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Another Government Ponzi Scheme Starts To Crack - Do You Depend On It?
Submitted by Nick Giamburino of International Man
Another Government Ponzi Scheme Starts to Crack - Do You Depend on It?
Government employees get to do a lot of things that would land an ordinary citizen in prison.
For example, it’s legal for them to threaten and commit offensive, rather than defensive, violence. They can take property from others without their consent. They spy on anyone’s email and bank accounts whenever they please. They go into trillions of dollars in debt and then stick the unborn with the bill. They counterfeit the currency. They lie with misleading statistics and use accounting wizardry no business could get away. And this just scratches the surface…
The U.S. government also gets to run a special type of Ponzi scheme.
According to the Merriam-Webster dictionary a Ponzi scheme is:
[A]n investment swindle in which some early investors are paid off with money put up by later ones in order to encourage more and bigger risks.
In the private sector, people who run Ponzi schemes are rightly punished for their fraud. But when the government runs a Ponzi scheme, something very different happens.
It’s no secret that the Social Security system is effectively one giant Ponzi scheme.
Actually, I think it’s worse. That’s because the government uses force and the threat of force to coerce people into it. People don’t have the option to opt out. They either pay the tax for Social Security or someone with a gun will show up sooner or later. I imagine Bernie Madoff’s firm would have lasted a lot longer had he been able to operate this way.
This whole practice is particularly egregious for young people. They have no chance at collecting the future benefits the government has promised to them. But they’re hardly the only people that are going to be disappointed in the system, which will eventually break down.
There are simply too many people cashing out at the top and not enough people paying in… even with the government’s coercion. That’s a function of demographics, but also the economic reality in which there are fewer people with quality jobs for the government to sink its fangs into. I expect both of those trends to increase and strain the system.
Actually, it’s already starting to happen.
Recently, the government announced that there would be no Social Security benefit increase next year. That’s only happened twice before in the past 40 years.
You see, the government links Social Security benefit increases to their own measure of inflation. If the government says “no inflation” then there are no benefit increases. It’s like letting a student grade his own paper.
So it’s no surprise that the official definition of inflation is not reflective of the real increases in the costs of living most people feel.
Medical care costs are skyrocketing. Rent and food prices are reaching record highs in many areas. Electricity and utility costs are soaring. Taxes, of course, are going nowhere but up.
But the government says there’s no shred of inflation. In actuality, it amounts to a stealth decrease in benefits.
One reason for this is that they constantly change the way they calculate inflation so as to understate it. Free market analysts have long documented this sham. If you take a global view, it’s easy to see that fudging official inflation statistics is standard operating procedure for most governments.
Incidentally, governments and the financial media don’t even understand what inflation is in the first place.
To them, inflation means an increase in prices. But that is not at all how the word was originally used. Inflation initially meant an increase in the supply of money and nothing else. Rising prices were a consequent of inflation, not inflation itself.
It’s not being overly fussy to insist on the word’s proper usage. It’s actually an important distinction. The perversion of its usage has only helped proponents of big government. To use “inflation” to mean a rise in prices confuses cause and effect. More importantly, it also deflects attention away from the real source of the problem…central bank money printing.
And that problem shows no signs of abating. In fact, I think the opposite is the case. The money printing is just getting started.
At least this is what we should prudently expect as long as the U.S. government needs to finance its astronomical spending, fueled by welfare and warfare policies.
As long as the government spends money, it will find some way to make you pay for it - either through direct taxation, money printing, or debt (which represents deferred taxation/money printing).
It’s as simple as that.
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Despite what you may have heard, everyone does not live to 100. Most baby boomers will never even get back what they paid into the SS system. SS is basically just a long-delayed tax refund. The only ones who did well were the ones who got in early, i.e., back in thirties, forties and fifties.
Instead of demonizing boomers, you should be asking who stole that money and not because you care about boomers. You should ask that question because they're going to keep stealing..
The U.S. has got lots of money to give to give away hundreds of billions to all their puppet regimes around the globe.The infrastructure in the U.S. compared to China,Europe,Japan is makes it look like its a third world nation.Why not give up this nonsense of global cop and spend the money helping your own people?John McCain and fellow national-socialist henchmen are you for that?
http://www.fedsmith.com/2013/05/23/government-owes-2-7-trillion-to-socia...
The government owes Social Security $2.7 trillion, but the government is both unable and unwilling to repay the stolen money, at least in the short run. - See more at: http://www.fedsmith.com/2013/05/23/government-owes-2-7-trillion-to-socia....
It was set up correctly to be self suficient. Pay it back and everything is fine. Congress and all elected officials pay should be cut before any cuts to SS and the money paid to SS. If the Government can print trillions of dollars for Wall Street, they can fix SS.
that's why nyc/dc stole the money and replaced it with non-marketable securities. regular treasury bonds could be sold into the market to make the fund whole. it was straight up theft
Why the fuck can't people get it through their heads...IT WAS NOT EVER A GOOD IDEA. It was an illegitimate overreach by government WHICH WAS ALWAYS DOOMED TO BE ABUSED.
If you accept the premise - THAT OF COLLECTIVISM - you deserve what you get.
Social Security, private pensions, public pensions, public endowments can no longer afford a drop in the markets or even a static market. Due to flawed assumptions in the actuarial models, circumstances have reached the point that if the bond and stock markets are not monetized dramatically upward, they all die. The Fed's terrified of these circumstances. Most Americans who are expecting to be future benificiaries have no clue.
They are obviously destroying the middle class and the productive capacity of the US on purpose. That's why all the factories went overseas and left people with connections to have the useless paper pushing desk jobs that produce nothing, as well as all the government jobs that are actively destructive to the economy and our freedom.
Destroying our ability to pay for food and shelter is the last step of their plan to destroy America. Courtesy of the US Government.
The only reason SS became a "scheme" is because all the funds paid into it were stolen and worthless IOU's were put in their place.
SS was sufficiently funded to weather the time period when when the outflows were greater than the inflows. The problem is that all those funds were stolen and now instead of making good on the IOU's they want to make it a pay as you go system.
The only way to make good on the IOU' is to cut spending somewhere else. But it is also worth noting that the funds were stolen so long ago that the national debt was under control and fiscal raping of the country was just beginning. Thank you Reagan.
All this talk about baby boomers, were the baby boomers even running the country at that time?
It was a "scheme" from it's CONception.
The "raiding" of the funds was merely follow-on crime.
You sound like one of those people who used to say "Communism is agood thing...in theory...but it hasn't been executed properly."
If you're going to blame a President on Social Security, blame FDR, the guy that actually shoved it down people's throats to buy votes.
US government is a ponzi scheme, from top to bottom. Why should this segment be any different?
It's a scam in a way that it favored those who earned more than 118K/Year. If I were on Contract "Full-time", I'd be in that category.
Senator Sanders did make his proposal months ago to remove the income limits.
http://thehill.com/policy/finance/232297-sen-sanders-offers-plan-to-exte...
I'm all for reforming the present system. Perhaps giving the People a few choices where to put that 6% or so in the future...
if social security went exclusively to those who paid in, it wouldn't be nearly as fucked up as it is now. it has expanded it's umbrella to include so many free shitters it has become a welfare program (vote buying)
Generational warfare is so ugly. And all class warfare is local. Collecting SS is not a character flaw. Hardly any different than any other type of insurance payment. I won't fight my fellow citizens over it.
Metallica - Fuel, I was just listening & thought yep after reading half the responses.
Recently, the government announced that there would be no Social Security benefit increase next year. That’s only happened twice before in the past 40 years.
The increases weren't significant anyway. The upshot, I believe, is that, by law, they can't cut payments. Try to imagine the chaos in a deflationary collapse when prices reset to a lower level.
I know many people who retired, believing their pensions and savings will last them the rest of their life. They are SO screwed. That's the major reason why I won't retire. Instead, I use SS as play money and stacking money.
Work till you drop and when you're laying on your deathbed( which I'm sure you will be able to afford ) tell your kid's your only regret is that you wish you would have worked harder.
You may not have a choice. I would have liked to have kept working longer but I was caught up in a layoff at 65. And a lot of people making the very big bucks now will be looking at $00.00 income when their firms casts them adrift. They will be in desparate straits for the money and be glad to get it when they turn 62 and qualify for the smallest payout.
S42 that is about the stupidest argument I have ever heard to continue working or hoard money. You are worried about having enough money to last you the rest of your life? Your government and your money may not last much longer! You are so screwed. At 70 I retired early at 61 to enjoy what was left of the big ponzi scheme called America. I don’t regret one minute of it. Enjoy your play money and stacking money. I will enjoy sleeping in, tennis, frequent vacations, all summer at the cottage on the lake, fishing, sailing, ATVing, snowmobling or having a relaxing read by the fire in the winter, topping off my preps and buying PMs. Only a fool saves paper while America burns…
"I will enjoy sleeping in, tennis, frequent vacations, all summer at the cottage on the lake, fishing, sailing, ATVing, snowmobling or having a relaxing read by the fire in the winter, topping off my preps and buying PMs."
sounds more than just a little self indulgent.
who are you helping today with your remaining energy?
Did you help your kids or grandkids get a home debt free or education in a valuable skill?
If yes, who else do you know who needs the same help?
Life solely for one own pleasure is a wasted life.
We all need times of relaxation and rest and celebration, and even frivolous timnes of little wastefulness, but your narriative sounded like
"Its all about me and my pleasure now"
I hope that's not at all accurate, but you'll have to look inside yourself.
It is not just SS, I think almost every major airline, for example, has filed for bankruptcy just to avoid paying promised pensions - especially the lucrative ones to the pilots. Instead they have dumped the whole mess on the PBGC at bankruptcy. The key to their failure was assuming a very healthy return (8% or better) on their portfolio when they knew they would be lucky to get 2%. This assumption enabled them to set aside much less money in the retirement funds they managed for the employees and pocket the rest.
With everyone so negative, that means I bet on the USD rising to 120 on the USDX and social security gets paid to all.