Government Admits: Social Security Is Unsustainable Ponzi Scheme

Bill Frezza discovered that our rulers have abandoned the pretense that Social Security is anything but an unsustainable Ponzi scheme when his 26-year-old son received a startling admission from Big Government in the mail:

The two-page pamphlet entitled “What young workers should know about Social Security and saving” reminds us that 50 million, or one in six, Americans will collect more than $614 Billion dollars in Social Security benefits this year. It informs young people that the Security Taxes they now pay go into a “Trust Fund” that is used to pay current beneficiaries. Paying off early investors with funds taken from later investors is precisely how Wikipedia defines a Ponzi scheme. The pamphlet advises that the Social Security Board of Trustees estimates that the “Trust Fund” will be depleted before my son’s 54th birthday. Because people are living longer and the birth rate is low, it goes on, taxes paid by workers in the future will not be enough to pay the benefits promised in his personalized retirement account statement enclosed with the pamphlet.

Therefore…

On top of the negative rate of return young people paying into Social Security are expected to suffer, the pamphlet concludes that my son should plan on taking an additional 24% haircut on the benefits promised in his statement.

…and furthermore…

Given the fact that Social Security will be bankrupt before my son even reaches my age, the pamphlet directs him to a handy web calculator that shows how much he will have to save every week if he hopes to retire on his own. Play with it for a few minutes and you realize that there is only one field in the calculator that really matters, and that is the rate of inflation. Plug in an annual inflation rate of one or two percent and the numbers look pretty reasonable as compound interest works its magic. But stick in the double digit inflation figures that were in vogue when Jimmy Carter was president and a funny thing happens. In order to prepare for retirement, young people would have to save more than they make!

Given the Vesuvius of cash the Fed pumped into the economy to disguise the real estate debacle, what do you think the odds are that inflation is going to stay at one or two percent?

Yet younger voters choose the irresponsible, power-mad liberals who are currently pushing to make the current mess infinitely worse with a new healthcare entitlement that will require the young to pay the bills for the old. Why? Frezza’s theory:

The only conclusion I can come to is that we Baby Boomers have infantilized our children into idiocy.

In other words, liberalism has succeeded in its primary goal.

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Why is this guy in jail and not running Social Security?

On a tip from nancz. Cross-posted at Moonbattery.

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