re: Social Security - Help me understand better

quote:

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For those who are very educated in this. how do you get more SS payout than you put in? Im not trying to do it, trying to understand why its so messed up without a simple "the govt controls it thats why".

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Your question makes logical sense. I believe you are missing one component, and most people miss it. People do not understand the role the Federal Reserve plays in our economy.

Without the Federal Reserve we would define what the federal government is running as a Ponzi scheme where the Ponzi scheme relies on larger income over expenditures into system over time. Ponzis run into a brick wall when the revenues become deficits and not surpluses.

The federal government does not have this issue. They have the Federal Reserve to always provide a consistent and reliable flow of money to at least meet government spending including SS and increases in SS. It's actualized on the bond market via primary dealers working on behalf of the Federal Reserve. The Federal Reserve via these primary dealers buy at the appropriate rate to cover federal government overspending and accomplish stated interest rate goals against the rest of the bond market (which includes everyone in the world minus the Federal Reserve). This is also known colloquially as money printing.

That's how you get more SS payout than you put in.

Now when you say "put in" that means from the production side.

Congress will always appropriate more money than tax revenue (run a deficit) because the FR will always bail them out and they assume the GPD (production) will always increase at 2% rate overtime. Part of GDP number is government expenditures...