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CHAIN
LETTERS When was the last time that you participated in a chain letter? No, I don't mean getting one in the mail or by email, nor do I mean distributing copies of the letter after adding your name to the list. I mean when is the last time you sent the requested amounts of money to the names on the list as requested by the letter you received? The potential income rewards are so high on chain letters, even when based on small amounts, that I am amazed that no one has started a chain letter that is formatted as a retirement vehicle. All of the revelations about under-funded corporate pension plans and the potential bankruptcy of the government's Pension Benefit Guarantee Corporation only add to the level of my amazement. Whenever you got your last paycheck, did you check to see if your employer withheld FICA for Social Security? No, I wasn't going to suggest that Social Security is a Ponzi scheme similar to a chain letter; you made that connection on your own. I was going to suggest that the chain letter might actually be both, the better and the fairer of the two. In a careless use of the language, I almost used the expression, better and fairer "investment", implying that something was saved and allowed to compound over time. Clearly nothing is saved or compounded in either Social Security or a Ponzi scheme. That is in fact the distinguishing characteristic of a Ponzi scheme; current benefits are paid from current receipts with nothing saved or invested out of current payments to provide for the future benefits for current payers into the system. Social Security robs Peter to pay Paul, where you are Peter and your parents and grandparents are Paul. If you are a boomer and having trouble making ends meet, can you imagine the problem you are going to impose on your children and grandchildren who are going to be confronted with a problem whose magnitude is ten times what you have faced? Do you remember the old story about the sailor on a ship at sea? Knowing what you now know, are you willing to ask your children and grandchildren to take their turn in the barrel? "Better?" You ask, doubting my earlier assertion that starting a retirement scheme chain letter might be a better choice than counting on Social Security. No less an authority than Warren Buffet said, "If you are very early in a chain letter, you can make money, but there's no wealth created." Social Security is almost 70 years old and because of the many repeated threats of insolvency has not only had to be bailed out by 22 separate tax rate increases, but also had to have the amounts subject to the tax increased on 38 separate occasions. The result: newcomers today are being taxed at a rate six times as high as the initial participants and they are being taxed on an amount that is 29 times the amount initially subject to the tax. The bottom line after 22 tax rate increases and 38 increases on the amount subject to tax, newcomers paying the max are being taxed 45 times as much as the initial participants could be taxed. Another less often used synonym is "pyramid scheme". During the "glory" days of SS, there was a rapidly expanding pool of workers paying benefits to a pool of retirees growing at a much slower rate. Think about all those boomers supporting the survivors of WWII. Now the pyramid is upside-down. All those boomers are going to stop paying and now start drawing benefits. Considering Social Security's record of financial shortfalls in spite of the boomers, how do you think it will fare now that the boomers represent an unfunded liability estimated between 44 Trillion and 71 Trillion dollars? If I were a boomer relying only on my "social security check", I would be thinking about drafting a retirement plan chain letter in order to take advantage of Buffet's quote by being "very early in the chain". Mr. Buffet has been a supporter of the Democratic Party, the party that imposed this chain-letter-like scheme on America. Mr. Buffet has been an out spoken critic of the American middle class because of the progressive failure of middle class Americans to save over the past two decades. More recently we learn that the American middle class is not only shrinking in size, but also shrinking in net worth as well. If Social Security and Medicare take more than 15% of the before tax income of middle class Americans, and this money is transferred to and spent by other retirees, is anybody surprised that middle income Americans are having trouble saving for their own retirements? And since there is no invested pool of savings that is compounding to build wealth, is it any surprise to anybody that the middle class is losing net worth and declining in size? Without the ability to save and compound wealth, is there any other way for most Americans at the lower end of the income scale to enter the middle class and then move beyond? The American middle class was the wonder of the world and the origin of the concept that all Americans are rich when compared to other countries. Should anybody be surprised that the onset of the shrinking middle class and the beginning of its declining net worth overlap and coincide with the coming of socialism to America. Socialism doesn't spread the wealth; it destroys it and then spreads the misery that the loss of wealth brings. There is no Constitutional authority for Social Security. A mandatory scheme like Social Security makes a mockery of freedom. Just as predicted by the Ponzi model, early SS retirees had a bonanza pay-off while there is no hope for future retirees to even recover the amounts they paid in. I have seen surveys showing that more children of the boomers believe in flying saucers than believe they will ever see one nickel of income from Social Security. If true, that would suggest that what "professional" politicians seem to believe is wrong after all; maybe you can't fool all of the people all of the time. The children and grandchildren of the boomers know the truth. When the time comes, do you believe they will passively take their turn in the barrel? Fairer, you ask? "Professional" politicians don't give you a choice with regard to Social Security. Even in our allegedly free country, participation in Social Security is mandatory. At least you get a choice with the chain letter. Spreading the Word about the Reagan Renaissance Without a national spokesman and in the absence of a major media presence, only you can spread the word about the Reagan Wing of the Republican Party and the Reagan Renaissance it hopes to foster. You can make a difference. Contact your friends and family. Send a link to these articles to Republican office holders and candidates that represent your district. Inform them of your views on socialism and that you are Pro-choice. Please email a link to this article and one to the Reagan Renaissance Archive to your favorite conservative editorial writer, political third party, website, political analyst, talk show host or any other conservative organization that might have an interest in turning up the heat in order to melt the ice. One man standing on the dock pushing on the bow of the Titanic will eventually push the ship away from the dock. Avoiding the iceberg in our future is going to take a lot of hands on deck. And time is of the essence. Author's
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