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!

Below is the response from my local house rep. Typical politician double speak…”I’m against it but I voted for it…”

Senator Feinstein voted for it and replied to my letter of protest. Senator Boxer voted for it and never replied.

Racetrack improvements, $100 million, movie industry $500 million and $2 million for wooden arrows are part of the bill? Are you kidding me?

All the pork thrown into this bill has got to wake America up to what is really happening with our elected officials. I swear….if it doesn’t, then Americans deserve what they get.

You can only blame ignorance for so long…pretty soon you crossover into the realm of stupidity.

If anyone votes in November for any of those that voted “yes” for this bill, they have crossed over. If this bill was really for helping the economy, then why did the stock market go down 150 points?

The ship is sinking folks… Make your vote count in November. Shove these losers that voted yes out the door.

FYI, Obama and McCain voted “yes” for the bailout bill. A vote for either of them means you approve of this bailout.

Doug Eberhardt

www.youcanmakeadifference.org

From my House rep Mike Thompson:

Dear Doug:

The Emergency Economic Stabilization Act passed by the House today is not much better than the one we rejected on Monday. While the increase in FDIC protection is an important improvement, more market reforms are still needed. The reality is that the credit market is locked up and that is hurting Americans. It was very evident that if the House failed to act the consequences would shake the foundations of our economy.

From the time that the Bush Administration first asked for this rescue package, I argued that if taxpayers were being asked to pay up, then we needed regulatory reform at the same time. But this week, the precarious state of our economy showed that we needed to act quickly, and that getting comprehensive regulatory reform would take time, a luxury we did not have. In my many conversations with constituents and economists, it became clear to me that this crisis is not going to just affect those on Wall Street, but folks on every street across our district and around the country.

You don’t have to look any further than today’s unemployment numbers to see why we have voted to act now. The country lost more jobs in September than any month in the last five years. Unemployment in California stands at 7.7 percent, the highest it has been in 12 years. A major reason is that our financial system has stopped functioning and banks are not extending credit to employers. I have talked with individuals and business owners across the district who say that the tightening of the credit market has already affected their ability to maintain operations or to expand their businesses.

Within the last two weeks, the Arcata Community Recycling Center has seen their interest payments balloon to four times their normal rate. Standard Structures in Windsor was about to finalize a $10 million order from a Texas company until they got word this week that the project was stalled because of the credit crisis. There are fifty jobs tied to that one contract. Many more of our small businesses will be forced to lay off workers or wait on hiring new workers if they don’t have access to credit.

Governor Schwarzenegger and Treasurer Bill Lockyer announced this week that California has four weeks of cash flow, and if the markets are not restored, the state will be unable to pay its bills. It’s only a matter of time before cities and counties will be forced to pass along these budget shortfalls by reducing public services. From public health and safety workers, to road crews and garbage pickup, the government services that we rely on will be disrupted and these jobs will go on the chopping block.

I can assure you I still disagree with this bill and I remain committed to enactment of concrete market reforms that address the underlying problems that lead to this crisis. To that end, I’ve received a direct commitment from Speaker Pelosi that she too will work to identify and address the problems that led us to this point. The House will immediately begin holding hearings on the regulatory shortcomings in our financial system, so that come January we will be ready to craft legislation that addresses the issues I’ve raised and others that will be uncovered. Congressman Barney Frank, who chairs the House Financial Services Committee, has promised me that his committee will make the reforms I advocated for a top priority. And I’ve received a personal commitment from Senator Obama that if he’s elected President he too will work for these important market reforms. In January, we will be well positioned to pass important legislation that will close the loopholes and tighten up regulations in the financial services sector.

Today I voted for this legislation because it was clear to me that we must take immediate action to restore a measure of confidence in the economy. This isn’t the end of our problems nor is it the last of the legislation. Like everyone else, I’m outraged that taxpayers have been tapped to cover the greed and excesses of the financial marketplace, and I’m outraged that as taxpayers we have been asked to cover for the failure of Wall Street regulators. But when forced to choose between doing nothing and passing this bill, I voted for what I believe is best for our country and our district, and voted to pass this legislation. We face a tough road ahead, but hopefully by unfreezing the credit markets, Americans can get back to growing their businesses and growing our economy.

Thank you for taking the time to contact me on this important issue. I appreciate your conviction on this matter and have valued your continued dialogue.

Sincerely,

MIKE THOMPSON
Member of Congress
[link edited for length]

Related posts:

1. America’s Infrastructure In 2009: Grade “F”
2. Which Congressmen Voted to Give IMF $100 Billion? Vote Them Out!
3. Are Congressmen Stupid or Ignorant?

Here is the 2005 Report Card on the 12 categories:

Aviation — D+

Bridges — C

Dams — D

Drinking water — D-

Energy — D

Hazardous waste — D

Navigable waterways — D-

Public parks — C-

Rail — C-

Roads — D

Schools — D

Solid waste — C+

Transit — D+

Wastewater — D-

SOURCE: American Society of Civil Engineers

There’s a game that I played years ago called Sim City. The basis for Sim City is managing local government. The objective of the game is to use your decision making skills to build a city and manage the city as potential disasters and other problems arise. Some schools, such as Auburn University use Sim City to teach students systems thinking, problem-solving skills and “craft” in the planning profession.

I remember in playing this game that if I concentrated on one aspect of planning and neglected others, there were consequences, sometimes severe consequences. This leads to our current situation here in America. For now, our nation’s leaders (Congress and the President) are spending their time waging undeclared wars where the cost to pay for said wars aren’t even included in the budget deficit figures.

So when will our leaders decide that our own nation needs some TLC and leave other nations to depend upon their own people to survive? The answer will probably be found when the next bridge collapses or the water situation hits crisis level. A “D-” for drinking water? Are you kidding me?

Our leaders are reactive, not proactive. The only thing that they are leaders of is the march towards the destruction of America as we know it! They would lose every game of Sim City they ever played. If only there were no consequences.

The next ASCE report card is due out in 2009. I can only imagine what further deterioration will have occurred. Can the grade of “F” be too far off? If your child receives these types of grades, are you proud of them? No! You do what you can to fix the problem by paying more attention to what is causing it!

What’s causing our problems in America? We need $1.6 trillion over the next 5 years to fix our infrastructure. Where will that money come from? Is it in the current budget? Will war with Iran make things better or worse? Does Congress even ask these types of questions?

So to pay for the repairing of infrastructure, congress can only do one of two things; raise taxes or print more money (the hidden tax called inflation).

Either way, you will pay more for everything.

You’ll find out what’s going on with your state’s infrastructure here.

Doug Eberhardt

Related posts:

1. Vote For Those That Voted “NO” To the Bailout Come November
2. Top 5 Articles of 2009
3. Social Security Will Be There For You, However…

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”

Congress is taking our nation towards bankruptcy because they don’t address the Evil that allows them to wage war and spend like there’s no tomorrow.  They live like kings and queens and the do so because We The Serfs don’t speak up!

Below is the letter I sent to Congressman, John Campbell of Newport Beach, California. He chairs the Budget and Spending Taskforce of the Republican Study Committee.

The purpose of the letter was to point out how his solutions are limited based on his own admissions and that to really solve the problem, the means by which Congress abuses its power must be removed.

Dear Mr. Campbell,

I listened to you on the House floor today. You’re on the right track, but you are missing a few important points. A few comments if I may….

If the government is to live within its means, congressional spending, as you say, is part of the problem. And the problem, as you point out, is congressional spending beyond their means (doubling the deficit for 2008).

This is something Congress can’t control, because again, as you mentioned, they have been doing it for the last 44 out of 48 years! Not a great track record!

The problem then lies in the “means” by which congress is allowed to conduct this spending. If we had a sound monetary system, then congress wouldn’t be able to play their spending games, including their war games. That is the bottom line.

But congress won’t cut the hand that feeds them, so there will be nothing your committee can do but either tax U.S. citizens more, or continue devaluing The People’s purchasing power via the hidden tax of inflation.

Congress IS the problem and the Federal Reserve IS the Evil that allows you the means to Pillage the Serfs.

America is headed for trouble no matter what your efforts may be to save her. The proof is in your words that we’ve only been able to do it for 4 years over the last 48! And these, most would say, were “the good years!”

If you want to help The People, then you need to cut government programs that contribute to the waste while paying off the debt….and you do it NOW!

The only way we can stop the spending madness is to take away the Evil by which they are allowed to drive us deeper in debt: The Federal Reserve.

The only way we can stop the spending madness is to take away the Evil by which they are allowed to drive our nation deeper in debt: The Federal Reserve.

Doug Eberhardt

Related posts:

1. Vote For Those That Voted “NO” To the Bailout Come November
2. The Ron Paul rEVOLution, Super Tuesday and “The Message!”
3. America’s Infrastructure In 2009: Grade “F”

Ron Paul is sly as a fox. When he decided to run for President in March of 2007, he knew his chances were slim that he would be elected. For Ron, it was more about “The Message.”

It is “The Message” that over the last year has gathered momentum and has spawned a rEVOLution which has a different meaning for every American. For some “the message” and the rEVOLution is about not following the Constitution by fighting undeclared wars. For others it’s about securing our borders and taking away the free incentives for illegal’s to come here. “The message” could be about being pro-life or eliminating the income tax. There is no one issue that applies to all, but rather an array of issues that appeal to each of us individually.

So why is Ron Paul leading a rEVOLution? The answer is simple. The Left and the Right have taken this nation to the brink of bankruptcy. The reason? Our elected representatives cannot live within their means, they spend like there’s no tomorrow, and police the world like they’ve been appointed by God to do so. But, more importantly, is “how” they get away with their actions. They do it through the hidden tax called inflation and they get away with it because Americans can’t see the immediate effect.

Allow me to explain. When one receives their paycheck each week, they feel the immediate effect of taxes being levied as they get to spend what’s left. They don’t feel the effect of inflation till they fill up their cars with gas or go to the grocery store and buy the necessities to live a comfortable life and realize that something has happened. The paycheck that used to buy all they need to live comfortably has come up short in purchasing basic necessities and there are still bills to be paid that a few years ago their paycheck covered. How can this be? The answer is “inflation.”

Inflation is simply, the increase in money supply. When the money supply is increased, you have to pay more for things. Why? Because a company has to raise their prices to maintain its wealth and overall profitability. There are also supply and demand issues as to why prices go higher, but we’ll leave that part of the equation out of this analysis for simplicity except for a few examples below.

The reason you are paying more for anything is because the Federal Reserve creates too much money allowing our government to live beyond its means. It’s easy to do when all the government has to do in receiving more money is borrow from the Federal Reserve who creates it out of thin air.

Here’s how it works, from the Federal Reserve Pamphlet, “Putting it simply…. The Federal Reserve – Federal Reserve Bank of Boston:

“The authority to print money is an important power for any government to possess, and congress has delegated that power to the Federal Reserve. Of course, along with the Federal Reserves authority to create money comes the responsibility to ensure that the money retains its value. In setting monetary policy, the Fed seeks to provide enough money to accommodate steady economic growth without upsetting the economy’s equilibrium. At the same time the Federal Reserve has a clear responsibility not to provide too much money, since a sharp jump in the money supply could upset the economy’s balance.”

How has the money supply affected inflation historically? Has their actions caused a “sharp jump in the money supply upsetting the economy’s balance?” Lets look at this chart and see. As you can see from the chart, inflation is much higher than the government’s version of it via the CPI. This chart shows you the reason why the government will no longer be publishing the M3 money supply data. They don’t want you to know about the 15% increase in M3 in the last year as John Williams from Shadow Government Statistics has calculated.

To understand this further, we must define how money works. According to the “Putting it Simply” pamphlet, the Fed says that; “For money to work in its three principal roles — as a medium of exchange, as a store of value, and as a measure of value — it must have two characteristics; 1. it must be relatively scarce, and 2. it must be widely accepted.”

So how has The Fed done? This can be answered in how weak the dollar is versus other major currencies. The U.S. dollar index, established in 1973, was trading at 122 in 2001 and today has fallen to near its all time low at just over 76. The U.S. Dollar has lost on average, over 37% versus the other major currencies in the last 7 years and even lost to historically weaker currencies like the Philippine Peso which has gained 28% on the dollar in the last 28 months alone. This is what happens when you’re the world’s largest debtor nation..

But the U.S. dollar is only part of the inflationary problem. Oil was under $30 a barrel in 2003, before the Iraq war started, and recently hit $100. Gasoline prices have doubled since 2003. Food prices have been rising in double digits and there is currently a long period of rising food prices forecast.

Inflation is a hidden tax and it is compounded by an interventionist foreign policy.

The major way we are paying for the wars we wage and our policing of the world is through inflation. Instead of paying down our debt, which now stands at over 9 trillion dollars, our armed forces are stationed in 130 different nations and currently waging two wars with a realistic threat of more. All the while, our own borders are left unprotected.

So to recap, when U.S. dollars are increased (money supply) the dollar’s purchasing power has decreased (inflation). Imagine for a moment your paycheck having 37% less over the last few years. If you felt the immediate visual effect of this inflation being subtracted from your paycheck, you’d be mad as hell and probably also shout, “I’m not going to take this anymore!” Well guess what? This HAS happened to you and you should be “mad as hell!” If this describes you, then welcome to Ron Paul’s rEVOLution and know that he not only wants to cure inflation by installing sound money principles, but he also wants to give you more of your paycheck by eliminating the income tax. Imagine the effect this would have on our economy if you were taking home MORE money and NOT feeling the effects of inflation?

But one can’t get rid of inflation and wars until they get rid of the root cause of these, the Federal Reserve. The Federal Reserve has not lived up to their promise for money to be a “store of value.” Also, money is not anymore “relatively scarce” and more and more people and countries are not “widely accepting” U.S. dollars. China, for example, removed the U.S. dollar peg in 2005 and is now pegging the Yuan to a basket of international currencies (although the dollar is still a part of the basket). . Today, the Yuan has appreciated about 14% versus the U.S. dollar since losing its 100% dollar peg.

The Federal Reserve is the cancer that has grown stemming from flawed decisions in the year 1913 under the Wilson administration when it was created. The Federal Reserve truly is the evil spoken about in the Bible, Romans 12:9 “Abhor that which is evil.” Without eradicating the Federal Reserve cancer, you can’t get rid of the inflation and wars. Ron Paul wants to eliminate the evil power held by the Federal Reserve.

How many other candidates currently running on the Left or the Right have any clue to all of this? What they will do is continue with the same garbage in, garbage out routine that will do nothing but drive our nation further into the black hole of never ending debt.

So what is “The Message?” The Message is different for each and every one of us. For many, it is a combination of issues. For some, it is only one issue that’s most important to them. All of these issues are centered on one cause which they have in common; Liberty, and one solution; the Constitution. This is what Ron Paul stands for.

By eliminating one of these Left and Right tools of destruction, The Federal Reserve, and thus inflation and the ability to fund undeclared wars, our government will have to live within its means and thus we all will have the Freedom to live a more prosperous life, maintaining our wealth and we’ll also be able to pass that prosperity on to our heirs. Isn’t this the way our forefathers envisioned America to be?

So come February 5th, we’ll have some answers about how America currently thinks. So far, by the voting that has been occurring in some states, America isn’t thinking too well. Will we continue the destructive course with continued inflation and the Federal Reserve that has our great nation on the verge of bankruptcy or will we be choosing Prosperity and Liberty by casting our vote for Ron Paul? Either way, “the message” will continue to spread and Ron Paul will be leading the rEVOLution to November and beyond.

All are invited to join!

Doug Eberhardt

Related posts:

1. It’s Not Too Late For Ron Paul!
2. Ron Paul Should Leave The Republican Party
3. Why Don’t Limbaugh and Hannity Support Ron Paul’s Bill to Audit the Fed?