Social Security will fail because for the next few decades at least, it will have more going out than coming in. That’s a recipe for failure. From Bill Bonner at bonnerandpartners.com:
POITOU, FRANCE – Uh oh.
The “social welfare” systems that are responsible for 40% of federal spending are going broke. A headline from The Wall Street Journal:
Social Security Expected to Dip Into Its Reserves This Year.
What reserves? Ah… the “Trust Fund.” But what’s in the trust fund?
What else? U.S. Treasuries.
In other words, the people’s favorite pension plan will depend on U.S. Treasury bonds… IOUs from the deepest debt hole in the world… the same IOUs that the world’s biggest central bank – the Fed – is unloading through “quantitative tightening.”
And these are the same IOUs that the federal government is selling, too – in record number. Deficits must be covered by borrowing (selling bonds). And in fiscal year 2019, the feds are going to need to sell $1.2 trillion worth of them.
Dangerous Ratio
Meanwhile, corporate America has some $7 trillion worth of bonds maturing over the next seven years. It will have to roll them over… by issuing new debt.
Who’s going to buy all this debt? At what price?
We’ll come back to those questions another day.
Meanwhile, Medicare is looking a little peaked, too. Its “trust fund” is expected to be depleted by 2026 – three years sooner than the last estimate.
And here’s the important number, says The Fiscal Times: 2.2.
That’s the ratio of workers to Social Security beneficiaries. In 1968, when America really was great, there were about five workers for every one beneficiary. By 2035, that ratio will have fallen to 2.2.
We know what you’re thinking: 2035 is a long time from now. Heck, many of us reading this (or writing it!) will not see it.
And that gives Congress and the administration plenty of time to correct any problems, right?
The U.S. government now consumes about a quarter of our national output… and directs, controls, or strongly influences another quarter. How does it make its decisions about when to spend… and when to cut back?
If it works the way they teach you in Civics class, we have nothing to worry about.
If their finances begin to go bad, our elected representatives – paragons of virtue and intelligence, every one of them – will take action to set things straight.
They’re smart people. Many of them have law degrees. Some have even been in business. In a pinch, they’ll sharpen their pencils, tighten spending, raise taxes, and put their house in order.
But this isn’t Civics class.
To continue reading: Why Social Security Must Fail
“Social Security will fail because for the next few decades at least, it will have more going out than coming in.”
That’s the case with all government spending
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With the amount of Amerikans dependent on the SS system, it’s no wonder Atlas will soon shrug. What comes afterward is anyone’s guess. The prescient Mr. Bracken documented a scenario called “The Poor Peoples’ March” in his excellent work: FOREIGN ENEMIES AND TRAITORS.
So, my friends, what do any of you think will happen when millions get booted off the gravy train, which they have been forced to pay into for their entire working lives? There will be a lot of FEDGOV parasites hauling ass for their bolt-holes in New Zealand. Those remaining will be the recipients of a hemp necktie. Stay tuned.