Co-director, Center for Economic and Policy Research :
The IMF Black Helicopter Gang Wants Your Social Security
A few years back there was a fear in some parts about black UN helicopters that were supposedly taking part in the planning of an invasion of the United States. While there was no foundation for this fear, there is basis for concern about another international organization, the International Monetary Fund (IMF).
This week the IMF told the United States that it needs to start getting its deficit down and put cutting Social Security at the top of its “to do” list. This one is more than a bit outrageous for two reasons.
First, the IMF can take a substantial share of the blame for economic crisis that gave us big deficits in the first place. The IMF is supposed to oversee the operations of the international financial system. According to standard economic theory, capital is supposed to flow from rich countries like the United States to poor countries to finance their development. In other words, the United States should be having a trade surplus, which would correspond to the money that we are lending to poor countries to finance their development.
However, the IMF messed up its management of financial crises so badly in the last decade that poor countries decided that they had to accumulate huge amounts of reserves in order to avoid ever being forced
to deal with the IMF. This meant that capital was flowing in huge amounts in the wrong direction. One result of this reverse flow was that the United States ran a huge trade deficit instead of a trade surplus. Another result was the $8 trillion housing bubble, the collapse of that crashed the U.S. economy.
The other reason that the IMF advice is infuriating is the incredible hypocrisy involved. The average Social Security benefit is just under $1,200 a month. No one can collect benefits until they reach the age of
62. By contrast, many IMF economists first qualify for benefits in their early 50s. They can begin drawing pensions at age 51 or 52 of more than $100,000 a year.
This means that we have IMF economists, who failed disastrously at their jobs, who can draw six-figure pensions at age 52, telling ordinary workers that they have to take a cut in their $14,000 a year Social
Security benefits that they can’t start getting until age 62. Now that is black helicopter!
Monday, July 12, 2010
Saturday, July 10, 2010