Janet Yellen just launched a nuclear missile into the heart of Social Security. You see, the Federal Reserve announced a 25 basis-point increase in the fed funds rate last Wednesday. At the same time, she made known the Fed’s intention to raise interest rates at least two more times in 2017. Now, by all accounts, the Fed’s actions were correct. The Fed is roughly 300 basis points behind the curve on interest rates. And should the economy enter another recession, the Fed would have no ammunition with which to fight an economic downturn if rates were kept at these lows. Read More
Janet Yellen just launched a nuclear missile into the heart of Social Security. You see, the Federal Reserve announced a 25 basis-point increase in the fed funds rate last Wednesday. At the same time, she made known the Fed’s intention to raise interest rates at least two more times in 2017. Now, by all accounts, the Fed’s actions were correct. The Fed is roughly 300 basis points behind the curve on interest rates. And should the economy enter another recession, the Fed would have no ammunition with which to fight an economic downturn if rates were kept at these lows. Yellen simply had no choice. But at the same time, this increases the unfunded liabilities of Social Security by trillions. That means Social Security’s troubles will show up much sooner than the trustees’ estimate of 2033. Rising Interest Rates Are Bad News For Social Security The U.S. government decided a long time ago to use non-marketable Treasury bonds to replace the cash Congress removed from Social Security. Adding insult to injury, these phony bonds pay phantom interest back to Social Security. #-ad_banner-#So when Social Security went into deficit spending in 2010, some of the interest generated by the trust… Read More