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View Diary: White House: No Medicare age increase, cut Social Security instead (360 comments)

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  •  Paying attention (0+ / 0-)

    And as you'd know, were you paying attention, words are best used to mean definite things. Purchasing power rises and falls; if my salary stays the same, then what has been cut is not the salary, but the purchasing power thereof. A cut makes people poorer, as does a decline in purchasing power. The end result may be identical, but it makes a difference how you get there (just ask any lawyer).

    Failure to get a raise may be equivalent to a cut in forecast purchasing power, but it is not, properly speaking, a cut in the defined benefit that is Social Security. Similarly, inflation has the same result as an increase in taxes, but inflation is not, properly speaking, a tax increase. If it were, then I would quite reasonably say that Ben Bernanke and the Fed have increased my taxes. Dos that seem correct to you? It does not to me.

    BTW: a rise in salary is what comes of getting a raise. Please look up them there words before you strew your mistaken "sic"s.

    •  Getting a raise DOES NOT necessarily (0+ / 0-)

      imply that your purchasing power increased.

      Real weekly wages peaked 39 years and 4 months ago and have not been anywhere within sight of that peak since. Not even close. Real wages kept falling month after month until near the end of Clinton's first term and are right now about 35% below the 1973 peak.

      That is how far purchasing power has fallen over that time.

      The Fed has actively pursued a policy of preventing wage inflation in excess of price inflation (an increase in buying power) for decades and if you listen to Bernanke you will find that the only inflation he worries about is wage inflation.

      99 percent of people born since 1955 have NEVER experienced an increase in purchasing through their working years. Even with the economy in free fall at the end of 2008 and early 2009 price inflation still exceeded wage inflation.

      All you have to do is look at a graph of productivity over the last forty years compared to wage growth over the same period and you will easily see that almost all of the gains were not passed on as wages and instead were used to inflate the costs of assets and especially commodities such as food and energy - because that is where the wealthiest "invested" all of that money knowing they have a very large captive "market" for such things.

      Chained CPI not only has a cumulative effect but it is a compound effect (every bit the same way compound interest works) such that in 30 years time the purchasing power of SS benefits will purchase only half of what can be purchased today and that's only IF inflation can be maintained at less than 2.5% throughout those 3 decades.

      So it isn't the small, lesser increase, in any one year that is an issue but rather the very large effect of compounding year over year that makes for a significant hit over time. How is it that you would expect someone to be able to make up that 50 percent loss of purchasing power by the time they retire - with wage inflation perpetually trailing price inflation? With savings rates below inflation throughout? It isn't mathematically possible, but feel free to try to convince yourself otherwise.

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