Courtesy of Mish.
In Social Security Payouts Per Worker; Accrued Interest on Accrued Promises; Imagination I posted numerous charts showing the unsustainable nature of the system.
First let’s review the background, then I will address what can be done to make the system Actuarially Sound.
Here is one key chart from reader Tim Wallace followed by commentary.
Social Security Burden on Non-Farm Workers
Accrued Interest on Accrued Promises
Social Security assets are nothing but IOUs, and interest income is actually interest on money long since spent.
The entire “Trust Fund” is nothing but a promise to pay. There are no real assets (other than the ability to raise taxes to meet current expenses). Everything else is just a promise, and even more absurdly, accrued interest on accrued promises.
The chart provided by Wallace should give everyone second thoughts about the ability to raise taxes to meet expenses.
Imagination
The key point is Social Security is now cash flow negative although imaginary assets have increased in value, based on imaginary interest, and imaginary ability of taxpayers to forever keep meeting escalating payouts.
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