Makes me think of the old adage about the "wolf guarding the hen house." There is an election on the line here, and trillions of dollars along with it. Does anyone think that those in power are not willing to do basically anything (including "cooking the books") to stay there? Sad but true, the golden rule is still in effect: "Whoever has the gold, makes the rules."
Totally agree. The main reason is SS # has no true savings / investment, it is more like fire insurance where every year transfers go from one group to the other. Private savings and investment in contrast result in improved technology/productivity over time and some of that tremendous benefit gets passed in the form of interest/dividends/capital gains to investors. That's why buy/holding a diversified portfolio returns 7% per year or so over the long term, versus SS returns between -3% and 2% YoY return depending on your sex, age, life expectency, income, etc (in many cases worse than just stuffing case in your mattress!) -Taric
Did you ever notice that SS is the only tax that has a max cutoff at 78K/year or so? The designers of SS weren't stupid enough to leave themselves open to that huge 12.4% drain on their own wealth. If we really ran into a social security liquidity problem, we could just raise the 78K limit and make the rich pay the bill. Socialism at its best. This $#$# pisses me off too, but I see the CPI as a symptom of a greater systemic problem. These institutions need replacing not fixing.
I do not like the CPI as an inflation gauge, Greenspan also has denounced its limitations, he prefers consumer expenditure as a measure of inflation. The CPI as it is calculate does imply that buyers of TIPS are getting ripped off like crazy. I don't know if they are fudging the numbers, that would imply major malicious activity that could trample the whole dollar ecosystem, but I think that buyers of TIPS should be aware that the CPI is probably understating the true nature of the current inflation rate.
i don't believe this is happening now, but government has also inflated inflation numbers before too. politics is in the equation , no one wants to be blamed for increasing rates too quickly and bush's re-election campaign.
24 May 2004 16:17 GMT Fed's Broaddus: Fed To Sustain Low-Inflation Environment WASHINGTON (Dow Jones)--The Federal Reserve will act to preserve the current low-inflation environment in the U.S., Richmond Federal Reserve Bank President Alfred Broaddus said Saturday. "Despite the recent run-up in fuel prices and some other commodity prices, I am confident the Federal Reserve can and will sustain the low-inflation environment that we have spent much of the last two decades establishing," Broaddus said in a commencement speech at Virginia Commonwealth University's School of Business in Richmond. The speech was posted Monday on the Richmond Fed's Web site. Broaddus, who doesn't vote on monetary policy this year, also was upbeat about the job outlook. "The most recent developments in the job market are very encouraging. Jobs overall grew at a solid pace in March and April, and most economists now expect more of the same in the months ahead," Broaddus said. Broaddus told graduates that he is "optimistic" about the longer-term economic outlook, citing continuing gains in productivity. Higher productivity growth may be sustained in the years ahead as businesses adopt recent broad-based technological advances, he said. Faster productivity growth "means more and better jobs and a substantially higher standard of living," he told the graduates. Turning to the federal budget deficit, Broaddus said it is "manageable" at its current level, but in the absence of policy adjustments is likely to grow substantially as the baby boomers begin to retire a few years from now. He cautioned that if the budget deficit continues to increase, it will "reduce overall investment in the economy, reduce the economy's longer-term growth and diminish the improvement in living standards you and your families would otherwise enjoy over the course of your careers." Broaddus last week said the inflation risks are still balanced and inflation expectations well contained even as price pressures are rising. Inflationary pressures have intensified, but are unlikely to get out of control, allowing Fed policymakers to gradually shift to higher interest rates, he said last week. Broaddus, who has been president of the Richmond Fed for 11 years, retires in August after a 34-year career at the bank. In July he turns 65, the age at which Fed policy requires Fed bank presidents to retire. Because of his impending retirement, Broaddus won't be attending the next Federal Open Market Committee meeting June 29-30. Financial markets widely expect the Fed to raise rates at its June policy meeting. The federal-funds target rate has been at a 46-year low of 1% since last June. -By Deborah Lagomarsino, Dow Jones Newswires