The Social Security Ponzi Scheme

The Binder

Most people believe that Social Security taxes are collected from their paychecks and kept safe and segregated by the government as a form of guaranteed, stable retirement income.

What most don’t understand is that for every dollar paid into Social Security, their employer also matches their contribution. One would think that there is a massive pile of Treasuries somewhere locked down in a fortress. The truth is, each “investment” is merely a general ledger entry jotted down in a rather small notebook. George W. Bush was shown once in a video with the binder in his hand, and he had no trouble wielding it in its entirety.

From 1937 to 1950, the maximum income amount subjected to the tax was $3,000 per year. Of course, at that time, this was a substantial wage. As time went on, government spending increased, the dollar lost value, and the maximum income amount was adjusted higher and higher; it is currently at $184,500. Taxable income is now being increased at a rate of roughly 6% per annum, supposedly based on the national wage index. Keep this in mind because that number will be important as we progress.

Lies, Lies, and More Lies

There are many facets of the sham that simply don’t align with official government statements. We will discuss the ones that are irrefutable.

The Social Security trust fund has been running deficits since 2010, by the government’s own admission. The fund will be completely depleted in the early 2030s, as confirmed by the trustees.

One of the official reasons for the depletion is that people are living longer than they used to. That statement simply defies all forms of mathematics. For someone who has worked their entire life, paying 7.5% of their wages into an interest-bearing account and having that contribution matched dollar for dollar, the account balance would be massive upon retirement. On top of that, the interest on those savings would have compounded year over year, making the figure multiples of what it would otherwise be. In such a case, the interest earned annually would be much more than the recipient is drawing in benefits, meaning that their balance would grow every year; the longer they live, the more the account grows—not shrinks.

Cost-of-living adjustments to beneficiaries are made every year, allegedly based on inflation numbers. Those collecting benefits for several years will attest to the fact that the adjustments have come nowhere near the price increases in the economy. The government has stated many times that wages (for existing workers) aren’t keeping pace with inflation and blames the corporations that employ them. Yet, if you remember the previous number of 6% hikes in taxable income, that number is supposed to be based on the national wage index. How can it be that wages aren’t keeping up with inflation when they say inflation is running at 2% but are justifying tax collection based on 6% wage growth? Simple logic says that both cannot be true, and either they are lying about inflation or they are lying about wages—or both.

Government supporters of this corrupt system claim that the deficits began because more people were leaving the workforce and heading into retirement. The baby boomers were the largest working generation ever and were still in the workforce; the very first did not reach full retirement age until 2011, let alone a massive wave. The largest portion of the boomer generation still has not retired; they will retire between 2026 and 2029. Even if this statement were true, admitting that benefits are being paid to retirees by those currently in the workforce is a direct admission that the system itself is a hoax (Ponzi).

The reason Social Security is running dry is pretty straightforward. It isn’t about a miscalculation or a wave of retirees. It is going bust because the government is simply incapable of managing anything, let alone finances. The system was doomed to fail from its inception because the government would oversee it. The amount of theft, waste, fraud, and bureaucracy merely accelerated its decline.

Because Social Security depends upon new taxes collected to pay existing retirees, it qualifies as a Ponzi scheme at its very core. As with any Ponzi scheme, as the scale of the scam increases, so must the inbound receipts to keep it afloat. Since the maximum taxable amount is ratcheted up annually, this aids in the continuation of the fraud. However, like every previous Ponzi scheme in history, it will not end well for those depending upon it.