Social Ponzi Insecurity In One Easy Chart

Tyler Durden's picture

Where a million essays, debates, rants, and denials have been littered over the past month arguing whether or not Social Security is a ponzi or not, we believe one simple chart should suffice to explain to the reader just where we stand. As those who follow the data series know too well, outlays exceeded revenues in 2010 for the first time ever, for a backward looking basis, and so when applying CBO data on future SSTF revenues and outlays (as a % of taxable payrolls), using 10 year moving average data, for forward looking projections, outlays surpass revenues and basically never look back until at least the end of the century. In other words: this is a construct that relies exclusively on new capital coming in to keep it funded and from imploding under its own weight, something better known in literature as a pyramid scheme. But yes: it is not a ponzi scheme in that it most certainly is not voluntary.

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papaswamp's picture

Does this include the $4 trillion already borrowed? know that intragovernmental loan thingy?

JW n FL's picture

Does this include the $2.6 Trillion stolen.. I mean in IOU's?

fuck you and yours..

rocker's picture

@JW n FL  Seems like the Rich, (phony job creator's who sold out 6 million jobs), will have to make up for all those tax cuts funded on the backs of those they stole the money from. After all, many of them were in Iraq, (saving America), from the terrorist while they were on their yachts bought by the tax cuts. They lie about a transfer of wealth. 90% of Americans paid for those tax cuts. The bill is done. Bloomberg was right. Time to Burn Wall Street to a level with the rest of America they destroyed.

Fuck Wall Street Bail Outs.  CNBC's Joe Kernen said on Air, "Bailing out the Banks is all Good".  Fuck you Joe Kernen and Wall Street too.

I think I need to buy a gun's picture

"we can always print entitlements we just can't guarantee their value" Alan Greenspan

Cliff Claven Cheers's picture

Speaking of Greenspan, it was he and the greatest president to ever live who decided to start using the SS fund in the General Budget, 2.6 Tril to date.  I don't think you call it Ponzi when it was Trust.  Now it is a Ponzi because Regan the great with a banker thought it would better be invested in weapons and such like star wars and tax breaks for the wealthy, you trickle down as in urine down your leg.  But hey now that the money is gone it sure is a ponzi to keep it going.  

I keep hearing Limbaugh and the likes still squabling of whos fault is was, Dems or Repubs.  I will tell you whose fault it is.  It is the American public's.  Only 50% of all eligible voters bother to vote and they all think it is the other bum, not theirs that is creating the problems.  Congress is owned by Corps and Banks and we don't give a shit enought to have had them change it.  God help us now.  The only thing we have left is the military, which is the most trusted institution in America.  Lets hope they step in whith a coup, suround Congress and put them all in FEMA camps.  This country used to be the United States, it is now the Divied States and I think the Military should officially become the 3rd party in this inpenetrable corrupt 2 Party system.  Admr. Mike Mullins said the biggest threat to this country is the Debt, not terrorists.  I hope they (the Military) have contingency plans when the pols blow up this country.  I think we need a period of Military Rule with 1 responsible and respected party and at a future date we will try making this country a Republic again, where the Federal Govt serves at the states pleasure.   The only thing we need those 535 plus 1 knuckle heads is to provide National Security and 435 can coin money and control the purse strings, and then get the hell out of the way and let the states manage themselves.  These Pols have already bankrupted us and our children and we are going to lose our entire military when dollar crashes.  How are you going to keep troops on duty if the govt can not pay them.

As I understand it the states agreed to unify and create a republic, not a far reaching Federal Police State that is now 25% of our GDP.

A Utal state legislator is putting together a bill right now to make every state agency account for how much of their budgeit is comprised of Federal Funds.  They are doing this in the anticipation all the Federal Funds stop for some reason, it may be the reason that same state legislator introduced and had passed legislation where utah accepts Gold and Silver as currency.

Just one more point about the 17th amendment, they sold that piece of shit as greater direct democracy.  Before that state legislators selected a state's National Senator and could recall them anytime they didn't tow the state's interests.  Now we have a milionaires club, I think over 60% who are out of touch with the common people.

God help us.  The Hubris of the Nation has no parallel in History.


Aeonios's picture

Cliff: "The Hubris of the Nation has no parallel in History."

You must not read much history. Rome, during the beginning of the transition to Empire (when Octavius became the first Augustus), was just such a bread+circuses nation. In fact the Romans invented the term "bread and circuses" (panum et circenses). Also, your quaint suggestion that the military become the "third party" and "set everyone straight" was played out multiple times.

Following the assassination of Nero there was " The Year of Four Emporers" followed by a short lived dynasty, then the "Five Good Emporers" of the Nerva-Antoine dynasty with its relative peace and prosperity. Then after Marcus Aurelius there was "The Year of Five Emporers", which was followed by a largely incompetent and corrupt military dictatorship known as the Severan Dynasty, which quickly eroded as the currency was debased out of existence, leading into the long age of war which "ended" with the worst dictators that Rome ever saw.

Constantine in particular was a fine example of modern political hubris. He was the first to make groveling in his presence a fact of law, and was known for expanding government until there was practically one tax collecter for every 10 citizens. It really wasn't amazing or surprising that Rome was sacked during that period, by people who had formerly served as mercinaries for the Romans, no less.

Cliff Claven Cheers's picture

Thanks for the education, do you see any parallels?

flacon's picture

Social Security is not a Ponzi Scheme! It is FAR, FAR WORSE!

Cliff Claven Cheers's picture

I understand how SS works, the money I pay in is not mine.  But the point is we would be fine right now if the 2.6 trillion was actually setting in an account to spend.  It has been looted and now this adds more pressure to the federal budget when we least need it.

My true view is ssi makes us soft as a nation, most have put that in the back of their mind that it will be there when they retire so they don't save. 60% of Americans don't even have $1000.00 saved.  People would save half their income like they do in China where there are no social safety nets.  I think we should have some safety nets in place to assist those that truely need it as they are our fellow countrymen.

And my larger point is the politicians have bankrupted this nation, if it weren't for borrowing 40 cents on every dollar we would be insolvent.  When the lenders stop lending and we either collaspe in a deflationary death spiral or we print into an inflationary death spiral.  This is going to undermine the safety of our nation.  As I said he is going to pay for our national defense then?  The politicians have severly undermined our safety and as such since we have lost all our states rights I think the US military would be justified in developing a new transition government back to our basic roots. 

I can only dream.



Bananamerican's picture

" It really wasn't amazing or surprising that Rome was sacked during that period, by people who had formerly served as mercinaries for the Romans, no less."

"do you see any parallels?"

U.S. Military: "se habla espanol"

FreedomGuy's picture

Actually SS trust fund raids started in the 60's. As for my tastes, I could argue too many people vote. These are the idiots who reelected Frank, Reid and Pelosi as we march happily toward the dawn of our statist future.

Silver Bully's picture

I believe Lyndon johnson evaporated the Social Security Trust in 1968 when he and congress passed the Unified budget. Not Reagan. Remember, ol Johnson needed to pay for the War on Drugs, the War on Poverty, and the War in Vietnam. Wars on 3 fronts ain't cheap ya know.

sun tzu's picture

You make perfect sense. The people on welfare are paying all the taxes. 

RockyRacoon's picture

And those on welfare are swelling ranks.   Wonder where all that money is going?   Hmmmm.....

Bicycle Repairman's picture

Whether it's official treasuries or SS's special "double secret" treasuries, it is debt and the government must find the money to pay off.  Traditionally the method is through taxation, so get ready to pay. 

If FedGov won't pay, then they are in default.  FedGov has lots of great assets to be attached in bankruptcy, so payment can be made no matter what.  A real benefit of a bankruptcy proceeding would be firing managment (535 guys) and reorganizing FedGov.

sdmjake's picture

"Traditionally the method is through taxation, so get ready to pay."

I'd say you are already are. The method being deployed is debasement of your currency. Inflate away the debt is the current strategy. Got Gold?

Do You Speak Greek's picture

I wonder what effect would raising the retirement age and the age at which benefits accrue by 5 years would have?? 

Any actuaries in da haus that can estimate??

mr. mirbach's picture

For those born after 1960 Social Security Full Entitlement starts at age 67. Maybe they should raise it to age 75.

Cole Younger's picture

People need to just say no to social security and be able to opt out. Why send money to the government?

sun tzu's picture

You don't understand. The government is here to take care of you and help you make it through this tough life

Are you kidding's picture

To keep people from dying in the don't want to see that.  I have no problem with government providing a minimum of care to the infirmed. the leeches...nothing.

Freewheelin Franklin's picture

Because the government hates competition.

CH1's picture

Why send money to the government?

Because if you don't, armed men eventually show up and lock you in a cage.

FreedomGuy's picture

Raising the retirement age is one of the dumb ideas. No one is going to let you work at those ages unless you are self employed. Because of health you may not be able to. So your government guaranteed retirement will not kick in at retirement. Right now 401k's are being cashed in right and left so you will have a tsunami of people who have canabilized their savings, are too old to work at any significant income, and will be projected to collect less than they paid in...way less with inflation, etc.

The proper solution is to end or buy out the current system with enforceable private contracts (something the government doesn't have) or at least freeze payouts immediately until revenues match outlays. Raising the age breaks the contract and sets up yet another huge problem for those future generations. You know, that generation that is actually going to pay off the national debt, lol, lol, lol!

Bicycle Repairman's picture

"enforceable private contracts"

Do you mean private contracts with private insurers?  Do you mean the guys who would have disappeared in 2008, if not for the bailout that covered them as well?

FreedomGuy's picture

Yes, I mean those guys...and more. There is no guarantee in this life that any company will survive but you have better odds with insurers than the US government...or any government. When insurers go under their contracts are usually bought out by others. BTW, not all banks and insurers went under. By not letting the bad players go under we confused who the smarter and stronger players were...the ones smart enough not to get involved in CDO's and stupid credit swaps.

Government makes no enforceable contract, nothing it will or has to honor over time. Our SSec "reforms" are perfect evidence. Plus, we are all forced by law to keep participating. If you saw AIG was a dog you could take your money elsewhere. Not with government.


Lucky Guesst's picture

High school would need extended to k-17 in order to keep the young adults busy while they are waiting for a job.

agNau's picture

If OB had any intelligence he would lower the age. Talk about some political firepower.
When OB care kicks in the number of recipients should drop dramatically!
Two problems solved.
What a pathetic herd of sheep is this countries citizenry.

Bicycle Repairman's picture

Adding a year or two would make the problem disappear entirely for the retirement fund.  Medicare is far more damaged and interestingly enough there seems to be no controversy about it.  To fix medicare, our health system would have to be drastically reformed.  The benefits of fixing our health care system would affect the entire economy and not just medicare.

caerus's picture

i told a couple of guys at the bar that ss was a ponzi last week and they immediately said that i sounded like perry...i told them that i thought perry was blowing smoke and trying to steal rp's thunder by spouting disingenuous faux libertarian talking may have been the booze but they left promising to vote for dr paul

Let them eat iPads's picture

Saying you sound like Perry was uncalled for.

You should have forcibly vaccinated them with a syringe full of Worchestershire sauce to the nards in response.

caerus's picture

i must admit...i was momentarily insulted

OldTrooper's picture

Well, there's a couple more votes for RP.  I'll buy a couple drinks too, for a few more votes.  Just like old-time campaigns!  That's cheaper than the $100 a week I've been doing for his campaign - and you get a nice buzz in the bargain.  I like it!

Dapper Dan's picture

Tuesday,  that's in like 12 hours, not enough time to complete the escape pod.

Reuters) - U.S. trade officials will announce a major trade enforcement action against China on Tuesday, according to a U.S. Trade Representative's office advisory obtained from a business group.

Did you reinforce the ramp?   No, we didn't have time.



OldTrooper's picture

Maybe America is a lost cause.  Idiocracy is here...just 500 years early.

CH1's picture

Americas is a lost cause, but not all Americans are.

There are good people here. We just need to ditch the system and do our own thing.

StychoKiller's picture

Re-elect President Comacho! :>D

Hedgetard55's picture

As the cash flow deficit grows larger each year, the ever growing difference has to be made up by government borrowing, meaning the program morphs from a pure Ponzi to a hybrid - a Ponzi/wealth redistribution scheme, as more and more of it gets funded through regular taxes, and by the next three generations. Pwned.

FreedomGuy's picture

Actually, the unwillingness to pay for the ponzi end game will cause its downfall. At the end of the ponzi the perpetrator runs off with the money when it is unsustainable. The US government will do the same with a strategic default. The have spent the proceeds.

Yen Cross's picture

  Prints like Gov. reinvestment.    Ex; spend 2 dollars to make 1.5 dollars.   (1) dollar becomes the treasury, and 1.5 dollars becomes { good will}...

   Lend 20% vs 1.5 dollars, and you have a ( Credit Default Swap).

Misean's picture

What's the interest on those intergovernment loan thingies. With this epic bond bubble, maybe they could tranch 'em and sell 'em.

Mike2756's picture

That's easy! Raise taxes to 18%!

goparra's picture

Have people seen this news story that a Chinese Bank has stopped trading FX Swaps with UBS, Soc Gen, Credit Agricole, and BNP?  Have not seen this on Zero Hedge yet.

Hulk's picture

+ 400k+ fresh prints a week says we won't quite make it to 2100...