Social Security is a Ponzi Scheme

A Ponzi scheme pays a profit on existing investments out of the money collected from new investments.

Administrators decide how much profit to distribute, which makes a Ponzi scheme very appealing to investors because it can provide very consistent and predictable profits as long as new investments steadily increase. If the administrators increase profit distributions at a rate equivalent to population growth, then a Ponzi scheme could last forever in theory. The only reason a carefully managed Ponzi scheme would fail is because investors lost confidence in it, which means that current investors withdrew their investment, and the number of new investors decreased.

The amount of money collected from new investments is always much less than the amount of profits being paid out on current investments, so the administrators can spend the rest however they want without impacting profit distributions, which is why a Ponzi scheme is so appealing to its administrators – who are basically stealing much of the money they receive as investments.

Social Security is a Ponzi scheme.

The government takes social security taxes from us workers and then gives some of our money to people over 65 and spends the rest. The day the government stopped taking money from workers for social security would be the same day that senior citizens stopped receiving social security. Therefore, social security is a Ponzi scheme.

So what happened to all that money the government took from those workers over their entire careers before they retired? Well, I just explained that. It’s gone. The government already spent it. Social Security is a Ponzi scheme.

Instead of paying social security from all that money the government took from those workers over their entire careers before they retired, it just spends their money and then pays them with money it takes from future workers. Like I said, social security is a Ponzi scheme.

Some apologists for the government quibble that the government doesn’t take our money from the social security “trust fund” and spend it but that it actually borrows the money from the social security trust fund and spends it. The social security trust fund thus invested that money by loaning it to the government, like buying government bonds, which is literally true, but do you see the lie? Suppose the government ever decided at some time in the future to pay back any of that SS money it collected and spent years before. Where would the government get that money from? FROM FUTURE TAX PAYERS! Like I said, social security is a Ponzi scheme.

Obviously, and for all practical purposes, there is no social security trust fund, and those politicians who refer to a social security “trust fund” are either ignorant or lying.

Social security is not just a Ponzi scheme because the government took all those SS taxes over the entire careers of all those workers, spent it, and then paid them SS from taxes taken from future workers. Social Security is a Ponzi scheme for so many more reasons.

Workers and their employers each paid half of a 2% SS tax in 1937; whereas,  in 1990 workers and their employers each paid half of an SS tax of 15.3%!

In 1937, only the first $3,000 of a worker's income would be taxed by by the SS, but in 1990, the SS would tax the first $51,300! (Today it is $106,800!)

People started paying SS in January 1937 and started receiving government checks not 40 years later, not 20 years later, but only 3 years later!

Likewise, workers today can start receiving SS checks at 65 as long as their entire career consisted of at least 2 years! Ida May Fuller, the recipient of the first SS check, worked a total of two years, paid a total of $24.75 in SS taxes, and collected $22,888.92!

Life expectancy for men was 58 in 1937 and 71.8 in 1990; whereas, workers started receiving government checks at 65, and in 1990, that age was – still 65!

Since 1990, the SS tax hasn’t increased and is still 15.3% ... so ... what happened after 1990 that could explain politicians’ reluctance to expand this Ponzi scheme?

The Internet!

Today, if the government tried to raise this tax, everyone would know about it before it happened, and not only would all of those politicians lose their prospects for reelection – some (perhaps many) would lose their lives!

This year the SS administration did not publish its annual report on April 1st because it suddenly has a deficit and it is at least 41 billion dollars. Of course, the media barely covered this story because it might have lead to questions like this one, “Why can’t the government just get the 41 billion from the trillions of dollars in the SS trust fund?” Yoda would say, “Mmmm. How embarrassing! Master Obama lost a whole 7 trillion dollars.”

Government apologists quibble that Social Security is fundamentally different from a Ponzi scheme because it is more open and could easily be sustained indefinitely by law. This is literally true, but do you see the lie?  Social Security can be more open and sustained by law by forcing new taxpayers to pay as much as necessary to sustain it. Social Security is different from a typical Ponzi scheme because Social Security is a fascist Ponzi scheme.

Consider that no one is allowed to opt out. That’s fascist. Consider that the government had no Constitutional authority to implement Social Security in the first place. That’s fascist. Consider that younger people whose taxes are repaying debts created before they were old enough to vote are thus victims of taxation without representation. That’s fascist.

Taxation without Representation is fascism.

The fascism of the Social Security system is not too surprising considering that fascism was the dominant philosophy in every industrialized country back in the 30’s. According to the SS website, which is the source for most of my article, the elements of FDR’s New Deal were being consistently struck down by the courts because they were unconstitutional, and thus SS itself was expected to be struck down. FDR therefore asked Congress to give him the breathtakingly fascist power to appoint 6 additional justices to the Supreme Court. Most Congressmen and most voters thought this was a pretty corrupt move by FDR, but FDR's fascist power grab became irrelevant only because one of the justices changed his vote (for unknown reasons) and started upholding the unconstitutional programs of FDR. Apparently someone made him an offer he couldn't refuse – as if his life and the lives of his loved ones depended on it.

Government apologists correctly point out that we could all decide that we will accept the Social Security Ponzi scheme because we are confident that we can force future tax payers to support it and administrate it well enough to keep it predictable indefinitely.

A majority of us clearly have decided to support the Social Security Ponzi scheme. A majority of us clearly have decide that we like fascism.

However, the fascists have already failed. In addition to spending all of the 7 trillion it received for Social Security, the government also spent another 7 trillion it borrowed from future tax payers. The federal debt is now 14 trillion dollars.

Fascism is the opposite of freedom (individualism), and now that we know the reality of Social Security, we are closer to having freedom again some day.

Freedom is the promise of reality.