I know that I tackled this one 16 years ago, but after eighteen years of running this blog, there are very few topics that I haven’t mentioned. The left loves to claim that Clinton ran a budget surplus when he was President. That is false. The national debt actually went up every single year that he was President. The reason that they can claim this, is the money was moved from one account to the other.
Let me explain:
Let’s say that your wife is angry that you are spending all of your money on guns and booze, and is afraid that you are maxing out the credit cards. You show her the bank statements from the checking account, and low and behold, your balance is larger now than it was a year ago: “See?” you say, “We have a positive cash flow.”
But what you didn’t show your wife was that the only reason your checking account is larger is that you borrowed the money from the kids’ college fund. It’s cool, your kids are only 8 and 6 years old. You have more than a decade to pay yourself back. It will be fine. It doesn’t count as debt, because you owe it to yourself.
That’s going to cost you later, because your wife is going to be pissed when she gets ready to send the crotch critters off to college, but that’s a problem for future you to deal with.
Well, that is exactly what the government did. They took the money from the Social Security Trust fund and used that money to cover the deficit. Every administration since 1983 has used Social Security surpluses to mask deficits elsewhere.
Politicians love the unified budget because it lets them:
- Spend more
- Claim fiscal discipline
- Avoid raising taxes
- Increase total debt hidden inside trust fund obligations
Gen Z keeps bitching about how “Boomers” are making life hard on them because housing costs or something. This is not how the previous generations really screwed them. The Silent Generation (those born between 1928-1945- my parents’ generation) were young adults when President Franklin D. Roosevelt signed the Social Security Act in 1935, establishing it as part of the New Deal to help workers and the elderly during the Great Depression. The architects of this deal were the Greatest Generation (born 1901-1927), led by FDR.
What Social Security was, was a plan for the Silent generation to be made whole because the Greatest generation screwed up the nation’s economy. In order to prevent the silent generation from stringing people up from lampposts, the Social Security Ponzi scheme was invented. This permitted the Silent generation to be taken care of in their older years, despite the fact that the Greatest generation had wiped out everyone’s retirement nest eggs.
At the same time this was being done, FDR also eliminated the domestic gold standard. In 1933, Franklin D. Roosevelt:
- Prohibited the private ownership of gold bullion
- Stopped redeeming dollars for gold inside the U.S.
- Devalued the dollar
But at this time:
- The Greatest Generation (born ~1901–1927) were young adults
- The Silent Generation (born 1928–1945) were children
- Baby Boomers had not yet been born
So this step did NOT involve Boomers.
The greatest generation had spent all of the silent generation’s money on booze, coke, and hookers, so the silent generation was reimbursed by stealing the future earnings of their children, the baby boomers. Like all Ponzi schemes, the people who got in early made the most money, and those who got in late are paying the bills. The older generations got way more than they paid in, but have ignored how badly they shafted their descendants.
In 1971, Richard Nixon permanently ended the ability of foreign governments to convert U.S. dollars into gold and this is what truly created our modern fiat currency system. This is the event almost everyone refers to when they ask about “who eliminated the gold standard.” Who were the key players?
- Richard Nixon (born 1913) → Greatest Generation
- His advisors (Shultz, Connally, Burns) → Greatest & Silent Generations
- Baby Boomers (born 1946–1964) were young adults, entering the workforce, or still teenagers.
Although Boomers didn’t decide the change, the fiat-dollar economy that followed became the system they lived their entire adult lives under, and which they defended politically as they took leadership roles in the 1980s–2000s. To understand how bad of an idea Social Security really is, let’s look at the math:
Let’s say that a person put $4100 per year into a retirement account that is earning 8% per year. This would simulate a person making $33,000 per year and the 12.4% Social Security tax is invested instead of being given to the government, who will quite literally spend it on booze and hookers. We will compare that to Social Security.
After working for 47 years, the person turns 65 and decides to retire. They have contributed a total of $192,700 into their account. If that money had gone to Social Security, their monthly benefit would be $2800. If they had instead invested that money as above, the balance on the account would be $1,856,890. It would earn $12,379 per month in interest. We have all been screwed out of our money.
So now generations that comprise the Millennials and GenZ are likely not going to get anything near what they are paying in, because all of it is gone. It’s been spent. That fund is nothing but a file cabinet full of several trillion dollars in IOU’s, but there is no money in there.
That is why the younger generations should be angry- they were robbed of their future earnings nearly 100 years before they were even born. They were born into a life of slavery. It wasn’t the Boomers who did it- it was the Greatest generation and the Silent generation- if you are GenZ, you were robbed by your great-great grandparents.
The system is insolvent. There isn’t enough money in the world to cover the debts created by that system. Currently, Social Security owes everyone about $75 trillion more than we have to pay- an amount that is double what our national debt already is- in other words our national debt isn’t $34 trillion, it’s more like $107 trillion. If you total all of the money in the world: every nation, every currency, every ounce of gold, it comes up to $134 trillion.
In other words, we are on the cusp of owing more money than actually exists. Even the official national debt of $34 trillion wouldn’t be eliminated if the government confiscated every 401k, IRA, 457 plan, and all other retirement accounts. The retirement accounts of US citizens are only worth about $31 trillion.
We are about to see a collapse of the US economy, and with it, the world economy. It’s inevitable.
29 Comments
Chutes Magoo · December 8, 2025 at 10:33 am
Ultimately, usury in the form of predatory lending is at the core of the situation that currently plagues us.
Divemedic · December 8, 2025 at 12:54 pm
So explain to me how lending would work in an ideal economy…
Chutes Magoo · December 8, 2025 at 6:07 pm
End Fractional bank loans to start with! Has anyone asked why they pay up to 18% on credit card debt?
Divemedic · December 9, 2025 at 5:50 am
That’s already been discussed here, and quite recently, too.
TRX · December 8, 2025 at 10:47 am
Bah! You must be one of those “hard money” advocates.
Generations of economists – professionals with Ph.Ds – have supported Modern Monetary Theory, which decouples money from… well, anything, actually. They have created vast mathematical models and reams of Learned Papers showing how this is the best way to manage finance, far better than primitive “hard money” systems that artificially limit a government’s spending options.
“It’s just money. You can print more of it.”
Divemedic · December 8, 2025 at 12:54 pm
Cool. So why do we have to pay ANY taxes, if the government can simply print all of the money that it needs?
TRX · December 9, 2025 at 11:09 am
Taxes aren’t about funding. They’re about power and control.
Barbarus · December 9, 2025 at 6:20 pm
I think it’s to give the idiot peasants, beavering away to earn this worthless paper, the impression that there is in fact some value to the stuff.
Milton · December 8, 2025 at 11:48 am
Thanks for reprinting, I missed the original.
KNOW YOUR ENEMY
SiG · December 8, 2025 at 12:09 pm
You mention the “unfunded liabilities” of social security payments and other things, but I’ve always thought of those differently than your emphasis, “There isn’t enough money in the world to cover the debts created by that system. Currently, Social Security owes everyone about $75 trillion more than we have to pay…”
I’ve always thought of that as like buying a car or anything on credit and having to pay more than the cash price over time. Let’s say I buy a new car on credit: the liability in a year is 12 monthly payments, not the full price of the car. The full price of the car is unfunded, but I don’t need to pay it all at one time. Yeah, we couldn’t pay all of that social security now, but we don’t have to. We pay it out over the life times of all the people getting the SS check. Even if the fed.gov wasn’t deficit spending out the wazoo like it has for all our lives, all they need to pay out is whatever the yearly amount is.
If they had to pay all of the $75 trillion right now, no government body in the world could, but no body has to. Just like buying the car on credit, all we’ve got to pay is the yearly payment.
I’m sure I don’t need to say this, but have at it.
Divemedic · December 8, 2025 at 1:19 pm
What you say sounds great on its face, but once you really look at it, it doesn’t work. Your analogy would be true if revenue each year exceeded benefits. But it is NOT the case.
When you buy a car:
You borrow a fixed amount (say $40,000)
You owe a known stream of payments (say $700/mo for 60 months)
You have a contract that cannot grow unexpectedly
You can default, refinance, or sell the car if needed
The lender cannot suddenly double your payment
You can’t be forced to take on more car loans to help future buyers
This is not how Social Security works.
Now apply that to social security.
1. Social Security doesn’t invest the money that is collected to fund the system. In fact, the law REQUIRES that the SS trust fund money be spent on other government programs.
2. SS pays everyone more than they collected. This is a problem because of #1, above.
3 What #1 and #2 then require is an ever expanding population of taxpayers that can be taxed to continue funding the system. That is the essence of a Ponzi scheme.
A Ponzi scheme works by using new investors’ money to pay returns to earlier investors. Social Security works by using current workers’ payroll taxes to pay current retirees’ benefits. This is called pay-as-you-go financing. Pay as you go financing only works when revenue exceeds outlay. That hasn’t been the case since 2010, when social security began running at a deficit.
If Social Security were like a car loan:
We would know the total cost in advance
The obligation would decline each year
We would pay off the “balance” over time
No new participants would be added automatically
Payments would disappear when the loan ended
But Social Security does none of this.
Every year, millions of new people become eligible
Every year, benefits rise (COLA + wage indexing)
Every year, life expectancy increases, making the total liability larger
Every year, Congress adds promises without funding them
Every worker is forced to “buy” into the system
The liability grows faster than revenue
This is not a loan, it is an open-ended, continuously expanding promise.
A Ponzi scheme collapses when not enough new participants join, or inflows fall short of promised payouts. Social Security faces the same structural pressures in that there are fewer workers per retiree, life expectancies are longer now than ever before, and birth rates are falling. The illegal immigrants who are being brought here are not paying nearly enough in SS withholding taxes to cover their added load on the SS system. On top of that, we have a large number of Boomers entering retirement.
In the 1950s, there were 16 workers per retiree. Today, there are about 2.8 workers per retiree. This is accelerating the problem. So back to your analogy of the car- in this case, the car payment continues to increase, while our income isn’t increasing nearly enough to pay for it.
That is where the problem is. What you are talking about is continuing to kick the can down the road. As that happens, the payments that must be made to keep paying social security out get larger, while at the same time, tax receipts aren’t growing nearly as quickly as required payments.
So my question for you is this: What happens when the car payment increases to the point that you can no longer afford it? You borrow more and more to cover your payments, of course. But what happens when you owe so much that people will no longer lend you money? You declare bankruptcy, of course. So what happens when a nation declares bankruptcy?
You analogy would be more accurate if it was: Social Security is like promising to buy a NEW car every month FOREVER — using the next buyer’s payments to pay for it. I buy a car this month, but you pay for it. Then you buy a car and your payments are covered by the next guy, and so on… If anyone isn’t paying enough, they still get a car and the payment shortfall is added to the next guy’s payment.
Such a system can’t work over time.
Robert · December 8, 2025 at 6:03 pm
“Such a system can’t work over time.”
The genius of Social Security is that the people who concocted this Ponzi scheme are long gone, past all earthly retribution, by the time it collapses.
We know in general outline how this scenario ends, because it has happened before. The pensions get paid without interruption. Hyperinflation makes them basically worthless, along with any savings that people may have accumulated. Old people die at accelerated rates because they cannot afford to buy food or pay rent or utility bills. They also cannot get medical care, which has become restricted to those who can document “urgent medical needs”. Beyond a certain age, medical care is not considered “urgent”. A new currency is introduced and the old currency discarded. Somewhere along the line, there is a good possibility of a very big war. All the “deals” are off for everybody if that happens.
“The past does not repeat itself, but it often rhymes.” (attributed to Mark Twain)
Georgiaboy61 · December 9, 2025 at 12:38 am
@Divemedic
Excellent explanation of the Ponzi scheme which is the Social Security System.
The thing about Ponzi schemes is that they often “work” for the early adopters, who then tell others that the “system works as promised.” The guys who get caught holding the bag are those at the tail end of the grift. Which is where modern Americans find themselves.
In other words, Franklin Delano Roosevelt was a liar back in the 1930s and “social security” was just another tax disguised as a benefit for old age.
SiG · December 9, 2025 at 9:16 am
A favorite saying of mine goes, “to err is human, but to really screw things up requires government.” I don’t know who said that, but ISTRC hearing it in the ’70s.
The problems there are all tied to government. Adding people like the current invaders to receive benefits that they never paid into which means there’s infinite return on their zero investment, all to get more votes and guarantee staying in power, or the way the Fed always tries for “constant benign inflation” that they never, ever achieve, and all the problems that come from that.
Vlad the non-Impaler · December 8, 2025 at 3:01 pm
“Every year, millions of new people become eligible”
“In the 1950s, there were 16 workers per retiree. Today, there are about 2.8 workers per retiree.”
Our population got older.
No politician wants to touch that 3rd rail so it continues on…much like a car without brakes on a steep hill. The choices are crash into the mountain or fly off the cliff.
Either choice will be painful or fatal. Let’s hope someone chooses the painful option. The fatal one would be epically bad.
Danny · December 8, 2025 at 3:49 pm
I understand what you’re saying. I’ve been hearing it for a long time but it hasn’t happened — yet. And when the economy collapses, we — everyone — will be in a world of hurt. There will be a whole lot of bewildered people. There will also be a whole lot of “stuff” everywhere.
But the question at that future time is what will be of value and why?
J J · December 8, 2025 at 4:39 pm
After reading all the responses by commentors, all I can say is that it’s easier to come up with alternate scenarios than to accept reality.
The end of the world’s economic system is nigh…nothing can or will be done to stop it.
lynn · December 8, 2025 at 4:48 pm
Divemedic is correct again. And it is time to pay the piper.
BTW, the Social Security and Medicare lockbox is not a file cabinet, it is an old fishing tackle box.
Jester · December 8, 2025 at 8:20 pm
Every single point DM makes on the comments and the original post is 100 percent on. Heck I did a college paper on this situation a decade ago and so far ever point made in it is the exact same stuff DM is talking about. The end conclusion I made is when it is time for me to be elgible for withdrawel there will be nothing to draw. I’m sending my money off to the Boomers who have dumped money in. But the biggest thing that is going on with it all is as DM puts it the coffers are empty. Any surplus that might have been there was spent. Things really accelerated in the 80s and even more so in the 90s. Hell if we could have spent half of the money we are forced to put in on the stock market or other investments of our choice we would be far better off. “But what if the stock market crashes, you wont have anything!!?” Yeah, like there’s gonna be anything left anyway as it is.
Xoph · December 11, 2025 at 1:37 pm
I did a paper 25 years ago and told my wife we would be lucky to collect any social security (We’re within 3 years and could take some early). SS has always been a tax, never an investment. OBTW 8% hasn’t worked historically, and when the Gov’t created 401Ks, the stock market was flooded with money that led to all sorts of other shenanigans.
If you are here, then you are aware. God had given you time to prepare. Your money will never be worth more than it is today. Buy ahead. Things you can trade. Food, clothes (socks, underwear, work pants and shirts), repair items. Canning supplies. Good work gloves.
You are the ultimate source of value in your life. Make yourself valuable. What can you do? Get healthy, Get fit, and learn a trade or trades. Make contacts. Be surge labor. Right now it’s cold, can you fix propane systems? You’re valuable.
Community colleges have lots of good programs. Skilled workers always get more than day laborers. Buy tools. Buy raw materials. Is storage a problem? Buy land. Learn to keep small ruminants, goats, & sheep. They take daily care, as do chickens. Cows you can leave alone but if they go skittish they can be very hard to work with. Daily or weekly contact recommended. R u in a HOA, hens, guinea pigs, and rabbits. Fencing – learn fencing.
Buy land. No rent it or take a loan, but buy it. Clear title. Land is the only source of wealth and they can’t print more of it. Develop it for your use. Rent farm plots.
Tools. Make sure you have replacement blades, lots of nails, screws, etc. Plumbing fittings that fit your residence. One solar panel, one inverter, one solar battery charger. You can at least charge phones and camping lights.
Ole Grump · December 8, 2025 at 10:56 pm
Not raining on your premise, but there is something that you should consider. You have assets more than the currency in your pocket. Real assets such as your house, the land it is setting on, the iron in the safe etc. Intangibles, your education, experience, your certificates in your field. It may be difficult to assign a dollar amount to those, but they have real value.
Our country has assets beyond the gold in Ft Knox. Part of that is the citizens such as yourself and every other productive person residing herein.
There may well be a time when politicians write that check that brings the house of cards down. It won’t be nice but the earth will keep on spinning. When it does, you will be still have your certs and still be needed. That is the true wealth of this society we call home.
TRX · December 9, 2025 at 11:17 am
The gold Don and Elon never got around to auditing, or even doing the tour they said they were going to do.
The last full audit of Fort Knox was in 1953, with a partial audit in 1974. Whatever a “partial audit” is.
Good thing I’m not one of those conspiracy theorists, or my trust in the government might waver a bit.
Divemedic · December 9, 2025 at 8:11 pm
My guess is that the gold is gone, and once Don and Elon found out the truth, realized what would happen to the US economy were that ever to come to light, they abandoned the plan.
Paul M · December 11, 2025 at 9:08 am
Exactly…and PDJT and Musk didn’t want The General Public waiting 20 minutes in line at Starbucks for their morning routine $6 (used to be $3) coffee to go full panic mode once the truth cat was let out of the bag. People enjoy their illusions…those who are aware would not panic but regroup and adapt (as best one can or could) while the mainstream suburbanite would go full ‘hair on fire as their illusion got shattered. Truth hits between the eyes, and so many of the unprepared do not want to believe it nor know what to do in the aftermath.
Stealth Spaniel · December 10, 2025 at 6:39 pm
Which is why, EVERYONE of us, needs to get their proverbial financial house in order.
>On social security?? What is the plan once the monthly check no longer rolls around??
>Just starting out? I hope that you are buying the gentleman’s form of currency and investing in silver COINS as you will need currency for housing, food, etc.
>The well achieved middle income manager? How much do you actually owe on that fancy house and those sooper cars in the driveway?? You better have a plan that includes more than reframing your 6 degrees and highlighting a new resume.
All of the peasants and beavers are far too close to the boiling water. The wealthy Elite can just move, hide, or bully their way through a total collapse. We on the other side need to foster some new ways of caring for our own. The good news in all of this; the Romans once again show us the way. As the Empire collapsed, it was the arts, farming, and the trades that burst forth in a renaissance. People never really learn-we just keep following the same circle path.
Recargador · December 11, 2025 at 7:18 am
I follow debtclock. It shows the national debt at nearly 38.465 trillion dollars. Where do you find your posted figure of 34 trillion?
Divemedic · December 11, 2025 at 8:56 pm
I show a debt of $38,352,200,418,068.14
From https://fiscaldata.treasury.gov/datasets/debt-to-the-penny/debt-to-the-penny
CE · December 14, 2025 at 9:32 am
It seems the only answer for the fiscal side, is continued inflation. With enough inflation, a $38T debt can be made to be smaller, relatively, when even a janitor will earn $400k a year. At the same time, with the destruction of consumption / consumerism, less taxable income from fewer job-holders presents an issue that only a significant population reduction among the recipients of entitlements seems likely to “cure.” It seems inevitable that at some point the gov will have no option but to default on its obligations. Ditching the fiat in favor of another type of money must occur, and when a new money is introduced, there is always new Law introduced simultaneously. The most-recent transition was from being able to pay debts at Law, to only being able to discharge obligations in equity. With the next new money, I wager the equity component will be eliminated.
Aesop · December 15, 2025 at 2:46 am
^This post. All of it. Over and over again, until the penny drops.
Oh and it wasn’t even the “Greatest” Generation at fault.
No one born after 1911 elected FDR the first time.
No one born after 1923 elected him the last time.
The true maximum fucker-uppers of all time were the generations before the “Greatest”, who not only elected FDR, but also voted for the @$$holes who passed Constitutional Amendments XVI-XIX (the Progressive Amendments), which destroyed (by express design) the constitutional republic that had existed to that point, and turned it into a mob-selected oligarchy, while simultaneously saddling the economy forever afterwards with the Fed.
They gave us the Income Tax, direct popular election of senators (which stripped all power from the states, and made Washington DC the sole and overarching power in the country), Prohibition, and women voting. Everything after those earthquakes is just gravity, working as it does.
The XXIst Amendment should have repealed XVI, XVII, and XIX, not just the XVIIIth, but folks were stupid and short-sighted then, as now.
So when Babylon falls, great will be the fall of it.
Anyone who doesn’t grasp this with no more explanation than DM’s post isn’t tall enough for the Internet, or any further rational discussion.
But they’ll have a good while to learn the lesson when it bitchslaps them across the face every day for 50 years or so with a spiked mace.
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