
An economist thinks US is bankrupt: What it means for retirement - HoppedUpMenace
https://www.msn.com/en-us/money/retirement/an-economist-thinks-us-is-bankrupt-what-it-means-for-retirement/ar-BBN2w0d?li=BBnbfcN
======
gricardo99
"When a friend on the brink of retirement was planning to take Social Security
before drawing money from his 401(k) plan, Kotlikoff persuaded him to reverse
his plan. "

Advising someone to defer withdrawals so that they have a bigger benefit
(unfunded and unable to be paid by a bankrupt government), means maybe he's
not so convinced the US is bankrupt.

~~~
village-idiot
Social Security is expected to go bankrupt by 2034. If you've got less than 16
years to live, betting on it is a good idea. More than that, it's a bad idea.

~~~
mooreds
No bankrupt in 2034, just unable to meet 100% of current obligations:
[https://blog.ssa.gov/social-security-funded-
until-2034-and-a...](https://blog.ssa.gov/social-security-funded-
until-2034-and-about-three-quarters-funded-for-the-long-term-many-options-to-
address-the-long-term-shortfall/)

~~~
toast0
Isn't that the definition of bankruptcy though? A person, company, or
government is unable to meet their current obligations, so they notify all
their creditors and go to court to find an equitable solution.

~~~
rtkwe
> unable to meet their current obligations

Things get tricky with governments where it's kind of trivial to raise more
money by a) raising taxes, b) simply redefining your obligations (in the case
of programs like SS or Medicare/Medicaid) or c) just making more money ex
nihilo.

------
xrd
This is a strange article in that probably 5% of the sentences therein are
actually dedicated to the meat of the headline and the rest dedicated to
promoting his company which helps with the stated problem. I wish I could
actually see the article debate his points instead of trying to sell me
something.

~~~
jvanderbot
Screams "promoted post".

------
dmm
Worst case for social security is that no funding changes are made and payouts
stabilize to around 70% of what was promised. Very bad for a lot of people but
far from the disaster that is many state's pension systems.

Medicare on the other hand...

~~~
village-idiot
The problem is that a large number of unfunded obligations will probably come
due at roughly the same time. We all know that our infrastructure is starting
to crumble, but the problem is that every single bridge that needs to be
rebuilt either represents a future debt to fund the construction, or a
willingness to abandon the economic activity that the infrastructure
(hopefully) enables.

The worst case scenarios is that Social Security, Medicare, some state
pensions, and our infrastructure will all hit the breaking point at once. At
that point we will need to make some _deeply_ unpopular changes, and it's
unclear if our political system has the will or the coherence to pull it off.

If we're lucky, these systems will begin failing sequentially within the next
few years, rather than all failing together.

~~~
toomuchtodo
If we're lucky, failures will compel voters and politicians to raise taxes to
pay up and stop kicking the can.

~~~
village-idiot
I think we’re past that point. We can and should raise taxes, but reductions
in expenditures is going to have to be on the table too.

Our expensive wars come to mind.

~~~
toomuchtodo
Agree, it's going to require regime change.

~~~
village-idiot
I genuinely doubt we have the political will to do it. There are a large
cohort of people who know they’ll be dead before these issues come to a head,
and they have reverted to a “protect what’s mine” mode.

------
legulere
Debt is about trust. Japan has the highest debt to gdp ratio, but that’s not a
problem because we trust it. With enough trust you can go pretty far. There
are a lot of trust factors for the US, like its military or the petrodollar.

~~~
Sutanreyu
Trust, in an economic sense, is how much material is being dedicated towards a
corporation's future existence... A corporation can be an individual, or a
company of individuals...

~~~
CamTin
Trust in this context means "If I loan you money, how skeptical am I that
you'll pay it back?" I can be skeptical for a number of reasons, from the
simple notion that I think you are just a crook and have no intention of
paying back, to more directly economic ones like the fact that I know you've
got no real prospects to make back enough money going forward to stroke the
interest on my loan. There are shades in-between, like if I know you _intend_
to pay back the loan and can technically afford it right now, but your credit
is bad all over town and you're one bad break from being totally and
irreparably insolvent. If you're family or a close friend, I might loan you
money without seriously expecting to get it back (though in these
circumstances I personally just recommend just making it a gift).

By "how much material is being dedicated toward...[it's]...future existence"
you presumably mean how much the firm or individual is investing in relation
to their income or some similar measure. That can be part of it, but
definitely isn't all of it. All market transactions are, contrary to the
technocratic worldview of mainstream political economists, human transactions.
The actual underlying human relationships matter, and the balance sheets only
matter inasmuch as they facilitate communications between actual people.

------
dragonwriter
> An economist thinks US is bankrupt: What it means [...]

What it means is “the economist doesn't know what ‘bankrupt’ means or
understand how public finance works for an sovereign entity whose debt is
primarily denominated in its own currency and probably shouldn't be taken
seriously on anything related to it.”

Or, more likely, “the economist knows all this quite well and is engaging in
political/commercial propaganda that relies on public ignorance.”

------
AndrewKemendo
I'm 34 now. I have absolutely no expectation that there will be a social
security system to speak of in 2049. Quite frankly it seems insane to me to
expect that it would still be around.

~~~
NTDF9
How can you be so sure? You must have read something I haven't.

Why can't the US tax more to fund its liabilities? Or, why can't they have the
Fed print more money and devalue the dollar?

~~~
acct1771
Tax who?

The Elite class, who have captured the regulatory bodies?

Or, well, everyone else, are, frankly, fuckin' broke, and in student debt on
top of that?

~~~
snowwrestler
What is your theory, that huge portions of the population will go destitute
and starving but do nothing about it?

No, at some point people won't take it anymore. At that point you get
political change. It has happened many times before in the U.S. Where do you
think Social Security came from in the first place?

~~~
ianmcgowan
It's a reassuring thought "at some point people won't take it anymore". But
the front page of hacker news today is filled with articles about cheap food,
the financial crisis, student loans and absurd housing costs.

It feels like an arms race between two groups - one trying to sound alarms
about the direction we're headed (Bernie) and another that thinks Brave New
World is a pretty good model to shoot for. I don't think the latter is an
organized conspiracy, just that there are structural tendencies that make
producing and marketing soma (literally with food and drugs, figuratively with
social media) more lucrative than, say, teaching high school or nursing.

It might be better if there _were_ an Illuminati in charge of things - they
presumably would be trying to steer between the extremes of another French
revolution and a descent into a 1984 world (which seems depressing even for
those in charge).

------
phobosdeimos
So long as the rest of the world keeps buying US debt they will keep trucking
on. The US is too big to fail: nobody can afford that house of cards to
implode.

~~~
mooreds
"When you owe the bank $100, they own you. When you owe the bank $100M, you
own them."

~~~
phobosdeimos
Yep, the EU saved a small country like Greece because the alternative was too
horrible to bear.

