22A048 The Social Security Scam by Jim Davies, 11/29/2022
After achieving a certain age, it's nice to be able to retire and smell the roses. Travel, perhaps, to explore America the Beautiful. Enhance one's home with an attractive garden. Reflect on the nature of the universe, write a Blog, donate time to charities, whatever one finds fulfilling. It's a nice time of life. And with any luck, there are grandchildren to make it nicer yet.
Expenses arise, so a pension is needed of course. If during one's employed years savings have been made, there will be a capital sum which will yield a return, and that's the traditional source of the pension. It worked. In the 19th Century it made a whole new class in society not just in America but in Europe too; called the "middle" class. Members lived, and retired, not just on inherited wealth but on money saved from profitable enterprise or service. They could pass on all or some of the capital to heirs, which enlarged and solidified the class.
Then came socialism, which stole it. Heavy earnings taxation made it much harder to save, and inheritance taxes made it very difficult to maintain a family nest-egg even if one could. To disguise the theft, a state pension scheme was provided instead. In England that was done in 1908 by the ruling "liberals", marking their lamentable transition from the classical kind (which valued freedom) to the modern sort (which imposes control.) In America Franklin D Roosevelt foisted it on gullible voters. It survives yet, and is known as the "third rail" by politicians: if they touch it, they die.
It's popular, though, not because it's sound but because government has removed all alternatives. Or rather, like government schools, you can add an alternative plan but you're forced to pay for the government plan anyway. Yes you can buy a Buick, but first you must pay for a Ford.
The premium, or compulsory "contribution", is carefully specified and fixed, at 15.3%. (No, not 7.5%; the "employer's contribution" can come only from what the employee produces for him.) The eventual payout is not; it is made at the option of Congress. There is no contract, as in a real, competitive insurance plan. If the FedGov reduces the purchasing power of its fiat "money" (and it has done, ever since before the SS scheme was enacted) it makes an increase, which is calculated (by its own rules) on the basis of that inflation (as measured by its own standards.)
Last month the raise for 2023 was described by 8% Joe as the largest ever, due to his "leadership", because the recent inflation rate had been high. Someone took down his Tweet about it because it implied that he had caused the inflation too, and they don't like to admit that. The raise is 8.3%, and if anyone thinks current inflation is that small, please make a bid for my bridge in Brooklyn. Shadowstats estimates 2022 consumer inflation at 17%.
What will be the alternative, after government has been tossed into history's ash can? - as above, saving capital for a good yield. Most folk will probably contract with a company with expertese in investing for this purpose; such is likely to obtain a better yield - part of which it will take as a profit - than amateurs. Life insurance firms may play a lively part. But the key word is contract; you pay the premiums, you will get the promised benefits, and inflation will not shrink them because they will be specified in a form of money that cannot be inflated - probably, gold.
It may be useful to watch the video we made in 1990 with Lou Garofalo, an experienced insurance broker. At one point I asked him whether, if "Social Security" were offered as a product in a competitive market, he could sell it. He though for a bit then said No. It would be unsaleable. Rival products would pay two or three times the benefits, for the same premium. That's the kind of improvement we'll see in the coming zero government society.
We may wonder how and why the improvement will be so large, and the answer is that professionals in this business create a large fund from premiums received and then pay benefits from its yield (dividends and growth). When the SS scam was launched in 1935, FDR gave the clear impression that the FedGov would imitate that business model. It didn't happen. Benefits are paid out directly from the forced "contributions" received, like every other government scheme. So the turbo effect of investment yields is simply missing.
FDR also promised, at the time of that launch, that the SS Number to be allocated to every participant would never, no never, be used for identification.