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Social Security


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6 replies to this topic

#1 thefirstimmortal

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Posted 12 December 2002 - 03:07 AM


The citizen of the United States who is compelled by law to devote something like 15 per cent of his income to the purchase of a particular kind of retirement contract, administered by the government, is being deprived of a corresponding part of his personal freedom. How strongly this deprivation may be felt and its closeness to the deprivation of religious freedom, which all would regard as “civil” or “political” rather than “economic,” were dramatized by an episode involving a group of farmers of the Amish sect. On grounds of principle, this group regarded compulsory federal old age programs as an infringement of their personal individual freedom and refused to pay taxes or accept benefits. As a result, some of their livestock were sold by auction in order to satisfy claims for social security levies. True, the number of citizens who regard compulsory old age insurance as a deprivation of freedom may be few, but the believer in freedom has never counted noses.

#2 bobdrake12

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Posted 12 December 2002 - 04:09 AM

http://www.ida.net/u...ialsecurity.htm

The Social Security Ponzi Scheme

A position paper by Donovan Bramwell
Copyright 2002 by author


Back in the 1920's a man by the name of Charles Ponzi defrauded hundreds of investors of their money, using a strategy that bears his name today: the Ponzi scheme. It works like this: Ponzi gets a group of investors to give him money, promising a nice return on their investment at the end of a specified term. By the time their investment has "matured," Ponzi has got a second, larger group of investors to likewise invest, and he pays off the first group, with "dividends," using the money invested by the second group. Then the second group gets paid off with money invested by a third group, and so on. Meanwhile, Ponzi is pocketing the surplus.

Ponzi schemes are fundamentally fraudulent. The U.S. Securities and Exchange Commission warns investors against Ponzi schemes and their cousins, pyramid schemes. The SEC instructs investors to be alert for the following characteristics:

o Reliance on funds from new investors to pay returns, commissions, or bonuses to old investors
o Need for an inexhaustible supply of new investors
o Absence of a profitable product or effort to make profits through productive work.

Many people operate under the misconception that the Social Security Program is a retirement program into which a person invests a portion of his salary with the expectation that when he retires, he will get his investment back, with dividends, in monthly payments. The Social Security Administration promotes this misconception by telling you that you have a Social Security "account." Well, it isn't so. The money contributed by today's workers (the third generation) goes directly to today's retirees, yesterday's workers (the second generation). In this regard, the Social Security Program operates exactly like an illegal Ponzi scheme, with exactly the characteristics that the SEC warns against. If I were to run a retirement/investment program the way the Federal government runs the Social Security Program, I would go to prison for fraud.

Fact is, though, the Social Security Program is not an investment/retirement program. It is a socialist tax-and-welfare program, implemented during the 1930s when the Federal government and the Federal Reserve Banks deliberately colluded to exacerbate and prolong an economic crisis, in order to make socialism popular among the masses. (The scheme was successful.) The courts have clearly ruled that payments to the Social Security Program are an excise tax on income, and Social Security benefits are welfare payments. The government has no legal obligation to ever pay you anything.

The Social Security Program is fundamentally flawed, though, in its similarity to an illegal Ponzi scheme. Ponzi schemes always collapse, leaving the last generation of investors holding the bag. The government has an advantage over Ponzi, though, in that it has the IRS to compel participation. Still, the only way to keep such a scheme solvent is to compel successive investors to pay more and more, while the recipients get less and less. Do the math.

The Social Security Program was very popular at first. The tax was small and the benefits were generous. Early beneficiaries got a lot more money back than they put in. Just like a Ponzi scheme.

Lately the program's popularity has waned. The tax is large, 12.4%. The benefits are meager. If you are an American earning the median income of $31,695 per year, and were given the option of investing that same amount of money in a stock mutual fund, you would retire with a retirement income of over $100,000 per year, about five times what you could expect from Social Security. Even a very conservative investment strategy would yield three times the benefits promised by Social Security. Young workers today seriously doubt that the program will still be solvent by the time they retire.

The entire Social Security Program should be incrementally privatized. I favor an "opt-out" program that allows payees to invest privately instead of participating in the government's program. Countries like Chile, Mexico, Britain, and Australia are already successfully making the transition from their failed Social Security systems to healthy systems based on individual retirement accounts. In Chile, over 90% of workers have opted out of the government-run system.

It's time for the U.S. to do what Chile has done. Too bad we didn't do it ten years ago; we missed a helluva market.

#3 bobdrake12

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Posted 12 December 2002 - 04:17 AM

http://www.nite.org/...onzi_scheme.htm

Ponzi Scheme

October 16, 2002



The Hard, Cold Truth About Social Security

Not only is the Social Security System a PONZI-PYRAMID FRAUD, it is also the mechanism through which the IRS is able to illegally acquire information that is used to attack you and force you to pay the 'income tax'.


Social Security is the ultimate "Ponzi Pyramid Scheme".

There are no funds whatsoever in the social security "trust fund". Congress has already borrowed it all and loaned it to Mexico, donated it to various foreign countries, bailed out the S&L’s, etc. Furthermore, Social Security is not a contract. It is a unilateral political promise that Congress can renege on at any time. A beneficiary has no standing against his benefactor. Social security payments are made at the discretion of the legislature and could be terminated tomorrow morning by a roll call vote.

When social security was first introduced in 1935, there were approximately 50 workers paying in to the bottom of the pyramid for each worker retiring (emerging) from the top. Today, there are approximately 3. The only way Congress can ever make good on its promise to pay tomorrow’s retirees is to cut back on benefits through "means testing" and other devices and to raise taxes, or BOTH. If a group of private businesspersons did what Congress has done, they’d all be in jail alongside convicted junk bond traders.

In case you ever find yourself wondering "What happened to all the money in my account ", please understand that THERE IS NO ACCOUNT and THERE NEVER WAS. The "virtual" account keyed to the number applied for on your behalf is simply a bookkeeping entry of how much you’re targeted to receive, assuming, of course, that there’s actually any money left. There is no dedicated, protected "trust fund". Congress cracks the piggy bank and steals your retirement dollars and spends them faster than they come in. That’s why there’s an annual deficit.

No private businessperson could possibly operate like this (but, then again, they can’t raise their own "debt limit" and place an order to have some more money printed any time they need it, either)

IT WAS ALL SPENT THE DAY IT ARRIVED AT THE SOCIAL SECURITY ADMINISTRATION!

HOW SECURE DOES THAT MAKE YOU FEEL ?


Congress has used your retirement money to fund its deficit spending and wasteful boondoggles. They gave it to the Emir of Kuwait (to fight Saddam), they gave it to Saddam Hussein (to fight Iran), they gave it to Iran (to support the Shah), they gave it to CHINA (most favored nation trade status) to show how much the America People REALLY OBJECT to and HATE COMMUNISM. They gave it to everyone in the world, except you, the rightful owner !!!

DO YOU FEEL REPRESENTED NOW !?

Everyone knows that THE KEY to building a successful retirement planning program is realizing the benefits of compounding interest on slowly appreciating assets over a long period of time. Without this appreciating/compounding effect at work for you in your retirement plan, THERE CANNOT BE ENOUGH TO LIVE OFF OF WHEN YOU RETIRE. NOT ONLY DOES SOCIAL SECURITY NEVER ACQUIRE ANY REAL INVESTMENT THAT MAY APPRECIATE, NO INTEREST AT ALL IS EVER CREDITED TO YOUR "ACCOUNT" ! DO YOU UNDERSTAND WHAT THAT MEANS ? IF NOT, RE-READ THIS PARAGRAPH OVER AND OVER AGAIN UNTIL YOU GET IT !

Carlos dePonzi was a Count in the early 1900s who "operated" the first fraudulent "pyramid" investment con; wherein money from later investors is directly and immediately used to "pay off" earlier investors, WITHOUT EVER INVESTING IN ANY REAL THING, while the "surplus" money raised (profit), is used to fund a very lavish lifestyle. Each "level" of "investors" is successively promised higher and higher rates of return (or forced to participate), with the testimony of earlier "investors" of how well the program worked for them as part of the sales pitch, until there are no more "investors" (read fools, or pigeons) left to enroll in the "pyramid". Of course, at that point in the con the "operators" (government), and all the money "invested" (your retirement money), DISAPPEAR forever, never to be seen again ! Congress of course made these fraudulent cons illegal for anyone to operate, EXCEPT THE GOVERNMENT, who has been doing it ever since, under the name "Social Security". They just got rid of the competition!


Copyright © 1997 - 2001
National Institute for Taxation EducationSM - NITESM
All rights reserved.


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#4 bobdrake12

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Posted 12 December 2002 - 04:27 AM

http://www.aynrand.o...nk/privat.shtml

Fully Privatize Social Security

The Looting of Our Retirement Savings Is the Product of Altruism

by Robert W. Tracinski


Presidential candidate George W. Bush recently announced that he would campaign for the partial privatization of Social Security. Under Bush’s proposal, taxpayers would be allowed to invest a portion of their Social Security taxes in the stock market.

This plan has been savagely attacked by the left, which claims that private investments are “too risky” to be relied on for retirement savings. But such claims are absurd — because any private investment would be a better financial deal than Social Security.

Imagine that you are 25 years old, and a salesman offers you the following: In exchange for 7.5 percent of your salary for the rest of your working life, plus a matching premium from your employer, you will upon retirement receive a monthly pension. Upon further questioning, however, you learn that the total payments you could reasonably expect to get would be less than what you could have gotten through a simple savings account.

Further, you discover that your money will not even be invested, but will be given away to the salesman’s brother-in-law to buy a car, to his neighbor to pay for college, to the local YMCA to renovate its basketball court. You will thus be paid, you realize, not from any returns generated by your funds, but directly from contributions by new “investors.” And what if there aren’t enough new “investors”? Simple, the salesman explains: Your benefits will be cut.

No rational person would buy into this Ponzi scheme. Yet that is precisely what Social Security is: Workers’ current premiums are used to pay for immediate government spending — while future benefits come from the taxes extracted from younger workers.

This is not news to most people. The destructive fraud inherent in Social Security has long been exposed by numerous commentators. But, absurdly, the left continues to denounce any proposed alternative to this system as “too risky.” Why is Social Security’s Ponzi scheme — which would result in a prison sentence if launched by a private citizen — viewed as untouchable? Economically, Social Security represents a colossal loss of wealth. What keeps this program alive is the morality behind it.

Consider the main argument leveled against any attempt to privatize Social Security. If we were left to manage our retirement savings on our own, it is claimed, some would fail to plan at all (or would invest foolishly), and would have nothing left for old age.

What this really means is that, in order to protect the irresponsible investors from their own folly, the responsible ones must have their savings ravaged. It means that those who are capable of planning for their future must be sacrificed for those who, supposedly, are not.

This viciously patronizing system regards people as essentially feeble-minded and helpless, unable to anticipate the requirements of old age. The government, therefore, must save them from themselves. How? By not allowing anyone to make his own decisions. And the tragic irony is that Washington, the epitome of blind short-sightedness, is “rescuing” us from our presumed stupidity — with a scheme so ruinous that only a fool would willingly participate in it.

But Social Security is not a plan designed to serve your best interests; instead, it is based on the premise that you must surrender your interests for the sake of others. Its purpose is not to help you pay for your own retirement, but to force you to pay for your neighbor’s — or your neighbor’s parents’.

This is why the left loves Social Security. It is a system under which all must sacrifice for all — and none may profit. Everyone is made dependent on government — and no one is allowed to provide for himself. The left doesn’t view such a program as a failure: It succeeds at achieving their altruist ideal — even at the cost of draining the people’s wealth and making it harder for them to plan for their retirement.

But it is time to reject the left’s premise of self-sacrifice and to assert the individual’s moral right to pursue his own self-interest. It is time to move to a voluntary system under which each individual is allowed to plan his own financial future with the money he himself has earned. George W. Bush’s proposal is a good start, but we should privatize Social Security completely.

Only then can we look forward to genuine retirement security — the security that comes from relying on one’s own thought and effort, not on the dishonest promises of a bankrupt, parasitical government program.

Robert W. Tracinski is a senior writer for the Ayn Rand Institute in Marina del Rey, Calif. The Institute promotes the philosophy of Ayn Rand, author of Atlas Shrugged and The Fountainhead. www.aynrand.org

#5 bobdrake12

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Posted 12 December 2002 - 04:31 AM

http://www.lpwv.org/socialsecurity.htm

Why We Must Privatize Social Security

By Alan Handleman


The current cry on Capitol Hill is, "Save Social Security!". They might as well talk about saving the Titanic. Social Security is a pyramid scheme that cannot be saved in its present form without increasing the payroll taxes which support it, restricting the benefits it pays, or both.

If Social Security is so wonderful, then WHY did our lawmakers EXEMPT THEMSELVES FROM IT?

While the other candidates promise to salvage this sinking ship, only the Libertarian Party offers a REAL WORLD solution, a plan that we believe will provide something truly secure to those dependent upon Social Security, while setting future generations FREE of the current system, which we see as a fantasyland fraud. First, we need a bit of background.

The Cato Institute, a Libertarian think tank, provides the means for calculating how much better off workers would be if allowed to invest privately that which they are now forced to pay in Social Security payroll taxes. A 25 year old earning $30,000 today and retiring at age 65, for example, can expect to draw $1,515 monthly from Social Security in 1999 dollars. Were he to invest conservatively in bonds, he could receive $1,985 monthly. Investing completely in stocks, he could retire on $6,882 monthly, and still leave a tidy nestegg for his heirs. Mixed portfolios would fall in between these figures. You can verify these facts for yourself.

Now let's look at what Washington's financial wizards have in store for us as an alternative. Social Security benefits are paid directly from the incoming payroll taxes. Because these receipts currently exceed benefit outlays, there is a surplus. The congress spends this surplus, replacing the cash with government bonds. These IOU's are the so-called "trust fund". Shortly after Baby Boomers begin to retire, payroll contributions will no longer cover benefits. Beginning in 2021, keeping the system afloat will require cashing in the bonds. The federal government, currently $6 trillion in debt, will have to borrow money from other sources to pay off those bonds, probably at higher interest rates. According to the Congressional Research Service, Social Security will be insolvent by the year 2034, unless taxes are increased or benefits reduced. The "trust fund" will be exhausted. Social Security will become a true Ponzi scheme at that point, the difference being that Charles Ponzi didn't force people to buy into his scams. They did so motivated by greed.

Where will most of today's lawmakers be when the Social Security bubble explodes? It's reasonable to presume that most of them will not still be in the Congress, making it easy for them promise to save Social Security today in order to win your vote. They tell you what they think you WANT to hear. I'm telling you what I know you NEED to hear -- the TRUTH. Originally, the combined Social Security payroll tax was TWO PERCENT. Today the combined contributions of employee and employer are FIFTEEN PERCENT.

Where will the Democrats and Republicans take it from HERE? Today, 3.3 workers support each beneficiary. In 1950, that number was 16. By 2034, fewer than two workers will be supporting each Social Security recipient at anticipated benefit levels. The current Social Security system is intergenerational economic cannibalism. Every working person who desires to opt out of this inept, immoral, involuntary system should be allowed to do so.

And what about those who depend upon Social Security NOW or who will be depending upon it SOON? Let's offer them something that really IS secure, but without wrecking the lives of yet another generation.

Harry Browne, the Libertarian Party's presidential candidate, was an investment advisor for 30 years. He suggests selling off trillions of dollars worth of assets that the federal government has acquired for purposes that clearly violate the Constitutional limits of its powers. With the proceeds, Harry suggests purchasing private investments that will provide REAL security for seniors, and that will even leave them a nestegg that they can leave to their heirs.

This would break that pyramid and FREE the young working aged adults and future generations to provide themselves with a REAL investment for their own retirement and a NESTEGG to leave to THEIR children too. Which would YOU rather have, a Ponzi scheme masterminded by politicians and bureacrats, or a plan based upon YOUR OWN decisions for planning your retirement?

#6 bobdrake12

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Posted 12 December 2002 - 04:43 AM

http://moneycentral....create/1205.asp
The Basics

Born after 1948? Don't count on Social Security (excerpts)

By Tom Woodruff


Early birds ate a lot of the worms

When Social Security was started as a pay-as-you go system in Depression-wracked 1937, it was a blessing for the disabled and the poor, but it wasn’t limited to those in need. Even the wealthy could ride this gravy train.

The sooner a person got on board, the better the ride. For a man retiring in 1940, the return on “investment” for the Social Security taxes he and his employer paid, adjusted for inflation, was a whopping 135%. For someone retiring in 1950, the return was a cushy 24%, 15% for 1960, 10% in 1970, 8% in 1980, 6% in 1990, and 4% today.

Notice a trend there? Most young workers can expect a negative return on their Social Security taxes -- they will get less in benefits than they paid in taxes.

In fact, according to economist Dean Leimer, workers born prior to 1916 -- some of whom are still collecting benefits -- have received a net transfer of $8 trillion from younger contributors over the years.

They were the biggest winners.

Better stuff those IRAs and 401(k)s

Folks who are working now are continuing to pick up that tab. The next generation supposedly will pick up yours. Trouble is, there will be more workers collecting benefits in the years ahead, and not enough workers making contributions.

Just as Ponzi ran out of investors, the government is running out of contributors.

In 1950, there were 17 workers for every retiree over 65. Now we have 3.3, and by 2025, we will have about two workers for every retiree. The number of people over 65 is expected to double over the next half century, but the number of working-age Americans is expected to rise just 25%.

That’s all you really have to know. Something has to give, and it will be your retirement benefits.

#7 bobdrake12

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Posted 12 December 2002 - 04:57 AM

True, the number of citizens who regard compulsory old age insurance as a deprivation of freedom may be few, but the believer in freedom has never counted noses.


The First Immortal,

I believe it is important to understand "the system".

Unfortunately, there is a variance in the truth between how "the system" has been presented to the majority of the American people versus how "the system" actually works.

In summary:

If Social Security is so wonderful, then WHY did our lawmakers EXEMPT THEMSELVES FROM IT?


bob




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