A Path to Retirement, for Those Far From It

I guess the US military bases ringing the world are an investment in some kind of future. US arms shot up El Salvador in the 1980s, and now MS-13 gangs float throughout US cities, so these things are investments of a sort.

I gain nothing by having the boot of US imperialism on the necks of people over the world. I will get Social Security and Medicare though. It's the one thing I'm paying into that I'll benefit from.

People would have to help out their retired parents any how. This just happens collectively.

As far as investments - have you been reading about how corporations balance sheets are flush with cash? Or about factory overcapacity rates? There is no lack of capital, the country is more awash with capital then it has ever been. There is just a lack of places to invest it. Because people aren't buying commodities, there is underconsumption - at least according to Jack Welch and many others.

But putting money in the hands of retirees helps consumption. It keeps the economy moving.

Also, the metric is GDP growth divided by the number of retirees. The US was able to pay Social Security in 1940, when GDP was $100 billion, but now it can't, with a $15 trillion GDP? That makes no sense.

The US has military bases in Cuba (which Cuba has asked to be removed for decades), Djibouti, and many other godforsaken places - the US is spending a fortune to get back into the Phillipines. Never mind bailing out the banks which had lobbied to be deregulated.

Yet the one program I've paid into my whole life and which I will benefit from they want cut. I don't think so.

> politicians decided they could siphon money from it in exchange for IOUs

No funds have been "siphoned" out of Social Security. It's not a bank account. When contributions exceed payments, the excess is invested in US Treasurys. When payments exceed contributions, those assets are sold to make up the difference.

> instead of being full of the earnings from past contributions, it's full of IOUs from the Treasury

Is your argument that instead of purchasing Treasurys, some other asset should have been used? Like what, municipal bonds? Corporate bonds? Real estate? Gold?

How do companies and other countries manage their pension funds? Do they not invest in IOUs of governments or corporations?

You have a point. That is not even safe retirement money today and definitely not in 40 years time.

The above is not how a standard pension fund works. A standard pension fund has to be able to make current payments from the earnings it has collected on past payments. That is originally how Social Security was supposed to work, but it is very, very far from working that way now and has been for a long time.

And yes, of course standard pension funds invest payments coming in in a portfolio of securities; but if the fund is having to sell securities outright (i.e., prior to maturity) to make current payments, instead of just making payments from the earnings on those securities, it has a big problem. Which is exactly the problem Social Security has; except that, because the US government is a sovereign government and can print money and lie about its accounting, it has been able to obfuscate what is going on.

Because Verizon and Facebook invest the cash they receive from sales of shares in assets that create wealth. (At least, we're assuming they do for this discussion; to they extent that they don't, they're not good investments, which is my point.)

To some extent the Alabama Port Authority is indeed similar to Verizon or Facebook, although I'd want to see their books to see how much was actually being used to create wealth. But the vast majority of the cash given to the US Treasury in exchange for T-bills goes to pay current expenses, not to create new wealth. It's as if you bought shares in Peter Thiel's latest startup and he used the money to buy groceries or pay his electric bill instead of building infrastructure for the startup.

I can anticipate one objection: surely Verizon and Facebook spend a lot of money on salaries and benefits, office supplies, etc.? Yes, they do; but if they're using cash from sales of shares to do that, they're in trouble. Cash for operating expenses should be coming from operating revenues, not from new investment; if new investment is being depended on to fund operating expenses, we call that a Ponzi scheme.