"Lec 11 - Social Security" Financial Theory (ECON 251) This lecture continues the analysis of Social Security started at the end of the last class. We describe the creation of the system in 1938 by Franklin Roosevelt and Frances Perkins and its current financial troubles. For many democrats Social Security is the most successful government program ever devised and for many Republicans Social Security is a bankrupt program that needs to be privatized. Is there any way to reconcile the views of Democrats and Republicans? How did the system get into so much financial trouble? We will see that the mess becomes quite clear when examined with the proper present value approach. Present value analysis reveals the flaws in the three most popular analyses of Social Security, that the financial breakdown is the fault of the baby boomers, that privatization would bring young investors a better return than they anticipate getting from their social security contributions, and that privatization is impossible without compromising today's retired workers. 00:00 - Chapter 1. Introduction 03:53 - Chapter 2. The Development of the U.S. Social Security System 19:16 - Chapter 3. Economic Imbalances in Social Security 38:48 - Chapter 4. Root Causes of Income Transfer in Social Security 01:05:21 - Chapter 5. Privatization of U.S. Social Security Complete course materials are available at the Open Yale Courses website: http://open.yale.edu/courses This course was recorded in Fall 2009.
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Channels: Finance
Tags: Lec 11 - Social Security
Uploaded by: yalefinancialth ( Send Message ) on 12-09-2012.
Duration: 72m 21s
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Lec 2- Utilities, Endowments, and Equilibrium
Lec 4- Efficiency, Assets, and Time
Lec 5- Present Value Prices and the Real Rate of Interest
Lec 6 - Irving Fisher's Impatience Theory of Interest
Lec 7 - Shakespeare's Merchant of Venice and Collateral, Present Value and the Vocabulary of Finance
Lec 8 - How a Long-Lived Institution Figures an Annual Budget. Yield
Lec 10 - Dynamic Present Value
Lec 12 - Overlapping Generations Models of the Economy
Lec 13 - Demography and Asset Pricing: Will the Stock Market Decline when the Baby Boomers Retire?
Lec 14 - Quantifying Uncertainty and Risk
Lec 15 - Uncertainty and the Rational Expectations Hypothesis
Lec 16 - Backward Induction and Optimal Stopping Times
Lec 17 - Callable Bonds and the Mortgage Prepayment Option
Lec 18 - Modeling Mortgage Prepayments and Valuing Mortgages
Lec 19 - History of the Mortgage Market: A Personal Narrative
Lec 21 - Dynamic Hedging and Average Life
Lec 22 - Risk Aversion and the Capital Asset Pricing Theorem
Lec 23 - The Mutual Fund Theorem and Covariance Pricing Theorems
Lec 24 - Risk, Return, and Social Security
Lec 25 - The Leverage Cycle and the Subprime Mortgage Crisis