economicmultipliers_125

Economic Multipliers (125)
Do you know what these are?
They help CREATE wealth in systems.
‘Buyer beware’ is just as much an economic multiplier for nations as it is for individuals.
       
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Some people in the United States want to privatize Social Security.  They argue that the private sector is better at creating wealth than the public sector and I agree that it is.

The question we must ask though is … Does everyone have the same ability to or the same opportunity to ‘create’ or ‘invest’ wealth?

Does this investment sound good to you?:
  • In the past 2 years (prior to May, 2014), the ‘company’ has already paid out ‘dividends’ of $6.17 per unit of ‘stock.’
  • Each ‘share’ today costs about $13.00.
  • The May 2014 dividend (annualized) would yield $2.68 or approximately 21% per year.
  • Earnings per share are listed at $2.91. 
If you’re dealing with someone you can trust, among other things, you’d also want them to tell you these things:
  • Initial ‘shares’ were issued at $20.00 per ‘share.’
  • The ‘company’ will most likely be out of business by the year 2021 (It’s a trust).  The ‘company’ has only been in business a little over 2 years.
  • Since one-third of the ‘guaranteed’ product has already been sold and $6.84 in dividends were paid as a result of those sales, the other two-thirds of the product is worth about $13.68 in dividends if product prices stay about the same, other expenses do not increase and no other product is produced prior to 2021. More product may be produced if sales and production are good.
  • Product prices may go up (a real possibility) … OR … down.  Expenses (which reduce profitability) may go up … OR … down.  More product may be produced (a real possibility) … OR … may not be produced.
  • You are buying a share of the profits from the sale of a fixed amount of product for a certain amount of time.  Around 2021, the ‘stock’ ceases to exist.  Although the ‘investment’ can be purchased in the stock market, over time, the ‘stock’ value will ultimately slide to $0.
The ‘company’ tells you in their literature what you are buying.  Will you read it?  Could you read it if the investment was part of a government-sponsored mutual fund with thousands of other investments?

If your initial investment was $20.00 and for 10 years you received total dividend payments of $120.00, you might not care if the ‘stock’ price closed at $0.00.  You recouped your original investment of $20.00 and on average, got another $10.00 per year just for putting $20.00 down … a ridiculous 50+ percent per year (of simple interest).  Likewise, you had the $10 dividend every year to reinvest, save or use to buy something else.

Of course this latter example is just an abnormal, fictitious example.

The first example is a purchasable security which people invest in.

I cannot comment on whether this is a good investment or not.  Product prices and/or expenses can go up or down and excess product may or may not be produced.  Time will tell.

I merely wanted an example of things you might not consider when the private sector talks about investing money that you earned.  And, it’s good that this investment is called a ‘trust’ because when other people invest your money, you need a LOT of trust.

The data will find this ‘company’ for you if you want to know more about it.  Very few U.S. ‘companies’ today (as a percentage) pay annual dividends that exceed 15 percent.  Investors expect this ‘company’ to do so because the initial investment will ultimately cease to exist and the investment is riskier than other kinds of investments.

This is one kind of investment … a riskier investment … that your Social Security dollars could be invested in if our current ‘social safety net’ of Social Security is privatized.

This investment will ‘expire.’

When anyone promotes the privatization of Social Security, it’s worthy to remember that future needs do not.