What You Don't Understand About Social Security

Discussion in 'Politics' started by Sundial, Sep 8, 2011.

  1. Sundial

    Sundial Class Warrior

    Aug 1, 2011
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    It doesn't matter how much is in the trust fund or not in the trust fund, or whether the fund is in Treasury bonds, gold, stocks, or cash. The only thing that matters is our future productivity, and our willingness to part with some of it, in order to sustain the social contract between people who worked in the past, and people who will work in the future.

    Bonds, gold and cash are tokens. They have no real value. Their only value lies in what they can puchase. No matter how much or how many we hoard, or save up, or set aside, their only value is some small fraction of the productivity of the workers of the future. (Specifically, the value they're willing to give up.)

    Here's proof: Suppose we were all the same age, and we all retired, having saved a trillion dollars each. ($1 trillion*number of people in the world). How much is all that money worth?

    The answer is: it's worth whatever goods and services it can purchase. If there are no goods and services (because everyone's retired), the value is 0. The answer, by the way, is the same if you hoard gold, or silver, or stocks.

    The answer is a little different if we hoarded, say - soup. Because then we could all have soup.

    But not much different, because we need other things besides soup; for example: hair cuts, cab rides, and CT scans. Those things have to be provided when they're needed. They can't be saved up.

    If you're worried about our ability to provide for old people in the future, the answer is not setting aside money - in fact setting aside money is counterproductive (but that's another thread).

    The answer is to provide for the workers of the future now, by investing in them now, so that the burden on them in the future is less.

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