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Politics : Ask Michael Burke

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To: JHP who wrote (84731)	10/31/2000 6:16:30 PM
From: TimF	Read Replies (2) of 132070

JHP, social security is very much like a ponzi scheme. It takes money from people now and pays them back with money it takes from others later (with the hope that they will in turn get more money back). It has not collapsed because 1 - the government can force people in to the system, 2 - the paybacks are delayed and some people die before they get much out, 3 - population growth, and 4 - per capita economic growth. #2 is still an important factor but people are living longer. #3 is decreaseing in the US, and the combination of people living longer and decreaseing population growth makes for less and less new workers to pay for each retiree. If #4 doesn't come through strongly the whole thing could collapse at some point. One of the biggest problems with SS is that the money isn't invested in anything that has a real rate of return. It is invested in IOUs that the government makes to itself. There is no real trust fund to draw money out of when the baby boomers retire. The money will have to come from other taxes. If the economy does not continue to grow at a decent clip things will get ugly. Tim

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