Friday, March 28, 2014

Robbing Retiree Peter to Almost Pay Retiree Paul (Musical Tribute)

The following chart shows real interest income plus real Social Security benefit income (per Capita, February 2014 dollars). As expected, real Social Security income is rising as more and more people begin retire. Unfortunately, the same cannot be said of interest income.

Click to enlarge.

Hang in there Retiree Peter! I have it on "good" authority (CNBC), that it's only a matter of time before interest rates rise up from the ashes and enhance that retirement income! And if that doesn't work, you can always try swinging for the fences on high-priced risk assets. What could possibly go wrong again?

Retiree Peter's Song

Sitting in this carpool
They're talking like damn fools
Got CNBC news blues!

And they're serving up hope
As I'm trying to cope
With savings that are too few!

Is it any wonder I'm so queazy?
Is it any wonder this recovery?

Well I'm so tired of zero
We get nothing but ZIRP
My bank's jammed with CDs!

I'd go out cruisin'
But I've no fuel to go
It is nothing but QE!

Is it any wonder I think it's criminal?
Is it any wonder this saver's in hell?

Source Data:
St. Louis Fed: Custom Chart


Troy said...

variation on the new theme, posted at DeLong's.

gold is notional full employment, 73% of the age 15-64 workforce (what we enjoyed briefly in 1999-2000.

what the heck is going on??? Retail isn't growing as we increasingly moved toward the big-box model in the 1990s and then the UPS guy model now.

Manufacturing, we know that story, Perot was entirely correct in 1992.

Information, things have gotten much more efficient since the 1970s, the decade-on-decade changes in IT between 1930s and 2010s were immense (though has the easy fruit been picked now -- stay tuned!)

Restaurants -- we seem to be well-served by them now, not really a growth industry even with the boomers retiring en masse this decade and next.

This economy is beginning to scare me.

Stagflationary Mark said...


Instead of the George Jetson utopia (supporting a family on just several hours of work per week), we are apparently content with the financial parasites sucking their hosts dry.

Put another way, I do think Ross Perot's "giant sucking sound" is happening but it's not just outsourcing that's doing the damage. Sigh.

Falling real interest income in spite of rising real savings is just a symptom of the hollowing out process in my opinion, and I really don't expect it to reverse without major structural changes (which most seem to resist).

Once again, this helps explain why I was and am so willing to lock in long-term TIPS yields for the long-term. It also helps explain why I'm a permabear. :(