Dies Retired

For the Sake of the Children,' Let Social Security Die

Social Security, Medicare and Medicaid are bound to fail. Rather than fight the inevitable, we should let these programs die gracefully.

I always hate it when a politician says, "For the sake of the children." It's really just code for "we're going to tax you."

In this case, however, it really is for our children's future that the elderly MUST allow these massive Ponzi schemes to be shut down.

Now, I don't mean to rain on anyone's government money parade. I also know that most have paid into this plan thinking (hoping?) someday you'd live to see the golden years of retirement. So, before you get mad at me, know that I have a solution... and it doesn't entail the elderly dying early.

We'll begin with dispelling the myth that all is hunky-dory with Social Security and that, according to the politicians, it's fully invested.

As you know, the program was supposed to work by investing what you put into it. When you reach the age of 65, they supposedly give your money back, plus earnings, in regular monthly installments.

That was the original plan. Unfortunately, they deviated off course. Your elected officials chose to spend (read steal) the money you put into the program, using it to buy votes from non-productive members of society.

Here is how the program now operates: Both current workers and future workers ("the children") get taxed to pay for the retirees. That works when you have 5.1 workers for every person on Social Security, as they did in 1960.

Unfortunately, and this is a problem throughout the Western world, we followed the encouragement of our leaders and stopped having children. Now it's projected that, by 2030, there will only be 2.2 supporting workers per retiree.

In other words, in the absence of massive tax increases, borrowing and printing currency out of thin air, there won't be enough young workers to take care of everyone. There's also no indication that any of those three choices would work. (One need only observe Europe's PIIGS for a living example.)

The Lockbox (And Other Fairy Tales We Want to Believe)

So what about the Lockbox we've heard about for so many years?

It's a scam that makes Bernie Madoff look like a piker.

You see, after the monthly checks have been sent out, if there is any money remaining, it goes into the so-called lockbox (really, it does). Then that money is placed in what's considered an extremely safe and conservative investment. (So far, so good.)

This is what our politicians keep referring to when they say everything is fine with your Social Security and it's currently fully invested. It's a lie.

Buy Aussie Bonds

The problem is that the "rock-solid investment" of choice happens to be U.S. Treasury bonds. As you know, a Treasury bond is a fancy name for an IOU with the government backing it.

In other words, they borrowed the surplus money and replaced it with promises.

When these bonds mature and our lockbox is due to get the investment principal back -- with interest -- guess what happens?

The U.S. government, having saved nothing, must raise taxes to repay the IOUs sitting in the lockbox.

It works like this:

1. You were taxed once for your future benefits. The government spent that money on welfare or warfare (or both) helping someone else.

2. Now others are taxed, to cover the government's shortfall, in order to pay your retirement benefits. (Left over moneys go into the lockbox again.)

3. Both the retirees and "the children" are taxed again to repay the Treasury bonds that are sitting in the lockbox.

Had our government invested in any other nation's bonds, the lockbox myth would have turned out to be a reality. If they purchased Aussie IOUs with our money, for example, there'd be money there with cash to spare. The insatiable appetite of our government rules out such logical action.

Make Social Security Optional

These retirement programs, run by bureaucrats for the benefit of politicians, will never work. The wealthiest segment of our population is forcing the younger generation (the children) to make good on promises of a corrupt, out-of-control government.

It's likely that, when the promises were made, the ones receiving early payment knew it could not last. Regardless, a promise is a promise. Just because the government stole your money and is delivering your check of funds stolen from another's future retirement does NOT diminish their obligation.

The solution that makes the most sense is to create a system that's 100% voluntary.

Few under the age of 30 would sign up or continue. They know it's never going to be there for them. I suspect the 50 and under crowd would also take their chances with investing for their own retirement, given the dismal results our government has had.

(This isn't the first time I've spoken about retirement. Sign up for Taipan Daily to receive more investment commentary.)

With a purely voluntary system, the question that immediately pops up is who would pay for it, if not the current workers (we've already smashed the lockbox myth)?

Given the U.S. has military bases in over 100 countries and wars we refuse to call wars being waged in three sovereign nations currently, I believe that we could fund our entire obligation by bringing the troops home. I suggest we defend our own borders and leave the world's problems to others.

In short, my proposal is to reduce the military industrial complex and fund the promises of our nation. Perhaps it's too much to ask, but I think in light of the success we're having overseas and on our southern states' borders, it might be a proposal worthy of consideration.

One thing, however, is for certain. Unless the current retirees acknowledge the system is beyond repair and insist that the burden they are forcing upon their children and grandchildren be made optional, the entire scheme will implode under its own weight.

The choice is simple. You can hope you die before the system ends, or we can acknowledge it's a scam and insist on repair. We must stop burdening the young with a continued theft perpetrated by our government.

P.S. I'd love to hear your thoughts on this. If you agree with me, and are nearing retirement age, write your congressman and senator. If you disagree with me, feel free to explain why: joseph@taipandaily.com.

Editor's Note: Inflation is rising rapidly, no matter what the government says. The result could spell doom for your bonds. But if you make one simple move right now, you could inflation-proof your portfolio and thrive as inflation continues to grow. Learn more from Taipan's Safe Haven Investor.

About the Author

Joseph McBrennan is the Editor of Wealth Legacy Advisory and a regular contributor to free financial market e-letter Taipan Daily. Editor Joseph McBrennan comes from at least five generations of investors and traders on both sides of his family, dating back more than 150 years. He brings to Taipan Publishing Group over two decades of experience in the investment banking business.

What calibers should be retired, and what calibers died before their time?

I think the .25 ACP should go the way of the dinosaur and 6.5 Grendel is awesome but its practically extinct..

I will take 25acp for $5. Ding! Ding! Ding!

The 41Mag was a great caliber - it just never caught on like the 44Mag did.
I have the 480 Ruger - it's great - but it died when the S&W 460 and 500 came out
6mm Rem Mag - another goodie - but, you never hear mention of it here anymore since the 243 Win is so much identical and popular now.

Now that the 17HMR is in town - the 5mm Rem Mag rimifre is gonna pass away shortly. It should probably take the 22Mag to the grave with it.

The 22 Hornet is still cool - but - soon as someone chambers a bolt gun in FN's new 5.7x28mm it will kill the Hornet. 5.7 will become the new Hornet. The idea of having a bolt gun in 5.7 and a 20rd semi-auto pistol is very very appealling to me.

Used to calibers came and went every 50 years. That was because the mildness of the steel and rust took such a toll on the first 100 years of guns. When Winchester introduced their new ball powders and the 308 Win back in the 1950's - it was suspose to put the 30-06 to bed. Didn't happen.

Who has a 222 Remington? There's another modern one gone by the wayside. I haven't seen that ammo on the shelf in a long time.

Remember the 45 Grizzly? 15-18 years ago you saw guys toten' them as the biggest semi-auto for hunting. They were on the cover all the big shooting magazines. Today - nada.

Remember the 44 Auto Mag? The early cartridges were made from cut down and annealed 30-06 brass - then stuffed with powder and 44 projectiles. All the rage in the early 80's and a big hit in the first 'Beverly Hills Cop' movie? Gonner.

So many calibers - so little range time........

CNN: Retired Gen Wesley Clark 'Holbrooke death tremendous loss'

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This entry was posted on Thursday, February 26th, 2009 at 12:51 pm and is filed under scrapbooking. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.