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Submitted by Gary Galles of the Ludwig von Mises Institute,

“We paid our Social Security and Medicare taxes; we earned our benefits.” It is that belief among senior citizens that President Obama was pandering to when, in his second inaugural address, he claimed that those programs “strengthen us. They do not make us a nation of takers.”

If Social Security and Medicare both involved people voluntarily financing their own benefits, an argument could be made for seniors’ “earned benefits” view. But they have not. They have redistributed tens of trillions of dollars of wealth to themselves from those younger.

Social Security and Medicare have transferred those trillions because they have been partial Ponzi schemes.

After Social Security’s creation, those in or near retirement got benefits far exceeding their costs (Ida Mae Fuller, the first Social Security recipient, got 462 times what she and her employer together paid in “contributions”). Those benefits in excess of their taxes paid inherently forced future Americans to pick up the tab for the difference. And the program’s almost unthinkable unfunded liabilities are no less a burden on later generations because earlier generations financed some of their own benefits, or because the government has consistently lied that they have paid their own way.

Since its creation, Social Security has been expanded multiple times. Each expansion meant those already retired paid no added taxes, and those near retirement paid more for only a few years. But both groups received increased benefits throughout retirement, increasing the unfunded benefits whose burdens had to be borne by later generations. Thus, each such expansion started another Ponzi cycle benefiting older Americans at others’ expense.

Social Security benefits have been dramatically increased. They doubled between 1950 and 1952. They were raised 15 percent in 1970, 10 percent in 1971, and 20 percent in 1972, in a heated competition to buy the elderly vote. Benefits were tied to a measure that effectively double-counted inflation and even now, benefits are over-indexed to inflation, raising real benefit levels over time.

Disability and dependents’ benefits were added by 1960. Medicare was added in 1966, and benefits have been expanded (e.g., Medicare Part B, only one-quarter funded by recipients, and Part D’s prescription drug benefit, only one-eighth funded by recipients).

The massive expansion of Social Security is evident from the growing tax burden since its $60 per year initial maximum (for employees and employers combined). Tax rates have risen and been applied to more earnings, with Social Security now taking a combined 12.4 percent of earnings up to $113,700 (and Medicare’s 2.9 percent combined rate applies to all earnings, plus a 0.9 percent surtax beyond $200,000 of earnings).

Those multiple Ponzi giveaways to earlier recipients created Social Security’s 13-digit unfunded liability and Medicare’s far larger hole. And despite politicians’ repeated, heated denials, many studies have confirmed the results.

One recent study of lifetime payroll taxes and benefits comes from the Urban Institute. For Medicare, they calculated that (in 2012 dollars) an average-wage-earning male would get $180,000 in benefits, but pay only $61,000 in taxes — “earning” only about one-third of benefits received. A similarly situated female does even better. The cumulative “excess” benefits equal $105 trillion, with net benefits increasing over time.

The Urban Institute’s calculations revealed a different situation for Social Security. An average-earning male who retired in 2010 will receive $277,000 in lifetime benefits, $23,000 less than his lifetime taxes, while for females, their $302,000 in lifetime benefits approximates their lifetime taxes. And things are getting worse. By 2030, that man will be “shorted” 16 cents (10 cents for women) of every lifetime tax dollar paid.

While those results resoundingly reject “we earned it” rhetoric for Medicare, the Social Security results, with new retirees getting less than they paid in, could be spun as “proving” Social Security is not a Ponzi scheme. However, that would be false. The reason is that Medicare is still in its expansion phase, as with Medicare Part D, piling up still bigger future IOUs. However, Social Security has essentially run out of new expansion tricks, although liberal groups are pushing to apply Social Security taxes to far more income as one last means of robbing those younger to delay the day of reckoning. That simply means that we are being forced to start facing the full consequences of the redistribution that was started in 1935. That is, the current bad deal Social Security offers retirees is just the result of the fact that it has been a Ponzi scheme for generations, and someone must get stuck “holding the bag.”

In fact, perhaps the best description of the current Social Security and Medicare situation comes from Henry Hazlitt, long ago, in Economics in One Lesson:

Today is already the tomorrow which the bad economist yesterday urged us to ignore. The long-run consequences of some economic policies may become evident in a few months. Others may not become evident for several years. Still others may not become evident for decades. But in every case those long-run consequences are contained in the policy as surely as the hen was in the egg, the flower in the seed.

Social Security and Medicare’s generational high-jacking has become “the third rail of politics” in large part because seniors want to believe that they paid their own way. But they have not. They have only paid for part of what they have gotten. The rest has indeed been a Ponzi scheme. And as Social Security is already revealing, the future cannot be put off forever, however much wishful thinking is involved. Some are already being forced to confront the exploding pot of IOUs involved, and it will get much worse.

The supposedly “most successful government program in the history of the world,” according to Harry Reid, has turned seniors into serious takers. The fact that some of them are now starting to share the pain caused by those programs does not contradict that fact. It just shows the dark side of the most successful Ponzi scheme in the history of the world.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/_21wP0-5LlM/story01.htm Tyler Durden

Submitted by Gary Galles of the Ludwig von Mises Institute,

“We paid our Social Security and Medicare taxes; we earned our benefits.” It is that belief among senior citizens that President Obama was pandering to when, in his second inaugural address, he claimed that those programs “strengthen us. They do not make us a nation of takers.”

If Social Security and Medicare both involved people voluntarily financing their own benefits, an argument could be made for seniors’ “earned benefits” view. But they have not. They have redistributed tens of trillions of dollars of wealth to themselves from those younger.

Social Security and Medicare have transferred those trillions because they have been partial Ponzi schemes.

After Social Security’s creation, those in or near retirement got benefits far exceeding their costs (Ida Mae Fuller, the first Social Security recipient, got 462 times what she and her employer together paid in “contributions”). Those benefits in excess of their taxes paid inherently forced future Americans to pick up the tab for the difference. And the program’s almost unthinkable unfunded liabilities are no less a burden on later generations because earlier generations financed some of their own benefits, or because the government has consistently lied that they have paid their own way.

Since its creation, Social Security has been expanded multiple times. Each expansion meant those already retired paid no added taxes, and those near retirement paid more for only a few years. But both groups received increased benefits throughout retirement, increasing the unfunded benefits whose burdens had to be borne by later generations. Thus, each such expansion started another Ponzi cycle benefiting older Americans at others’ expense.

Social Security benefits have been dramatically increased. They doubled between 1950 and 1952. They were raised 15 percent in 1970, 10 percent in 1971, and 20 percent in 1972, in a heated competition to buy the elderly vote. Benefits were tied to a measure that effectively double-counted inflation and even now, benefits are over-indexed to inflation, raising real benefit levels over time.

Disability and dependents’ benefits were added by 1960. Medicare was added in 1966, and benefits have been expanded (e.g., Medicare Part B, only one-quarter funded by recipients, and Part D’s prescription drug benefit, only one-eighth funded by recipients).

The massive expansion of Social Security is evident from the growing tax burden since its $60 per year initial maximum (for employees and employers combined). Tax rates have risen and been applied to more earnings, with Social Security now taking a combined 12.4 percent of earnings up to $113,700 (and Medicare’s 2.9 percent combined rate applies to all earnings, plus a 0.9 percent surtax beyond $200,000 of earnings).

Those multiple Ponzi giveaways to earlier recipients created Social Security’s 13-digit unfunded liability and Medicare’s far larger hole. And despite politicians’ repeated, heated denials, many studies have confirmed the results.

One recent study of lifetime payroll taxes and benefits comes from the Urban Institute. For Medicare, they calculated that (in 2012 dollars) an average-wage-earning male would get $180,000 in benefits, but pay only $61,000 in taxes — “earning” only about one-third of benefits received. A similarly situated female does even better. The cumulative “excess” benefits equal $105 trillion, with net benefits increasing over time.

The Urban Institute’s calculations revealed a different situation for Social Security. An average-earning male who retired in 2010 will receive $277,000 in lifetime benefits, $23,000 less than his lifetime taxes, while for females, their $302,000 in lifetime benefits approximates their lifetime taxes. And things are getting worse. By 2030, that man will be “shorted” 16 cents (10 cents for women) of every lifetime tax dollar paid.

While those results resoundingly reject “we earned it” rhetoric for Medicare, the Social Security results, with new retirees getting less than they paid in, could be spun as “proving” Social Security is not a Ponzi scheme. However, that would be false. The reason is that Medicare is still in its expansion phase, as with Medicare Part D, piling up still bigger future IOUs. However, Social Security has essentially run out of new expansion tricks, although liberal groups are pushing to apply Social Security taxes to far more income as one last means of robbing those younger to delay the day of reckoning. That simply means that we are being forced to start facing the full consequences of the redistribution that was started in 1935. That is, the current bad deal Social Security offers retirees is just the result of the fact that it has been a Ponzi scheme for generations, and someone must get stuck “holding the bag.”

In fact, perhaps the best description of the current Social Security and Medicare situation comes from Henry Hazlitt, long ago, in Economics in One Lesson:

Today is already the tomorrow which the bad economist yesterday urged us to ignore. The long-run consequences of some economic policies may become evident in a few months. Others may not become evident for several years. Still others may not become evident for decades. But in every case those long-run consequences are contained in the policy as surely as the hen was in the egg, the flower in the seed.

Social Security and Medicare’s generational high-jacking has become “the third rail of politics” in large part because seniors want to believe that they paid their own way. But they have not. They have only paid for part of what they have gotten. The rest has indeed been a Ponzi scheme. And as Social Security is already revealing, the future cannot be put off forever, however much wishful thinking is involved. Some are already being forced to confront the exploding pot of IOUs involved, and it will get much worse.

The supposedly “most successful government program in the history of the world,” according to Harry Reid, has turned seniors into serious takers. The fact that some of them are now starting to share the pain caused by those programs does not contradict that fact. It just shows the dark side of the most successful Ponzi scheme in the history of the world.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/_21wP0-5LlM/story01.htm Tyler Durden

 

As with so many other Americans, it didn’t go all that smoothly, as the Speaker tweeted after his first failed attempt “Guess I’ll just keep trying…”

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Pn2CiUgdgNQ/story01.htm Tyler Durden

 

As with so many other Americans, it didn’t go all that smoothly, as the Speaker tweeted after his first failed attempt “Guess I’ll just keep trying…”

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/Pn2CiUgdgNQ/story01.htm Tyler Durden

Before it became a conspiracy fact, the traditional response to all suggestions of a massive Libor/FX/commodity/mortgage rigging cartel was a simple if stupid one: too many people are involved and so it can never be contained. As it turns out not only can it be contained, but when the interests of the “conspiracy” participants are alligned, it can continue for decades. Naturally, the same applies for the pinnacle of the global wealth pyramid: the world’s billionaires and their plan of wealth preservation and accumulation.

Not only have the world’s richest been the biggest beneficiaries of the monetary and fiscal policies since 2009, with the current 2170 global billionaires representing a 60% increase since 2009 according to UBS, but their consolidated net worth has more than doubled from $3.1 trillion in 2009 to $6.5 trillion now. At the same time, the net worth of the “bottom 90%” of the world’s not so lucky population, has declined. Yet, somehow, the Fed is still revered.

Naturally, as in global financial conspiracies, the question arises: is it possible that instead of representing the interests of the general population, what the central banks simply do is follow the instructions of a far smaller cabal, that of the world’s uber wealthy?

In case there is any confusion, the above is a rhetorical question. It goes without saying that what the world’s largest wealth accumulators want above all else, is to preserve a status quo that allows their capital-based wealth to increase as fast and as much as possible in a regime of reflating asset prices, while keeping the bulk of the world’s population distracted, entertained, and collecting their daily welfare check.

Consider the downside: according to a new report by Wealth-X and UBS, “the average billionaire is incredibly well connected, with a social circle worth US$15 billion – five times the net worth of the average billionaire. This figure is based on a calculation of the net worth of only the three top connections of billionaires, and so it is likely to be even higher when considering the number of UHNW individuals the average billionaire interacts with while attending various meetings, dinners, and events.” It is during these “meetings, dinners and events” that the real policy defining the future of the world is set – far beyond the theater of a corrupt, dysfunctional Congress or incompetent Executive. And the policy is simple – “more for us, nothing for everyone else.”

The bottom line from Weatlh X: “factoring in all of the connections between the world’s billionaires, this equates to a total social circle worth a combined US$33 trillion” or double the GDP of the US.

The estimated “circle of influence” among the friends of just the US’ richest is shown below.

Source: Wealth-X

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/tAIv-rkTV_k/story01.htm Tyler Durden

Before it became a conspiracy fact, the traditional response to all suggestions of a massive Libor/FX/commodity/mortgage rigging cartel was a simple if stupid one: too many people are involved and so it can never be contained. As it turns out not only can it be contained, but when the interests of the “conspiracy” participants are alligned, it can continue for decades. Naturally, the same applies for the pinnacle of the global wealth pyramid: the world’s billionaires and their plan of wealth preservation and accumulation.

Not only have the world’s richest been the biggest beneficiaries of the monetary and fiscal policies since 2009, with the current 2170 global billionaires representing a 60% increase since 2009 according to UBS, but their consolidated net worth has more than doubled from $3.1 trillion in 2009 to $6.5 trillion now. At the same time, the net worth of the “bottom 90%” of the world’s not so lucky population, has declined. Yet, somehow, the Fed is still revered.

Naturally, as in global financial conspiracies, the question arises: is it possible that instead of representing the interests of the general population, what the central banks simply do is follow the instructions of a far smaller cabal, that of the world’s uber wealthy?

In case there is any confusion, the above is a rhetorical question. It goes without saying that what the world’s largest wealth accumulators want above all else, is to preserve a status quo that allows their capital-based wealth to increase as fast and as much as possible in a regime of reflating asset prices, while keeping the bulk of the world’s population distracted, entertained, and collecting their daily welfare check.

Consider the downside: according to a new report by Wealth-X and UBS, “the average billionaire is incredibly well connected, with a social circle worth US$15 billion – five times the net worth of the average billionaire. This figure is based on a calculation of the net worth of only the three top connections of billionaires, and so it is likely to be even higher when considering the number of UHNW individuals the average billionaire interacts with while attending various meetings, dinners, and events.” It is during these “meetings, dinners and events” that the real policy defining the future of the world is set – far beyond the theater of a corrupt, dysfunctional Congress or incompetent Executive. And the policy is simple – “more for us, nothing for everyone else.”

The bottom line from Weatlh X: “factoring in all of the connections between the world’s billionaires, this equates to a total social circle worth a combined US$33 trillion” or double the GDP of the US.

The estimated “circle of influence” among the friends of just the US’ richest is shown below.

Source: Wealth-X

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/tAIv-rkTV_k/story01.htm Tyler Durden

Given the following chart, it is perhaps no surprise that the demand for iPhones in the US is higher than in the rest of the world. Forget about reaching for yield in CCC-rated cov-lite leveraged loans, ignore the latest internet no-profits-but-lots-of-eyeballs IPO, the real way to make money in the new normal is the ‘iArbitrage’.

 

A 38% return would seem just too-tempting for an enterprising hedge fund – and we are sure eBay will be more than willing to provide the transaction platform…

 

Chart: Goldman Sachs

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/_0QFOm6D2aI/story01.htm Tyler Durden

Collecting 2 and 20 in a world where “alpha-creation” through insider trading (thank you 72 Cummings Point Road for ending that party) is now history will be even more difficult after the current year is over when LPs get their year end performance reports and find out that for the fifth year in a row they have underperformed not only the S&P (by a whopping 75%) but the average plain vanilla mutual fund, which happens to collect a fraction of the fees hedge funds charge just to enjoy the privilege of engaging in pissing matches on CNBC with other hedge fund billionaires.

As the chart below shows, through October 31, the average hedge fund has returned a paltry 6%, 75% below the return of the S&P 500 and the average mutual fund. And while the traditional retort: “hedge funds aren’t supposed to outperform the market but to hedge downside risk” is always at the ready, the retort to that retort is that as long as Mr. Yellen is Chief Risk Officer for the S&P, and the Federal Reserve is engaged in QE and otherwise generating a “wealth effect”, which according to many will be in perpetuity or until the Fed finally and mercifully is abolished, the purpose behind the existence of hedge funds is simply no longer there as the Fed will never again voluntarily allow the kind of market drop that would make the existence of hedge funds meaningful.

Of course, if and when the Fed loses control, not even the best hedged fund will do much to offset the ensuing cataclysm.

Some other observations from Goldman:

• The typical hedge fund generated a 2013 YTD return of 6% through October 31, compared with 25% gains for both the S&P 500 and the average large-cap core mutual fund. At mid-year 2013 the average hedge fund had returned 4%, suggesting second-half gains of 2% while the S&P 500 rose nearly 5%.
• The distribution of YTD performance suggests that 20% of hedge funds have generated absolute losses. The standard deviation of YTD hedge fund returns is wide, at 11 percentage points. Fewer than 5% of hedge funds have outperformed the S&P 500 or the average large-cap core mutual fund YTD.
• Equity long/short funds have posted slightly better returns than the average across all funds, at 10%. Many of the poorest performers YTD are macro funds, which generated an average YTD return of -4%.
• Stock pickers have received a boost from their long books, as the most important long positions have outperformed the S&P 500 by nearly 500 bp so far in 2013. Our Hedge Fund VIP basket has returned 30% YTD.
• However, many widely-held short positions continue to outperform, offsetting the strong performance of popular longs and hampering overall hedge fund returns. The 50 stocks over $1 billion market cap with the highest short interest as a percentage of market cap have returned an average of 34% YTD. More than half of the 50 key short positions have outperformed the S&P 500 YTD, and five have returned over 100%

Precisely as we forecast they would 14 months ago.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/HGHoEmQ_I0E/story01.htm Tyler Durden

Collecting 2 and 20 in a world where “alpha-creation” through insider trading (thank you 72 Cummings Point Road for ending that party) is now history will be even more difficult after the current year is over when LPs get their year end performance reports and find out that for the fifth year in a row they have underperformed not only the S&P (by a whopping 75%) but the average plain vanilla mutual fund, which happens to collect a fraction of the fees hedge funds charge just to enjoy the privilege of engaging in pissing matches on CNBC with other hedge fund billionaires.

As the chart below shows, through October 31, the average hedge fund has returned a paltry 6%, 75% below the return of the S&P 500 and the average mutual fund. And while the traditional retort: “hedge funds aren’t supposed to outperform the market but to hedge downside risk” is always at the ready, the retort to that retort is that as long as Mr. Yellen is Chief Risk Officer for the S&P, and the Federal Reserve is engaged in QE and otherwise generating a “wealth effect”, which according to many will be in perpetuity or until the Fed finally and mercifully is abolished, the purpose behind the existence of hedge funds is simply no longer there as the Fed will never again voluntarily allow the kind of market drop that would make the existence of hedge funds meaningful.

Of course, if and when the Fed loses control, not even the best hedged fund will do much to offset the ensuing cataclysm.

Some other observations from Goldman:

• The typical hedge fund generated a 2013 YTD return of 6% through October 31, compared with 25% gains for both the S&P 500 and the average large-cap core mutual fund. At mid-year 2013 the average hedge fund had returned 4%, suggesting second-half gains of 2% while the S&P 500 rose nearly 5%.
• The distribution of YTD performance suggests that 20% of hedge funds have generated absolute losses. The standard deviation of YTD hedge fund returns is wide, at 11 percentage points. Fewer than 5% of hedge funds have outperformed the S&P 500 or the average large-cap core mutual fund YTD.
• Equity long/short funds have posted slightly better returns than the average across all funds, at 10%. Many of the poorest performers YTD are macro funds, which generated an average YTD return of -4%.
• Stock pickers have received a boost from their long books, as the most important long positions have outperformed the S&P 500 by nearly 500 bp so far in 2013. Our Hedge Fund VIP basket has returned 30% YTD.
• However, many widely-held short positions continue to outperform, offsetting the strong performance of popular longs and hampering overall hedge fund returns. The 50 stocks over $1 billion market cap with the highest short interest as a percentage of market cap have returned an average of 34% YTD. More than half of the 50 key short positions have outperformed the S&P 500 YTD, and five have returned over 100%

Precisely as we forecast they would 14 months ago.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/HGHoEmQ_I0E/story01.htm Tyler Durden

Submitted by Philipp Bagus via the Ludwig von Mises Institute,

Still unnoticed by a large part of the population is that we have been living through a period of relative impoverishment. Money has been squandered in welfare spending, bailing out banks or even — as in Europe — of fellow governments. But many people still do not feel the pain.

However, malinvestments have destroyed an immense amount of real wealth. Government spending for welfare programs and military ventures has caused increasing public debts and deficits in the Western world. These debts will never be paid back in real terms.

The welfare-warfare state is the biggest malinvestment today. It does not satisfy the preferences of freely interacting individuals and would be liquidated immediately if it were not continuously propped up by taxpayer money collected under the threat of violence.

Another source of malinvestment has been the business cycle triggered by the credit expansion of the semi-public fractional reserve banking system. After the financial crisis of 2008, malinvestments were only partially liquidated. The investors that had financed the malinvestments such as overextended car producers and mortgage lenders were bailed out by governments; be it directly through capital infusions or indirectly through subsidies and public works. The bursting of the housing bubble caused losses for the banking system, but the banking system did not assume these losses in full because it was bailed out by governments worldwide. Consequently, bad debts were shifted from the private to the public sector, but they did not disappear. In time, new bad debts were created through an increase in public welfare spending such as unemployment benefits and a myriad of “stimulus” programs. Government debt exploded.

In other words, the losses resulting from the malinvestments of the past cycle have been shifted to an important degree onto the balance sheets of governments and their central banks. Neither the original investors, nor bank shareholders, nor bank creditors, nor holders of public debt have assumed these losses. Shifting bad debts around cannot recreate the lost wealth, however, and the debt remains.

To illustrate, let us consider Robinson Crusoe and the younger Friday on their island. Robinson works hard for decades and saves for retirement. He invests in bonds issued by Friday. Friday invests in a project. He starts constructing a fishing boat that will produce enough fish to feed both of them when Robinson retires and stops working.

At retirement Robinson wants to start consuming his capital. He wants to sell his bonds and buy goods (the fish) that Friday produces. But the plan will not work if the capital has been squandered in malinvestments. Friday may be unable to pay back the bonds in real terms, because he simply has consumed Robinson’s savings without working or because the investment project financed with Robinson’s savings has failed.

For instance, imagine that the boat is constructed badly and sinks; or that Friday never builds the boat because he prefers partying. The wealth that Robinson thought to own is simply not there. Of course, for some time Robinson may maintain the illusion that he is wealthy. In fact, he still owns the bonds.

Let us imagine that there is a government with its central bank on the island. To “fix” the situation, the island’s government buys and nationalizes Friday’s failed company (and the sunken boat). Or the government could bail Friday out by transferring money to him through the issuance of new government debt that is bought by the central bank. Friday may then pay back Robinson with newly printed money. Alternatively the central banks may also just print paper money to buy the bonds directly from Robinson. The bad assets (represented by the bonds) are shifted onto the balance sheet of the central bank or the government.

As a consequence, Robinson Crusoe may have the illusion that he is still rich because he owns government bonds, paper money, or the bonds issued by a nationalized or subsidized company. In a similar way, people feel rich today because they own savings accounts, government bonds, mutual funds, or a life insurance policy (with the banks, the funds, and the life insurance companies being heavily invested in government bonds). However, the wealth destruction (the sinking of the boat) cannot be undone. At the end of the day, Robinson cannot eat the bonds, paper, or other entitlements he owns. There is simply no real wealth backing them. No one is actually catching fish, so there will simply not be enough fishes to feed both Robinson and Friday.

Something similar is true today. Many people believe they own real wealth that does not exist. Their capital has been squandered by government malinvestments directly and indirectly. Governments have spent resources in welfare programs and have issued promises for public pension schemes; they have bailed out companies by creating artificial markets, through subsidies or capital injections. Government debt has exploded.

Many people believe the paper wealth they own in the form of government bonds, investment funds, insurance policies, bank deposits, and entitlements will provide them with nice sunset years. However, at retirement they will only be able to consume what is produced by the real economy. But the economy’s real production capacity has been severely distorted and reduced by government intervention. The paper wealth is backed to a great extent by hot air. The ongoing transfer of bad debts onto the balance sheets of governments and central banks cannot undo the destruction of wealth. Savers and pensioners will at some point find out that the real value of their wealth is much less than they expected. In which way, exactly, the illusion will be destroyed remains to be seen.

via Zero Hedge http://feedproxy.google.com/~r/zerohedge/feed/~3/suR4tpC7fSE/story01.htm Tyler Durden