In response to:

Social Security Cliff in Sight

James Carroll Wrote: Jan 18, 2013 9:51 AM
Key concepts to understand "social security": Ponzi scheme. Aesop's ants and grasshoppers.
Kibitzer Wrote: Jan 18, 2013 1:44 PM
Don't know about the ants and grasshoppers, but it is absolutely a Ponzi scheme just like all the borrowing to fund all the deficit spending on other government programs. The is absolutely no plan or intention on the part of the federal government to pay off even one net dime of the debt. Eventually the debt bubble will burst and the consequences will make the great depression look like a Sunday picnic.
Kibitzer Wrote: Jan 18, 2013 1:45 PM
That should have been, There is absolutely no plan ...
BobIsBob Wrote: Jan 19, 2013 5:38 PM
No, there is a plan, and it has been done before. President Carter faced the same dilemma in 1978. His solution was to simply print enough money to pay all the interest and continue to fund the deficits. Then, inflation cut the actual value of the bonds in half. Obama will do the same thing (is doing the same thing), for the simple reason that he has no other choice.

Of course, that will make the interest rates on new bonds soar, but that problem is for 3 years from now, which will make the total debt soar. Social Security benefits will drop, as the stated (admitted) inflation rate is always well below the real inflation rate.

There will probably also be raises to the retirement age, and SS tax hikes also.

In response to my post Making Social Security Actuarially Sound in a Business-Friendly Manner I have been exchanging emails and phone conversations with Jed Graham at Investor's Business Daily.

Jed thinks benefit cuts will happen, and I agree. However, Social Security cuts are considered the "third rail" in politics.

If you are not familiar with the term, it means anyone espousing cuts cannot be elected.

Retirees Will Outlive Trust Fund

Graham's current position on the viability of Social...