October 5, 2006
NEOCONOMIST IN CHIEF:
Fed chief urges revamp of Medicare, Social Security (Kevin G. Hall, 10/05/06, McClatchy Newspapers)
Citing an unpublished Fed research paper, Bernanke said that if today's savings rates remain constant, future generations would be forced to consume 14 percent less than they do now because they'll have to shift their money to pay for boomers' retirement benefits.But if today's Americans cut current consumption by 4 percent and put that money into savings, that could stave off the 14 percent reduction in American consumption two decades from now.
"These numbers shouldn't be taken literally, but the basic lesson is surely right — that the decisions that we make over the next few decades will matter greatly for the living standards of our children and grandchildren," Bernanke said.
Bernanke also said a more liberal immigration policy would ease the burden of a shrinking work force.
Nice to have the Fed chairman pimping for Neoconomics.
No politician is going to raise taxes that much. They'll implement a means-test, fix CPI, and do other mitigating steps long before that.
Of course the old folks will howl. In Europe they'll out-vote the youngins and grab their wealth anyway, but the US won't be so demographically challenged.
Posted by: Gideon at October 5, 2006 11:39 AM