An economist thinks US is bankrupt: What it means for retirement
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Advising someone to defer withdrawals so that they have a bigger benefit (unfunded and unable to be paid by a bankrupt government), means maybe he's not so convinced the US is bankrupt.
But changing it would take an act of Congress. Congress currently can't legislate its way out of a paper bag, let alone a crisis. And passing legislation that reduces money going to people who have been promised it... that's going to take courage to take the hit from voters, and that has been conspicuously lacking in Congress for a while.
On the other hand, bankrupting SS would be worse. That might concentrate minds.
Being forced to move the goalpost and defraud creditors is hardly a sign that the US's insolvency is a non-issue.
Things get tricky with governments where it's kind of trivial to raise more money by a) raising taxes, b) simply redefining your obligations (in the case of programs like SS or Medicare/Medicaid) or c) just making more money ex nihilo.
No, it's the definition of insolvency, which may or may not least to bankruptcy. But, in any case, the Social Security Trust Funds can't be insolvent because they aren't real distinct entities, just accounting structures within the US government, which is not even remotely suspected of being unable to pay it's current obligations out of current revenues any time soon (nor is it anticipated to have much trouble continuing to secure financing for lavish discretionary spending on top of actual obligations.)
It seems that the only difference between insolvency and bakruptcy is that bakruptcy involves a court order stating how the insolvent debtor will meet its obligations, which is largely irrelevant in this discussion as it's largely semantics.
Medicare on the other hand...
The worst case scenarios is that Social Security, Medicare, some state pensions, and our infrastructure will all hit the breaking point at once. At that point we will need to make some deeply unpopular changes, and it's unclear if our political system has the will or the coherence to pull it off.
If we're lucky, these systems will begin failing sequentially within the next few years, rather than all failing together.
Our expensive wars come to mind.
Does the US have the same old vs. young divide in politics as seen in Western Europe?
A policy change asking the young to pay even more for the older generations who arguable had it better/easier would not be an easy thing to pass in France, Germany or the UK.
Devaluation seems the only right answer to me
The problem is that printing money and handing it to the government causes inflation. This is essentially the same as devaluation, as you said, except for one difference: devaluation is a one-time event, whereas inflation tends to not be. In particular, next year the government is also going to need money to keep Social Security running. But it's going to need more, because of this year's inflation. And there's going to be all the people further in poverty because of this year's inflation, so other government expenses go up. So the Fed has to print more money next year. So next year's inflation is worse than this year's. So the year after that, the Fed has to print even more money...
No, worst case is that dishonest political propaganda convinces people that the no action scenario has worse results than this, leading to action being taken which itself has worse results, such as dismantling social security in favor of mandatory investment in private defined-contribution retirement products.
By "how much material is being dedicated toward...[it's]...future existence" you presumably mean how much the firm or individual is investing in relation to their income or some similar measure. That can be part of it, but definitely isn't all of it. All market transactions are, contrary to the technocratic worldview of mainstream political economists, human transactions. The actual underlying human relationships matter, and the balance sheets only matter inasmuch as they facilitate communications between actual people.
What it means is “the economist doesn't know what ‘bankrupt’ means or understand how public finance works for an sovereign entity whose debt is primarily denominated in its own currency and probably shouldn't be taken seriously on anything related to it.”
Or, more likely, “the economist knows all this quite well and is engaging in political/commercial propaganda that relies on public ignorance.”
Why can't the US tax more to fund its liabilities? Or, why can't they have the Fed print more money and devalue the dollar?
Social security only has a post-retirement COLA, benefits calculation from point of qualified earnings to retirement is wage indexed. While in normal conditions this is more favorable, in a runaway inflation scenario where wages lag, the wage index will be less than a COLA would be, so rapid devaluation actually works write well to reduce SS real obligations, though it had other adverse consequences.
The Elite class, who have captured the regulatory bodies?
Or, well, everyone else, are, frankly, fuckin' broke, and in student debt on top of that?
No, at some point people won't take it anymore. At that point you get political change. It has happened many times before in the U.S. Where do you think Social Security came from in the first place?
It feels like an arms race between two groups - one trying to sound alarms about the direction we're headed (Bernie) and another that thinks Brave New World is a pretty good model to shoot for. I don't think the latter is an organized conspiracy, just that there are structural tendencies that make producing and marketing soma (literally with food and drugs, figuratively with social media) more lucrative than, say, teaching high school or nursing.
It might be better if there were an Illuminati in charge of things - they presumably would be trying to steer between the extremes of another French revolution and a descent into a 1984 world (which seems depressing even for those in charge).
You may, too. Don't plan on it, but you may.
We basically have no alternative to the system of fiat currency and debt.