The U.S. Economy: Stand by for more worse news

To workaholic, ref your post 539:

Thanks. I got and read that in Peter Schiff´s Email to me a couple of days ago. I think he is more correct than many, but a little extreme in some of his statements, but only time will tell. I´ve made some extreme statements too - years ago predicting the US economic problem ends with no food in poor urban grocery stores, as they have been too frequently looted (like happened in Watts, CA, years ago); well armed hungry gangs going into suburban areas to take canned food and stored grains etc. from basements etc. Cities financially broke and not able to pay an adequate number of police and firemen, etc. - It is scary that US has at least one hand gun per adult male, and many of the more responsible ones have none. As I said - only time will tell how bad it gets. Democracy suspended and years of Martial Law in many areas, at the least I think still, but on the bright side: the National Guard will be hiring.
 
20130204-money-rain.jpg
“Raining down, but only on the rich & well-connected.” (This quote is the article´s caption for the figure.)
http://www.economonitor.com/blog/2013/02/past-and-future-effects-of-the-economic-stimulus/?utm_source=contactology&utm_medium=email&utm_campaign=EconoMonitor%20Highlights%3A%20The%20Fall%20Will%20Probably%20Kill%20You said:
What do we have to show from five years of massive stimulus?
Since 2007 America has had one of the strongest economies in the developed world. This includes record high corporate profits, a slow steady rise in jobs, and rising incomes for the 1%.
{Billy T insert: Corporate profits mainly from foreign sales & Job growth slower than population growth with more jobless every year.}

But it has not come for free; it cost $6.4 trillion in new Federal public debt since the recession started in December 2007. That’s a 225% increase in the debt, $1.2 trillion per year. Worse, we’ve blown the money. Borrowing at low rates to rebuild America’s infrastructure would have been wisdom. Instead most of the money has disappeared along with the past five winters’ snows — leaving only the debt and our decaying infrastructure.

What about the unknown effects? History has few precedents for such a wide range of government stimulus programs, done at such size, undertaken for so long. There might be severe economic effects, as yet unseen — becoming visible only slowly, or when the programs are ended. How have the stimulus programs distorted the normal working of the US economy?

Afterwards economists will explain why these (now conjectural) ill effects were quite obvious. How could so much be borrowed — how could such low rates be maintained — how could the nation’s credit markets be manipulated (eg, now the government guarantees 80%+ of new mortgages) {Billy T insert: Or Fed the buyer of 85% of new US Treasury bonds} — without long-term ill effects?
The “ill effects,” launched by GWB, were obvious to me, 6+ years ago. I still expect they will be obvious to most by Halloween 2014.
20130104-imf-debt-growth.jpg

Like the USA, debt is gaining on GDP in many countries. How this all ends should be obvious, even to non-economists. (Hint: Not well.)

PS to Quadraphonics: You have not attacked me or my posts for more than 6 months now. Have you switched to my POV?
Or are you just being kind to a "senile old man" people should ignore?
 
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Let's stop and think about this for a minute.

Would you say "Human Emotions" are an important aspect of "Economics"?

Emotions are an important aspect of markets and human behavior, not of economics. Much to your chagrin Michael, economics is a science. Keynesian economics policies provide empirically derived remedies for specific economic events. In many respects it’s like Quantum Theory. Keynesian policies act to mitigate markets when human emotions become irrational and destructive to markets and economies.
 
PS to Quadraphonics: You have not attacked me or my posts for more than 6 months now. Have you switched to my POV?
Or are you just being kind to a "senile old man" people should ignore?

I sincerely doubt Quad has changed his "POV" or in any way supports your notions. Unfortunately Quadrahonics has not posted on any topic for several months now.
 
Emotions are an important aspect of markets and human behavior, not of economics. Much to your chagrin Michael, economics is a science. Keynesian economics policies provide empirically derived remedies for specific economic events. In many respects it’s like Quantum Theory. Keynesian policies act to mitigate markets when human emotions become irrational and destructive to markets and economies.
Oh, let me see if I have you correct here:
1) Economics is the study of markets
2) Markets are made up of humans
3) Human's have behaviors
4) Human behavior is an important aspect of markets
5) Human behavior has nothing to do with economics
6) Economics is very similar to quantum mechanics

REALLY Joe?
REALLY???

You don't see ANY logical incompatibilities between at least (the very least) two of your propositions?


Second question, could you elaborate on why 'Emotions' are important aspect of markets and human behavior? What exactly do you mean by this statement? Care to give a couple examples?
 
I sincerely doubt Quad has changed his "POV" or in any way supports your notions. Unfortunately Quadrahonics has not posted on any topic for several months now.
I was under the impression he got totally destroyed and his schooling left him a charred rump of a human.... more lurker than man now..... :p

Seriously, I seem to recall he said he was moving or wanted to make a major move.
 
Billy T,

I'm wondering, since you think there will be a run on the dollar, I wonder what you think comes next? Suppose it's later 2014, it's impossible to boot the can down the road (I hate to use an analogy but ... meh...) then what? Will something replace the US currency? A "New" dollar? Gold and Silver? A combination? What exactly do you suppose happens next? Everything gets revalued - debts are wiped clean? Blood in the street?

I personally see interest rates rising, the US Government cutting back on services, the US Government maybe starting some more wars in the ME and Africa (there's some jobs), I'm not quite sure how infrastructure will be paid for - if at all (but that is something that people would think "good" debt plus it creates jobs, and it is needed), I'm guessing the new norm will be ultra uber rich are still rich, top 10% will be doing OK as they own stocks, the 90% below those will learn to live in the "New" economy - which will be a much poorer one. I for one think people WILL roll over, say 'what can I do?' and simply live at a much much much lower standard of living than their parents. I don't really see how any sort of immediate 'Revolution' is going to be happening. Nope, kids will move home with mom and dad. Population replacement rate will begin to decrease among those in the upper 50-80%. It'll probably increase among the very very poor as they need more children to claim more in welfare which will be shrinking. Most people will work much longer hours for a lot less. Lots of people will try to immigrate overseas - not that it'll help. That sort of thing. In general, the upper 10% will have a good life. The bottom 90% will normalize to a lower standard of living. I mean, North Koreans are resorting to Cannibalism (by some accounts, parents are eating their own children - we're more civilized, we just sell ours into Bonded labor). And even as bad as life is, North Koreans know one thing for sure, Free-Market Capitalism will enslave them ....and Dear Leader of the Central Government... he's God, and Loves them.
 
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Oh, let me see if I have you correct here:
1) Economics is the study of markets
2) Markets are made up of humans
3) Human's have behaviors
4) Human behavior is an important aspect of markets
5) Human behavior has nothing to do with economics
6) Economics is very similar to quantum mechanics

REALLY Joe?
REALLY???

You don't see ANY logical incompatibilities between at least (the very least) two of your propositions?

You are not correct; economics is the study of how resources are allocated and not human emotions. The study of human behavior is in the realm of psychology, not economics.

Second question, could you elaborate on why 'Emotions' are important aspect of markets and human behavior? What exactly do you mean by this statement? Care to give a couple examples?

Markets can act irrationally because humans are not always rational especially when market participants are driven my strong human emotions like fear. It’s really not that hard to understand. That is why I never sell into panic, because I can almost always get a better price in the days that follow a panic (e.g World Trade Center Attacks).
 
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Markets can act irrationally because humans are not always rational especially when market participants are driven my strong human emotions like fear. It’s really not that hard to understand. That is why I never sell into panic, because I can almost always get a better price in the days that follow a panic (e.g World Trade Center Attacks).

And when the players are computerised High Speed Trading (HST) systems.

http://www.nanex.net/aqck2/4094.html

Nanex ~ 1-Feb-2013 ~ Flash Crash Record Smash

On February 1, 2013, at 15:38:17, the stock of Pacira Pharmaceuticals (symbol PCRX) nosedived 13% in about 1/2 a second on 138 trades from 10 different exchanges (about 45,000 shares). Incredibly, it fully recovered less than a second later, which earned this stock, the title of the fastest flash crash ever. After market close, the exchange busted all trades below $18.92.
 
And when the players are computerised High Speed Trading (HST) systems.

And this is somehow relevant? Computerized trading somehow explains the market crash induced by the World Trade center attacks and the resulting panic?

Computerized trading doesn’t explain a single market panic. It has left a number of people scratching their heads. Computerized trading basically uses price trends to place trades. So computerized trading has the effect of amplifying and exaggerating trading trends. It doesn't create them.
 
Billy T, I'm wondering, since you think there will be a run on the dollar, I wonder what you think comes next? ...
Assets, like bonds, whose value is stated in fixed dollars will lose great fraction of their value. The bond market´s total current value is much greater than that of the stock market so huge fortunes will be destroyed and as many of these fortunes were partially built on credit (leverage) many other fortunes not directly destroyed will also be destroyed. The entire banking system will collapse and FDIC will pay depositors the nominal value of their savings, etc. in freshly printed dollars, which have very little value.

World´s worst ever and longest lasting global depression will follow in less than one month except in China and some other Asian countries and their suppliers of raw material, energy and food stocks, like Brazil, Australia, NZ, Canada, plus a few very backward nations mainly in Africa, which are not much tied into the global economy. China, Brazil, etc. will have a bad recession for a few years but then form a new recovering trade group - they have everything they mutual need and already for many the US and EU are relatively minor trading partners.

I strongly suspect there will be considerable social unrest in US and EU and Marshall Law will be used to contain it. What form of government follows that is hard to predict, but probably a government more like China´s will be welcomed by most as replacement for Marshall Law, especially as China is still prospering and providing rising material benefits for its people. (Government that can put food on the table is much more valued than freedom of the press by hungry people.)

BTW the world´s largest ever, short-term, mass migration is beginning now. In the next three or less days the fast modern trains in China will move 225 million people from the coastal cities back to their inland homes for the new year - many only get home once per year! Many others will go by bus and a few even by private car. The total migration will be nearly equal to the entire US population! Crudely speaking, one in every four Chinese will travel an average of more than 500 miles going home, yet be back at work in 10 days!
 
You are not correct; economics is the study of how resources are allocated and not human emotions.
I just want to make sure I understand you clearly.

Economics has absolutely nothing at all and is no way related to human emotion. Is that correct?
Economics is a 'Hard' Science no different than Chemistry, Physics, Biology, etc.... Is this correct?


Also, I wasn't sure why Keyen's was referring to "Animal Spirits"? What was he talking about and why was he talking about it? I'm pretty sure Biologist don't talk about "Animal Spirits" when they talk about Animal Biology.
Also, I wasn't quite sure what Ben Bernanke was referring to when he said he needed to restore "Confidence" in the market? I'm pretty sure Physicists don't talk about "Confidence" when they talk about velocity.
Also, I wasn't exactly clear on "Irrational Exuberance"? When the Federal Chairman made the point to talk about "Irrational Exuberance" what was he talking about and why? I'm sure Chemists don't talk like that.

What are all these things Joe? They seems like "Human Emotions" and "Human Feelings" - don't they?

Also, what is MONEY? What is VALUE? What is WORTH? These things have nothing at all to do with "Human Emotion"? IS that your argument Joe?


Oh, if so, then given "Human Emotions" have absolutely nothing, nothing at all, to do with the "Economy", why is it do you think so many companies spend to much money marking their products as being Sexy and Cool or Fear (many times at the same time)? I mean, if it's all just supply and demand. And humans make perfectly unemotional rational and logical choices regarding their purchases. Then, why all the pretty young girls on the covers of magazines? Why the need for "Brand" identification? I mean, this has absolutely nothing at all to do with "Economics" right? It's only about 'how resources are allocated'.



Give me a break Joe!? Do you REALLY believe everything you were taught in Econ-101?!?!?



Lastly, since "Economics" is a Hard Science? Oh really? Is that so, then I'd like to repeat the GFC only instead of bailing out the rich, I'd prefer to let them go broke. Let's repeat the experiment 50 times for good measure. Could you please explain to me HOW we are going to follow the Scientific Methodology Joe? Go one now, tell me how "Economics" follows Scientific Methodology. Because get this, where I come from, if you can't repeat the experiment and arrive at the same data trend, you're not doing Science.
 
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Assets, like bonds, whose value is stated in fixed dollars will lose great fraction of their value. The bond market´s total current value is much greater than that of the stock market so huge fortunes will be destroyed and as many of these fortunes were partially built on credit (leverage) many other fortunes not directly destroyed will also be destroyed. The entire banking system will collapse and FDIC will pay depositors the nominal value of their savings, etc. in freshly printed dollars, which have very little value.

World´s worst ever and longest lasting global depression will follow in less than one month except in China and some other Asian countries and their suppliers of raw material, energy and food stocks, like Brazil, Australia, NZ, Canada, plus a few very backward nations mainly in Africa, which are not much tied into the global economy. China, Brazil, etc. will have a bad recession for a few years but then form a new recovering trade group - they have everything they mutual need and already for many the US and EU are relatively minor trading partners.

I strongly suspect there will be considerable social unrest in US and EU and Marshall Law will be used to contain it. What form of government follows that is hard to predict, but probably a government more like China´s will be welcomed by most as replacement for Marshall Law, especially as China is still prospering and providing rising material benefits for its people. (Government that can put food on the table is much more valued than freedom of the press by hungry people.)

BTW the world´s largest ever, short-term, mass migration is beginning now. In the next three or less days the fast modern trains in China will move 225 million people from the coastal cities back to their inland homes for the new year - many only get home once per year! Many others will go by bus and a few even by private car. The total migration will be nearly equal to the entire US population! Crudely speaking, one in every four Chinese will travel an average of more than 500 miles going home, yet be back at work in 10 days!
So, according to this scenario, once the US imposes marshal law, the country voluntarily accepts a dictatorial government? I just do not see that happening. You're making the assumption people would welcome the meager safety and benefits they'd barely receive from a dysfunctional incompetent government as opposed to pulling together. Hell, tens of thousands of Americans were without electricity as late as the middle of December following Hurricane Sandy. The government isn't going to fix anything. It will be up to the people to recognize what is self evident - THEY are society, not the government. Maybe it will finally pull the curtain back to see the shriveled old Wizard? We can only hope :)

I do agree that, MAYBE in the shitty inner cities, where all hell will break lose, people may come to live under serious marshal law - and for an extended period of time. But not outside of the cities. You'll find private patrols in very short order. AND there is absolutely no way the actual US Constitution would be amended to follow anything near China's horrible corrupt structure of government. I don't see it happening. China was so, so, SOOOO economically devastated from years of massive socialism, that it was quite easy to see how to fix things. But, as China progresses, then all those low hanging apples will have been plucked and their form of government will not function. It's already starting to happen there. They're moving towards more freedom, not less.


Anyway, my best guess is that Americans will slowly normalize to a much lower standard of living. This must happen. We don't produce enough, we don't save enough, we borrow to much, we're too deep in debt. This means government services, pensions, healthcare, SSI, and military will be severely cut. Deep cuts. Americans will complain and bitch and then they'll get on with living at a much lower standard of living. That's the way it must happen. When you're broke and can't beg borrow or steal any more money, reality sets in and by choice or otherwise, live at a lower standard of living. Soon that will be the new norm. I think the financial sector will massively shrink. Banks and other financial services will have to go bust this time. I think farming will make a come back in a big way, particularly if you're making foods Asians like to eat. Maybe in a decade or two - we'll start to get real grow again.


It's really a shame we didn't choice to go through route of Iceland, we'd be in the clear and growing again.
 
Computerized trading doesn’t explain a single market panic. It has left a number of people scratching their heads. Computerized trading basically uses price trends to place trades. So computerized trading has the effect of amplifying and exaggerating trading trends. It doesn't create them.

Whatever you say joe.

http://www.nanex.net/FlashCrash/OngoingResearch.html

Ongoing Research - Market Events and Phenomena

Our business is supplying a real-time data service comprising trade and quote data for all US equity, option, and futures exchanges. We have archived this data since 2004 and have created and used numerous tools to help us sift through the enormous dataset: over 5 trillion quotes and trades as of December 2012. The flash crash (May 6, 2010) had approximately 7.6 billion trade, quote, and depth records.

http://www.nanex.net/aqck/aqckIndex.html
 
So, according to this scenario, once the US imposes marshal law, the country voluntarily accepts a dictatorial government? I just do not see that happening. You're making the assumption people would welcome the meager safety and benefits they'd barely receive from a dysfunctional incompetent government as opposed to pulling together. ...
Read more carefully. I never even implied all of the US would go under Marshall Law:
... I strongly suspect there will be considerable social unrest in US and EU and Marshall Law will be used to contain it. What form of government follows that is hard to predict, but probably a government more like China´s will be welcomed by most as replacement for Marshall Law, especially as China is still prospering and providing rising material benefits for its people. (Government that can put food on the table is much more valued than freedom of the press by hungry people.) ...
It is possible that riots may spread, even to places like Kansas cities, but I agree low density areas that produce food will probably have guns and self organize to protect themselves. The typical well off suburb of large poor urban centers is where I think self-orgnization by citizens will not be adequate and Marshall Law will be required to prevent looting, or worse (home burning, rapes, etc.).

Yes most who remember mass starvation in China are now dead and only their children know how bad it was but knowledge is not personal experience. The modern generation, never having gone days without eating, want benefits other than food from the government, and is getting them. Just hours ago on CNN* there was more than 5 minute story of the crack down on bribes to high official. For at least 1000 years deeply ingrained in the Chinese culture was that a very generous gift should be given to the the official who could grant what you needed or wanted. CNN show a bottle of rice wine, sold in large volume as a standard gift, that cost more than $600 dollars and lots of other expensive fancy gifts, many much too costly to just be gift for your mother, or girl friend, etc.

Then several Chinese on the street, who could speak English, were interviewed by CNN. More than half knew of the new government´s crack down** on expensive gifts given to officials and thought it was a good effort, but expressed doubt it could over come the long standing tradition.

* My edition CNN often shows things that would not be popular with advertisers in the US who have an interest in keeping Americans thinking they live in the best of all possible worlds, go out and buy, buy, etc.

** It is now illegal in China to show high luxury items on TV etc. Government does not want either the corruptions or the waste of people´s money. Other promotional images, such as very pretty girl standing next to expensive cars are restricted. (BTW, Brazil killed TV ads for a local beer by too reveling Paris Hilton, about a year ago, which is strange as next week (carnival) totally nude except for some small feather fans, very well formed ladies, will be walking down the parade street. - Ahh, but that´s tradition and you don´t mess with tradition.)
... there is absolutely no way the actual US Constitution would be amended to follow anything near China's horrible corrupt structure of government.
It does not need to be amended - just ignored. Already US citizens* can be killed intentionly by drones without any judicial process, or even "clear evidence" they present any danger to the US. Also for years now an executive order, (used only after hurricane Katrina) allows government to cease property, control movement of people, throw disruptive ones in jail just by high official´s order etc.

* For example a 17 year old boy, a good student with nothing bad known about him and born in the USA, where he lived all but his life but the last month. He had gone to Yemen to look his US born / citizen father, who was pro Al kada. The father was killed by drone attack less than a month before his son was too. The still living grandfather, a US citizen too, is trying to sue the government for their wrongful deaths, especially that of his grandson who did absolutely nothing wrong and never even spoke against the US. Grand father says he does not want money - just the US to apologize and follow the constitution -not ignore it.
... tens of thousands of Americans were without electricity as late as the middle of December following Hurricane Sandy.
True and National Guard was widely deployed to help local police. Free movement was restricted. In many cases even those who could prove they owned property were not allowed to re-enter the area. AFAIK, not one neighborhood formed your "self protection group" but almost all did as the police and National Guard ordered them to. Get real, or at least know what actually happens in times of social stress, even in the "good old USA."
 
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I'm certainly not 'looking down' on anyone. I grew up poor, as in $40 a week poor. So, I know all about being poor. Which is why I find it funny to hear Joe ask BillyT if he's proposing Welfare recipients rough the system. Gods yes they do. The reason why disability is up is because that's become the new welfare scam.

I believe you're wrong on that point. Disability claims have gone up due to the Iraq-Afghanistan war:

What the nation owes each year to veterans who are disabled during service has more than doubled since 2000, rising from $14.8 billion to $39.4 billion in 2011, according to the Department of Veterans Affairs.

The toll of wars in Iraq and Afghanistan, where troops served repeatedly in combat zones, is a key contributor to escalating costs of individual disability payouts, says Allison Hickey, VA undersecretary for benefits."I would point first and foremost to multiple deployments," says Hickey, a retired Air Force brigadier general. "I would call it unprecedented demand."The 3.4 million men and women disabled during their service — some of them having served in World War II — are about 15% of the nation's 22.2 million veterans.http://www.usatoday.com/story/news/nation/2013/01/15/veteran-disability-costs-climb/1837925/

You cannot fight a ten year war and not expect a rise in disability claims.
 
... You cannot fight a ten year war and not expect a rise in disability claims.
That is certainly true, and a continuing cost of wars. I have remarked in posts that we will be paying for GWB´s needless wars decades after GWB is dead. Not only that, but as I predicted before GWB invaded Iraq, the main beneficiary would be (and is) Shiite Iran. My other main prediction has not yet fully come true - I.e. Turkey has not had its Kurds fully revolt to join what was NE Iraq but some day will be Kurdistan; however de-facto Kurdistan already exist - the local Kurdish government, not the government in Baghdad, grants the oil exploration contracts and gets the fees. When the Shiite South of Iraq´s Shiite government is annexed as an autonomous state by Iran, then the NE of what was Iraq will declare its status as an independent nation and Turkey´s problems with its Kurdish South will intensify.

The true object of the Iraq war was to get the lucrative oil contracts away from France. (Why France so opposed the war and was vilified by US press for doing so. - Recall the staged demonstration of "good Americans" pouring French wine into NYC gutters? -It was well covered - I even saw it live on Brazilian TV and that surely took a few days to arrange.)

However, I think the cost of disabled veterans is NOT included in the Social Security Disability cost records, but in the Veterans Administration budget, but could be wrong about that.
 
That is certainly true, and a continuing cost of wars. I have remarked in posts that we will be paying for GWB´s needless wars decades after GWB is dead. Not only that, but as I predicted before GWB invaded Iraq, the main beneficiary would be (and is) Shiite Iran. My other main prediction has not yet fully come true - I.e. Turkey has not had its Kurds fully revolt to join what was NE Iraq but some day will be Kurdistan; however de-facto Kurdistan already exist - the local Kurdish government, not the government in Baghdad, grants the oil exploration contracts and gets the fees. When the Shiite South of Iraq´s Shiite government is annexed as an autonomous state by Iran, then the NE of what was Iraq will declare its status as an independent nation and Turkey´s problems with its Kurdish South will intensify.

The true object of the Iraq war was to get the lucrative oil contracts away from France. (Why France so opposed the war and was vilified by US press for doing so. - Recall the staged demonstration of "good Americans" pouring French wine into NYC gutters? -It was well covered - I even saw it live on Brazilian TV and that surely took a few days to arrange.)

However, I think the cost of disabled veterans is NOT included in the Social Security Disability cost records, but in the Veterans Administration budget, but could be wrong about that.

Interesting. I never thought of the Iraq war of being of benefit towards Iran but you're right, its completely worked out in their favor. You're not the only one predicting that the Kurds will try and annex themselves with NE Iraq, it may not have happened as yet but many believe it will be a likely or inevitable outcome.

As far as disability and veterans benefits vs. Social Security this article may shed some light on how SS is affected by veteran's claims it usually crosses over: http://www.ultimatedisabilityguide.com/veteran_social_security.html
 
More on world´s largest ever, short-term, mass migration mentioned at end of post 551:
www.bloomberg.com/news/2013-02-09/china-s-toll-free-holiday-highways-cut-traffic-jams-nationwide.html said:
China eliminated tolls on its nationwide highway network for most passenger vehicles for the annual Lunar New Year holiday in a move meant to reduce traffic congestion during the planet’s biggest human migration. ... Cars with seven seats or less will be able to ride toll free from today through Feb. 15, the official Xinhua News Agency reported.

A record 3.41 billion* passenger trips may be made this year during the Lunar New Year period, Xinhua reported on Feb. 5, citing the National Development and Reform Commission. Today, the eve of Lunar New Year, the Ministry of Railways expects 3.54 million people to ride trains, down from 6.11 million yesterday, Xinhua reported today. The country’s airlines have the capacity to transport 35.5 million passengers in the 40-day holiday period that began Jan. 26 and runs through March 6, Xinhua said. Trains are set to record 225 million trips during the holiday, Xinhua reported.
* That 3.41 billion is more than 10 times the entire US population on the move during about one week or 10 days at the most!
 
... As far as disability and veterans benefits vs. Social Security this article may shed some light on how SS is affected by veteran's claims it usually crosses over: http://www.ultimatedisabilityguide.com/veteran_social_security.html
Thanks. I was nearly correct that Veteran´s disability benefits do NOT come out of the Social Security budget, but SS does have extra cost if Veteran does not have "40 quarters" of private employment pay upon which to calculate his benefits.
http://www.ultimatedisabilityguide.com/veteran_social_security.html said:
If a veteran served in 2001 or earlier their earnings receive special credits for purpose of computing Social Security benefits. Credits equal $300 for each quarter of active duty pay for those who served between 1957 and 1977. If you served between 1978 and 2001 you receive credits equal to an additional $100 in earnings for each $300 you received in active duty pay ( total credits may not exceed $1,200 a year) ...

Can you get both Social Security Benefits and Military Retirement?

Yes, and generally there is no reduction in your Social Security Benefits due to your Military Retirement. In other words you get full Social Security benefits based on your earnings. If you have health care benefits from the Department of Veteran's Affairs your health care benefits may end or change when you become eligible for Medicare. ...
SUMMARY: Generally speaking the SS only administers the funds the Veterans Administration provides, but if the Vet does not have 40 quarters of private pay, he will cost SS more as his total SS benefits are brought up to 40 highest pay quarters.

I retired early to go live in Brazil with only 38 quarters of max SS taxed pay. Two of my much lower pay summer jobs quarters while a graduate student were mixed into the average but I still get near the max SS can pay each month as they were the oldest quarters and got the greatest CPI correction for their age. I did not need the SS income, especial in Brazil, so I waited until I would get "full benefits" as had good health. Already I have collected many many times more than I paid into SS all of which was at much lower annual rate than current workers pay. When I retired, the SS collection in next year would also double! It was net benefit to avoid that and stop with only 38 full dollar contributions, but real reason for move to Brazil was not economic. It was to live with beautiful Brazilian lady professor I met in Mexico.)
 
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