This is more Ramblings than Musings, or a little of both.
I recently read that the U.S. Government has promised something like 50 trillion Dollars of future entitlements to us. That might be a little high. For argument's sake, let's say it's really only 25 trillion Dollars. It doesn't matter. We won't get it.
25 trillion Dollars is $25,000,000,000,000. In 2006, the typical moderately priced new car sells for about $25,000. Warning: Rambling immediately ahead.
Last year at this time I bought a newer car, a 2004 Mercury Grand Marquis.
2004 Mercury Grand Marquis
You'll save about 1/3 the price of a new car if you'll buy one that has a year and some miles on it. Mine was about a year or so old and had 21,000 miles on it. I had done the calculations and figured out that the first 20,000 miles or so cost about 67 cents per mile in depreciation, while the next 100,000 miles cost about 12 cents per mile in depreciation. I simply could not justify putting those first 20,000 miles on a car that will probably go 120,000 miles without any serious mechanical problems. If you want to, fine. But it's a foolish thing to do.
It's a wonderful car. It's smooth, and quiet, and gets an honest 25 miles per gallon on the highway. Really. It does.
Anyway, the U.S. government is promising to pay its senior citizens and its disabled citizens the equivalent of one billion moderately priced new cars. That's a one followed by nine zeroes. That's about 50 years of new car sales.
There is one thing for certain about a promise that cannot possibly be kept: it won't be kept. The U.S. government cannot transfer wealth to its senior citizens and disabled citizens equivalent to the price of one billion new cars. The fact that it has promised to do exactly that is an interesting fact, but it isn't going to happen.
The U.S. would have to do one of the two following things to actually pay out that $25,000,000,000,000: it would have to either raise taxes so high that they would cripple the economy, and thereby prevent the payment of the taxes; or it would have to create so much new money that the resulting inflation would make the $25,000,000,000,000 worth a small fraction of what it's worth now. But since the Social Security benefits are indexed to inflation, and since medical expenses are increasing at a rate far exceeding general inflation, inflating the money supply to pay for the entitlements would fail. It would only create a spiral that could never get ahead of itself.
The only reasonable conclusion is that those entitlements will never be paid, regardless of what promises have been made. If you are nearing retirement age, you will get the money they have promised to pay you. If you are younger than about 40 or so, there is simply no way that you can get that money. You won't get it. Period. Forget about it. It ain't gonna happen. Do NOT count on Social Security to pad your retirement. It will not be enough to make much difference. You must save and invest for your own future. The U.S. government is NOT going to pay for it. What cannot happen will not happen.
Take another look at that picture. Bear in mind that the U.S. government is promising to pay out the equivalent of a billion of those things; maybe two billion of them. It won't.
Back to my home place.