Free Markets, Free People

Economic Statistics for 22 Nov 13

3rd Quarter e-commerce sales growth slowed to 3.6%, vice 4.8% in the previous quarter.

The Kansas City Fed Manufacturing Index rose a point to a reading of 7 in November.


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2 Responses to Economic Statistics for 22 Nov 13

  • By PAUL KRUGMAN, Nobel Prize winner

    Today, however, workers who have any retirement plan at all generally have defined-contribution plans — basically, 401(k)’s — in which employers put money into a tax-sheltered account that’s supposed to end up big enough to retire on. The trouble is that at this point it’s clear that the shift to 401(k)’s was a gigantic failure. Employers took advantage of the switch to surreptitiously cut benefits; investment returns have been far lower than workers were told to expect; and, to be fair, many people haven’t managed their money wisely.

    As a result, we’re looking at a looming retirement crisis, with tens of millions of Americans facing a sharp decline in living standards at the end of their working lives. For many, the only thing protecting them from abject penury will be Social Security. Aren’t you glad we didn’t privatize the program?

    So there’s a strong case for expanding, not contracting, Social Security. Yes, this would cost money, and it would require additional taxes — a suggestion that will horrify the fiscal scolds, who have been insisting that if we raise taxes at all, the proceeds must go to deficit reduction, not to making our lives better. But the fiscal scolds have been wrong about everything, and it’s time to start thinking outside their box.

    … did you notice the obvious absence ?

    “The shift to 401(k)’s was a gigantic failure” because of the US monetary policy of the Federal Reserve and the Treasury that makes bonds an almost useless exercise and has devalued the value of the dollar by printing “paper” money (quantitative easing) to fund the federal budget deficit.

    The solution to retirement funding isn’t more government spending because “Yes, this would cost money” that just isn’t there.

    Those “fiscal scolds” are right.