Stealing from Seniors and CPI Lies

awgee_IHB

awgee_IHB

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Government Statistics and Lies



by Ron Paul











<em>There has been a lot of talk in Washington recently about senior citizens, mostly about how various healthcare reform models would help or hurt them. But there is another critical issue that has quietly devastated seniors financially over the last few decades. It concerns how the cost of living is calculated. How does the administration justify not giving a cost of living increase to Social Security recipients this year? According to the official Consumer Price Index calculation, life has gotten cheaper for the first time in decades. If the government can show statistically that the cost of living has gone down, not up, then they can make the case for not giving a cost of living increase to social security recipients. But does this match reality? Using older calculations of CPI, the cost of living has actually increased - by roughly 5%.



The CPI (Consumer Price Index) is a calculation based on the average price of a fixed basket of goods that was initially designed to help businesses adjust for inflation. The government eventually started using it to determine cost of living adjustments for entitlement programs. Couple that with politicians' discovery that they could raid the social security trust fund to pay for new spending programs, and you have a perfect storm to deny seniors what they were promised, while hiding the true size of the deficit. For politicians, it is a win-win.



For seniors, it is a different story. Economist John Williams of Shadow Government Statistics has estimated that if the original methodology of CPI had not changed, Social Security checks would be nearly double what they are today. This represents a lot of money that politicians have been able to literally steal from seniors, to spend on their own wasteful programs. One example of how they do this is to substitute hamburger for steak, which lowers the average price of that basket of goods. But living on hamburger, or maybe dog food, instead of steak does not represent a constant standard of living. This renders the measurement virtually meaningless, even though politically it comes in very handy.



I have introduced legislation to keep politicians in Washington from ever raiding the Social Security trust fund again. HR 219 The Social Security Preservation Act would assure that all monies collected by the Social Security Trust Fund would only be used in payments to beneficiaries, or be placed in interest bearing certificates of deposit. This would at least stop the bleeding of the fund, and take away some incentive to tease and torture the numbers in order to give seniors the minimal amount. This would also cut off a source of funding for government growth, so it is not likely to get easy support from many politicians.



It is bad enough that Washington imposes high payroll taxes on American workers. The least Congress could do is use the tax dollars for their stated purpose. Instead, seniors will have a harder and harder time trying to survive on a fixed income in an economy based on variables and deception. For them, it is too late to start over. Today's young people will be forced to pay into the system for years to come. The first step towards solving the impending crisis facing Social Security is to stop politicians from raiding the trust fund and to significantly cut federal government spending.



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Just merely take into account the increase in sales tax and that is enough right there to argue that cost of living has increased. This is not even considering the obvious increases to medical expenses, using Medicare or not. It is unbelievable to me that anyone can argue that cost of living hasn't increased, if they want to say "we don't have the money", that's fine with me, but to pretend that costs have stayed the same is just exactly what the article says, lies and more lies.
 
[quote author="tmare" date=1257304655]Just merely take into account the increase in sales tax and that is enough right there to argue that cost of living has increased. This is not even considering the obvious increases to medical expenses, using Medicare or not. It is unbelievable to me that anyone can argue that cost of living hasn't increased, if they want to say "we don't have the money", that's fine with me, but to pretend that costs have stayed the same is just exactly what the article says, lies and more lies.</blockquote>


It's not "we don't have the money", it's "we already spent the money" that they are trying to avoid answering. The BS with COLA is just trying to put off the day of reckoning rather than actually show any fiscal restraint. This was the whole point of the "Social Security Lock Box" meme from the 2000 Presidential debates between Gore and GWB.



The Federal Reserve may be a bad thing, but considering what the Federal Government does with statistics in the name of politics, I shudder to think what they would do with actual control of the monetary supply. Can you imagine a world where fiat currency is left to the whims of a selfish electorate?
 
Ron Paul is a self serving crackpot. If we did what he suggested, we'd have unemployment at 30% or worse.



Feeling bad for seniors and baby boomers who were on the winning end of the Bernie Madoff-esque forced ponzi scheme called Social Security? Gimmie a break.
 
I am just happy it looks like I will start getting my FICA/Social Security money back soon.

Just a few more years to go and the checks they be a coming. Sorry to those of you under 30.

Your just screwed.
 
[quote author="no_vaseline" date=1257309314]Ron Paul is a self serving crackpot. If we did what he suggested, we'd have unemployment at 30% or worse.



Feeling bad for seniors and baby boomers who were on the winning end of the Bernie Madoff-esque forced ponzi scheme called Social Security? Gimmie a break.</blockquote>


Borrowing money to pretend unemployment shouldn't be 30% is crackpot.
 
Show me one government/central bank that operates the way Ron Paul is suggesting we change to. Somalia doesn't count, unless that's your idea of government.



Ron Paul would scuttle Social Security in a minute if he had a chance. If you want to front run a crackpot, run one who isn't self serving or duplicitous.
 
Be Prepared for the Worst

Ron Paul, 10.29.09, 09:20 AM EDT

Forbes Magazine dated November 16, 2009











The large-scale government intervention in the economy is going to end badly.











<em>"Any number of pundits claim that we have now passed the worst of the recession. Green shoots of recovery are supposedly popping up all around the country, and the economy is expected to resume growing soon at an annual rate of 3% to 4%. Many of these are the same people who insisted that the economy would continue growing last year, even while it was clear that we were already in the beginning stages of a recession.



A false recovery is under way. I am reminded of the outlook in 1930, when the experts were certain that the worst of the Depression was over and that recovery was just around the corner. The economy and stock market seemed to be recovering, and there was optimism that the recession, like many of those before it, would be over in a year or less. Instead, the interventionist policies of Hoover and Roosevelt caused the Depression to worsen, and the Dow Jones industrial average did not recover to 1929 levels until 1954. I fear that our stimulus and bailout programs have already done too much to prevent the economy from recovering in a natural manner and will result in yet another asset bubble.





Anytime the central bank intervenes to pump trillions of dollars into the financial system, a bubble is created that must eventually deflate. We have seen the results of Alan Greenspan's excessively low interest rates: the housing bubble, the explosion of subprime loans and the subsequent collapse of the bubble, which took down numerous financial institutions. Rather than allow the market to correct itself and clear away the worst excesses of the boom period, the Federal Reserve and the U.S. Treasury colluded to put taxpayers on the hook for trillions of dollars. Those banks and financial institutions that took on the largest risks and performed worst were rewarded with billions in taxpayer dollars, allowing them to survive and compete with their better-managed peers.



This is nothing less than the creation of another bubble. By attempting to cushion the economy from the worst shocks of the housing bubble's collapse, the Federal Reserve has ensured that the ultimate correction of its flawed economic policies will be more severe than it otherwise would have been. Even with the massive interventions, unemployment is near 10% and likely to increase, foreigners are cutting back on purchases of Treasury debt and the Federal Reserve's balance sheet remains bloated at an unprecedented $2 trillion. Can anyone realistically argue that a few small upticks in a handful of economic indicators are a sign that the recession is over?



What is more likely happening is a repeat of the Great Depression. We might have up to a year or so of an economy growing just slightly above stagnation, followed by a drop in growth worse than anything we have seen in the past two years. As the housing market fails to return to any sense of normalcy, commercial real estate begins to collapse and manufacturers produce goods that cannot be purchased by debt-strapped consumers, the economy will falter. That will go on until we come to our senses and end this wasteful government spending.



Government intervention cannot lead to economic growth. Where does the money come from for Tarp (Treasury's program to buy bad bank paper), the stimulus handouts and the cash for clunkers? It can come only from taxpayers, from sales of Treasury debt or through the printing of new money. Paying for these programs out of tax revenues is pure redistribution; it takes money out of one person's pocket and gives it to someone else without creating any new wealth. Besides, tax revenues have fallen drastically as unemployment has risen, yet government spending continues to increase. As for Treasury debt, the Chinese and other foreign investors are more and more reluctant to buy it, denominated as it is in depreciating dollars.



The only remaining option is to have the Fed create new money out of thin air. This is inflation. Higher prices lead to a devalued dollar and a lower standard of living for Americans. The Fed has already overseen a 95% loss in the dollar's purchasing power since 1913. If we do not stop this profligate spending soon, we risk hyperinflation and seeing a 95% devaluation every year."</em>
 
http://articles.moneycentral.msn.com/Investing/top-stocks/default.aspx?feat=1351070&gt1=33002



<em>India has bought 200 tons of gold from the International Monetary Fund at $1,045 an ounce, which is close to a recent record high of $1,070. The entire transaction is worth almost $7 billion. The move is seen as a way for India?s central bank to move some of its capital away from investments in the dollar. The IMF may sell another 200 tons of gold in the relatively near future and most experts expect that the buyer will be China, which has foreign currency reserves of $2 trillion and might like to have its own hedge against the value of the American buck.</em>
 
Well, I like Ron Paul at some level, but he misses the obvious. Yes, there is a huge gap between perceived and real wealth. Yes, it will get resolved. The question is how. What Ron Paul misses is the revealed preference of the electorate to avoid transparent resolution to this. People actually want to keep the illusion going. If that's people's choice (screw retirees here, screw the young generation there, screw Chinese holders of treasury debt elsewhere) than there is no point in fighting it.
 
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