GBMelBlount
03-21-2013, 08:12 AM
I once saw a list of all of the promises made (and quietly broken) by the United States Government in order to convince Americans to embrace Social Security.
I just wonder what people would be saying if it was a corporation who did these things to us and not our beloved government?
THURSDAY, NOVEMBER 6, 2008
The Social Security Ponzi Scam
Social Security is one big Ponzi scam. Current workers are taxed to pay for benefits for current retirees. If a private insurance company operated the same way as Social Security, then they would be shut down for fraud.
There are no tangible assets in the Social Security Trust Fund. There is merely a stack of IOUs, to be paid by future inflation or future taxation.
The Social Security tax runs a surplus, but the profits are stored in Treasury Bonds. A government can't store value in the currency it issues. If there's a budget surplus, that is deflationary. If there's a budget deficit, that is inflationary. Social Security is operating at a surplus. This surplus means that inflation can occur elsewhere without people noticing.
Suppose the USA were on a gold standard, and suppose the Social Security Trust Fund were invested in gold. In that case, there would be tangible assets in the trust fund.
Similarly, suppose that the Social Security Trust Fund were invested in the stock market. That would also represent tangible assets. However, when the Treasury Bonds are redeemed and the money spent in the stock market, there would be massive inflation. There's a valid criticism that "investing the Social Security Trust Fund in the stock market is subsidizing the stock market". However, many state government pension funds invest their assets in the stock market.
Current retirees earn a return of 2%-3% on their "investment" in Social Security. That takes into account the Ponzi structure. A return of 2%-3% is far less than a current retiree could have earned elsewhere.
There is no legally guaranteed right to a Social Security benefit. At any time, the benefit could be cut or eliminated. Inflation will erode the value of the benefit. Social Security should be viewed purely as a tax.
Why is Social Security politically untouchable? It isn't because current retirees have such a strong lobby. If both political parties strongly said "Social Security must be overhauled!", then voters would be SOL as usual. Retirees couldn't effectively form a "save Social Security party" any more than any other third party movement could succeed. If the mainstream media honestly reported the nature of the scam, then reform would be guaranteed.
The real reason Social Security is politically untouchable is that it's a massive loot and pillage operation. The surplus Social Security tax isn't saved; it's spent. The Social Security tax allows inflation to occur elsewhere without people noticing.
The reason the bad guys don't want to cut back on Social Security benefits is that current workers would get wise to the scam. Current workers would say "Why am I paying this huge tax in exchange for nothing?" Social Security must appear to be politically untouchable so that the workers/cattle will continue paying the tax.
Some economists say that the Social Security crisis will occur 20-30 years from now, when the Social Security Trust Fund is exhausted. That is false. The true crisis will occur in a few years, when Social Security benefits paid exceed Social Security taxes collected. At that time, taxes or inflation must sharply increase.
There is no way that Social Security promises can be kept. A partial default on Social Security is guaranteed. There will be tax hikes, benefit cuts, massive inflation, or a combination of all three.
If taxes or inflation get too high, then there is a strong incentive for people to work off-the-books and use sound money instead. These "unfunded State obligations" for Social Security and Medicare are one of many reasons why I predict the State will collapse during the next 20 years. As taxes get higher and higher, the incentive for dodging them increases.
http://fskrealityguide.blogspot.com/2008/11/social-security-ponzi-scam.html
I just wonder what people would be saying if it was a corporation who did these things to us and not our beloved government?
THURSDAY, NOVEMBER 6, 2008
The Social Security Ponzi Scam
Social Security is one big Ponzi scam. Current workers are taxed to pay for benefits for current retirees. If a private insurance company operated the same way as Social Security, then they would be shut down for fraud.
There are no tangible assets in the Social Security Trust Fund. There is merely a stack of IOUs, to be paid by future inflation or future taxation.
The Social Security tax runs a surplus, but the profits are stored in Treasury Bonds. A government can't store value in the currency it issues. If there's a budget surplus, that is deflationary. If there's a budget deficit, that is inflationary. Social Security is operating at a surplus. This surplus means that inflation can occur elsewhere without people noticing.
Suppose the USA were on a gold standard, and suppose the Social Security Trust Fund were invested in gold. In that case, there would be tangible assets in the trust fund.
Similarly, suppose that the Social Security Trust Fund were invested in the stock market. That would also represent tangible assets. However, when the Treasury Bonds are redeemed and the money spent in the stock market, there would be massive inflation. There's a valid criticism that "investing the Social Security Trust Fund in the stock market is subsidizing the stock market". However, many state government pension funds invest their assets in the stock market.
Current retirees earn a return of 2%-3% on their "investment" in Social Security. That takes into account the Ponzi structure. A return of 2%-3% is far less than a current retiree could have earned elsewhere.
There is no legally guaranteed right to a Social Security benefit. At any time, the benefit could be cut or eliminated. Inflation will erode the value of the benefit. Social Security should be viewed purely as a tax.
Why is Social Security politically untouchable? It isn't because current retirees have such a strong lobby. If both political parties strongly said "Social Security must be overhauled!", then voters would be SOL as usual. Retirees couldn't effectively form a "save Social Security party" any more than any other third party movement could succeed. If the mainstream media honestly reported the nature of the scam, then reform would be guaranteed.
The real reason Social Security is politically untouchable is that it's a massive loot and pillage operation. The surplus Social Security tax isn't saved; it's spent. The Social Security tax allows inflation to occur elsewhere without people noticing.
The reason the bad guys don't want to cut back on Social Security benefits is that current workers would get wise to the scam. Current workers would say "Why am I paying this huge tax in exchange for nothing?" Social Security must appear to be politically untouchable so that the workers/cattle will continue paying the tax.
Some economists say that the Social Security crisis will occur 20-30 years from now, when the Social Security Trust Fund is exhausted. That is false. The true crisis will occur in a few years, when Social Security benefits paid exceed Social Security taxes collected. At that time, taxes or inflation must sharply increase.
There is no way that Social Security promises can be kept. A partial default on Social Security is guaranteed. There will be tax hikes, benefit cuts, massive inflation, or a combination of all three.
If taxes or inflation get too high, then there is a strong incentive for people to work off-the-books and use sound money instead. These "unfunded State obligations" for Social Security and Medicare are one of many reasons why I predict the State will collapse during the next 20 years. As taxes get higher and higher, the incentive for dodging them increases.
http://fskrealityguide.blogspot.com/2008/11/social-security-ponzi-scam.html