The debt numbers start to get really hairy when you add in liabilities under Social Security and Medicare — in other words, when you account for the present value of those future payments in the same way that businesses have to account for the obligations they incur[GAAP rules]. Start with the entitlements and those numbers get run-for-the-hills ugly in a hurry: a combined $106 trillion in liabilities for Social Security and Medicare, or more than five times the total federal, state, and local debt we’ve totaled up so far. In real terms, what that means is that we’d need $106 trillion in real, investable capital, earning 6 percent a year, on hand, today, to meet the obligations we have under those entitlement programs. For perspective, that’s about twice the total private net worth of the United States. (A little more, in fact.)This quote is a little bit of a digression from the main point of the post, but his illustrates the fact that the most if not all of the money that the younger generation is paying into the system will simply not be there when we retire and the fact that social security is at the heart of America's coming bankruptcy. (Take away the unfunded liabilities and America's debt problem is still very significant and will be a major drain on the economy's future ability to produce which will not leave enough to fund these programs.) Social security and Medicare taxes take about 15% of your monthly income, assuming you earn a modest, not so modest for me at the moment, 3000 dollars a month this would be 450 dollars a month. Where is this 15% of your monthly income or 450 dollars a month going? It is being wasted and squandered. So how much money could a person born in 1988 expect to have if he took the this 15% of his monthly income and invested it in an investment with a modest 5% return?
Social Security and Medicare taxes are 15.3% of his income. If he[ the person born in 1988 who makes 30,000 a year for his life] invested that 15.3% of his income instead, he would be investing $4,590. Supposing that this annual contribution was invested each year for the next 48 years and the principal was collecting 5% interest, instead of the Social Security value of $212,938.88, he would have $863,036.55! That's a little more than four times the return that Social Security is 'promising.'So basically social security is not only stealing 212,938.88 dollars of your income directly from taxes, 450 dollars a month--which is in reality much more than that as I am sure most of us here plan on earning at least 60,000 a year plus the fact that the tax will have to go up so the initial amount invested or the money directly taxed would be at least doubled and the return from the private investment would be more than double the million dollars rate of return-- it is also stealing the potential uses of this money which could include the potential of earning you 1 million dollars over your lifetime. So basically the government will have stolen over 1 million dollars of the average person's total lifetime income. This is very ingenious way of stealing a significant sum of money from you over your lifetime. The average yearly income earned is 50,000 times this by 40 and you get a total lifetime income of about 2 million dollars. Add this 1 million, still assuming the 30,000 yearly income, and you get three million. So about a potential third of your lifetime income is being stolen.
This is only one little way that the government and the economic system is stealing the fruits of our labor. Combine this with the system of credit, look at how much of your mortgage payments actually go towards the principal; the deprecation of the dollar through inflation,; and all of the other taxes to name a few. Combine all of these together and a significant percentage of our income is being consumed by the government. In the case of social security is could be costing you 1 million dollars over the course of your lifetime and around 450 dollars a month. No big deal though. (Our whole economy is one big bubble after another, none of it is real. While all of these developments in the political and economic realm are nothing new the effects that these various cycles or bouts have are cumulative and is leading to a very big economic upheaval that will occur in our lifetimes which will basically take what little we have left, and along with the transformative effects this will have with our relationship to the government.)
