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The Coming Generational Storm: What You Need To Know About America's Economic Future Paperback – January 1, 2005
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How to avoid a fiscal crisis in the next generation and how to protect yourself if the government acts too late: policy recommendations and individual strategies to protect against skyrocketing tax rates, drastically reduced health and retirement benefits, high inflation, and a ruined currency.
In 2030, as 77 million baby boomers hobble into old age, walkers will outnumber strollers; there will be twice as many retirees as there are today but only 18 percent more workers. How will America handle this demographic overload? How will Social Security and Medicare function with fewer working taxpayers to support these programs? According to Laurence Kotlikoff and Scott Burns, if our government continues on the course it has set, we'll see skyrocketing tax rates, drastically lower retirement and health benefits, high inflation, a rapidly depreciating dollar, unemployment, and political instability. The government has lost its compass, say Kotlikoff and Burns, and the current administration is heading straight into the coming generational storm.
But don't panic. To solve a problem you must first understand it. Kotlikoff and Burns take us on a guided tour of our generational imbalance, first introducing us to the baby boomerstheir long retirement years and "the protracted delay in their departure to the next world." Then there's the "fiscal child abuse" that will double the taxes paid by the next generation. There's also the "deficit delusion" of the under-reported national debt. And none of this, they say, will be solved by any of the popularly touted remedies: cutting taxes, technological progress, immigration, foreign investment, or the elimination of wasteful government spending.
So how can the United States avoid this demographic/fiscal collision? Kotlikoff and Burns propose bold new policies, including meaningful reforms of Social Security, and Medicare. Their proposals are simple, straightforward, and geared to attract support from both political parties. But just in case politicians won't take the political risk to chart a new direction, Kotlikoff and Burns also offer a "life jacket"guidelines for individuals to protect their financial health and retirement.
This paperback edition of The Coming Generational Storm has been revised and updated and includes a new foreword by the authors.
- Print length276 pages
- LanguageEnglish
- PublisherMit Pr
- Publication dateJanuary 1, 2005
- Dimensions6 x 0.75 x 9 inches
- ISBN-109780262612081
- ISBN-13978-0262612081
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About the Author
Dallas Morning News personal finance columnist Scott Burns is nationally syndicated by Universal Press. His column can be read on the Web at www.scottburns.com and on MSN's MoneyCentral, one of the three largest financial Web sites.
Product details
- ASIN : 0262612089
- Publisher : Mit Pr; New Ed edition (January 1, 2005)
- Language : English
- Paperback : 276 pages
- ISBN-10 : 9780262612081
- ISBN-13 : 978-0262612081
- Item Weight : 14.4 ounces
- Dimensions : 6 x 0.75 x 9 inches
- Best Sellers Rank: #70,208 in Books (See Top 100 in Books)
- #642 in Economics (Books)
- #1,029 in Personal Finance (Books)
- Customer Reviews:
About the author
Laurence J. Kotlikoff is a NY Times Best Selling author, a William Fairfield Warren Professor at Boston University, a Professor of Economics at Boston University, a Fellow of the American Academy of Arts and Sciences, a Fellow of the Econometric Society, a Research Associate of the National Bureau of Economic Research, and President of Economic Security Planning, Inc., a company specializing in financial planning software. Professor Kotlikoff received his B.A. in Economics from the University of Pennsylvania in 1973 and his Ph.D. in Economics from Harvard University in 1977. The Economist Magazine ranked Kotlikoff among the world's 25 most influential economists. This ranking reflects Kotlikoff's voluminous writings to the public, podcast, radio, and television appearances, and press interviews.
From 1977 through 1983, Kotlikoff served on the faculties of economics of the University of California, Los Angeles and Yale University. Kotlikoff joined Boston University's Department of Economics in 1984. In 1981-82 Professor Kotlikoff was a Senior Economist with the President's Council of Economic Advisers.
Professor Kotlikoff is author or co-author of 21 books and hundreds of professional journal articles. His most recent trade books are Social Security Horror Stories -- Protect Yourself from the System and Avoid Clawbacks, Money Magic -- an Economist's Secrets to More Money, Less Risk, and a Better Life (Little, Brown Spark published in January 2022), the NY Times best seller, Get What's Yours -- the Secrets to Maxing Out Your Social Security (co-authored with Philip Moeller and Paul Solman, Simon & Schuster, 2015), The Clash of Generations (with Scott Burns, MIT Press, 2012), Jimmy Stewart Is Dead (John Wiley and Sons, 2010), Spend ‘Til the End (co-authored with Scott Burns, Simon & Schuster, 2008), The Healthcare Fix (MIT Press, 2007), and The Coming Generational Storm (co-authored with Scott Burns, MIT Press, 2004).
Professor Kotlikoff publishes extensively in newspapers, and magazines on issues of personal finance, taxes, Social Security, healthcare, deficits, taxes, generational policy, pensions, saving, and insurance. Professor Kotlikoff has served as a consultant to the International Monetary Fund, the World Bank, the Harvard Institute for International Development, the Organization for Economic Cooperation and Development, the Swedish Ministry of Finance, the Norwegian Ministry of Finance, the Bank of Italy, the Bank of Japan, the Bank of England, the Government of Russia, the Government of Ukraine, the Government of Bolivia, the Government of Bulgaria, the Treasury of New Zealand, the Office of Management and Budget, the U.S. Department of Education, the U.S. Department of Labor, the Joint Committee on Taxation, The Commonwealth of Massachusetts, The American Council of Life Insurance, Merrill Lynch, Fidelity Investments, AT&T, AON Corp., Merck, and other major U.S. corporations.
He has provided expert testimony on numerous occasions to committees of Congress including the Senate Finance Committee, the House Ways and Means Committee, and the Joint Economic Committee.
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The book covers several parts, including:
1) Diagnostic of the fiscal crisis (demographic study),
2) Why certain (pseudo) redeeming factors will not alleviate the problem,
3) Why the U.S. will turn in a Banana Republic with hyperinflation,
4) Proposals to fix Social Security and Medicare and resolve our fiscal crisis,
5) An investment guide to protect one self if the fiscal crisis is ongoing.
The authors' persuasiveness of their point of view is erratic from one topic to the next ranging from excellent to really bad.
Their treatment of the first two topics: diagnostic and pseudo redeeming factors are outstanding. The demographics of our aging population represent a tsunami of fiscal costs that have not been provisioned for. Additionally, wave of immigration, improvement in technology, increase in labor productivity will not alleviate these costs. Immigrants cost as much in benefits as they pay in taxes. Technology has actually increased the intensity and the cost of health care. Also, Social Security benefits are fully indexed to inflation and labor productivity index. I give this section a 5 rating.
The authors are convinced that the U.S. Government will be hell bent on decreasing its real unfunded liability by printing money that will result in hyperinflation. I think this is nonsense. The Federal Reserve which is politically independent is the body who controls the levers of the money supply and associated inflation. It will never cause a situation where hyperinflation will take root. We most probably will have real interest rate levels substantially higher than we do now. But, the risk is that such high real interest rate levels will choke economic growth and cause recession and deflation, not inflation as the authors suggest. I give this section a 1 rating.
The authors proposals to fix Social Security and Medicare are excellent, as they make economic and political sense. They are talking of a very slow privatization phase in of Social Security, and a voucher system for Medicare so elderly would make economically informed decision when purchasing health care. I give this section a 5 rating.
Their investment guide unfortunately is piss poor. I'd give this section a 1 rating, here is why. The authors recommend holding as your core investments inflation indexed bonds (either TIPS or I Bonds). However, these bonds give you very mediocre returns before tax. They give you terrible returns after tax. Over the long run, there is little chance you will protect your assets against inflation on an after tax basis with these instruments. They recommend international bonds as a hedge against the inevitable long term depreciation of the dollar [view of the authors]. However, that is unlikely. Per their own demographic study just about all developed countries have a much worse unfunded liability problem than we have. This is because their societies are aging more rapidly and their government benefits are more generous. If the dollar has to tank, you have to wonder against what? From a long term demographic perspective there are no clear candidates. Finally, the authors also recommend gold as an investment, especially through gold mining companies. I think only a gold bug could follow this recommendation. Gold has little merit as an investment. It's proclaimed inflation hedging benefits have melted away twenty years ago.
If you are further interested in this subject, I also strongly recommend two excellent books by Robert Stowe England: "The Fiscal Challenge of an Aging Industrial World" and "Global Aging and Financial Markets." These books give you a better comparison between the U.S. and other developed countries' fiscal position. Regarding investments, I strongly recommend Burton G. Malkiel's "The Random Guide to Investing."
This is a must read for anyone interested in the truth of the future of the United States.
A fun read just the same.