CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Monday, July 06, 2009
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
Previous Posts
- Jobless Claims as Percent of Labor Force Fall for ...
- Toyota Is The Most American Car Company
- PJ O'Rourke: Why Politicians Love Trains, Hate Cars
- Will D.C. Taxi Industry Become a Cartel Like NYC?
- Power To The People in Cuba. Sometimes
- Macho Run Amok and Excessively Compensated Is Givi...
- Fireworks
- Cars.com 2009 American-Made Car Index: Detroit Aut...
- Ray Charles: America The Beautiful
- Stronger Underwriting, Bigger Down Payments
5 Comments:
What is the economy if not the propagation of wealth against time?
This reminded me of another thing PJ O'Rourke said in the video you posted. If people were smart enough to learn from mistakes, Ponzi's scheme would have been the last one. That's why Libertarians support necessary laws and the rule of law.
Me:
There is a difference between creating markets which lend long and borrow short on expected lifetime earnings and a scheme of wealth transfers from one generation to the next. The former is a voluntary transaction with potentially diversifiable risks. The latter is an insolvent scheme of theft with an uncertain date of collapse.
Using my SS estimated benefits statement from 2 years ago I calculated that basically they'll just give me back everything I pay (self employed so the full amount) until I retire plus inflation.
So the 25 years of prior contributions by me and my employers would have negative 100% return and whatever is paid from now on will have a return of about 2% or 3%.
That's a negative return if I had done the full calculation. Since we know that taxes are going up or benefits down, even that old calculation was flawed.
Great cartoon. When you start looking for Ponzi Schemes, almost everything the Federal Government does seems suspect. Housing is even a Ponzi Scheme of a sort. Once the inflows stop, the projected gain calculations end. If I get another letter, brochure, etc. from my broker, telling me I'm missing out, or that diversification and constant contributions are the key to life-long financial success, I'm going to collapse (in a fit of laughter). These same people could not tell that a deflationary spiral was coming, much less how to invest in such an environment, and I'm supposed to give them more money? Hilarious.
Post a Comment
<< Home