The COLA war has begun…Its about inflation and the first shots fired and I suspect it will blast US politics even further out of shape.
COLA stands for Cost of Living Advancement as it applies to Social Security and inflation.
Here are excerpts from a recent USA Today article about inflation and the risk to Social Security.
“WASHINGTON (AP) — Come January, Social Security benefits for nearly 50 million Americans are going up 2.3%, the smallest increase in four years. It will mean an extra $24 per month in the average check, the government announced Wednesday. The cost of living adjustment means that the monthly benefit for the typical retired worker in 2008 will go from $1,055 currently to $1,079 next year.
“The 2.3% increase is the smallest since a 2.1% rise in 2004. It compares to an increase of 3.3% last year and a jump of 4.1% in 2006, which had been the biggest advance in 15 years.
“The COLA is based on the change in consumer prices from the July-September quarter of this year compared to the same period last year. Benefit payments have been tied to inflation since 1975.
“The big jump for 2006 occurred because energy prices had soared in September of 2005, reflecting the impact of Hurricane Katrina. This year, however, energy prices have been coming down in recent months after having spiked in the spring.
“With oil prices surging this week to highs above $88 per barrel, analysts believe that consumers will get socked with higher gasoline prices and home heating oil costs in coming months, but those gains will come too late to influence the new cost-of-living adjustment. In addition, food prices and medical prices have been rising rapidly this year. But those gains have been offset somewhat by a moderation in categories that the elderly tend to buy less of such as computers, consumer electronics and clothing.”
There is little doubt that Social Security will not work well when boomers start drawing their lot. One trick the government will use is to let the US dollar fall. Another is to fiddle with inflation figures which affect COLA. Plus our kids will have to pay more. Already the government is raising taxes on nearly 12 million wage earners by raising the maximum amount of Social Security earnings subject to tax from $97,500 currently to $102,000.
Current projections are that Social Security will run out of money as early as 2017 but even this figure is a scam as the assets the Social Security Trusts holds is US Treasury bills. In other words US debt is called an asset!
Alan Greenspan wrote in his book, “Almost all of the developed world is at the edge of a demographic abyss for which there is no precedent: a huge cohort of workers, the baby boomer generation, is about to move from productive work to retirement.”
I head for Ecuador shortly and it’s Alan Greenspan’s book I’ll take to read. In the book he asks if the boomer’s golden years will really be golden and says that America may be on a collision course with a terrible reality.
Will the government solve this huge problem? Have no doubt there will be a huge war and COLA will be part of the skirmish. Expect prices to rise and inflation statistics to not keep pace.
This is why I am multi currency investing and buying more real estate. Each fights inflation and a falling greenback.
Until next message, may you miss the COLA wars…both the drink and the lies.
P.S. We will look at how to fight inflation at our upcoming International Business and Investing course in Ecuador .
Space is always limited. We can have a maximum of 50 at this courses and currently 41 have reserved and paid. Many more have enquired.
This course fee is rising from $549 to $799 next year for one and from $799 to $999 for a couple. You can enroll in this course until it is full at the old low price. You can enroll in the March 7-9 course at this low fee until November 3, 2007.
Sign up as soon as possible and share the satisfying, profitable and exciting lifestyle that being international brings with Merri and me. To enroll please go to: https://www.garyascott.com/gr1018.html
Stay on and enjoy a two day real estate tour. Details are at https://www.garyascott.com/catalog/ecuador-tours-november-2007
Stay on and enjoy our Shamanic Tour! Don’t miss this tour as it will be the last for at least a year. We have had over 4,500 enquiries about Ecuador in the past five months. 90% of them have been about Ecuador real estate so in 2008 we’ll be expanding our real estate tours instead of the shamanic tours.