So where do the Social Security trustees get their information to make their current projections? Looking at their 2004 projections shows the worst case scenario is already close to reality here in 2009.  From the 2004 OASI Fund Trustees Report (OASI stands for Old Age Survivor Insurance):

Uncertainty of the Projections

Significant uncertainty surrounds the intermediate assumptions. The Trustees have traditionally used low cost (alternative I) and high cost (alternative III) assumptions to indicate this uncertainty. Figure II.D7 shows the projected trust fund ratios for the combined OASI and DI Trust Funds under the intermediate, low cost, and high cost assumptions. The low cost alternative is characterized by assumptions that improve the financial condition of the trust funds, including a higher fertility rate, slower improvement in mortality, a higher real-wage differential, and lower unemployment. The high cost alternative, in contrast, features a lower fertility rate, more rapid declines in mortality, a lower real-wage differential, and higher unemployment.

This “high cost alternative in the 2004 report is represented by the numeral III in the graph below, showing Social Security funds to run out by 2031.

Question to Ponder: If the governments own projections from five years ago have resulted in the worst case scenario coming to fruition in just a few short years, what does this hold for today’s projections on how long the Social Security Fund will last?

Today’s projections show a projection of funds running out shortly after the beginning of 2028 as shown in the graph below.  Please note that the Trustees graphics have gone downhill in the last five years.  It looks like government is cutting back in some areas.

The Truth of the Matter

One can choose between I. low-cost projections, II. intermediate-cost projections and III. high-cost projections in the graph above.  If you believe the Social Security Trustees high-cost projections, the fund for Social Security benefits and Disability benefits combined will run out in the year 2025.  The Disability portion is scheduled to run out by the year 2016.  That’s just seven short years from today, assuming things remain the same.

Why Use the “High-Cost” Projections?

Take a look at what our past and current administrations are doing to the economy.  The current budget deficit is slated to run 1.6 Trillion for 2010 and $9 Trillion for the next decade to include $1 Trillion for an overhaul of the nations health care system.

This is new debt added to the current debt of $11.8 Trillion.  Where will this money come from?  Answer? Inflation and higher taxes.

To make matters worse, the interest on the assets in the fund are projected to be lower through 2012 than in last year’s report because of the lower interest rate environment.

Social Security Won’t Run Out of Funds…..However….

How is adding debt to more debt going to solve any of America’s problems in following through with the promises to seniors who have trusted their government to at a minimum give them their money back they put into the system?

Answer?  The Government is very capable of paying all the money back that they have collected from citizens over the years.  The problem is that the dollars they collected will have a much, much lower purchasing power than the dollars they are paying out.

This is the effect of the U.S. government creating and carrying so much debt. The government can always, through the Fed, create as much money as it needs to pay seniors their social security check just by the press of a button.  But what most in America don’t understand is what effect the current spending will have upon their future income’s purchasing power.  If you’re asking for health care overhaul today, how will it be paid for tomorrow?

The System Is Broke, Sure, But Should I Be Worried?

Unfortunately for those who live on Social Security, the answer is yes, you should be worried.  The prices of items just ten short years ago are much higher than they are today.  Ten years from now, prices will be much, much higher than they are today.  If you rely on just social security CPI adjustments, they will come, but won’t keep pace with real inflation.  Some of you will be forced to make alternative decisions on where to live.  Younger families will be forced to take in their older relatives.

For those that have time on their side, they can do something about it by buying gold to insure they are prepared for the dollar devaluation that is sure to come.  Gold since 2000 has kept up with inflation and will continue to do so.

Your financial advisor won’t tell you about gold because most of them are ignorant of how gold fits into a diversified portfolio.  Financial guru Dennis Gartman was on CNBC just today talking about how he would recommend 2% to 3% invested in gold, but laughingly said at the most 5% because, “you can’t eat gold.”

Well Dennis, you can’t eat paper dollars either, can you?  Ask yourself this question: “Will 5% of your portfolio in gold protect the 95% that is subject to the fall of the U.S. dollar?”  Answer:  No.  This is what Gartman and other financial advisors don’t understand.

I met Gartman once.  He said he is wrong over 80% of the time.  You can count his current comments about gold in that 80%.  Sure, gold could fall in price from here with a temporary dollar move higher.  But in the end, all of this government spending will come back to bite seniors pocket books every time they head to the grocery store.  Our Government reaps what it sows.

Related posts:

1. America’s Infrastructure In 2009: Grade “F”
2. Vote For Those That Voted “NO” To the Bailout Come November
3. We’re Winning The War On Terror!

Even more reasons the dollar is on shaky grounds…and for that matter, the stock market to…. Got gold?

Pakistan expects 500,000 to flee Taliban fighting

and if the U.S. does interfere in Pakistan….good time for China to attack us! (joking here, but don’t underestimate the words of Sun Tzu):

“Hence to fight and conquer in all your battles is not supreme excellence;  supreme excellence consists in breaking the enemy’s resistance without fighting.  Sun Tzu “Art of War”

So thinking ahead, the following question needs to be contemplated:

What will Obama do?

Here are the facts:

Obama: U.S. prepared to pursue targets in Pakistan

and don’t forget this statement from Obama during his 8/1/07 Presidential campaign speech;

“The first step must be getting off the wrong battlefield in Iraq, and taking the fight to the terrorists in Afghanistan and Pakistan…. If we have actionable intelligence about high-value terrorist targets and President Musharraf won’t act, we will.

It’s rather obvious to me what Obama will do…

No related posts.

Stock market is falling apart…

Dollar has fallen 40% since the war began…

World food crisis because of rising food prices…

More people IN THE U.S. getting food from local food banks…who are low on supplies…

Real inflation rate in double digits (you know..utilizing the same criteria for figuring inflation from the Carter years)…

Housing bubble has burst…

Consumer debt over 2.6 trillion…

National debt over 9.3 trillion…

Trade deficit averages 58 billion a month…

Budget deficit in the hundreds of millions doesn’t even include the cost for the wars…

Real Unemployment near 14% when you include the “discouraged workers…”

Industrial production has contracted year over year…

Oil and Gasoline prices at record levels…

There are no consequences to our actions around the world are there?

Things are going real well! We’re winning! We’re winning!

Meanwhile, seniors on a fixed income are crying…

Where we go from here I prefer not to dwell on…

But hey! …we’ve got Obama or McCain to save us!

Editor’s note: I did not include in the above analysis, the losses of liberty to include; the patriot act, various house and senate bills that will take away more of our freedoms, including your right to free speech in criticizing the U.S. government that passed the House by a huge margin (Senate Bill – S. 1959), legal wire tapping and domestic spying (FISA), right to detain indefinitely, TSA pat down search abuse and now body scanners, terrorist watch list now over 900,000, real ID in the works, International Cyber Crime Treaty and loss of private property through Eminent Domain to name a few.

YOUR ELECTED CONGRESS HARD AT WORK!

To do something about those elected Congressmen and women, read Alex Wallenwein’s fine column.

Doug Eberhardt

Related posts:

1. Social Security Will Be There For You, However…
2. America’s Infrastructure In 2009: Grade “F”

I’m mixing up my normal type of support article for Ron Paul….frustration sometimes does this to me! I want to see if just by adding the name “Britney Spears” to a Ron Paul article if viewership will increase by any significant amount. But in writing the article, I actually have come to like the idea it represents!

Britney Spears and Ron Paul should be hooked at the hip like the two actors, Matt Damon and Greg Kinnear, in the movie, “Stuck on You.”

This will accomplish one of two things. It will either stop the media flurry over Britney Spears where she can lead a normal life again as the paparazzi won’t follow her around any longer or it will cause the media to report on the every move of Ron Paul.

I don’t write this article in a “Spoof” or “Wonkette” mocking manner. There is a degree of seriousness to it. I do realize it is “somewhat” far-fetched or wishful thinking, but desperate times call for desperate action! Nothing has worked so far right?

TMZ, Entertainment Tonight, Access Hollywood, you know…what America watches each night for an hour, along with the regular media’s consistent reporting, would give Ron Paul all the coverage he needs between now and November.

Seriously, what do you think would happen? The media can’t get enough of Britney Spears! Ron Paul would finally get some coverage!….except on Fox News of course…but only war loving neocons watch that channel anyway….

Imagine that…Britney Spears would become an American Hero! The headlines would be; “Britney Spears Helps Save America!” or “Britney Spears Helps Save the Dollar!” But the best aspect to it all is Ron Paul would finally get the media coverage that is coming to him. As a matter of fact, it would make up for all the media coverage he HASN’T received over the last year! His “message” would finally get through to the masses!

Take that biased MSM!

Now all we need to do is draft Britney Spears into the rEVOLution! She may not be the perfect campaign spokesperson, but we’d put a gag order on her and just use Britney for her uncanny ability to draw media attention. It would probably keep her out of trouble having a good fatherly figure around her and she would have some appeal to the youth vote! Hey, we need the votes!

Anyone have her number?

Doug Eberhardt

Related posts:

1. A Solution for Ron Paul Supporters?
2. It’s Not Too Late For Ron Paul!
3. Voting Fourth Party