Social Security is the third rail of US politics. President Biden has recently made great hay out of Representative Scott daring to even hint that this sacred program could be altered in any way, manner shape or form. Nor have the Republicans dared to challenge our one and only president on this matter. Instead, they have contented themselves with utter and total denial that they had any plans in the offing along these lines. Social Security changes are not on the table, they aver. They have no plans of altering even a jot or tittle of this holy program.
But it gets even worse. Once you relieve people of the responsibility of providing for their own future economic security, they lose interest in personally investing in future productivity. Why bother saving when you know that the government will take care of you? Of course, this deterrence of thrift comes at the expense of real capital goods formation.
Even worse, the Ponzi scheme hasn't been taking in enough cash lately to fund current benefit payments, so the "trust funds" have been selling off Treasury securities to make up the difference, which is in addition to the increased quantities of Treasury securities that have to be sold to fund the already ginormous official Federal deficit. However it is funded (either by the market or by the accelerated creation of money and money substitutes by the global banking system), it also comes at the expense of real capital goods formation.
With the brief exception of the COVID lockdowns, there has been an almost perfect inverse correlation between the share of GDP allocated to private sector investment spending and the share of GDP allocated to government expenditures over the past sixty years, the latter share being driven upwards relentlessly since the passage of Medicare in the mid-1960s by the growth of Social Security and Medicare. The price we pay for this Ponzi scheme is that the economy deindustrializes, labor becomes less productive in real terms, standards of living of most working people (and just about everyone else who is not on the Federal Reserve fiat money gravy train) go down, and the federal government must rely more and more on fiat dollar creation to pay its bills.
Vincent: Excellent points. Where were you when I needed you? When I wrote this essay!
But it gets even worse. Once you relieve people of the responsibility of providing for their own future economic security, they lose interest in personally investing in future productivity. Why bother saving when you know that the government will take care of you? Of course, this deterrence of thrift comes at the expense of real capital goods formation.
Even worse, the Ponzi scheme hasn't been taking in enough cash lately to fund current benefit payments, so the "trust funds" have been selling off Treasury securities to make up the difference, which is in addition to the increased quantities of Treasury securities that have to be sold to fund the already ginormous official Federal deficit. However it is funded (either by the market or by the accelerated creation of money and money substitutes by the global banking system), it also comes at the expense of real capital goods formation.
With the brief exception of the COVID lockdowns, there has been an almost perfect inverse correlation between the share of GDP allocated to private sector investment spending and the share of GDP allocated to government expenditures over the past sixty years, the latter share being driven upwards relentlessly since the passage of Medicare in the mid-1960s by the growth of Social Security and Medicare. The price we pay for this Ponzi scheme is that the economy deindustrializes, labor becomes less productive in real terms, standards of living of most working people (and just about everyone else who is not on the Federal Reserve fiat money gravy train) go down, and the federal government must rely more and more on fiat dollar creation to pay its bills.
This will not end well.