Yesterday we took a look into FDIC and its hairline illusion of solvency. But this isn’t the only “social safety net” put together by the FDR administration during the New Deal.
The Social Security Act of 1935 established the federalized Old Age, Survivors and Disability Insurance, or what we more commonly refer to as Social Security. Social Security is just one of the many Federal promises made by the FDR administration, in a Fascist consolidation of power, who’s check will eventually bounce.
Social Security sounds great on paper, and certainly was a very politically popular move. Fund retirement old age insurance through payroll taxes, what could possibly go wrong?
Well everything apparently. The SSA has stated that they can only continue to fund Social Security projections until 2034 at which point the program will be entirely insolvent. But with a growing fiscal gap of unfunded liabilities well over $200 Trillion, the question needs to be asked, which debts will the Fed service with their arm of expansionary monetary policy?
Of course, the solvency of the program is not a new debate, but as more of the boomer generation enters the eligibility window, expect the partisanship around this issue to escalate. It’s likely we will see a push to raise SSA revenues through a larger tax burden, something we will be, no doubt, sold as necessary for our well being.
Pundits argue that the “risk free” nature of a low risk, public retirement fund like Social Security is necessary to protect the consumer from the volatile nature of the market. I do have to wonder just how “safe” funds that hold devaluing fiat currencies, rather than assets, actually are. It seems that our monetary policy is already directly tied to the performance of the market.
But it’s not merely the ponzi-like insolvency of social security which raises concerns. The Opportunity Cost of Capital and the mandatory participation in a federalized insurance program (rather than a less regulated, privatized variant) make it at best, soft socialism, and at worst, an outright scam.
Legal and public guarantees of future financial safety, just like FDIC, are an illusion.
Book of the Month:
The Ethics of Money Production by Jorg Guido Huulsman
-“In a truly free market, paper money could not withstand the competition of commodity monies. The more farsighted and prudent market participants would get rid of their paper money first, and the others would follow in due course”
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