Get Rich Quick - or How Social Security Worked
Obama acknowledged this week the country could face trillion-dollar deficits for years to come. He has pledged to try to rid government of wasteful spending and to look at ways to address costly entitlement programs such as Social Security and Medicare.I have a new business plan in the works. I live in a small town that has just had a big influx of 30 year olds, with families, working at our factory at lifetime jobs. I'm going to set up a bank, and persuade those folks to send me about 5% of their paycheck every two weeks, so I can hold it for them. I will tell them I will add 5% interest, compounded monthly to the money they send, and after 30 years they can buy the house of their dreams in Florida.
Move the clock forward 30 years.
John Smith takes early retirement, comes to see me and says he is going to take the $500,000 shown on his monthly statement as the value of his account, and buy a house in Florida, on the beach. I, of course, chuckle and say, how can you do that? You just have a piece of paper with numbers on it, not actual money. It takes actual money to buy a house. Not only that, but your co-workers all want to do the same thing, and I don't have anywhere near that much money to give you. So, you will have to borrow $500,000 from me, at 6% interest, and $50,000 in loan fees, if you want to buy that house.
John says, but I sent you money for 30 years, I know I have it here.
So, I say, sure you did, but look at this big bank building we are in. Your money paid for it. Look at my house. Your money paid for it. Look at how much my employees make. Your money paid for that. You can't expect to still have any money, you just have a piece of paper with numbers on it.
Now, what's wrong with my business plan?
Advertisement
If you loan me the money at 4%, and no loan fees I might still be able to buy that house.
Do like they do at my Credit Union, charge me 2% more than they pay out on a share backed CD.
January 8, 2009 6:48 PM | Reply | Permalink
Right - so if instead of giving the $ to social security and running the risk that it's not there when I want to buy that house, I would rather be able to have that $ in an account that I own and I take the risk on how it's invested.
January 8, 2009 11:24 PM | Reply | Permalink
Oh my! Both of you guys get F's for those responses. What do you think would happen to a bank that behaved that way? Do you suppose they might be charged with fraud, perhaps forced to fulfill their obligations? Well, when Obama talks about Social Security needing fixing, he becomes a party to fraud.
All of us have paid through the teeth for SS to remain well funded, for about 30 years now, paying far more than SS needs in any given year. We have been depositing our FICA payments into the SS bank, and when it is our time to draw on that, the money is most certainly there.
Furthermore, we continue to pay more in FICA taxes than SS needs per year. So, if that money has been vanishing, the Feds owe the SS system big time, and the FICA rate needs to go to zero for several years until we catch up. Anything less is fraud.
January 9, 2009 12:06 AM | Reply | Permalink
Big time or small time, you can't owe money to yourself (except metaphorically and metaphors aren't enforceable in a court of law).
The Feds are the SS system; ergo, they can't owe the SS system anything.
January 9, 2009 11:19 AM | Reply | Permalink
It's time to think outside the box.
The box I’m talking about is the preservation of Capitalism, as the bankers wish to interpret, as the only solution. It is an integral part but not solely the only solution.
Bankers are interested in one thing and one thing only PROFIT.
They answer to shareholders, Greed is a fact, but what checks it?
Hoppy You wrote, “What do you think would happen to a bank that behaved that way?”
Hoppy , that’s the problem, were so worried about the banks.
If the SS security trust fund is filled with IOUs, at what return are the IOUS?
What is the current rate of 10 year T Bill? The mortgage rates tend to follow the ten-year note.
Yet for some reason, the SS Security Trust can only trust the Government IOU’S but it can’t trust the Peoples IOU? An IOU backed by a deed of trust. Paid back at a comparable rate of return as paid by the Ten year NOTE.
The Banks have proven they have no interest in what is good for the Nation only what’s good for the bank, which is not necessarily in the best Interest of the rest of the passengers in the so called collective boat. As in “were all in this boat together”, except; they’d as soon throw all but their group, overboard.
So what banks would do, we all know what they’d do, and if you should benefit so be it.
Ask any one of their beneficiaries and they’ll tell you it’s the best thing going.
It’s an ideological thing.
Moneychangers, have been woven into the fabric of society, there is no reason to accept that every decision they make is based upon Justice. Greed affects them too.
What alternative do the people have?
Suppose WE the People were able to go to the Chinese people, who are currently buying our debt. Could we directly ask them to finance our mortgage industry through Bonds issued by SS Trust fund, whose sole objective would be homeownership? By passing political Ideology or greedy bankers, the Chinese instead of paying for our war ventures or any other projects or stimulus package, they would back the SS Homeowners Bond.
Seeing that Congress can’t decide which special interest they should help.
The Chinese would help stabilize the housing crisis, and in turn reap the benefits of increased consumer spending?
How about an A for attempt?
January 9, 2009 2:35 PM | Reply | Permalink
A bank is not merely a name that a financial system calls itself. It is a legal designation bestowed by the government (state and/or federal) on an institution that satisfies certain requirements.
The SS Trust, is not a bank in the sense that it is recognized as such by the government. To Ellen's point, it is subject to the fiat of the government.
We can argue the political angles of messing with SS, but let's not delude ourselves that the same hard and fast rules that govern private/public financial services apply here.
January 9, 2009 5:02 PM | Reply | Permalink
Bush has certainly proved that the government is not obliged to obey any laws. But, even with that in mind, we, all of us, have been paying into the SS system since the 1980's at an artificially high rate, just to build up the trust fund so SS will always be adequately funded. If that was not possible to do, then we have been defrauded by our government. If it was possible to do, then there is enough money in the trust fund to cover SS until 2049, way beyond the length of time that can be even approximately predicted. And, that is not different from depositing money in a savings account, which is also a "trust fund", not a pile of gold set aside for our use later.
The 14th amendment to the Constitution says, "4. The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned." I find it hard to understand how it can be tolerated for a President, whether Bush or Obama, can question that the government is obligated to honor the SS trust fund obligations.
January 9, 2009 11:29 PM | Reply | Permalink
Easy Money
You can easily get rich these days. One can earn money online by doing simple Data Entry jobs. These jobs are very simple and easy to understand. Social security is because of moeny but money is not because of social security.Read more
Easy Money
May 12, 2009 3:00 AM | Reply | Permalink