Social Security's Surplus Disappearing Fast in Downturn

The Social Security program's income and expenses depend on the population demographics. These demographics wax and wither. By contrast a Ponzi scheme's base only expands.

Calling SS a Ponzi scheme is like calling an insurance company a Ponzi scheme just because it hit a rough patch of multiple hurricanes.

if an insurance company set up a program like Social Security, they would be locked up and the key thrown away.

"Gil Faver"

"Gil Faver"

I always thought Iceland Treasury Bonds were the safest.

Only if you are interested in purchasing a lifetime supply of hákarl.

It's not meaningless if a corporation owns Treasury bonds. Those bonds are considered long term investments which are distinct from tangible and intangible assets.

The alternative would be for the trust fund to hold stock and corporate bonds. I have advocated that, but the market collapse makes it a difficult point to argue.

People need to make provisions for the future and just not rely on SS, but isn't that well known?

-- Ron

This wasnt supposed to happen until 2018 according to the trustees report. But we may see for a few years. The Trustees report is very modest about future economic growth and doesnt model sudden lurches like bubbles and great recessions. We could return to the main demographic trend when the recession ends.

A Ponzi scheme is when you lie about how money is to be invested and paid out. SS has been up front about how it operates (except before WWII when it used insurance terms like premiums and annuities to describe its methods.)

Correct. If a corporation owns Treasury bonds, they are an asset. If a corporation owns corporate bonds from another corporation, they are an asset. But if a corporation owns its OWN bonds... are they an asset? That's exactly the situation with the Social Security Trust Fund. The federal government has issued itself its own bonds and is calling them an asset. I'm not an economist or an accountant or anything of the sort, but that sounds like Enron-style accounting to me.

--Bill

No, it's a Ponzi scheme because it squandered its funds and now depends on those getting in the mandatory scheme to keep its liabilities funded. Of course, in a demographic winter when couples traded having children to hoard retirement funds, the scheme is bound to fail. Ironically, those retirement funds are failing too...

Happy Easter!

Overextending in the short term on the bet that this will prove a good investment in the long term is typical of many businesses.

You forgot: Happy Passover and spring solstice.

I'll skip the hakarl. I've been told it smells like the cleaning fluid used to get dirt out of bathtubs. I am going back to USA bonds after all. Of course, there are Pakistani, Iranian, and, Somali bonds. They could be good solid investments too. I'll think it over.

Y can't compare it to private accounting. Thumper

I hear that since piracy is becoming quite stable and lucrative in Somali, their bonds should do very well.

Chip

No, I didn't. The Passover is not today and the spring solstice happened a few weeks ago.

I wonder if you're going to remind your Jewish and Pagan acquaintances about a Christian holiday too...

Passover is a multi-day event, and we are in fact in the midst of it. Anyone posting happy Easter greetings in a forum open to all cultures and religions is fair game for being reminded that more than Christians read here.

Fair game? What's this, open season on Christians? Just let Christians be Christians and celebrate our holidays without policing and let those who mind having their holidays remembered manifest themselves. I for one won't reply that they should mind the Christians. It's their feast.