Did you know that one in six Americans aged 65 and older live in poverty?
This startling statistic came to light while we were researching a forthcoming publication focusing on the path to a prosperous retirement. Frankly, it’s quite appalling. Additionally, President Obama’s proposal to modify the Social Security inflation adjustment adds to this concern.
The essence of this adjustment is based on a controversial concept known as “chained-CPI.” This theory suggests that when the price of one product rises, consumers can simply switch to a cheaper alternative. For instance, if the price of apples increases, people may opt for oranges; if Coke costs more, they might buy Pepsi instead; and when tuna becomes pricier…well, there’s always cat food.
It’s evident that Obama is acting under influences far beyond his control. The Social Security System has been on a precarious path since its inception. Continue reading
As winter transitioned to spring in 2013, many anticipated that the economy was poised for a rebound. The groundwork for recovery had been laid: housing markets were showing signs of improvement, and the Federal Reserve was injecting monetary stimulus at an unprecedented rate of $85 billion per month.
Everyone was eagerly expecting the next wave of economic growth to emerge, almost within their grasp. In fact, one could nearly taste the prospects of a fruitful and prosperous season ahead.
The stock market, always the optimist, was already investing borrowed funds and projecting unearned returns from projected profits. Daily, it reached new heights, enticing investors back into the game.
How could they resist? Investors often buy high and sell low. Those new record highs acted as the perfect lure, drawing them back in at just the wrong moment.
Then, without warning, an unwelcome development occurred. Economic troubles surfaced unexpectedly, akin to the sudden appearance of grade school head lice. Continue reading
According to David Stockman on The Daily Ticker, “The Fed is like a wet blanket smothering the economy. Everything is under their tight control… and they will ultimately fail, dragging the private economy down with them.”
This former Reagan budget director, private equity investor, and author is out promoting his new book, The Great Deformation: The Corruption of Capitalism in America. He began the week with a Sunday op-ed in the New York Times, covering many themes discussed here.
The article is extensive, but definitely worth a read. You can read it here.
We’ll leave you with Stockman’s closing remark:
“The United States is financially, morally, and intellectually bankrupt. The Fed has ignited a global currency war involving Japan, angered the Brazilians and Chinese, and left the eurozone teetering. When the latest stock market bubble bursts, there will be nothing to prevent the ensuing collapse.” Continue reading
According to Austrian economist Ludwig von Mises, this concept is referred to as time preference. It suggests that, all else being equal, individuals prefer to achieve certain goals sooner rather than later. Essentially, people value immediate gratification over delayed satisfaction.
In contemporary society, this desire for quick rewards has reached new heights. People increasingly seek instant gratification, a phenomenon Mises termed high time preference.
However, the discipline of saving and investing sharply contrasts with this high time preference. Despite this, many individuals yearn for more—whether it be more possessions, nicer items, a larger home, or luxurious vacations.
To attain greater consumption, one must first focus on production. Production entails time and sacrifice. Mises characterized the willingness to forego present consumption for greater future rewards as low time preference. This mindset leads to increased savings.
Individuals with a low time preference (i.e., savers) are pivotal to wealth generation and the robustness of capital markets. Without their contributions, money would be spent almost immediately, and there would be a lack of available capital to enhance production. Continue reading
