PPI final price demand was reduced to -0.2% in May, seasonally adjusted.
Compared to last month PPI, which was at 0.5%, this is good news. However, Final demand is still up by 2.2%, unadjusted, from 12 months ago. You can find the report here.
The decrease for the final price demand for the month of May, mostly, comes from final demand goods index -0.8%. Leading the decrease was the energy index which dropped to -4.8%, of which, the majority came from decline in prices for gasoline, I posted the reason why in this post. Price for final demand foods decreased to -0.1%. However, index for final demand goods less food and energy rose to 0.3%.
Price for final demand services remains unchanged. The final demand services less trade, transportation, and warehousing rose to 0.2% and 0.1%, respectively. While prices for final demand transportation and warehousing services fell by -1.4%. Most of the decreased for final demand transportation and warehousing services came from prices for airline passengers which decreased to -4.3%.
Price for final demand less foods, energy, and trade services were also unchanged from last month PPI.
While PPI was reduced for the month of May, inflation is still above the 2% target. Nothing has changed as inflation still persists and the decline in energy index will pick back up since it was reduced by government intervention, not by the market and in addition, it’s the summer season and traveling, historically, tend to pick up in the summer season which means there will be more demand for oil.
Keep this in handy, Consumer Price Index (CPI) is not “inflation”, it’s a measure of inflation. The higher the inflation, the lower the purchasing power of the currency, which means it cost more to buy a product or service.
For the month of May, Energy index fell by -2.0% led by gasoline index decreasing by -3.6%, most likely, due to Biden administration releasing 1 million barrels of gasoline from Northeast reserve.
However, increasing from last month CPI, shelter rose to 0.4% while food, overall, increased to 0.1%. Mainly, from food away from home index which rose to 0.4%. This will get much worse in the coming months due to this and this.
Core CPI (less food and energy) rose to 0.2% from last month CPI. With medical care commodities with the biggest jump to 1.3%, while medical care services rose to 0.3%. Transportation (airlines fare) and new vehicles saw decreased of -0.5%.
Core goods (commodities less food and energy) remains unchanged.
Core services (services less energy services) rose from last month CPI to 0.2%.
Overall, inflation is still rising and is not going away. Inflation is still above 3% (all items) while unemployment rate remains low. All strong signs that increasing interest rate is needed to fight the persistent inflation.
Gold will, eventually, surpass the US Dollar. It is inevitable. Every strong and powerful empires have met their demise at one point or another. Look at the Roman empire, the Ottoman empire, the Spanish empire, the French empire and the British empire. They all have met their demise and are no longer the “top” leader in the world. The “top” leader, at the moment, is the United States of America.
There are various reasons for it:
The ending of World War 2, which cripple the economy of Europe.
U.S. had a strong and powerful economy and well-developed financial system after World War 2 ended.
Most importantly, Saudi Arabia agreed to sell their oil in US dollar which created the petrodollar. The petrodollar forces all countries to have a large reserve of US dollar in order to buy oil. This was huge as Saudi Arabia and the middle east, in general, are the top oil reserve in the world. This is why United States of America have remained the “top” leader for so long.
However, changes are inevitable. Even a powerful empire such as United States of America will, unfortunately, meet its demise at one point. As of June 2024, the United States of America federal debt stands at $35 trillion. Yes, it’s at $35 trillion and is only getting bigger, which is, disastrous because the debt is already larger than the entire U.S. economy.
As I mentioned before, the U.S. economy is addicted to cheap debts and the government is recklessly spending like there’s no tomorrow. Other countries are taking note of what’s happening in the United States. United States is no longer the reliable and stable force in the world. Allies and adversaries’ nations are taking notice and are, slowly, taking precautionary steps to distance themselves from the U.S. Dollar.
Even Saudi Arabia is selling their oil in other currencies and is searching to expand and strengthen businesses treaty and trades with other countries such as China to build gas pipelines in $1-billion deal is one example. And Saudia Arabia is not alone, many countries are trading in different currencies, including Chinese renminbi and Indian rupee, with each other. This is a growing trend and once a trend is in motion it tends to stay in motion. I expect this trend will grow and expand for the next several years.
This may come as a shock to many people as United States has been the undisputed #1 for such a long time, that it is unfathomable to live in a world where United States isn’t #1. But nothing last forever. Empires rises and falls, and United States is no different.
Adversaries are not afraid of repercussions of the United States. Just look at Iran, Russia, China and many more, are taking bold moves against the interest of the United States despite sanctions as a consequence of their actions.
They have become boldened because of what they perceived, correctly, the weak status of the US military. Now, let me clear about this, no adversaries come even in the ballpark to launch an attack against the US military via warfare on land, sea and air. Not a chance.
To launch against US army requires many adversaries’ countries to ban together and share resources with each other and, somehow, manage to spot all submarines with nuclear bombs moving globally around the world and disable all radar guarding the U.S. airspace. Do you think that Russia, China and other adversaries are just going to work like a team and manage to achieve all these complex and difficult objectives? That’s about as close to impossible as it gets. Even if they somehow, miraculously, worked together and have the resources to match the US military defense budget. No one and, I mean no one, trust the Chinese Communist Party (CCP) and for good reasons, which is why this scenario is very unlikely to happen.
However, the US military is currently in a downward spiral for more than two decades. Recruiting is at all time low, readiness is abysmal, according to U.S Government Accountability Office (GAO) and, even, weapons systems and fighter jets are experiencing delays and might not even be delivered until 2025. Despite the fact, that the US military received $842 billion dollar in funding from the Department of Defense (DOD). The F-35 weapon program cost, alone, is expected to exceed over $2 trillion due to the delays.
There’s no more money to give out. With the $35 trillion debt and rising, US military in crisis and social security with their own crisis. It’s becoming increasingly difficult to envision United States of America as untouchable. Cracks are starting to show and it’s easy to see why countries would dump the US dollar and start replacing them with gold.
As this report will show, gold has already surpassed Euro in global international reserves. This shouldn’t come as a surprise since central banks have been buying gold by the tons since 2021. China central banks has been, consistently, buying and storing gold. It doesn’t help the US dollar case, when U.S. decided to confiscate the assets of Russia as a consequence of the Ukraine war. Since the confiscation of Russia assets, the buying spree of gold has accelerated.
Remember, adversaries just realize that the US dollar reserve has counterparty risks that they didn’t take into account such as getting confiscated. So, replacing US dollar with gold eliminate counterparty risks and, at the same time, reduce U.S. influence.
With many central banks doing just that, it will make trading with each other much easier since gold is something that many countries trust and, in addition, it avoids trade disruptions and, unwanted, sanctions like the ones Russia is, currently, experiencing due to the Ukraine war
One important thing to consider is that central banks will buy gold, regardless of the price. Central banks aren’t price sensitive. They don’t care if the price is close to its all-time high. For them, it’s about strategic reasons and protecting themselves.
While it’s true that the US dollar status isn’t just going to vanish from one year to the next. US dollar still has room to go because there’s no other fiat that can come close to matching the status of the US dollar and strong empires tend to have strong foundations to withstand multiple crisis just like the roman empire, but to think that the US dollar status isn’t under threat is foolish.
Petrodollar status is in danger of being cutoff, gold prices are close to it’s all time high, tremendous debts and weak economy are strong signs that the US dollar will not remain #1 for much longer.
Even United States influence, and power is waning due to the disaster foreign intervention in Ukraine and Gaza. Especially, in the Ukraine war. The war has been nothing short of disaster. It’s so bad that the U.S. government is allowing Ukraine to use U.S. weapons against Russia. This proxy war is in danger of escalating to a full-scale war.
And all of these conflicts, lack of stability, crisis, and massive printing will increase the prices of gold for the next several years until current events start winding down.
Disclaimer: I am not a financial advisor, and I am not recommending any investment decision for anyone. If you want to invest, seek a financial advisor. I am just writing this for educational purposes and because I enjoy writing about it. Please, please, please seek a financial advisor for any investments.This is not a recommendation to buy or sell any stocks or securities, just my opinion. I often lose money on positions I trade/invest in. Do not make decisions based on my blog.
The total amount for the 30-year bond auction was $22 million.
The bid to cover spread was 2.486.
Dealers took 13.7%, while direct bidder took 17.8% and indirect bidder took 68.5%
The highest yield was 4.403% with median yield being 4.350%.
This was a fantastic auction for the bond as foreign demand for the bond was, surprisingly, strong. Dealers took a low amount due to strong foreign demand, which is great since banks doesn’t have to sell a large amount of bonds to clients.
10-year bond auction total amount was $39 billion.
The bid to cover spread is 2.67.
Dealer took around 11.6%
Direct bidder took 13.8%, while indirect bidder took 74.6%.
This was a fantastic auction with strong foreign demand taking the most chunk of it which proves that there’s still appetite for long term US bonds despite the weak auction of the 3-year bond which contradicts the narrative of foreigners seeking shorter term bonds. Although $39 billion is downwards from last month auction of $42 billion.
With the highest yield being 4.44%, while median yield 4.37%.
Direct bidder took 16%, while indirect bidder took 64.1%
Compare to last month report. This was bad, dealers have to pick up the slack due to foreign demand not being in strong demand, which shouldn’t come as a surprise since U.S. debt stands at $35 trillions. While the bid to cover spread was lowered to 2.43 compared to 2.63.
Yield was high, although not over 5%, it was 4.659% with median yield being 4.59%
Dallas Fed Services & Manufacturing index was released for the month of May 2024 and, unlike mainstreams media which always seems to report that the economy is doing great, is better to get the source straight from business owners and get a sense of how things are going so far.
Each index shows that general business activity index remained negative which suggest weaker activity for business owners.
For manufacturing index “The general business activity index moved down five points to -19.4, and the company outlook index fell seven points to -13.4.” With employment index at negative which indicates that there were more layoffs than hiring.
While service index “The general business activity index remained negative and fell two points to -12.1”. Particularly, with retail sales and wholesale sectors struggling with sales and increased inventories.
And it doesn’t look like sentiments are going to improve any time soon, based on this poll by this report.
Small business owners are drowning with debts, excessive regulation, crimes, inflation and high taxes. Many small business owners are seriously contemplating about shutting down their business for good, if relief doesn’t come soon enough.
Per the report, around 46% of all workers in the U.S. are employed by small businesses, totaling 61.6 million people.
36% from the poll graded Biden’s performance of helping small businesses an “F”. Moreover, many small businesses are struggling to recover their business activity from the COVID-19 pandemic lows, which leads to many small businesses to simply closing their doors.
Is not only small business owners that deals with these various issues but also the titans in the oil and gas industry as well.
The tax is to help fund the energy transition to wind and solar energy (NetZero agenda), which is not practical for our modern society as I wrote in previous posts. You can read it here and here.
The head of the UN is, essentially, putting the blame on the whole climate change on the fossil fuel industry (better term is hydrocarbon). The top UN even went as far as telling advertiser and PR to ditch their oil and gas clients and never do business with them again.
Those taxes will go to funds and those funds will be redirected in two ways:
to countries that are suffering the effect of hydrocarbon industry
to people struggling with rising food and energy prices.
Yet, putting more regulations and increasing taxes is, somehow, supposed to improve energy and food prices? In addition, there is no mention of how printing money from central banks for aids, “green” energy and sending millions and millions of dollars to Ukraine, Gaza and Israel leads to inflation? Not a word of it was mentioned, which is very strange, since they want to “help” people that are struggling with rising food and energy prices. This is some low-grade bunko. They know very well where the source of inflation is coming from, they just don’t want to admit it, and pass the blame to something else.
Do these leaders know how complex and difficult it is to extract crude oil (upstream) and refining them to be used as diesel, jet fuel and gasoline (downstream)? And refining them is immensely difficult since the crude oil in Saudi Arabia is different than the crude oil from Venezuela or Russia. So, different refineries are needed for each type of crude oil. Those refineries aren’t cheap, and they take an extensive time to develop and bring it online.
Do they know that climate changes have very little to do with hydrocarbon industry? Here’s a quote from this report.
“Climate change is largely controlled by the sun, in combination with a myriad of other factors ranging from cosmic rays to the changing tilt of the earth to possibly the solar system’s rotation around the galaxy.”
What about all the livelihood it will destroy when hydrocarbon industry profits are being, drastically, reduced?
What about the investment in the hydrocarbon industry CAPEX (which is where investments go to improve or maintain an asset, or to explore new areas to extract crude oil reservoir)? Those investments cost millions of dollars.
Just for the sake of argument, let’s say that the top UN is correct in his assumptions.
The windfall tax is approved and goes into effect, how is this going to improve the lives of the working class and middle class?
With windfall tax, hydrocarbon industry is simply not going to produce more oil. They are incentivized to not produce and/or search for new crude oil reservoir. The industry will cut down their payroll, which means layoffs, and all of these leads to high energy prices because there’s no new supply to replace the used one, but demand will keep increasing, someone has to keep those massive, hungry energy data centers satisfied when AI starts becoming more and more powerful and, since nuclear energy is still the bugaboo that everyone fears, hydrocarbon and coal are still the go-to energy sources, not the “green” energy, for those data centers and they aren’t going anywhere.
How does high energy prices help small businesses owners stay afloat? How does high energy prices help improve people standard of living? How does destroying livelihood supposed to make the economy better?
It’s simple, it’s doesn’t. Despite all the propaganda against hydrocarbon, oil and gas is essential to our modern lifestyle and society. Without it, we will go back to living like the stone age which doesn’t bode well if you live in a colder part of the earth.
How does banning Liquefied Natural Gas (LNG) from being exported is going to improve the economy in the United States? This is insane! There’s a huge demand for LNG from European countries due to the Ukraine war and Asia countries. It’s hard to support such a decision when United States has some of the biggest natural gas reserves in the world and is already the number one exporter of LNG. So, why would Biden administration or, anyone for that matter, support such a counterproductive decision which hurt the U.S. economy? Is a misguided policy, at best.
Our leaders need to do a better job at understanding that the oil and gas are there to help mankind, not to destroy it. More energy, better efficiency and innovations are the way forward for mankind. With research and technology growing each day, fusion energy might become a possibility for the current century.
The use of efficient energy can recover and improve the global economy. It’s not a coincidence that when efficient energy sources are found, better technologies emerge and, as a result, our standard of living increases. Just look at how many new technologies emerge just from steam engines invention: automobiles, electrical power plant and so much more. Massive organic growth in the U.S. GDP could rise to offset some of the debt that the U.S. government has accumulated, but in order to reach those organic growth, all of these costly regulations and red tapes needs to be reduced drastically.
However, a trend is motion tends to stay in motion until a boiling point is reached. For small business owners and titan industries get ready for more regulations and high taxes in the foreseeable future cause our leaders, clearly, shows no evidence of changing their stance.
The FDIC is one of the several U.S. banking system regulators. FDIC is the agency that oversees banks. One of the FDIC responsibilities is to research banks’ balance sheet and write a report of which bank(s) are in trouble.
The chairman of FDIC is Martin Gruenberg. Gruenberg has been with the FDIC since 2005. Gruenberg is the longest FDIC board member in its 89-year agency history. Unsurprisingly, he was nominated to be the chairman of FDIC in 2022 by Biden, this marks the second time Gruenberg has been nominated and elected as the chairman of FDIC. The first time he was nominated and elected as the chairman of FDIC was during Obama tenure as President in 2011. Gruenberg election for the second time as the FDIC chairman position was a no brainer. At minimum, Gruenberg had more than a decade of experiences with the agency making him a stable authority for the agency, but that proved to be a huge mistake.
As reported here, here, here and here. FDIC is a toxic workplace environment. Female examiners described FDIC as sexualized, boys’ club environment where women’s appearances were talked about openly.
Female employees were subject to sexual harassment such as receiving unwanted dick pick, invite them to strip clubs, expecting sex with male colleagues to get ahead, pressure to drink alcohol during work hours, and any female employees that complains about the misconduct were met with retaliation or were asked to leave the agency.
If that’s not enough, gay employees were referred to as “little girls“, while black employees were told they were “token” hires to fill a quota.
Moreover, according to employees, they described Gruenberg as “harsh”, “aggressive”, “upset”, “vitriol[ic], “disrespectful” and “lost his temper” when receiving bad news or opinions he disagreed with, and Gruenberg response was described as “demeaning and inappropriate manner.” Which prompt employees to avoid delivering/withheld bad news to Gruenberg during a critical time where three major banks (Silicon Valley Bank, Signature Bank and Republic First Bank) failed, and many lenders are struggling to stay afloat with current interest rates (5.25% – 5.50%).
Good grief!
Remember, FDIC is the agency that oversees banks. If employees couldn’t deliver the bad news that banks were in trouble to their boss, how would they ever fix the problem? Well, they don’t. They just let banks failed and then acknowledge that the banks were in trouble. Wow……….
Gruenberg is largely responsible for the toxic workplace he has establish and, while he seems apologetic during the hearing, people aren’t buying it, and he was forced to resign. Gruenberg had almost two decades to fix this toxic culture, but he dismisses it, and where the hell is the background check on him? Surely, if someone works for the FDIC, there has to be an FBI background check to scan for these unwanted behavior and attitude. It should have shown on the scan.
While on the subject, how come Biden didn’t fired Gruenberg on the “spot“? Biden pledge to fire anyone on the “spot” for treating people badly. Moreover, what happen to standing by #MeToo, Black Lives Matter, and LGBTQ+ pride principals that Biden administration claim to support?
How come no one’s is talking about the blatant misogyny, racisms and discrimination under Gruenberg tenure?
It just seems bizarre that Biden didn’t fire him on the spot, since clearly Gruenberg violate many of Biden principals that his party support, and waited until he was forced to resign.
Clearly, not firing Gruenberg, shows that they don’t give a hoot about FDIC employees, safety in the banking systems, people livelihood at stake with the current economic conditions and the principals that Biden administration claim to support (BLM, #MeToo, etc.)
Better yet how come the leaders working for the most important institutions, clearly, don’t seem like a good fit for the role yet still gets appointed. While at the same time, there are many great people who work for the government that have shown true leadership skills and have a great track record that proves that they are up for the task, yet those people are rarely given the opportunity.
Is a system that rewards incompetence and toxic personalities while punishing competent employees. Bizarre.
PCE deflator is describe as the Fed favorite inflation signal. So, for the Fed to see the core PCE decrease to 0.2%, excluding food and energy, will be considered a victory (hint: it’s not) as it’s the lowest increase of PCE for the current year. However, from the same month one year ago, PCE price index was 2.7%.
There was an increase in Core PCE, mainly from services. Biggest increases in services were housing (shelter, due to 0% down payment and loans given out to illegal immigrants for housing), utilities, financial services, insurance and healthcare for $49.1 billion. It was offset by transportation and services, recreational goods and vehicles (which explain why cars inventories are piling up despite positive development) by $10 billion.
Personal savings was $744.5 billion with personal rate saving percentage at 3.6%. As I wrote on my previous post, personal savings is very low compared to $5 trillion back in 2021.
While you might be wondering, with such a low personal rate savings, how are people getting by?
With credit card debt. Since 2021, credit balances have climbed to nearly 50 percent. With credit cards annual percentage rate at 20.66%, consumers are feeling the pinch. As I wrote before, delinquency will keep rising as inflation shows no sign of slowing down.
Still, consumers keep spending on recreational products and services, the question is when, not if, will consumer be tapped out with current economic conditions? Looking ahead, remains to be seen.
Social Security Act was passed in 1935. The act purpose was an attempt to prepare for unforeseen circumstances in modern life such as old age, disability, unemployment and so much more.
While social security act was noble in its intention, it could lead to some unforeseen consequences, for example, is like a safety blanket for individuals who can’t or, more likely, don’t want to manage their finance responsibly and, instead of, being proactive with their financial circumstances and be cautions with spending. People will just assume that the social security will be there when they have to retire.
That’s a big assumption. People assume the funds for social security will always have revenues to cover for benefits expenses. It takes the responsibility off the individual and pass it along to the government. Before social security, to retire comfortably, you need to become self-reliance with your productivity and save more than you spend. Passing the responsibility to the government takes the learning of self-reliance skills out of the equation and leads to a bad outcome as more individuals become dependent upon the government.
In 1935, most people didn’t reach the age of 65. Life expectancy between 1930 – 1945 was less than 65. By 1950, life expectancy was raised to 67. Obviously, this was due to the progress of technology, research and medicine. As decades pass by, life expectancy is increasing. That is an incredible and fantastic milestone for humanity, and I am all up for longer life expectancy. However, looking it from the social security fund point of view, is a complete disaster.
Why is that?
Well, social security funds are split into two: Federal Old-Age and Survivor Insurance (OASI) Trust Fund and the Federal Disability Insurance (DI) Trust Fund. These are the funds where payroll taxes go to. Those funds are used for investments and those investments provided interest to social security funds.
Those are the three ways social security gets funded: 1) payroll taxes (Tax revenue), 2) interest from the investments and 3) the funds itself.
The US economy after World War 2, was very strong. There were strong manufacturing industries, huge young workforce coming from the war and there was huge demand for US products, for example steel, to be delivered to Europe to rebuild their civilization from the aftermath of the war. In addition, the Bretton Woods system was established which propel the US Dollar to be convertible to Gold.
All of these contributing factors helped Social Security funds to be flush with excessive revenues easily covering the benefits costs of social security.
Unfortunately, change is inevitable. The US economy is no longer as strong as it was after World War 2. Now, the US economy is weak. The US government wasn’t in debt after World War 2. Now, the US government is in debt by the trillions.
The US fertility stands at 1.78 (1.8 children born per woman), which is low. It needs to stand at 2.1 (2.1 children born per woman). Low fertility rate means fewer working people in the labor. People are living longer, which means benefits expenses will increase.
Low fertility rate + longer lifespan = less tax revenue and more expenses.
According to the social security annual report,
“The significant deficiencies concern internal controls over certain financial information systems and internal control over accounts receivable with the public (Example, benefits overpayments).”
Here’s some nitpicks of the report:
“Net cost of OASI Program is $1,208,709,000,000.00”
“Net cost of DI Program is $158,075,000,000.00”
“Total Net cost of all programs is $1,433,339,000,000.00”
“Funds are invested in interest-bearing obligations to the U.S. Government. These investments consist of Treasury special-issue securities. They are non-marketable securities.”
On page 109, “Sustainable Solvency – Based on the estimates of incomes and cost presented in the Statement of Social Insurance, the OASDI program does not meet the criteria for sustainable solvency. In addition, the reserves in the combined OASI and DI Trust Funds must be stable and rising as a percentage of annual program cost at the end of the period.”
“Cash Flow Projections – Income including interest is only estimated through 2034, the year that the reserves in the combined OASI and DI Trust Funds are projected to become depleted. After the point of depletion, no interest earnings would be available. Moreover, because the program lacks the authority to borrow to continue paying benefits, benefits payment would be limited to the available tax income (noninterest income).”
They also release the 2023 OASDI Trustees Report. Which is a forecast about the foreseeable future until 2075.
Nitpicks about the report:
“Productivity: The ultimate assumed growth rates for the sectors are as follows: 2% for the non-farm business sector, 2% for the farm sector, 1.63% for the household sector, 0% for the nonprofit sector, and 0% for the government sector. Ultimate average annual rate of growth in total-economic productivity of 1.63%.”
“Price Inflation: OCACT expects that monetary policy will continue to target relatively low inflation but will not be able to prevent occasional burst of inflation caused by demand and supply shocks over the long-range period.”
“Unemployment Rate and Labor Force: As noted in 2021 and 2022 reports, the Trustees believe that there has been a structural shift in the determinants of employment, such that the future of age-sex-adjusted unemployment rates will average somewhat lower than they did over the last six complete economic cycles. Therefore, the ultimate civilian age-sex adjusted unemployment rate is assumed to be 4.5%, which is the same as in the 2022 report.”
“Fertility: The Trustees assume an ultimate Total Fertility Rate (TFR) of 2.0 for alternative II. Although the TFR in the industrialized countries has been observed at levels as low as the 1.2 to 1.5 range, the cultural and economic climate in the U.S. makes it highly unlikely that our TFR will remain below a level of 1.7 for any sustained period.”
In other words, they expect a rosy scenario for the foreseeable futures with no mention of war, pandemic, lockdown and/or economic crisis. In addition, they expect low inflation, fertility to remain at 2.0 and low unemployment.
Even with those optimistic scenarios, the trust funds will be depleted until 2034.
The demise of the funds for social security will be, according to the report, in 9 YEARS!!!!!!!!!!!!!!!!!
And, in my opinion, the funds could be depleted much sooner. It’s quite ironic, that they don’t take into account the demise of the social security funds, which will trigger an economic crisis.
They also expect the labor workforce to remain robust, which is not happening. Many companies are drowning in debt due to high interest rates; consumers are cautious with their spending which leads to weak sales and that leads to layoffs.
If you remember, the report says that it needs tax revenues to be stable and rising to cover the funds. Again, that’s not happening. When the funds get depleted, there will be some tough and unpopular decision to make. Do they borrow to keep the social security trust funds afloat, do they raise payroll taxes to offset the deficit, or do they slash benefits and raise retirement age? None of those options are popular outcome for any current or up and coming politicians.
As an example, France President Emmanuel Macron was forced to raised state pension age from 62 to 64 to prevent the pension system from collapsing. It immediately became unpopular with the population, trade unions, left and right political parties. Demonstrations were held in Paris for various days and 112 people were arrested.
If you think Biden is going follow Macron footsteps, you will be disappointed. Biden will not touch social security. In fact, in his words, “social security remains strong”.
No, it is not strong, it is the opposite of strong. Which report did he read?! It’s kind of alarming, that the problem is not even acknowledged. In order to solve a problem, a problem must be acknowledged, and the social security is gigantic problem that cannot be ignored and pushed away. People will, eventually, wake up and find out about this.
It seems that the most likely scenario to play out would be to take on more debt. Since, cutting benefits and raising retirement is out of the question, options are very limited. And remember, taking on more debt will raise inflation (contradicting the report), reduces purchasing power and the global status of the US dollar will take a huge blow.
They can kick pushing the can down the road, but inevitably, cutting benefits and overhauling the system will have to be options that must be taken upon to prevent a collapse in the US economy.
The RedBlueprint 