First of all, there are lies and damn lies!!! Secondly, this analysis needs to be recalled. After reading the article, I printed the list of maximums for salary, and taxes from the inception of the OASDI and Medicare from 1937 and Medicare from 1966. IF, I had earned the maximum salary for each year from 1955 to 2005 (my working years), I would have only contributed $122,434.34 and one can assume my employers matched it. Of course, I did not meet those maximums until latter years of employment. Where did Dr. Krieg come up with his erroneous figures???
In fact, my contribution to Medicare equaled $21,112,18 and Medicare paid almost $66,000.00 for one night stay in the hospital some 6 years ago. Where does the good Dr. get his information and where does he figure the monies come from to fund these large health bills??
This kind of misinformation only fuels the fury and stupidity of the general public.

"Debt held by the SS trust fund is level 4 debt, the weakest obligation to fulfill."

So the money the government owes ME is a "level 4 debt". The governments obligation to pay ME is "weak". They have a weak obligation. My obligation to pay taxes however is as strong as Super Man. I guess it's like my mama said. Might makes right.

Avatar wrote:
What the SS trust fund does represent is a legal obligation for our government to repay the principal and interest.
You are correct, but not all T-bond obligations are created equal.
There are Expicit Liabilities, represented by the T-bonds owed to China (debt held by the public) and Exposures Implied by Current Policies or the Public's Expectations About the The Role of Government, which is comprised partly of the SS trust fund.
Debt held by the public is level one debt, the strongest obligation to fulfill.
Debt held by the SS trust fund is level 4 debt, the weakest obligation to fulfill.
See a paper entitled "Federal Debt, Answers to Frequently Asked Questions, An Update, " published by the GAO.
See pages 65 and 66.
Click to view link
Avatar then wrote:
The Government takes the SS taxes and invests them in USA bonds that pay interest.
No, the government takes the excess SS taxes and interest and loans them to the Treasury to pay for current expenses.
How can those same dollars and interest be in the bonds and the Treasury for current expenses at the same time?
Don Levit

@DB

You mentioned that the Prussian social welfare state was championed by Bismarck.

There is a line that goes back to the Reformation; I need to reread the material Van Creveld presented. However, we would also need to trace the money power back before Rothschild; we are going back to the 1540's here.

It is worth doing the research.

Speaking of research, you may want to investigate Linda Minor's research here: Click to view link Mafias are at least honest about their intentions.

You should be able to connect the dots across more than two centuries; I have done some research into New England history to cover the colonial period.

I do not look only at concrete events; I try to determine behavior patterns. I have shared my findings and conclusions here. Yankees behavior patterns are consistent across all social classes and levels.
Terezin (Theresienstadt) is their idea of a model society.

Reply from The Daily Bell

True about mafias and we have traced central banking back to Venice.

@DB

You mentioned that the Prussian social welfare state was championed by Bismarck.

There is a line that goes back to the Reformation; I need to reread the material Van Creveld presented. However, we would also need to trace the money power back before Rothschild; we are going back to the 1540's here.

It is worth doing the research.

Speaking of research, you may want to investigate Linda Minor's research here: Click to view link Mafias are at least honest about their intentions.

You should be able to connect the dots across more than two centuries; I have done some research into New England history to cover the colonial period.

I do not look only at concrete events; I try to determine behavior patterns. I have shared my findings and conclusions here. Yankees behavior patterns are consistent across all social classes and levels.
Terezin (Theresienstadt) is their idea of a model society.

Dotti,

Thank you! I always enjoy your posts as well.

You have more faith than I do.

The system is broken and no fix will come without serious pain. Here, I'll do my part. I hereby rescind all claim to all monies I've paid into social security over the last 23 years. I hereby accept the printing of money, and the devaluing of my purchasing power, to fund payments to all people currently retired, and within 10 years of retirement. I hereby offer my spare bedroom to any idiot who believed that the government would keep their promises, as long as I have known them for over 10 years and trust their reputation. I hereby accept that I will likely work until I die.

Not 1 in a million people, in the world, will make that kind of sacrifice. Therefore, the likely conclusion is default, without any civil negotiation to soften the blow.

NAPpy, I stand in awe!!!

What a wonderful response to the referenced post--characteristic of posts by this particular feedbacker.

Hopefully, it will be taken as a constructive criticism for anyone who is susceptible to this type of faulty reasoning.

I applaud you!

How can you claim "to think critically... ", while lumping people you don't know into arbitrary groups? Your average American has been beaten as a kid, abused in public schools and you wonder why critical thinking skills have declined? Tell me, where in today's world do you not have public education and some measure of socialism? If there is no Galt's Gulch, then by what reasoning do you single out Americans you don't know, for fault? Fractional reserve banking backed by legal tender laws and central banks is a world-wide phenomenon! Given the circumstances we were all born into, it's a miracle people learn to think critically at all.

So, given the hypothesis that abuse lowers the probability that critical thinking will occur, aren't you being evil and / or corrupt by laying blame on the abused? By the way, what's your strategy? All I hear from you is snide allusions to "liquidation", "social diseases", and "production". What does that mean?

Here's a solution. You don't initiate force against anyone, ever. If force is used against you, you can submit, run away, defend yourself, or disengage. The decision is personal, but since most Americans are grossly out-gunned, to promote "fighting back" is cowardly and hypocritical because the likely result is suicide. Submitting happens by default because waking up doesn't just happen--you have to recognize that there's a problem, look for a solution, and get lucky enough to find it, and lucky enough to find it quickly. I'm ashamed to say that it took me decades to wake up, so I'm not about to bash the slow progress of others.

Running away is easier if you have means, but in all honestly--run away to where? The current problems are GLOBAL, and to claim that the U.S. is especially guilty is ignorant or malicious.

I think the best solution for most, and what I'm trying to do myself, is to disengage. Withdraw from the fractional reserve system. Hold PM's. Barter. Pay as little in taxes as you can get away with. Associate with liberty-minded people. Ridicule, ostracize and avoid statists. We're social animals, and ostracism has proven to be a very effective tool in the past. Learn how to defend yourself. Hold food reserves. Integrate into a worthy community because it'll be hard to survive difficult times on your own.

There. See? Constructive recommendations without labeling. Now, you try it!

Re: "... There are plenty of others there who are just as narcissistic and useless as Americans,"

This sounds a lot like bigotry to me--at the least it is stereotyping an entire nation of what are obviously a very diverse people.

Well, the problem with government programs, at best, is they were concieved without the intention of causing harm (not likely).

They had no business fornicating without the ability to support their offspring in the first place.

But today the issue is, who is going to support the illigetimate child, the unloved program?

I say the institution responsible has to live up to the consequences of their actions. And no, it is not the American people. They did not petition government for this "service". And if the unwed mother is too weak, then go after the father, the federal reserve.

Just about every government program is named exactly opposite of what it is designed to accomplish

Well the repeal of the Glass-Steagall Act certainly did not have the free market consequences Reagan foresaw or its principal advocates: Wendy and Phil Gramm. Wendy helped Enron and Phil worked for USB which needed to be bailed out by the Swiss and American governments. Even the executive of Citicorp that pushed for the merger with Travelers said in 2009, we need a Glass-Steagall act to prevent another 2008. The problem with most government programs is Lack of over sight and consequences. This leaves these programs open to abuse and fraud. The perpetrators are rarely caught and/or punished.

Some people are outraged by the operation of the Social Security trust fund, using inflammatory language to describe our politicians as having 'raided' the trust fund. I don't happen to be outraged. I realize and accept that the government has a variety of revenue sources. What the Social Security trust fund does represent is a legal obligation for our government to repay the principal and interest on the special bonds in the trust fund. I have faith that these bonds will be honored - provided that future generations can afford to repay the bonds. ( Steve Vernon) The government takes the social security taxes and "invests" them in USA Bonds that pay interest. It also uses these taxes to lie about the budget. It deducts the amount of deficit equal to the social security revenue. Thus if 250 billion is received in SS taxes,our budget deficit is reduced by this much so it does not look as bad as it is-a ponzi scheme of sorts.

Just about every government program is named exactly opposite of what it is designed to accomplish. So, we have social insecurity. Take away enough funds from people who could have otherwise invested it for their own security, and squander it so it is unavailable to them when they most need it. Like any ponzi scam, the first few in may do well. Later, the majority get screwed. Once enough get screwed, people speak out. Once that happens, naturally the government wants out and starts talking about privitization. Ok, that is how it should have been all along. But that does not relieve government of its contract. Cut the EPA, HUD, FDA, etc. and make good on your obligations. If not, then Gov is in default. They will either default on us or on the central bank. And since we do like like central banking, we Americans have to stand together on this issue. We either have to be the rock or the hard place.

Mr. Danforth, you may be correct that, legally, S.S. is a general income tax.

However, to me, an average American Joe, it sure seems like the government positions it as an 'insurance policy.' To wit, they use the term, 'Social Security.' If the Feds really wanted to portray this as a a general income tax and general payment scheme, they could instead name it 'Old Folks' Welfare' or 'Transfer Payment for the Aged.'

Great analysis, Mr. Krieg: easy-to-follow and absolutely compelling. I have never considered the value of the matching contribution, and you are absolutely correct to include it.

Keep up the bombardment, sir!

Would someone point me to one one privatized federal program that is doing fabulous. Amtrak? Post Office? Fannie or Freddy?

Nothing in our tattered constitution that I can see would make SS any more illegal than anything else their doing,,, but that is a different subject.

Mr. King is correct in his calculations. Yes, Grandpa paid his fair share. He didn't bring up another fact that most miss,,, inflation. Gramps dollars were much more valuable than what we presently have by 30 to 90 pct depending on the time the 'donation' was paid.

These useless empire wars in just the last ten years cost far more than SS. Just listen to the howling when defense cuts are mentioned. And when/if they are mentioned,,, do they talk about reducing the number of bases? or reducing the cruise missile arsenal? NOPE! Veteran Benefits and Military payroll go on the chopping block. Seems hardware is more important to people than people.

Anyone see a "Wars Tax" on their payroll below FICA and Medicare? Didn't think so. Where's the war money coming from... Well part of it is from SS. Yes, the monies their looting from SS and putting into the General fund are being spent on Defense and other "projects". Then in order to make SS obligations they "Borrow" from the ever so friendly Fed.

Look at the Bankster bailout. 10-16 Trillion. Anyone think that might stay off the SS financial meltdown?

Remember the Trillion or so the Pentagon couldn't seem to account for back in 01?

And the Trillion or so floated away by the FDIC to Bail failing banks? (At least that was partially paid for)

And the Trillion or so to beef up the DHS and the staggering array of "intelligence agencies" to secure our freedoms.

Finally, I see no problem with making SS a voluntary contribution but stand by... What happens to those that opt out and don't save or the money they saved was inflated away? Are we going to stand by and watch them starve?

The problems we are experiencing are directly attributable to the looting and fraud by the banking and political system during the last 40 years which, by the way, received voter approval every two years.

Disclaimer:
"We" may not include any of us...

gmallcast has got it right.
The entire trust fund, principal and interest is comprised of unfunded non-marketable Treasury securities.
It is unfunded, because the principal (excess FICA taxes) and interest (paid in debt, not cash) represents IOUs from the Treasury to the SS trust fund.
In the last 2 years, interest had to be used to help pay benefits due to the shortfall of income from expenses.
One may ask "Why not simply liquidate the interest to make up for the shortfall? Don't insurance companies do this without raising new revenues, cutting expenses, or borrowing?"
If the trust fund was operated like an insurer, yes.
The interest can only be liquidated in one of 3 ways - raising revenues, cutting expenses, or increasing debt held by the public.
This is because the interest was credited to the trust fund via unfunded debt, with no immediate impact on the budget.
The trust fund merely represents the amount of draw on the Treasury without an appropriation. The draws om the Treasury are like all other pay-as-you-go expenses - like battleships.
The trust fund makes it no easier to pay benefits than if the trust fund did not exist.
I can provide governmental links and excerpts to back all of my statements.
Don Levit

According to the definition of a Ponzi scheme, "Social Security" is exactly that. Also, when used by a government, it is taking money and using it to bribe voters. The whole concept, if analyzed, doesn't pass the smell test.

Now that some recipients are living longer than the actuaries have figured, the structure of the whole concept is crumbling. However, it did its job by providing political "sainthood" to those politicians who have supported the fraud over the glory years of taking from some and giving to others. - - And Ponzi and now Madoff were jailed for the identical shenanigans!

The problem with this analysis is that there are still many, many SS recipients who put in a small fraction of what they will receive in benefits. My father died in 2008 at age 93 after retiring at age 65. My mother never worked at all for pay. The two of them together received well over $1,000,000 in benefits in those 28 years. The year he retired, the wage base for SS deductions was a maximum earnings of $22,900. He and his employer together contributed less than $1,000. The average SS contribution for both him and his employers over his working career was less than $500 per year, or around $15,000 TOTAL contribution over his entire working career. The first year of his retirement, he received benefits exceeding that amount.

Looking at it another way, other FUTURE SS recipients must make up that million dollar difference over what he and his employers paid in and what he received in benefits.

In short, the huge elephant in the room in Mr. Krieg's analysis is the fact that he ignores the fact that Social Security was never designed to be an annuity funded by each taxpayer. It was designed to be a wealth transfer scheme where the wealth of future contributors pays for the benefits of previous generations of recipients.

Even if my father's contributions had been put in a lock box, and even had they earned interest, he would still have received vastly more in benefits than he ever contributed. And by the way, there wasn't a single year that he didn't contribute the maximum required by law.