The Capitalist Investor - Episode 199

The Capitalist Investor

In this week’s episode of The Capitalist Investor, we delve into Social Security. What is the future of social security? What are the options on the table? What are the possibilities? In this thought-provoking discussion, we will explore these themes in detail, providing analysis and insights into their potential impact on the economy & your future income.

The Future of Social Security: Exploring Fixes

One of the key topics discussed in the podcast is the JOLTS report, which provides insights into job openings and labor turnover. The report came in better than expected, with job openings increasing by 600,000 in a month. However, it is important to note that the JOLTS report is a lagging data point and can be volatile. As one of the hosts points out, “Jumping 600,000 jobs in a month isn’t necessarily concerning if it doesn’t stay that way.”
The Options on the Table
Another significant theme discussed is the bond market and the impact of rising yields. Jeffrey Gundlach, a renowned bond manager, warns that an uptick in unemployment could lead to a recession. The bond market has been experiencing a sell-off, driving up yields. This has implications for companies that have taken on significant debt, as higher rates make it more expensive to service their debt. Additionally, the US government may face challenges in refinancing its debt at higher rates, leading to increased interest payments and the need to print more money.

Means Testing & Benefit Reduction

The hosts also touch upon the concentration of stock market gains, with the equal weight S&P 500 down 2% for the year. This highlights the dominance of a few tech-heavy companies in driving the overall market performance. While these companies have seen significant gains, many other companies are struggling to maintain good margins and face challenges in the current economic environment. This concentration of gains raises concerns about the overall health and sustainability of the market.

Cost-of-Living Adjustments

The hosts also address the issue of cost-of-living adjustments (COLA) and the challenges associated with determining the appropriate increase in benefits. Currently, COLA adjustments are based on the Consumer Price Index (CPI) or a derivative of it. However, the hosts suggest that the formula for calculating COLA could be changed to provide a more sustainable and predictable increase in benefits.
They propose a linear approach, where benefits increase by a fixed percentage each year, regardless of inflation rates. This would provide more stability and allow individuals to better plan for their retirement income. However, they acknowledge that any changes to the COLA formula would need to be carefully considered to ensure that benefits keep pace with the rising cost of living.

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Keep Listening to The Capitalist Investor:
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Episode 31:
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Episode 47:
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Episode 63:
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Episode 79:
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Episode 95:
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Episode 111:
Special Episode – Talking Energy with Daniel Turner, Ep. #111
Episode 127:
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