Note from a friend
"In life, the most we can look forward to is getting old."
One of the “pundits” I follow who usually makes sense is Dennis Miller (not O’Reilly’s buddy – whom I also enjoy). The Miller I refer to today is a regular on caseyresearch.com. Here’s that Miller talking about something Ben Bernanke recently said:
"In a nutshell, Bernanke refers to seniors and savers as ‘collateral damage.’ He was quoted as saying the government and banks have saved over $2 trillion in interest since the first TARP bill, at the expense of seniors and savers. To me that is not the real collateral damage, that is a loss of an income opportunity, much of which may have been replaced by putting our capital at risk. The real collateral damage is going to come when the stock and bond markets collapse and seniors and savers who are not careful are going to see their life savings drop by 40-50%. The irreplaceable loss of capital is going to be the big collateral damage, and one the Fed probably never thought about, but will be absolutely responsible for." -Dennis Miller
Me again. Why would I care about Bernanke or Miller’s words? Simply, I’m one of those guys who Ben refers to as “collateral damage.” I’m a senior but thanks to our government, not much of a saver any more. Who in our middle class has anything left over at month’s end to save?
So Miller said above, “… much of which may have been replaced by putting our capital at risk.” I’m afraid he lost me with that one. O.F.s that have been retired for years once put their money in CDs, T-bills and bonds, stuff like that. When I retired, thirty-year Treasuries were paying nearly 8%. CDs weren’t far below that, slowly sliding down to maybe 5%. Today, try to find a safe place to put it for 1%. Thirty year Treasuries aren't quite 3% and -- let's see -- they'll mature when I'm pushing a hundred and tw ... Wow! Forget it!
If our government’s plan is to bring a dead stop to “independent” seniors, they’re going about it the right way. Take this hypothetical case. Herman and Maude retired in 1985 with $900 a month in Social Security (between them). They had saved $200,000 and had it invested fifty-fifty between a 30-year Treasury at 8.25% and two CDs at 5.75%. Their monthly income would have been $1,587.50 a month: $19,050 a year. That would have been the equivalent of $42,110. this year. Herman and Maude didn’t have any big debts, so for several years they “lived the good life.” That is, until around 2009 ...
Today Herman and Maude are getting some $1,300 a month from Social Security and only about $266. a month interest from their $200,000 life savings.
With a total annual income of $18,800, and now in their 90s, Herman and Maude have joined the 16% of older Americans who are living in extreme poverty. Our fictional couple are reluctant to starve to death, so are dipping into savings each month, but they’re getting feeble and in need of assistance with their everyday activities. An assisted living facility is looming and they are very expensive.
So let’s see what's in store for this old couple who worked hard, paid their own way, never taking a penny they didn't earn. Their living expenses are about to jump dramatically, their capital assets are being used up, further reducing their meager interest-income. The government is eyeballing their Social Security, now claiming it is some form of government assistance (though Herman and Maude, together with their employers, paid substantially into it all their working lives).
And our president has the gall to claim, “Without equivocation we are better off than when I took office!"
As John Wayne said, “Anything is possible when you’re willing to lie.”
