy.CreditJulio

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Bankruptcy Soars As The Country Grapples With An Unprecedented Debt Problem

By Michael Snyder – Re-Blogged From Freedom Outpost

America, you officially have a debt problem, and I am not just talking about the national debt.  Consumer bankruptcies are surging, corporate debt has doubled since the last financial crisis, state and local government debt loads have never been higher, and the federal government has been adding more than a trillion dollars a year to the federal debt ever since Barack Obama entered the White House.  We have been on the greatest debt binge in human history, and it has enabled us to enjoy our ridiculously high standard of living for far longer than we deserved.  Many of us have been sounding the alarm about our debt problem for a very long time, but now even the mainstream news is freaking out about it.  I have a feeling that they just want something else to hammer President Trump over the head with, but they are actually speaking the truth when they say that we are facing an unprecedented debt crisis.

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Pensions – A Stealth Mortgage On Your House

By John Rubino – Re-Blogged From http://www.Silver-Phoenix500.com

Money manager Rob Arnott and finance professor Lisa Meulbroek have run the numbers on underfunded pension plans and come up with an interesting – and highly concerning – new angle: That they impose a “stealth mortgage” on homeowners. Here’s how the Wall Street Journal reported it today:

The Stealth Pension Mortgage on Your House

Most cities, counties and states have committed taxpayers to significant future unfunded spending. This mostly takes the form of pension and postretirement health-care obligations for public employees, a burden that averages $75,000 per household but exceeds $100,000 per household in some states. Many states protect public pensions in their constitutions, meaning they cannot be renegotiated. Future pension obligations simply must be paid, either through higher taxes or cuts to public services.

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Trustees Report: Medicare to Go Broke 3 Years Sooner

By Associated Press – Re-Blogged From Newsmax

Medicare will run out of money sooner than expected, and Social Security’s financial problems can’t be ignored either, the government said Tuesday in a sobering checkup on programs vital to the middle class.

The report from program trustees says Medicare will become insolvent in 2026 — three years earlier than previously forecast. Its giant trust fund for inpatient care won’t be able to fully cover projected medical bills starting at that point.

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More Absolutely Crazy Pension News

By John Rubino – Re-Blogged From http://www.Silver-Phoenix500.com

“War” and “pensions” are conceptually about as different as it’s possible to be. But – in a measure of how far into Crazy Town we’ve wandered – they’re both taking the world in the same direction.

If a Middle East (or Asian!) war doesn’t spike oil prices and push the global economy into recession, then pensions will probably produce the same end result. Here’s an excerpt from a much longer New York Times article that should be read in its entirety for a sense of what public finance has become:

A $76,000 Monthly Pension: Why States and Cities Are Short on Cash

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Are Intragovernmental Holdings Real Debt?

By Scott Anderson – Re-Blogged From Seeking Alpha

[This article orignally was written over 5 years ago. I’ve update the numbers to today. -Bob]

As everyone who is paying attention knows, the amount of US debt outstanding is fast approaching $20.5Trillion. But whom do we owe it to? Most of the debt, about $14.8T of it, represents debt held by the public. This portion of the debt is easy to comprehend. It could be bonds held by investors, savings bonds given to children, bonds purchased by the Chinese government, or even bonds purchased by our good buddies at the Federal Reserve. The remaining balance of $5.7T, known as “Intragovernmental Holdings,” is what I would like to discuss today.

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Unsound Money Is Crucifying Pensions

By Alasdair Macleod – Re-Blogged From http://www.Silver-Phoenix500.com

Deficits are mounting in pension obligations. It is a global problem over which pension trustees are helpless. It is also a problem that’s brushed under the carpet, with prospective and current pensioners generally unaware of the threat to their retirement. Investors in companies with defined benefit schemes, schemes which promise an inflation-adjusted entitlement based on final salary, generally ignore this important issue, as do most stock market analysts. Analysts know the deficits are there, but so long as they are buried in the notes to the accounts and not actually represented in-your-face on balance sheets, the assumption appears to be they can ignore them.

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Trump’s Tax Cuts: The Good, The Bad, and the Inflationary

By Stefan Gleason – Re-Blogged From Money Metals Exchange

At last, tax reform is happening! Last week, President Donald Trump celebrated the passage of the most important legislation so far of his presidency.

The final bill falls far short of the “file on a postcard” promise of Trump’s campaign. It even falls short of the bill trotted out by Congressional Republicans just a few weeks ago. It is, nevertheless, the most significant tax overhaul in more than a decade.

Corporations and most individual taxpayers will see lower overall rates. That’s the good news.

Unfortunately, there is also some not so good news investors need to be aware of.

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Out Of Money By November 29th

By Dan Amerman – Re-Blogged From http://www.Silver-Phoenix500.com

“Social Security benefit indexing is not only not based on retiree expenses – but quite ironically, it is designed to exclude retiree expenses.”

In this analysis we will combine two “technicalities” that many people have probably never even thought about, and show how in combination and over the course of a retirement – they can completely change our day to day quality of life.

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Out Of Money By December 12th – Social Security Partial Inflation Indexing (Part 2)

By Daniel Amerman – Re-Blogged From http://www.Silver-Phoenix500.com

Most advice on long-term planning for retirement and Social Security benefits is based on the assumption that Social Security will fully keep up with inflation. As we are establishing in this series of analyses, the full inflation indexing of Social Security is a myth and there are major implications for standard of living in retirement as well as the associated decisions with regard to both Social Security and investment planning.

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Social Security Inflation Lag Calendar – Partial Indexing

By Daniel Amerman – Re-Blogged From http://www.Silver-Phoenix500.com

There is a lot of advice out there about Social Security – most of which is based on Social Security being fully inflation indexed.

However, as we will establish in this first in a series of analyses, Social Security is only partially inflation indexed. As a matter of design it does not fully keep up with inflation.

Sound like an obscure difference?

“Partial inflation indexing” is little understood by the general public, but it could transform your standard of living – along with the quality of life of millions of others – in the years and decades to come. Indeed, partial inflation indexing can mean effectively having only 11 months of benefit purchasing power- or even 8 months –  to cover 12 months of expenses each year.

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Three Myths About Fixing Social Security

By Brenton Smith – Re-Blogged From Newsmax

Social Security is the largest, and arguably most important, program in the federal government. It is a life-line for millions. For the rest of us the program is a set of never-ending, polarizing arguments.

The contentiousness is caused in large part by the number and conflicting nature of the urban legends surrounding the system. Everyone has a fact that is someone else’s myth.

These convictions about the program shape who voters elect, and seriously limit what candidates are willing to say to the electorate. These beliefs have so penetrated the public conscience that actual policy makers are left herding unicorns.

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British Feds Ban Surgery for Smokers and the Obese

By Benjamin Arie -Re-Blogged From Conservative Tribune

Socialized medicine is a wonderful, compassionate system that brings important care to everyone… at least, that’s what leftists in the United States and Europe keep insisting.

As the United Kingdom is finding out, however, everyone is not actually equal under health care socialism. As soon as the system starts running out of other people’s money, people are quickly pushed out… and you’d better hope that you’re not one of the unlucky ones who gets thrown aside!

That’s exactly what happened this week in Britain, as the socialized National Health System announced that patients are being banned from important surgeries if they happen to be a bit overweight or smoke tobacco.

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‘Big Government’ Is Ever Growing, on the Sly

By George Will – Re-Blogged From National Review

The number of federal employees hasn’t changed much in 50 years, but that fact masks how the government has actually grown relentlessly.

In 1960, when John Kennedy was elected president, America’s population was 180 million and it had approximately 1.8 million federal bureaucrats (not counting uniformed military personnel and postal workers). Fifty-seven years later, with seven new Cabinet agencies, and myriad new sub-Cabinet agencies (e.g., the Environmental Protection Agency), and a slew of matters on the federal policy agenda that were virtually absent in 1960 (health-care insurance, primary- and secondary-school quality, crime, drug abuse, campaign finance, gun control, occupational safety, etc.), and with a population of 324 million, there are only about 2 million federal bureaucrats.

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Federal Grants to States

By Veronique de Rugy – Re-Blogged From Mercator Center George Mason University

The federal government spends over $500 billion annually on grants-in-aid to state and local governments, making grants-in-aid the third largest item in the budget after Social Security and national defense. In recent decades, federal aid to state and local governments has soared and, thus, increased their reliance on federal aid for the financing of certain government functions.
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Using data from the Office of Management and Budget (OMB), the following two charts place the post-1960s explosion in federal grants to state and local governments in perspective. Grants-in-aid are a primary mechanism that the federal government uses to extend its influence into state
and local affairs. Under the grant-in-aid process, the federal government claims to extend aid to the states to finance “areas of domestic public spending” or for “swift fiscal relief during the recent recession” or for when “severe and unforeseen economic conditions” arise.

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Really Bad Ideas, Part 4

By John Rubino – Re-Blogged From Dollar Collapse

As Hurricanes Harvey and Irma wreaked their havoc over the past couple of weeks, several interconnected questions popped up, the answers to which make us look, to put it bluntly, like idiots.

Why, for instance, are there suddenly so many Cat 4 and 5 hurricanes? Is this due to man-made climate change and is this summer therefore our new normal? The answer: Maybe, but that misses the point. There have always been huge storms (like the one that wiped Galveston, TX off the map in 1900, long before global warming was a thing), and barring another ice age there always will be. So the US east coast will remain one of Mother Nature’s favorite targets.

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Higher Interest Rates May Force Higher Inflation Rates

By Daniel Amerman – Re-Blogged From http://www.Gold-Eagle.com

1) Financial analysis of the three way relationship between interest rates, inflation and the U.S. national debt.

2) Higher interest rates causing higher interest payments on the $20 trillion national debt would ordinarily cause soaring deficits over time.

3) Detailed analysis of the “loophole”, which is that if inflation even moderately increases – then interest rates can rise without exploding the real debt.

4) This simultaneous increase in interest rates and inflation would have a major impact on all markets, as well as long term retirement planning.

5) The logical response to rising interest rates may be to sharpen one’s focus on how to better deal with higher rates of inflation over the long term.

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Something Big, Bad And Ugly Is Taking Place In The US Retirement Market

By SRSrocco – Re-Blogged From http://www.Silver-Phoenix500.com

While the highly inflated value of the U.S. Retirement Market reached a new high this year, something is seriously wrong when we look behind the scenes.  Of course, Americans have no idea that the U.S. Retirement Market is only a few steps from falling off the cliff, because their eyes are focused on the shiny spinning roulette wheel called the Wall Street Stock Market.

Yes, everyone continues to place their bets, hoping and praying that they will win it big, so they can retire in style.  Unfortunately, American gamblers at the casino have no idea that the HOUSE is out of money.  The only thing remaining in their backroom vaults is a small stash of cash and a bunch of IOU’s and debts.

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Larry Kudlow: Democrat Plan for Government-Run Healthcare a ‘Disaster’

By Rob Williams – Re-Blogged From Newsmax

Larry Kudlow, the economist and former adviser to President Ronald Reagan, said the economic agenda spearheaded by Senate minority leader Chuck Schumer, D-N.Y., will be a “disaster,” if Medicaid is any guide.

“A government plan is not going to work. Medicaid, which is a disaster and has spiraled out of control and has expanded and expanded and expanded with no eligibility requirements anymore – that’s the perfect example,” Kudlow said on CNBC. “If you want a Democratic program that is going to be government-run, single payer – take a look at Medicaid, which has been a disaster.”

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The Walmart Guy vs Anti-Capitalism Millennials

By Lloyd Marcus – Re-Blogged From iPatriot

Though we have never met, I smiled recently seeing my favorite Walmart employee. For over ten years, I witnessed him gathering shopping carts in the parking lot. He is a white millennial who only has the use of one arm, walks with a severe limp and appears slightly mentally challenged. I once saw him leaving work driving a new looking compact car. My wife Mary prepared his taxes when she worked for a tax preparation company. I thought, “Hey, this brother has got it goin’ on — doin’ his thing.”

The Walmart guy could easily qualify for disability; sit home on his butt allowing taxpayers to take care of him. Far too many able-bodied millennials feel entitled, believing government should provide them free everything.

The Walmart guy’s work-ethic, self-reliance and pride in earning his own way is truly refreshing. The Obama Administration practically begged Americans, even non-citizens http://bit.ly/1ixsqOm, to get on food stamps and to apply for as many government freebies as possible. This addicts voters to government handouts and keeps them voting for their Democrat dealers. Disability claims skyrocketed under Obama. http://bit.ly/1ts1LYs

Disturbingly, polls say a majority of millennials reject Capitalism. http://wapo.st/2mINyo7 They believe Socialism is fair and compassionate and Capitalism is selfish and cruel. This explains “yutes” hero worship of socialist/democrat presidential candidate Bernie Sanders. Millennials love Sanders’ promise to take the hard earned wealth of achievers to redistribute to lazy pot-smoking losers. Former British Prime Minister Margaret Thatcher said, “The trouble with Socialism is that eventually you run out of other people’s money.”

Socialism always ends up spreading mediocrity and misery equally among the masses while the rulers live high on the hog. Have you noticed that Hollywood Leftists and socialist politicians want government to force us to drive tiny tin-can cars, surrender our guns and lower our carbon footprint? Meanwhile, they travel in gas-guzzling limos and private jets with armed guards.

Capitalism gives everyone a shot at achieving their American dream. I will slap the next fellow black person who whines to me about how whitey has stacked the deck again us. Capitalism birthed America’s first female millionaire, a black woman born in 1867. Madam C. J. Walker was an entrepreneur, philanthropist, and a political and social activist. http://bit.ly/2byUBOr Socialism would have enslaved Madam Walker to the government system, giving her just enough free stuff to get by. Okay, I promise not to slap anyone.

It was depressing hearing it reported that a large number of Americans support taxing income over a million dollars at 100%. First of all, confiscating that money would generate around $616 billion which only covers a third of our annual deficit. http://bit.ly/2tGS3CR

But what is most troubling is the disgusting class envy loser mindset of those who believe it is right for government to take people’s hard earned money. They do not realize that such financial tyranny would kill jobs and the incentive to be all one can be. How dare government place limits on success. Such thinking is un-American, counter to our God inspired founding.

We allowed Leftists’ silent-coup-takeover of public education decades ago. Consequently, Leftists have produced an army of stealth Leftist sleeper-cell operatives against their parents. Remember when Leftists instructed kids to steal their parent’s guns and turn them in to their teaches? http://bit.ly/2vgZ3bj Remember Michele Obama instructing students to report politically incorrect speech at the dinner table? http://bit.ly/1qL62Dz

Outrageously, white students are taught beginning in kindergarten that they were born racist. http://dailym.ai/29AwJVZ In essence, white students are taught to feel ashamed and hate themselves for their unfair white privilege. The Walmart guy is on Leftists’ excrement list simply for being a working class white male. http://bit.ly/2tfHN58 It angers me envisioning Leftist bullies getting into the grill of my Walmart guy, scolding him about his evil white privilege.

Students support black college student’s demand for free tuition and housing. http://fxn.ws/2kPQEWP

Black students also expect academic and behavioral standards lowered for them. I’m a 68 year old black man. I would be highly offended having standards lowered for me. Millennials quickly embrace Leftists twisting everything into evidence of unfairness and white American racism.

Years ago, a white friend shared that her son came home from middle-school in tears about how white men abused everyone; blacks, women, native Americans and so on. Today her son is an America hating Communist who still believes European white men are the greatest source of evil in the world.

Folks, we much turn this mess around regarding Leftists’ indoctrination of our kids. Trump appointing Betsy DeVos as Secretary of Education is a major step in the right direction. DeVos favors restoring power back to parents regarding the education of their children.

Oh, we’re out of milk. I’m confident I will see my Walmart guy diligently working.

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Senate Pushing Obamacare Bailout

By Bill Hoffmann – Re-Blogged From Newsmax

Sen. Rand Paul, R-Ky., told Newsmax TV on Thursday he remains dead set against the newly tweaked Senate healthcare bill and warned Republicans they will be clobbered with blame when their watered down version of the failing Affordable Care Act similarly begins to collapse.

“I don’t think some miracle happens with this Republican plan,” Paul, a Kentucky Republican, said on “Newsmax Now” with Bill Tucker. “The main thing that happens is now the . . . dysfunctional part of the marketplace is going to be blamed on Republicans.

Important: Newsmax TV is available on DirecTV Ch. 349, U-verse 1220, and FiOS 615. If your cable operator does not have Newsmax TV just call and ask them to put us on — Call toll-free 1-844-500-6397 and we will connect you right away to your cable operator! Continue reading

Government Insolvency Gets Harder to Ignore

By Clint Siegner – Re-Blogged From https://www.moneymetals.com

Several U.S. states and the federal government are hopelessly insolvent. It’s something many bullion investors have known for years.

The real question is when this reality will pierce the mainstream illusion that deficits, and the crushing pile of debt which accompany them, don’t matter. That moment drew closer last week when ratings agencies downgraded Illinois state bonds to one notch above “junk” status.

S&P and Moody’s dropped the state’s creditworthiness rating to BB+/Baa3 – the lowest ever for a U.S. state. Illinois currently has $14.5 billion in unpaid bills and a government deadlocked over forming a new budget.

That stack of bills represents a whopping 40% of the state’s operating budget. At the heart of Illinois’ problems are massive union pension obligations for retired government bureaucrats.

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Public Pensions System: Insolvent to the Core

By Constantin Gurdgiev – Re-Blogged From True Economics

A truly worrying view of the U.S. public sector pensions deficits has been revealed in a new study by Joshua D. Raugh for Hoover Institution. Titled “Hidden Debt, Hidden Deficits” (see http://www.hoover.org/sites/default/files/research/docs/rauh_debtdeficits_36pp_final_digital_v2revised4-11.pdf) the study opens up with a dire warning we all have been aware of for some years now (emphasis is mine):  “Most state and local governments in the United States offer retirement benefits to their employees in the form of guaranteed pensions. To fund these promises, the governments contribute taxpayer money to public systems. Even under states’ own disclosures and optimistic assumptions about future investment returns, assets in the pension systems will be insufficient to pay for the pensions of current public employees and retirees. Taxpayer resources will eventually have to make up the difference.”

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Republicans Fear for Their Safety as Threats Mount

By Cristina Marcos – Re-Blogged From The Hill

A growing number of House Republicans are facing physical threats from angry constituents in their districts, leading many to fear for their safety.

In the last few weeks alone, the FBI arrested a man threatening Rep. Martha McSally’s (R-Ariz.) life, a woman pursued Rep. David Kustoff (R-Tenn.) in her car, and Rep. Tom Garrett (R-Va.) heightened security at a town hall event in response to death threats.

Other Republicans still holding town halls say they haven’t felt physically threatened by protesters, but they worry about the depth of anger from some constituents in the polarized environment and what it means for political civility.

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Maine’s Economic Present and Future Look Bright, but Democrats in Denial

By Onan Coca – Re-Blogged From http://constitution.com

The state of Maine is offering the rest of the nation proof that conservative economic policies not only work better in the short term by stimulating the economy, but are beneficial for the long term as well ensuring long–term economic success.

A new article in the Bangor Daily News examines the exciting economic successes of the controversial Republican Governor Paul LePage. Maine’s economic outlook is so bright that many other states in the nation are watching to see how they might incorporate some of the states policies in their own plans. The Daily News notes that Maine has an all-time record amount of “cash on hand,” more than $1 Billion, and that this is mostly due to Governor LePage’s fiscal discipline and economic decision making.

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$1 Billion in Social Security Benefits Paid to Individuals Without a SSN

Re-Blogged From Minuteman News

How does this kind of thing happen?   The Feds are so hit or miss when it comes to identification/proof requirements.   You can’t buy a pack of Sudafed now without showing a driver’s license.   And, heaven forbid you try to buy a gun (a guaranteed second amendment right) without handing over your right arm.   But, you want to collect money from the government – no proof of SSN needed.

$1 BILLION in tax dollars because these jokers can’t or won’t do their jobs.

The Washington Free Beacon reports – The Social Security Administration paid $1 billion in benefits to individuals who did not have a Social Security Number (SSN), according to a new audit.

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Phasing Out Social Security

cropped-bob-shapiro.jpg   By Bob Shapiro

Social Security is in trouble. Money going out should exceed money coming in within three years. Of course, the current income on the Treasuries in the Trust Fund are counted as real, even though those Treasuries are little more than IOUs from Uncle Sam’s left pocket into his right pocket. In real world terms, the Trust Fund already is in Deficit.

Even with the rosy Treasury assumption, the Trust Fund balance should be zeroed out within 15-20 years, depending on whose projections you use.

Image result for Social Security Deficit

Economics Professor Laurence Kotlikoff of Boston University calculates that the actuarial deficit is around $100 Trillion, so anyone who says that we can tinker here and adjust there to save Social Security is just not living in the real world.

Social Security is dying. Social Security will end. The only question is whether it ends in a collapse – causing tens of millions of retirees to become destitute overnight – or whether Social Security is phased out, allowing current retires to get all they expect.

I suggest a phase out – a very long phase out.

  1. Today, end filing for early retirement for Social Security benefits. Seniors who already are receiving early benefits may continue, but no further applications will be accepted or processed. Transfer all non-retirement portions into one of the Welfare programs.
  2. For all Americans currently over 60 years of age, they may file and receive full Social Security benefits when they reach the current full retirement age.
  3. For all Americans currently under 60 years old, their full retirement age will be raised by one month for every two months until they reach 60. For example, a 50 year old has 120 months before he reaches 60, so his retirement age will be 60 months later than the current full retirement age.

    Image result for roth ira

  4. Americans under 60 may choose to opt out of Social Security. By opting out, they forfeit any accrued Social Security benefits. They will be allowed to deposit their FICA deduction tax free into a Roth IRA – that’s double Tax Free. The employer match, and self-employment tax, will continue to go into the Social Security Trust Fund. (This will cause large deficits near term but large surpluses down the road.)
  5. At some point, every American will be off Social Security, either by dying or by opting out. Any money remaining in the Trust Fund will go into the General Revenue Fund.
  6. Employer match after that point either:
    1. May be ended
    2. May go into the General Fund
    3. May by added to the employee’s Roth IRA

Image result for phase out

This phase out easily could take 60 years to complete. It will not be painless as the younger an American is, the less he will receive in benefits. But, it will put the burden where it can be handled most easily – with younger workers who have more time to plan. And, it sets up a system which still requires putting money aside for retirement, but that money is owned and controlled by each individual American worker.

It should be noted that Medicare is under the same pressures, also with a calculated actuarial deficit around $100 Trillion. A similar phase out for Medicare also makes sense.

 

2016 Budget Deficit Almost Final Around $600 Billion

cropped-bob-shapiro.jpg   By Bob Shapiro

The US Budget Deficit for Fiscal 2016 is about to close, and various estimates bracket a $600 Billion Deficit. I’ve seen numerous analyses which forecast this to rise to over $1 Trillion over the next few years, largely due to the growth of Social Security, Medicare, & other Health outlays, which currently make up about 2/3 of total federal government outlays.

Here is a wealth of numbers from the Office of the President. (I copied below only a tiny amount because the many graphs didn’t copy well.)

2016 United States Budget Estimate

GDP: $16.5T

Total Receipts: $3.34T

Total Outlays: $3.95T

Total Surplus or Deficit as Percentage of GDP: -3.3%

* Note: To the extent feasible, the data have been adjusted using chained 2009 GDP to provide consistency with the 2015 Budget and to provide comparability over time.

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Two Unexpected Reasons to Phase Out Social Security

cropped-bob-shapiro.jpg   By Bob Shapiro

There are numerous valid arguments for phasing out the Social Security System.

These include the obvious, such as, since Social Security is a pay-as-you-go system, meaning that it depends on revenue from current workers to pay for current retirees, it is a Ponzi Scheme which eventually must fail.

I’d like to talk today about a couple of arguments that may surprise you: 1. Social Security, by it’s very design, is racially discriminatory, and 2. Social Security laws trying to foreclose “double-dipping” are keeping American children from getting the best possible education.

Racially discriminatory? A study from the Centers for Disease Control shows that there is a huge gap between life expectancies for black versus white Americans – age 75 for blacks versus 80 for whites (79 overall).

cdc life expectancy

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Nearly 80 Percent of US Taxes Paid by Rich

By Joe Crowe – Re-Blogged From http://www.newsmax.com

Americans that earned six figures or more paid 79.5 percent of the nation’s share in individual income taxes in 2014, according to preliminary IRS information, reports The Washington Free Beacon.

In 2014, Americans paid a total of $1,358,093,169,000 to the IRS in individual income taxes. Americans earning $100,000 or more paid $1,079,392,180,000 or 79.5 percent of the total.

Those top earners represented 16 percent of the total number of individual income tax returns filed with the IRS in 2014. The highest earners were 23,745,195 of the 148,686,586 individual returns filed.

“Liberals say that high earners pay a high share of taxes only because they have high incomes,” Cato Institute tax policy expert Chris Edwards explained in the Beacon report.

“But high earners also pay much higher tax rates than everyone else,” Edwards continued. The top fifth of earners paid a 14-percent tax rate, while the middle fifth paid at a 2-percent rate, he added, citing Congressional Budget Office figures. The U.S. progressive tax rate is the highest among wealthy nations. Edwards called on Congress to make the U.S. tax code “more equal and proportional,” because “the level of progressivity in the tax code has become extreme.”

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Gold, The Misery Index And Insanity

By Gary Christenson – Re-Blogged From The Deviant Investor

In 1980 Ronald Reagan spoke about the Misery Index.  An economist had added the inflation rate to the unemployment rate, called it the Misery Index, and used it to indicate the social costs and economic difficulty for the middle class.

Today the Misery Index is much smaller than in 1980, thanks to … intelligent fiscal management, economically beneficial monetary policy from the Federal Reserve, and wise political policy from the White House.  If you believe any of those, read no further.

Most people will agree that the Misery Index is much smaller today because the numbers have been gimmicked.  Does anyone believe a few percent for inflation or around 5% unemployment?   Massage (torture) the numbers and the Misery Index declines, incumbent politicians are re-elected, while far too many people remain out of work, earning practically nothing on their savings, and paying too much for food, clothing, drugs, medical care, college, transportation and so on.

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Maine Food Stamp Work Requirement Cuts Non-Parent Caseload by 80 Percent

By Robert Rector, Rachel Sheffield and Kevin D. Dayaratna – Re-Blogged From The Heritage Foundation

The food stamp program is the nation’s second largest means-tested welfare program; its costs have risen from $20.7 billion in 2000 to $83.1 billion in 2014. Contributing to this rapid expansion is the enrollment of able-bodied adults without dependents, which has risen from nearly 2 million in 2008 to around 4.7 million today. Benefits to these individuals and related administrative expenses cost the taxpayers around $10.5 billion per year. Welfare should not be a one-way handout. In keeping with the success of both the 1990s welfare reform and Maine’s recent food stamp work requirement, the U.S. government should require constructive behavior from able-bodied recipients in exchange for benefits. Specifically, able-bodied adult food stamp recipients without dependents should be required to take a job, prepare for work, perform community service, or at a minimum search for employment in exchange for aid and assistance at the taxpayers’ expense. This reform would save taxpayers $9.7 billion per year. Continue reading

What We Need From the Candidates

cropped-bob-shapiro.jpg   By Bob Shapiro

The US is 5 months into Fiscal Year 2016, and the 2016 Presidential nomination process is moving along quickly. It looks like we may know who the two Big Party candidates will be within just a few months.

Even so, it appears that the candidates, and the “question asking” media have been ignoring one of the economic elephants in the room. I’m referring to the eternal US Budget Deficit, and the National Debt it causes, which are destroying our once great country.

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A Blueprint for Balance: A Federal Budget for 2017

Re-Blogged From The Heritage Foundation

The Blueprint for Balance provides detailed recommendations for the annual congressional budget. Congress needs to drive down spending – including through reform of entitlement programs – to a balanced budget, while maintaining a strong national defense, and without raising taxes.

While Congress cannot solve everything at once, it can and must take opportunities through the annual budget and appropriations process to make a down payment of putting the government’s finances back in order. They can do this by immediately reducing discretionary spending and taking meaningful steps to reduce mandatory spending by reforming those programs.

The Blueprint:

  • Balances the budget while reducing taxes. The Blueprint reaches primary balance (i.e., without including interest of the debt) within the first year and eliminates deficits by 2023 without counting any benefits from growing the economy (that would result in balance even sooner). The budget stays in surplus while allowing the nation to begin reducing the national debt. It does this while completely eliminating over $1.3 trillion in the tax revenues included in Obamacare.

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A Dangerous Moment For Social Security

By Justin Spittler – Re-Blogged From http://www.Silver-Phoenix500.com

Social Security funds are drying up…will there be any money left when you retire?

Social Security is America’s largest federal program. In 2015, it paid out $870 billion to more than 59 million Americans.

Most Americans see Social Security as a retirement savings program. During your working life, you pay 6.2% of every paycheck to Social Security. In return, the government sends you a check every month after you retire.

However, unlike a retirement plan like a 401(k), the money you pay into Social Security doesn’t land in your own personal account. Instead, it goes into one big pot called the “Social Security Trust Fund.”

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Bernie Sanders Says We Should be Spending Less on Health Care

By Ryan McMaken – Re-Blogged From http://www.mises.org

In the announcement of of his new health care plan this week, Bernie Sanders claimed that the US spends more on health care than any other country, and he said it as if it was a bad thing.
The claim that the US spends more than anyone else can indeed be true, depending on what measurement you use. As a dollar amount for all spending, Americans are near the top.  If you accept the World Health Organization’s, data — something that may or may not be advisable —  then the spending breakdown looks like this:
According to WHO, the US per capita spending is $8,467, followed by Norway at $6,106 and Luxembourg at $6,020.
Most of what puts the US above everyone else in this case is private spending. Rich countries in general spend more on health care since, even if one has access to taxpayer-financed health care, those with the means will often elect to pay for even more services (if the law allows). This isn’t just out-of-pocket, by the way. This is all spending in the private sector, so it includes the services already covered by a private insurance plan.  Although health care is among the most regulated and subsidized industries in the country, most government transactions are technically “private”:
Even after all that private spending, though, there’s still a whole lot of spending done by the government, and we find that in terms of government spending, the US is not an outlier at all, but is among the spendy-est of nations:
In this case, the US comes in at $4,047 behind Norway ($5,198), Luxembourg (5,061), and the Netherlands ($4,070), and is also quite comparable to Denmark ($3,801).
Wait, So Is Spending Now a Bad Thing? 
Here’s where it gets silly, though. When we’re talking about government spending on social welfare programs, the US is often condemned for not spending enough. Americans are stingy, we’re told, and are so greedy, in fact, they refuse to tax themselves to pay for more welfare programs.
The truth, however, is that the US is among the biggest spenders on welfare in general, and on health care in particular.
By this measure put out by the OECD, in terms of direct government spending on welfare as a percentage of GDP, the US comes in at 19.2 percent, which means it spends more than Australia, Canada, and Iceland. Switzerland is nearly equal to the US at 19.4 percent, and Norway is at 22 percent. So, we’re apparently to believe that this alleged “free market” and social-Darwinist system in the US is defined by a 2 to 3 percent difference in spending when compared to Norway or the United Kingdom (21.7%).
And this doesn’t even take into account all the tax breaks that the US commonly uses to reduce the tax burden on low-income households. If those are taken into account, the OECD notes, then social expenditure in the US is even higher than Norway, Luxembourg, and many others.
Nor does the government neglect health spending as part of all that spending. The US, which spends 20.3 percent of government expenditures on health, ranks with Switzerland (21.1%), New Zealand (20.3%), and Japan (19.4%):
So, if the US is spending nearly as much as, or even more than, the “generous” welfare states of northern Europe, why are we be constantly lectured about the need for more taxes and a larger role for government in everything?
Well, that’s when the advocates for even more taxpayer largesse change gears. “Don’t get me wrong,” they say. “We definitely need more taxes, and lots of them, but we need to spend those taxes differently.”
And that’s where the Bernie Sanders plan comes in. Sanders would like to overhaul the US health care system for the second time in five years, but this time, after instituting universal health care via a single-payer system, he’ll eventually make health care spending drop, and then we can cut taxes spend that tax money on something else.
How to Lower Costs: Revoke Choices for Patients
How will Sanders make the cost of health care go down? Well, that’s where things get murky, because the entire “plan” for doing this is about four pages long, and just based on the idea that administrative costs in the US are too high.
Writing in The New Yorker, James Surowiecki, who is hardly an advocate for laissez-faire, remains skeptical:

The answer in the document is vague: “Reforming our health care system, simplifying our payment structure and incentivizing new ways to make sure patients are actually getting better health care will generate massive savings.” The general idea seems to be that moving to the single-payer model will lead to a huge drop in administrative costs, and will also allow the government to use its leverage to drive down the prices of drugs and medical devices. According toan analysis that the campaign released by Gerald Friedman, a professor of economics at the University of Massachusetts at Amherst, costs in the new system would also rise much more slowly than they do today. Sanders claims that, all told, his plan will save ten trillion dollars across ten years.Neither the plan nor Friedman explains where those ten trillion dollars would come from.

Surowiecki concludes:

The truth is that if you want to save a trillion dollars a year in health-care spending, you can’t do it solely by cutting administrative costs and drug prices.

The fact of the matter is that high health care costs in the US are a byproduct of US consumer choices and a variety of factors far beyond the fact that administrative costs are high. Victor Fuchs writes in The Atlantic:

Why does the United States spend so much more? The biggest reason is that U.S. healthcare delivers a more expensive mix of services. For example, a much larger proportion of physician visits in the U.S. are to specialists who get higher fees and usually order more high-tech diagnostic and therapeutic procedures than primary care physicians.

Compared with the average OECD country, the U.S. delivers (population adjusted) almost three times as many mammograms, two-and-a-half times the number of MRI scans, and 31 percent more C-sections. Also, the U.S. has more stand-by equipment, for example, 1.66 MRI machines per 6,000 annual scans vs. 1.06 machines. The extra machines provide easier access for Americans, but add to cost.

Similarly, occupancy rates in U.S. acute care hospitals are much lower than in OECD countries, reducing the likelihood of delays in admissions, but building that extra capacity adds to cost. Aggressive treatment of very sick elderly also makes the mix expensive. In the U.S. many elderly patients are treated in intensive care units (ICUs), but in other countries they would receive only palliative care. More amenities such as privacy and space in hospitals and more attractive clinics also add to U.S. costs.

While the U.S. mix of services is disproportionately tilted toward more expensive interventions, the other OECD countries emphasize a “plain vanilla” mix. Compared with the U.S., the average OECD country has 30 percent more physician visits and more than 30 percent more hospital days per capita.

One can agree or disagree from a medical perspective as to whether or not all those C-sections and tests are a good thing, but the fact of the matter is that Americans seem to have no problem with taking advantage of all these “extra” health services. Old people are free to refuse intensive efforts to save their lives, and opt for the European model of letting very-ill old people die sooner rather than later to save money. But many choose procedures designed to prolong their lives instead of merely ease their pain.
These are choices that real people make, and the only way to truly cut the cost of health care such a system is to diminish the ability of people to make these choices.  Rather than leave these decisions up to the individuals, who may opt for more expensive options, these choices would instead have to be made by administrators who are primarily concerned with keeping costs under control.
Now, even if one has no particular problem with government control of the health care system, anyone whose honest about any political decision knows that there are both winners and losers, and upsides and downsides. There are upsides to single-payer type health care if all you need is some antibiotics and a hernia surgery.
However, if your problem involves difficult diagnostic problems, you may opt for the more “expensive” health care system.
But What About Outcomes?
Having been robbed of the idea that the US welfare state is unusually stingy, the advocates for more welfare must then fall back on the idea that the outcomes are worse, so, therefore, the US taxpayers must both spend more and spend differently.
The problem is that it is not at all obvious that the outcomes would be significantly different after some additional tinkering with the system.
After all, the divergence between US outcomes and the outcomes in the supposedly superior systems of western Europe can be quite small.
Here’s a map of life expectancy at birth for Europe, using OECD data. It ranges from the mid-70s in Russia and Eastern Europe, to 83 in Iceland and Switzerland. Government-provided health care is the norm throughout Europe, including Eastern Europe:
 Below is the same scale imposed on North America.
It ranges from a high of 82 in British Columbia, Ontario, and Quebec, to 75 in West Virginia, Alabama, and Oklahoma. (Nearly all of Mexico is below 76 years.)
Most of the northern and Western US, however, has life expectancy levels at or above 80, putting is in the same category with Denmark, the UK, Belgium, and others.
Moreover, what we find is that, while all the US health care law is dominated by federal law, the differences in state life expectancy statistics can range by several years depending on regional factors. In other words, health care law in the US is nationwide, but health care outcomes vary significantly by region.
Logically, this would lead us to believe that health care outcomes depend on something more than mere public policy, including obesity rates, foreign born populations, and ethnic makeup. (See here for more.)
These issue can have profound effects on health outcomes, and although its been recently implied in the context of migrants that Europe is very ethnically diverse, the reality is that European countries are far more ethnically uniform, far more “white” than the US, and definitely less fat.
Indeed, if the US had an ethnic mix like Canada, where the largest non-white group is Asians (who have higher life expectancy than whites), and where the percentage of immigrants is higher than it is in the US, the life expectancy of the US would immediately increase significantly. (In North America, immigrants are healthier than natives.) Like Europeans, Canadians are also less obese than Americans.
Conclusions
None of what I say here should be regarded as an endorsement of the American health care system which today is largely a hodgepodge of government regulations and historical accidents that led to the creation of a system driven by huge insurance conglomerates in a response to federal public policy after World War II. It’s a system that encourages more private spending on health care, by the way.
There is, of course, nothing “free-market” or laissez faire about American health care.
However, we should also be realistic about the effects of the suggested alternatives, which seek primarily to replace a highly regulated system with a totally centrally-planned one. Both are very sub-optimal, and a shift from the current system to a new system will bring both costs and benefits for different groups.
But, this idea that a move to a European-style system of health care will slash costs is based on nothing more than pure speculation, which is why no details are provided. In the meantime, taxpayers will be expected to pay far more in taxes.  And in the midst of it all, there’s no reason to believe that outcomes will be changed significantly in light of the realities of lifestyle, demographics, and geography.

Social Security And The National Debt Are Misleading The American Public

B Daniel Amerman – Re-Blogged From http://www.Silver-Phoenix500.com

We are told that many economics experts don’t worry about the total national debt because $5 trillion of that debt doesn’t really exist; it is rather just a theoretical bookkeeping transaction for money that the federal government owes to itself. Netting out this bookkeeping entry then allows some authorities assert that while the debt is a bit on the high side relative to the size of the economy, it is far from historically unprecedented, and certainly no cause for despair or rash talk about insolvency.

We are also told that many financial experts don’t worry about the solvency of Social Security and other federal government retirement programs, because they are funded with $5 trillion of the safest assets on earth, those being United States government Treasury obligations (i.e., the national debt), which are being held for our benefit by the federal government.

Unfortunately, both statements cannot be true simultaneously.

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A Government Ponzi Scheme Starts To Crack

By Nick Giambruno – Re-Blogged From http://www.Silver-Phoenix500.com

Government employees get to do a lot of things that would land an ordinary citizen in prison.

For example, it’s legal for them to threaten and commit offensive, rather than defensive, violence. They can take property from others without their consent. They spy on anyone’s email and bank accounts whenever they please. They go into trillions of dollars in debt and then stick the unborn with the bill. They counterfeit the currency. They lie with misleading statistics and use accounting wizardry no business could get away. And this just scratches the surface…

The U.S. government also gets to run a special type of Ponzi scheme.

According to the Merriam-Webster dictionary a Ponzi scheme is:

[A]n investment swindle in which some early investors are paid off with money put up by later ones in order to encourage more and bigger risks.

In the private sector, people who run Ponzi schemes are rightly punished for their fraud. But when the government runs a Ponzi scheme, something very different happens.

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Immigrants and Welfare

By Cathy Burke – Re-Blogged From http://www.NewsMax.com

Half of immigrant households, both legal and illegal, received some kind of public assistance in 2012, compared with 30 percent of non-immigrant families enrolled in welfare programs, a new report shows.

According to the Center for Immigration Studies’ 52-page study, which examined the Census Bureaus’ Survey of Income and Program Participation data, welfare use rates are “a good deal higher than use rates shown by other Census data.”

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DOL vs the US Economy

cropped-bob-shapiro.jpg   By Bob Shapiro
The US Government is bloated. Who knew?
Most spending either is duplicative of what already is available in the private, productive sector of the Economy, is actually harmful to the US Economy, or just uses up capital for unneeded programs – capital which would be better spent on the investment which would make all Americans richer. Who knew?
The Department of Labor is just one example of this waste. It pays people to NOT work, so many people don't look for work as hard as they could. It prohibits unskilled workers from getting the jobs which might teach them skills, through the Minimum Wage.
Here is an introductory video from the CATO Institute on D.O.L. and its waste.

We need to get government back under control, and the Department of Labor is a good place to start.

Game Theory & Retirement Choices – Should You Get Yours, Before Everyone Else Tries To Get Theirs?

By Daniel R. Amerman, CFA – Re–Blogged From http://danielamerman.com

Game theory is a hot topic in many fields right now and for good reason – it can uncover better ways of making decisions, that are often otherwise missed. A particularly good example is the uncommon insights that game theory can deliver for us when it comes to making better retirement decisions.

For our decision-making “game”, let’s say there is a $1 million pool of money to be split between you and nine other people. If you wait until the end of ten years to cash out – you and everyone else are promised that you’ll be equally entitled to $250,000 each.

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Plan to Save the Highway Trust Fund Falls Short

By Michael Sargent – Re-Blogged From www.heritage.orgg

Last week, the House passed an $8-billion bailout of the Highway Trust Fund using gimmicky offsets and tax increases to finance new highway and transit spending through mid-December.

Not to be outdone, the Senate released its 1,030-page, six-year highway deal, including $48 billion in offsets that make even more extensive use of tax increases and budget tricks.

The kicker is that these measures will pay for only the first three years of the bill, leaving the final three years of spending to be funded down the road or appended to deficits.

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The Fact-Free Left

  By Thomas Sowell – Re-Blogged From http://www.LewRockwell.com

The outrage over another multiple murder of American military personnel on American soil by another Islamic extremist has been exacerbated by the fact that these military people had been ordered to be unarmed — and therefore sitting ducks.

Millions of American civilians have also been forbidden to have guns, and are also sitting ducks — for criminals, terrorists or psychos.

You might think that, before having laws or policies forcing fellow human beings to be defenseless targets, those who support such laws and policies would have some factual basis for believing that these gun restrictions save more lives, on net balance, than allowing more legal access to firearms. But you would be wrong.

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US at War With Puerto Rico

cropped-bob-shapiro.jpg   By Bob Shapiro

The US is causing high unemployment, high and growing public debt, and an increasing reliance on handouts among the citizens of Puerto Rico. US federal laws are killing what could be a Free Market success in this territorial “possession.” Peter Schiff discusses below, the particulars of US stupidity on the island, making Puerto Rico another Greece waiting to happen, and he outlines easy solutions to the US caused socialistic destruction.

By Peter Schiff – Re-Blogged From http://www.Gold-Eagle.com

While Greece is now dominating the debt default stage, the real tragedy is playing out much closer to home, with the downward spiral of Puerto Rico. As in Greece, the Puerto Rican economy has been destroyed by its participation in an unrealistic monetary system that it does not control and the failure of domestic politicians to confront their own insolvency.

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