How to Fix Social Security

The government collects Social Security taxes, spends some on current retirees, and then loans the rest to the government to spend in the usual ways that government wastes it – almost as if they just took the fruits of our labor and poured most of it into a hole.

The Social Security Trust Fund is nothing but IOUs (in the form of US Treasuries) because that money was loaned to the government. In other words, it’s gone. Previous generations already spent their Social Security, and now they expect us and our children to pay for their retirement.

Social Security is a Ponzi Scheme.

Imagine if all the money collected for Social Security taxes were saved, or better yet, invested. Obviously investing in US Treasuries would just mean that future US taxpayers would pay back the holder of those Treasuries, and we all know that a Trust Fund of IOUs to be paid by future taxpayers is just a Ponzi Scheme.

Imagine if the Social Security Trust fund were invested in a more free market manner in the Americans who paid into it. Imagine if each generation paid its own way. Imagine if the Social Security Trust Fund loaned money directly to the American people instead of to the government?

The way to improve Social Security is to invest the Trust Fund by loaning out the money to Americans at whatever interest rate the market will bear. The borrowers would be among the same people paying into it. We could borrow from the Trust Fund to buy a house, start a business, educate ourselves, or repair our health.

A Trust Fund we loan directly to ourselves is tantamount to investing in ourselves. No, actually, it is better than that. It is an incentive to invest in ourselves; whereas, Social Security today is an incentive to neglect our own future, and Social Security today is an incentive to steal from future generations. Social Security today is corrupting the character of all Americans.

I hope you don’t like the Federal Reserve because the Social Security Trust Fund would replace the Federal Reserve … and thereby eliminate significant financial fraud in America.

Why didn’t FDR do this from the beginning? How corrupt must FDR and everyone since have been to give us a Ponzi Scheme instead of investing the Trust Fund more fairly and more effectively?


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Equality 7-2521 - May 1, 2011

No. No. No. You do not want the government saving and investing for you. Bill Clinton said that if he gave you a tax cut you would just spend it but the government would invest that money. Do you want the government competing with the private sector? This trust fund would be politically controlled and "all people would be equal but some people would be more equal" and have a greater need or right to these funds. We have to much government down payments and investing in the future now. Government is not the solution it is the problem.*
*Ronald Regan

Jim - May 2, 2011

Well, yes. I pretty clearly explained in my other articles on Social Security (to which I linked) that the most pragmatic and most principled solution is to end Social Security – but that's not going to happen.

Replacing the Federal Reserve with the Social Security Trust Fund is merely an improvement that would be acceptable to a majority while killing the Federal Reserve. Woohoo! If implemented as I described, the government would not actually be investing our money. It would just be a plain old bank making money only through loans.

Of course, government would fail like it always does and implement this plan with all of the corruption imaginable, but I just wanted to show how easily one could design a much better plan than FDR and progressives in general when applying their own philosophy, thus exposing the corruption and incompetence of FDR and other progressives in general.

A better and less progressive improvement would be to let people invest some or all of their Social Security contributions themselves, but that is not going to happen because people know that the government has so corrupted the financial sector that it is no longer a free market and thus is no longer safe for the honest investor who lacks inside information. Even if it were safe, if anyone lost their savings through their own stupidity, they would simply claim that because government forced them to invest that money, then government should bail them out, and a majority would agree.

Parzival - May 1, 2013

The Federal Reserve is not a government agency. It is private. The idea to replace the Fed with SS sounds more dynamic and interesting than the current ponzi scheme…

Anonymous - October 24, 2013

Is there still an annual surplus to be "invested" or are we in the red?

Jim - October 24, 2013

"Social Security’s total expenditures have exceeded non-interest income of its combined trust funds since 2010, and the Trustees estimate that Social Security cost will exceed non-interest income throughout the 75-year projection period."

A quick Internet search just now took me to the Social Security Administration website at http://www.ssa.gov/oact/trsum/, which contains the preceding statement:

Before asking me to look that up, did you at least try to look it up yourself first?

Jim - October 24, 2013

If you talking about whatever money may officially remain in the "trust fund" minus the IOUs (treasuries), then I am saying that number is irrelevant because the folks who paid it in voted for politicians who borrowed way more than that, and who spent it foolishly as well.


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