Posted on 04/24/2005 2:49:07 PM PDT by Matchett-PI
Social Security Reform No. 123
Inherent in our political system is the glaring flaw that 535 people can pull the wool over the eyes of 300 million.
People don't vote on bills before Congress, they rely on those 535 people.. When those elected minions do the wrong thing, seldom do the people even know about it.
That failure is compounded by a MSM dedicated to keeping the truth from the people if it would hurt the Democrat party. So we come to Social Security and the single greatest criminal fraud in the history of man. Try a $1.7 Trillion collateral theft on for size. Then get real on a $11 Trillion fraud. A fraud so serious that if committed by an American Corporation, it would find its officers and directors pounding rocks at the closest penitentiary .for eternity..
As an old accountant I find it criminal if a corporation doesn't record its liabilities in the year in which it incurs them. When that corporation conspires to deceive their shareholders and the public, their officers belong in jail. Just like those of Enron, Adelphia, etc. But the public has been deceived by Congress. Congress has not recorded on its books an $11 trillion liability. The unfunded obligation to pay Social Security participants their benefits earned this year and in past years. The enormity of this fraud is brought into broad relief when one realizes that all the whining and hand wringing over our $4.5 Trillion external debt is a mere pittance to the unrecorded $11 Trillion unfunded liability. Congress has carelessly and I believe criminally (in the greatest moral sense) allowed this cancer to metastasize.
Into the conspiracy jumps one George W. Bush. He has the audacity to suggest a solution to the fraud. He advocates that we, the people, extinguish this liability (pay it off) by abandoning our existing Ponzi scheme and embrace personal accounts. Needless to say the response by the Democrats and the MSM (or is that redundant) was ballistic in opposition to the overhaul of a fraudulent, unfunded program that is based on the deception of and lies to the American people (the most trusting blokes on the planet). The Democrats first line of defense of this criminality is that there is no crisis. Social Security is just fine. It will not even approach "insolvency" until 2018 to 2042. It is at this point I depart sanity.
A new friend wrote to me yesterday that I review a paper written by the Federal Reserve Bank of St. Louis on the comparison of the rate of return that would have been received in 2003 had personal accounts been in effect all 70 years as compared to the benefits one would receive under the "old" Social Security. My problem is the paper starts off their arguments on the basis that Social Security is a fact, not a rescindable promise. Then upon this fallacious premise they merrily proceed to discuss rates of return. It just melts my candle to see a respected institution endorse such nonsense as a basis of their analysis. There is a crisis. A criminal crisis, perpetrated by a protected class of people who populate the powers of communication in America.
The balance of their 20-page report proves their conclusion that personal accounts would generate higher returns than Social Security does. That is a mind numbing conclusion. The rate of return is not a rate of return as far as Social Security is concerned. It is based on what Congress deems it to be. It is nothing more that a rate of "promise". And as such, it ain't much. The fact is that a finding of the rate of return on a "nest egg" is valid and comparable. So let's just do that that.
First, however, let's dispense with an issue my friend is concerned about. In computing and comparing, we use a single income level and a single rate of return to develop our analysis. We know this will never be a true. There will always be variables not the least of which is timing for those shooting for higher returns by investing in indexed stock funds. But those concerns pale into the ether when you accept the reality that old Social Security keeps your money. You can't create a nest egg if you have no money. Therefore, distortions will exist in the computations, but if you focus on that you miss the bigger picture that compounding affords.
On comparisons on this site, we use a 6% flat return on the nest egg, interest on the nest egg, etc. We use an average salary or wage for 45 years. These are not designed to give a person his exact return, his exact nest egg, his exact monthly check. It just provides a guideline to enable a user to gage his potential under personal accounts and compare them with the result they would achieve (if any) under the Old Social Security.
However, just to be obstinate, let's use the findings of the Federal Reserve. On page 7 of 20 they state that the S&P stocks have averaged a 8.5 percent rate of return for the last 56 years. That 6-month CDs have averaged 6.9% for the last 40 (since they started keeping it). Under those circumstances, it appears I have materially understated the "nest eggs" and retirement checks. But overstated or understated, the fact remains under the Old Social Security you have nothing but a rescindable promise and under personal accounts you have wealth you have been forced to accumulate. What a nice result the new "ownership society" provides. ...
Also check out Dick McDonald's Social Security Blog. http://www.dickmcdonald.blogspot.com/
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