Our friends are back with another excellent guest post to start your day. I'll add some thoughts on the PPI and other information to the comments section but, for today, here's something different to consider.
FISCAL NON-CONFORMITY IN THE ERA OF FINANCIAL LASSITUDE, by AGXIIK and Renozep
In case anyone forgot that Social Security will go tango uniform in 9 years and thinks the payments will drop only 25% will be in for a rude surprise.
If demographics, worker wages, higher employment levels and payroll taxes will fix this we might be shocked. Politicians must make hard choices soon and, as we've seen, they'll fold like the $5 lawn chair you bought a Dollar General going out of business sale.
When 25-30% of the US population votes for more social security and medicare they will get it.
RENOZEP, the editor of these occasional articles, found the following videos that shine a spotlight on the Costco Precious Metal phenomenon, something that many are seeing as a way to bypass serious declines in future income streams.
After I saw the videos and visited our local Costco, I was unable to find any of the 10 ounce Royal Canadian bars but they must be out there somewhere. Bullion sellers and local coin stores had better prices.
I returned to Costco for Silver Bars and THIS happened! - YouTube
Costco is selling RCM .9999 10 ounce silver bars. Did Costco get APMEX to buy 2 months of American Silver Eagles at wholesale to stock this retail giant?
Capital Gains Taxes Loom Over Blue States - Welcome To The Great Reset | Armstrong Economics
Here's something to ponder whether you live in a high, low or no tax state. The usual suspects eye capital gains as a way to pay for things the government cannot afford right now. If your income is low enough, gold and silver can be sold with virtually zero capital gains. Your accountant can guide you on these decisions.
Precious metals have no counter party risk, can be held in a Self Directed IRA or bartered or sold quietly. Even Gen X and Millennials are buying gold and silver. If you live in a state with a combined capital gains rate of 50% or higher this message is for you.
DDB and Al tell you why the present job and business economy will not fill the social security trust fund. Not enough jobs or payroll taxes.
Why Nonconformity Cures a Sick Self and a Sick Society - YouTube
Second passports, gold, silver, bitcoin, bug-out locations and GOTS are all means to repudiate the criminal normalcy of the social media world where everyone is just another sheeple.
Is Schiff is selling something. Yes, as his article noted. Hundreds of companies are selling something and some sell silver and gold.
Like all of us, he's a non-conformist.
When Social Security runs down or runs out of money what are you doing to do? Governments take the most desperate of measures when facing the inevitable reckoning of gross fiscal mismanagement. When their various schemes like Social Security and Medicare are depleted, devalued and dissipated by the inevitable math that afflicts all forms of financial Ponzification, we get left holding the empty bag.
Here are some options:
Buy land: A good idea if it's income producing, in a tax friendly venue subject to the rule of law and not overburdened with excess taxes and regulations.
Semi non-conformist: Buy stocks? That's a good idea provided the market is amicable to your investment objectives and you have time on your side .
Conformist: Buy bonds? That can be a sound investment if bond rates are higher than inflation and the debtor has a solid rating.
Ultra-conformist: Inside tip. No debt has a AAA rating, even the UST.
Own a business: It's one of the best tax preferences cash flow machine that can produce spendable income for decades, fund retirement plans and can be passed on to the next generation with good tax planning
Non-conformist: Go Expat. You can move to a lower tax state or buy a second passport for a reasonable price and live in a lower cost, lower tax venue. Get out of Dodge. GOTS said Jim Sinclair
Ultra Non-conformist: All of these investments can provide for you when social security is recognized as essentially broke and the government is unwilling or unable to keep up with the corrosive affects of inflation while failing to keep promises made a century ago.
Governments wealthy enough to give to everyone are powerful enough to take it back.
Buy gold and silver? Non-conformist. They're a great plan for the long term, have provided a high single gain over the years and reflect well in the ensuing commodity cycle as other assets fail in their promises to provide for you.
Gold and silver are the closest thing to real money because they are real money; not subject to specious government promises, debt and pieces of green paper
Schiff's article below is an interest and informative read:
May 7, 2024
Social Security’s annual trust fund report was released yesterday… and, no surprise, the report states very clearly that trust fund balances “are projected to become depleted during 2033.”
Allow me to repeat that: Social Security’s most important trust fund will run out of money in nine years.
This is a fact, not some wild conspiracy theory; remember that the annual report is signed by top government officials including the United States Secretaries of the Treasury, Labor, and Health and Human Services… so the projection is about as official as it can get.
But if you dive into the report, you quickly notice that even such a grim forecast may, in fact, be too optimistic. Many of the key economic assumptions that they make in the report are wildly inaccurate. They assume, for example, that US fertility rate will be as high as 2.1 (i.e. 2.1 children born per woman). But, in reality, the US fertility rate has been falling for decades, and just hit another all-time low of 1.6 last year.
They’re also way off on other assumptions-- like economic productivity. They assume (rather optimistically) that productivity growth will average 2%. Last year it was just 1.3%. And in 2022 productivity actually shrank by 1.9%. They’re also way off-base in their assumptions about inflation, unemployment, and more.
Plus, just like the Congressional Budget Office’s long-term projections about the US economy, the Social Security trustees don’t account for any kind of future emergency, pandemic, recession, depression, war, financial crisis, or debt crisis. The really ironic part is that the trustees’ assumptions fail to consider the future economic impact of Social Security going bankrupt.
Think about it-- when Social Security’s trust funds suddenly run out of money, it’s going to trigger a major crisis in the United States. Clearly this will be disruptive and throw off their rosy economic assumptions. But they don’t account for this either. Bottom line, Social Security’s demise is, at best, nine years away. And probably sooner.
So, what will happen when Social Security runs out of money?
Remember that 70 million retirees’ monthly benefits are essentially funded from three different sources.
The first source is payroll tax revenue; people currently in the labor force fork over a portion of their wages to pay Social Security benefits. For decades, payroll tax revenue exceeded the total benefits that Social Security paid. And this surplus was invested into a special trust fund, which now totals trillions of dollars.
And that’s the second source of funding for the program: investment income from the trust fund, while the third source is the trust fund itself. Again, for most of Social Security’s history, the trust fund was growing, and its investment income was compounding year after year.
But starting in 2021, Social Security’s annual costs have exceeded combined payroll tax revenue and investment income. So, in order to make ends meet, the program had to start dipping into its trust fund.
The fund’s reserves are now falling. And, again, by 2033, the trust fund will be fully depleted. This also means that there will be no more investment income… leaving payroll tax revenue as the sole source to fund Social Security. Once this happens, the report states that retirees will have to suffer an immediate, substantial cut (roughly 25%) to their promised benefits. And most likely this cut will continue to become worse over time.
It’s not like there aren’t options to fix Social Security. The government could overhaul the program, raise the retirement age, or start allowing private asset managers to generate higher rates of return for the trust funds (while they still have money). But everyone in government insists that they are not going to touch Social Security. Joe Biden never misses an opportunity to promise that he will veto any attempt to reform the program.
As a matter of fact, Joe Biden released a statement yesterday (after the trustee report was published) saying-- literally in the first sentence-- that “Social Security remains strong.” Come again? What report was this guy reading?
Social Security is, by definition, NOT strong. The trust fund is indisputably going to run out of money in nine years. But this guy is just living on another planet. He refuses to acknowledge reality, he refuses to fix the problem, and he promises to prevent other people from fixing the problem.
Now that’s leadership.
I find it remarkable, though, how many other ‘experts’ are falling in line behind the President. Even the Wall Street Journal, which is supposed to be a conservative-leaning paper, published an article this morning to say that Social Security’s rapidly depleting trust funds are no big deal… because Congress can always just “choose” to continue funding the program.
Uh... with what money? The budget deficit is already $2 trillion per year. So, if Congress “chooses” to continue paying out 100% of Social Security benefits after 2033, it will all be funded with more debt. The Journal then suggests that such spending “could also mean the U.S. deficit continues to grow at a pace economists find alarming, potentially weighing on the performance of the economy.”
Could? Potentially? In what reality does multi-trillion-dollar deficit and a fully depleted Social Security trust fund NOT weigh on the US economy?
It’s astonishing how few people want to acknowledge the reality. Social Security will run out of money. Benefits are at risk. And the only way to ‘save’ the program is more debt… which means more inflation, more risk to the dollar’s global reserve status, and more consequences down the road.
That said, Social Security is a perfect example how to think about a Plan B. It is a known and obvious risk: the program will almost certainly run out of money.
But if you know this is going to happen down the road, you can take steps now to secure your retirement-- like setting up tax-advantaged retirement accounts to set aside more money in an extremely tax efficient way.
It’s the same with inflation, the national debt, and the dollar; when you can make a very strong case for rising prices and decline in the dollar’s global reserve status in the future, there are ways to mitigate those risks today.
Real assets like gold, energy, uranium, and other critical minerals, plus the companies that produce them, will likely be fantastic investments in a debt-ridden, inflationary environment. And it just so happens that many of them are trading at ridiculously cheap prices right now.
