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IPFS News Link • Social Security

Doug Casey on How Social Security Increases Could Cause an Inflationary Death Spiral

•, by Doug Casey

It represents an additional about $100 billion in annual spending for Social Security. Moreover, cost of living adjustments could increase even more in the future.

However, it seems the government will pay for this $100 billion by printing even more currency, which will make prices rise, even more, necessitating further cost of living increases.

What do you make of this?

Doug Casey: From its very inception Social Security was an unsustainable Ponzi scheme. They anticipated that money from new contributors would pay off early recipients. For decades they had demographics on their side; the average American was young and had a large family, and the economy was growing.

Worse, Social Security corrupted Americans, making them think they didn't have to save for their own future—that the government would provide for them. Meanwhile, the extra tax burden made it harder for them to do so, supporting a dysfunctional bureaucracy of over 60,000 employees.

But they've reached a tipping point. The average American is 39, about the age when someone might become a grandparent. The economy is headed downward. And the average family is way below the replacement level of 2.2 children. Social Security currently pays about 50 million retired people every month, about one out of six people in the US. As late as 1960, there were five workers for every Social Security recipient. By 2010 it became three to one. By 2030 each beneficiary will be supported by two workers. Demographics are destiny—especially for Ponzi schemes.