I think that that is at the root of a lot the the problem. I’m retired and I collect Social Security - but I have never voted or indicated that I thought that Social Security was anything but a Ponzi scheme which is highly seductive but in fact is slanted towards leaving young people holding the bag.The trouble with the Social Security system is that it doesn’t have an independent investment base. It is all “invested” in “safe” government bonds. Let’s face it, historically government bonds have been safe, and they always will be safe in dollar-denominated terms. But when government gets its credit rating downgraded by Moody’s, that is no joke. When the debt skyrockets, at some point people sober up and realize that there isn’t enough money in the world to pay the retire that debt - and then that “safety” becomes a bitter joke.
It’s a Ponzi scheme because the Government - acting as our "fiduciary" “invests” the money in its own debt. This results in a situation where a single entity - in this case the government - writes and IOU to itself and claims that it has economic value. It doesn’t - when it comes time to draw on the SSTF, the Social Security Administration will present a bond to the Treasury and the Treasury will have to print dollars to honor that bond. That is, it will have to borrow that money on the open market - and its credit rating will tank in the process.
And that is a sword of Damoclese hanging over the heads of our own children and grandchildren. On a personal level, the only way to ameliorate that situation is to pass as much of that Social Security money down to your children as you can. The government told us that the payroll tax wasn’t a tax but an investment. But it really was a tax, because that money is gone. We should accept that reality and, to the extent your circumstances permit, indemnify your children against it.
Well said - thank you so much for expressing the peril of “funding by Ponzi” much better than I could have.