Government Ponzi Schemes, Part II
What is Being Done to Fix Runaway Entitlements?
The short answer is “very little.”
The longer answer is “patches on symptoms and the invention of other ponzi schemes.”
One attempted patch on the problem, to fill the growing gap, derives from yet another unpublicized ponzi scheme. This involves collecting Social Security Taxes from illegal aliens who have acquired “false” social security numbers. These numbers are not totally false, they allow the collection and payment of Social Security taxes to the government. But, these illegal aliens will never be able to collect Social Security payments for their retirement. This is a way to raise the number of workers paying in per retiree, and this revenue is a disincentive for the government to crack down on illegal immigration in earnest.
This further ends up with the federal government exploiting local and state governments by creating a burden to provide education in public schools, medical expenses for treatment in emergency rooms and hospitals, and other social services for illegal workers and their families. You could view this exploitation of lower levels of government by the federal government as yet another ponzi scheme.
Another solution is selling federal debt to foreigners, and as that becomes more difficult, print more money. This seems like the last strategy possible before a collapse, because it is a symptom of an impending collapse. An increased supply of U.S. dollars will lead to a drop in the value of the dollar and inflation. This will necessitate either increasing entitlements to keep pace with inflation, or it will result in those on entitlement programs having less purchasing power and a lower standard of living.
The Soviet Union employed similar schemes that crashed in 1991, resulting in the collapse of empire, soldiers being unpaid for months, if not years, and elderly people in their 80s being forced to sell their possessions on the street in order to buy bread.
The longer the U.S. waits to recognize that its largest entitlements programs are ponzi schemes, the worse the future will be. We need to recognize that what the government is doing is not substantially different from what Bernard Madoff did, for which he received 150 years in prison. Our federal legislators have made a pact with the devil and soon the devil will ask for payment.
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