The type of financial fraud known as a Ponzi scheme promises investment returns far in excess of what can actually be achieved. It “works” (pays cafly participants ridiculously high returns) so long as there are enough foolish latecomers paying into the scheme, they, of course, will ultimately have nothing because their “investments” have been given away to the lucky early birds.
Social Security is the world’s biggest Ponzi scheme, and Ida Fuller was the earliest bird of all. The very first retiree under the session, Ida had contributed a grand total of $44 by 1940, at which time she began to take her pension, over the years she received $21,000 Ah, Ida, would that we all could be 0 fortunate! The cruel joke of Ponzi is that the latecomers pay in and find nothing left when it’s their turn to retire, Currently more money is paid into Social Security than goes out as benefits to seniors (our Ponzi scheme is still in its early, deceptive stage). But the extra money is immediately spent, so there is no trust fund building up.
Worse, the balance between what ‘goes in and what goes out is shifting. Slowly, inexorably, the pension payments are catching up to the payroll taxes coming in.
By the year 2005, just a decade from now, the outgo will be $2,5 billion more than the income. By 2020 (are you age 40 or younger? That’s when you will retire) the input will be $226 billion less than the promised pensions.
Where will that money come from? There is no trust fund, only a fictitious bookkeeping entry. When its Ponzi pantry is empty, the fraud can be only by resorting to a choice of three nasty alternatives. The government can borrow that much more—$225 billion more each year on top of the ‘outrageous borrowing it already does—and thereby accelerate the growing federal debt, or the government can increase taxes. ‘The payroll tax is already 15.3% () and other taxes are so high that both political parties want to Cut, not raise, them. Or the government could cut over expenditures. Fat chance of that. Anybody getting a government check can come up with a host of tearful reasons why it must continue, And they find plenty of politicians willing to spend your money to do so.
What is already being done to hide the shameful Ponziness of the system is to slowly raise the age at which you ‘become eligible for the full pension, and to tax pension recipients (who heretofore were not taxed—after all, the money they put in had already been taxed once!) Think about it. Taxing Social security benefits is simply a sneaky way of not paying them.
It’s a deplorable, disgusting, perfidious mess, perpetrated by lying Congressmen who piously set up their ‘own generous pension plan, vastly superior to Social Security. It all happened because Abraham Lincoln pointed out that you can fool all of the people some of the time.
‘We’re not alone (if that’s a comfort to you), All of the European democracies face the same problem — or rather refuse, as we do, to face it.
The solution exists (it’s really quite obvious) and it’s being done—in Chile. Back in 1981 the Chilean government said to its people, “You can continue to stay in (their version of Social Security) or you can choose to save and invest for your retirement in any one of a number of approved private plans.” Ninety-one percent chose the private plans and they couldn’t be happier with the results. We could easily phase into something similar. All our financial institutions would set up a whole raft of investment choices and you could go with B of A, or Merrill Lynch, or Metropolitan Life, or Fidelity mutual funds—or whatever. In Chile you have to set aside 10% of your earnings; and as long as we have the temptation of welfare, we’d have to make participation compulsory, 100.
The results of phasing out Social Security and phasing in private investing would be two enormously beneficial outcomes.
First, the huge pool of investment capital formed would provide the financial fuel to make the U.S. forever the world’s industrial powerhouse. Presently, we are starved for capital because Americans are such poor savers; the “savings” we put into Social Security are phony and create no jobs conational wealth. Secondly, the pensions from the private investments would be much bigger than those from Social Security Much bigger.
Most people don’t really understand ingly large rewards of Longterm investments and the power of compound interest over time.
See the kind of financial affluence you could have if your payroll tax dollars were invested rather than squandered as they are now. courtesy: The Business Tribune.
Article extracted from this publication >> June 30, 1995
