Social Security Is Not Insurance

Social Security is touted as an "insurance" program, but it is nothing of the sort.

Insurance, in and of itself, is risk management. You pay a premium, derived from the level of risk you are willing to assume, it's potential costs, and its statistical likelihood, so that if the "bad" thing happens, you have some or all of those expenses paid.

It doesn't matter who runs the program, whether profit or non profit, whether commercial or a mutual aid society, which is where almost all insurance programs started, such as the Amish continue to do now.

However there are two, very important, differences between insurance and SS.

First is that SS has no actual assets to draw against for paying out "claims." Every penny collected in SS taxes is immediately spent. For most of its existence, the surplus was immediately mingled with all other general funds, with nothing but a set of almost hidden bookkeeping entries made. It's not even counted as part of the government debt. There is no fund set aside to pay claims. Even mutual aid societies have, and have always had, those.

Second is that you have no legal right to any payout, even if you meet all the conditions under which you, mistakenly, thought "entitles" you to them. The government uses the word "entitlements," but, as far as government goes, there's no such animal. It's nothing but political shorthand to make it sound better. It stands for a class of benefits that is on "autopilot" as far as budgeting is concerned. Congress passes "rules," the administration implements the "rules," and they aren't affected by passing budgets ... except when Congress changes the "rules," which they are legally free to do at any time.

SS is a Ponzi scheme and always has been. Money paid out today is taken from monies collected today by an ever increasing number of "investors," with government grabbing everything "extra," just as Charles Ponzi himself did. Or at least it was until demographics started running up against the hard limit of available new people to fleece. For most of its existence, there were far more people paying in than those collecting. The retirees up until the last 20 or 30 years, reaped a huge bonanza over what they actually paid in.

These days, you don't even get out what you put in.

Government was able to spend far more money than they took in in regular taxes. When that "extra" money started drying up is when the budget deficits and the total debt started exploding. Politicians, as politicians are wont to do, just kept kicking that can down the road, initially knowing, and recently hoping, that they would be ready to retire before the time finally came to pay that piper.

That time is here.

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Don’t Count On Social Security Benefits

The Ponzi scheme known as the Social Security Benefit system is running out of steam.

When it was first created, it was promoted as supplement to regular retirement savings for a few well-defined groups of people. Life expectancy was 63 and full benefits didn’t kick in until 65. During its first 40 or 50 years, for those who lived long enough to collect on it, it was the best and “safest” return on your money for retirement there was.

Far more money went into the so-called trust fund than was paid out. That “excess” was “invested” in “special” Treasury notes, in essence IOUs from the government to itself. That money then went into the general fund and was spent like all the rest. Since it was an internal debt it doesn’t even show up on the balance sheets or get counted as part of the debt.

Over the years, more and more people have been added and benefits increased to where many people expect Social Security benefits to take care of their minimum retirement needs. Life expectancy increased to 65, 67, 70, 72 years old or more. More people getting more money for a longer time with fewer and fewer people paying into the system. There was a major “patch” made in the 80’s when age for full retirement was boosted up and tax (excuse me, “contribution”) rates shot up.

As the demographics kept changing, there was less and less “excess” to tap. External borrowing had to take its place. Deficits began skyrocketing up.

Not one penny was paid out on those “securities” until just a few years ago.

It was all just funny money on cooked books. Nothing was being cashed in. Nothing taken out of revenues, only more put into the general fund and replaced by those IOUs. Treasuries are only as safe as the government’s power to take money from current taxpayers.

The Court has already ruled that you have no legal claim to Social Security benefits. There is absolutely NOTHING that guarantees that the retirement payments you expect will continue to be made or at what level or at what retirement age or with what COLA formula (if any) or any other change they want to make, after all, it’s just another law.

One of the saddest lessons of history is this: If we’ve been bamboozled long enough, we tend to reject any evidence of the bamboozle. We’re no longer interested in finding out the truth. The bamboozle has captured us. It is simply too painful to acknowledge — even to ourselves — that we’ve been so credulous. (So the old bamboozles tend to persist as the new bamboozles rise.) – Carl Sagan

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