SOCIAL SECURITY TRUST FUND is a FRAUD

. . . . . . . . Upon retirement your monthly Social Security check will be calculated relative to your age when you retire and the amount deducted from your wages during your working years. Even though the amount anyone will receive is figured according to their contributions in the past, every Social Security check comes from the weekly and monthly payroll deductions taken from wages and matching money paid by employers in the present. This amount is just over 15% of the gross wages of almost all workers, up to a wage cap of about $88,000 annually (the Medicare portion is deducted to a higher cap). This is a little less than one-sixth of all wage income. If many are working, then one-sixth of that labor may pay higher benefits and take care of the elderly and disabled adequately; if few are working, then benefits will have to be reduced and many of the elderly without other income may live in privation. Obviously the ability for Social Security to pay benefits depends on the ability of our economy to produce income. In essence and in fact 15% of our productive labor is taken to provide the food, clothes, shelter, medicine, etc. that retired citizens need to live on.
By law, any surplus FICA tax collected by the Social Security Administration is transferred to the U.S. Treasury Department and exchanged for government bonds. The accumulation of these Treasury Bonds is what the government calls our Social Security Trust Fund. This fund, however, is a complete fraud, because the Treasury Department does not invest this money in any manner that preserves it, or require that the government departments receiving it must pay it back in the future. Like all taxes, it is spent as part of the annual Federal Budget and gone forever. It makes no sense to even talk about repayment. Even though these bonds do earn interest annually (additional Treasury Bonds), the interest is a fraud also; these bonds, both principle and interest, do not represent a fund, nor is the administration of this fund a trust, as any dictionary will attest. This bogus fund is just an IOU from Americans to Americans.
In the Reagan, Bush-1 and Clinton years, the Congress and the President attempted to balance the national budget (after the Reagan tax cuts of the early 1980’s) by raising FICA taxes beyond what was needed to fund Social Security. The government then took by statute, not borrowed, these excess dollars to help fund our other government expenses: Housing, Education, Defense, etc. But these excess dollars are spent, and the bonds, along with the interest due, are just promises by government to raise the Income Tax in the future when these bonds are due. For the Social Security Administration to hold bonds, redeemable only by the authority of the U.S. Congress to raise the Income Tax to pay off those bonds, and to call those bonds a Trust Fund, is ludicrous and a fraud. The Social Security Administration would have you believe that it will cost taxpayers less to fund Social Security obligations in the future when these bonds are mature and redeemable. It is truly amazing that people this stupid can be given positions of importance and trust in government.
The idea that the Social Security Administration and the Treasury Department are independent entities with legal standing like citizens or corporations is bogus. The Federal government in its entirety has legal standing, but its parts are not similarly independent. The illusion of separation and independence between the SSA and the Treasury is maintained because the FICA tax is a regressive income tax, hitting the working poor harder than the wealthy. The Social Security tax was instituted 25 years after the Income Tax was established by Congress; it would have been simpler in 1938 to raise the Income Tax on everyone to fund Social Security, but then the wealthy would have objected to paying their fair share, so the politicians bowed to the demands of wealth and we are dealing with the continuing misfeasance of our tax structure today. If our society were just now developing a tax structure to pay our collective bills, Social Security would get its funding from the general Income Tax just as The Defense Dept., Education Dept., Health and Human Services, etc.; because we would require that structure to be fair, by being equitable, in how taxes are raised; and fiscally responsible by taxing our productivity to avoid any kind of debt or phony financing scheme.
When the government sells a bond to any citizen, business, or foreign entity, it is obligated to payoff that bond when due, even if that requires reducing other expenditures, including Social Security, or raising taxes; because government must pay its debts first and foremost. We often hear the term “full faith and credit of the government” with regard to guaranteeing the payment of government debt; without which the government could not entice anyone to lend to it. But the “full faith and credit of government” is irrelevant with regard to the Social Security Trust Fund, because when we the people both own and owe a debt, that debt does not exist; and likewise the obligation to pay likewise does not exist; so neither government faith nor credit are applicable in dealing with this issue. It is a mistake for the Treasury Department to issue Treasury Bonds to the Social Security Administration in exchange for surplus Social Security Tax, because it confuses everyone into believing that they are real obligations for payment by the government and the taxpayers that support the government; BUT THEY ARE NOT!
The Social Security Administration has monthly demands on its cash flow, and when its income is projected to be less than its outflow, Congress will need to raise taxes (in one form or another), or reduce benefits to recipients, to keep the Social Security Administration books balanced. It simply does not matter whether Congress raises taxes and that income is given directly to the SSA to meet its obligations, or Congress raises taxes to payoff government bonds held by the SSA, and those proceeds used to fund Social Security. In either case taxes are raised the same amount to cover the cost of maintaining the Social Security system; this was already done once in 1976, before the so-called trust fund was instituted. The Trust Fund bonds themselves are baloney, because they have zero value and liability to we the people. . . . . . . .

The above excerpt is taken from my book SOCIAL BENCHMARKS which can be viewed or purchased from Amazon.com by clicking on the above link. To view a larger image of the cover just click on it.

Comments on this blog can be made directly to the author at craigdhanks@aol.com

To view another blog site by Mr. Hanks, with articles of a scientific nature, please click the following link; http://fundamentalscience.blogspot.com/

The Biggest Borrower

Banks have been around in one form or another for hundreds of years. Early banks were usually individual merchants who needed people with surplus products that they wanted to sell, and other people with other surplus products that they would be willing to barter and trade through the merchant for foreign goods. Still another group of people would borrow surplus goods that the merchant could sell by contract on credit, paying back more than they borrowed from future harvests or labor. The merchant profited from the margin created by charging more than he paid for any commodity. In a community or in a nation, this is the foundation of banking. Banks are the chief outlets for us to store, exchange, and borrow that universal labor receipt we call money.

Who is the largest borrower in the U.S.? The government appears to win hands down, but it is not the largest borrower. The banking system is the largest borrower by far. We think of banks as lenders and as a place to store our surplus labor-money. But like government, banks do not create real money; their greatest source of money to lend, is borrowed money. Banks make their profit by charging more for the use of the money that they lend, than they pay to borrow it from depositors. So where do the banks get their loans? From people and businesses that put money in savings accounts and checking accounts. Laborers and businesses are the biggest and primary lenders in our economy, because they are the only source of labor, both stored and surplus. Banks are only secondary lenders, because they are borrowing from the surplus of our productive labors, which we deposit in them to be loaned to others. When a bank pays interest for our cash and check deposits, it is borrowing those deposits from those who have a surplus over and above their current needs. Without this type of surplus, banks would go out of business immediately. And banks do go out of business during recessions and depressions when there is no surplus labor for them to borrow. . . . . . . . .

The above excerpt is taken from my book SOCIAL BENCHMARKS which can be viewed or purchased from Amazon.com by clicking on the above link. To view a larger image of the cover just click on it.

Comments on this blog can be made directly to the author at craigdhanks@aol.com

To view another blog site by Mr. Hanks, with articles of a scientific nature, please click the following link; http://fundamentalscience.blogspot.com/

Declaration of Independence vs. the Constitution

In exploring the workings of governments; the bureaucracies that define how they interact with the citizenry, and how the citizenry are manipulated for political and economic purposes; I have learned that there is a great deal of confusion in the average citizen concerning the formation of governments and the power available to preserve those governments.

A good example is the lack of understanding of our own historical foundations. Europeans discovered the Americas and associated islands over 250 years before some of the British colonies seceded from the British Empire, and established their own governments. For over two and one half centuries the laws of Britain along with the colonial laws, approved by Britain, provided to the citizenry their social, economic, and political structure. With the increasing development of the colonial economies and the abundance of resources for manufactures and trade, England continually taxed the Colonies of their productive labor and resource wealth. Economic disparity with England, reinforced by the social and political disparities between England and the Colonies, was the motivation for colonial self-determination and desire for complete control and ownership of the wealth generated by the Colonies.

Thus was born the Declaration of Independence; a very strange document, whose validity cannot be argued in any court, since it predates any court that its formulators would recognize as a valid court. The authority claimed by those who wrote this document is placed by them above all other. However, the U.S. Declaration of Independence and the U.S. Constitution with its Bill of Rights, are in such great conflict with each other, that they mutually exclude the authority of the other to be the vehicle by which society may establish, promote and preserve its government; to enforce the authority of one is to negate the authority of the other. It is impossible to believe that both of these documents are valid in their exclusive philosophies. . . . . . . . . . . . .

The above excerpt is taken from my book SOCIAL BENCHMARKS which can be viewed or purchased from Amazon.com by clicking on the above link. To view a larger image of the cover just click on it.

Comments on this blog can be made directly to the author at craigdhanks@aol.com

To view another blog site by Mr. Hanks, with articles of a scientific nature, please click the following link; http://fundamentalscience.blogspot.com/

Rights, Rights, and More Rights

Rights, rights and more rights. Rights for some, rights for all, denied rights, new rights, old rights, universal rights, equal rights. You would think that with all the public chatter about rights we would have a better understanding of rights; what they are and what they are not, and exactly where they come from.

In fact, there are no such things as rights. The common notion that we are born with some universal baggage, called rights, is nonsense. There is no right to life, liberty, or the pursuit of happiness. From wars and disease and famine, to accidents and crimes, to abortion, to self-destruction by any number of means, people die against their wills by the thousands every day. The liberty and happiness we all hope to enjoy is as much an exception as most believe it to be the rule. The current destruction of life, liberty, and happiness, worldwide, should be enough to convince anyone of the fallacy of our current concept of rights.

Much of our social interaction is founded on tolerance; specifically the tolerance or intolerance of each other’s behavior. Tolerance, when it is universally taught and accepted, is called a right, and for many it has its own separate existence apart from social structure. Tolerance is not separate from any social structure. In fact, our limits of or refusal to limit behavior define our social structure. Tolerance belongs to the community or the state, not to the individual, and therefore there are no such things as individual rights. While community rights (tolerance) change with every new law.

So rights as they are described in today’s societies are really just the types of behavior that are to be tolerated by all. Any behavior that interferes with the tolerable behavior of others is itself not to be tolerated (not a right). One fundamental purpose for constituting governments is to establish and enforce rules of social and economic behavior, since we come into the world without rights to protect us from the possible abuse of others. . . . . . . . . .

The above excerpt is from the book Social Benchmarks, which is available from Amazon.com by clicking on the title link above.

To view the cover in a larger format, just click on it.

Comments about this blog may be made directly to the author at craigdhanks@aol.com

To view another blog site by Mr. Hanks, with articles of a scientific nature, please click the following link; http://fundamentalscience.blogspot.com/

Gold or Silver?

Which is the better investment to survive economic collapse?

It is fall 2008; our economy is shrinking; our personal and business assets are losing market value across the board; the banking system is going catatonic; and commodities like gold and silver are bouncing around like my truck on a road full of potholes. Earlier in the year the US dollar was declining in value against virtually every other currency and all commodities. While this fall the dollar has strengthened relative to foreign currencies because the problems in our economy are also global problems that are affecting the economies of all industrialized countries. Along with the worldwide banking collapse and strangulation of our economies by high energy prices, we are entering into a significant global recession. Price speculators have been very active all year long in all of the commodity markets, such that prices on all raw materials, including gold and silver, shot up dramatically in the first six months of 2008, while in the past few months speculation is now driving most commodity prices way down. Since gold and silver have been de-monitized for a long time their values only rise and fall with industrial demand, because social demand for them as safe-haven money is still very limited. If our economy goes into a deep recession, the uncertainty of job security, retirement security, and the near certainty of rising inflation, caused by government deficits and Federal Reserve intervention into shoring up failing banks and other private businesses, will cause more people, as well as many businesses, to exchange dollars for gold and silver. Right now there is a preference for gold rather than silver as a security hedge; but for the individual, gold is the wrong metal to own.

Consider that with more than six billion people on earth there simply is not enough gold and silver available to have these precious metals fulfill the role of money for everyone. It is estimated that about 4.4 billion ounces of gold have been mined in historical times and at least 4 billion ounces are still with us as pure bullion, or easily recovered and smelted into pure bullion; this amounts to only two-thirds ounce per person. It is also estimated that about 44 billion ounces of silver have been mined in historical times and about 20 billion ounces of this silver has been consumed in the past and disposed in ways that are not profitable to recover. Approximately 24 billion ounces of silver could be recovered and converted to coins or bullion; this amounts to about four ounces per person. Central banks and governments hold about 800 million ounces of gold and negligible amounts of silver, leaving just over 3 billion ounces of gold and 24 billion ounces of silver in the hands if businesses and individuals; or an approximate ratio of 8 to 1.

If our paper currency fails, causing people to barter with gold and silver for their daily needs and wages, then gold can at most command a value of eight times that of silver. Since the current ratio of value is $750 to $10, or 75 to 1(in the fall of 2008), gold is nearly 10 times higher that it should be relative to silver. This means that silver will appreciate many times over when gold and silver become barter money again. It is less than 50 years since silver was taken out of our US coinage; yet prior to 1964 silver has been in coins going back over 1000 years. While gold has not been barter money since 1934 in the United States, its history as coined money goes back more that 2000 years.

It makes no sense to ask whether gold will go to $10,000 per ounce or $10 per ounce, because it is the US dollar that is changing value. Gold and silver change their value very little with respect to goods and services for which they may be bartered. One hundred and two hundred years ago an ounce of gold would buy a good suit of clothes and an ounce of silver would buy a good meal at a restaurant, and so they will today. Over the years these metals have not strayed very far from this valuation except under severe economic tensions, at which time they typically rise in value rapidly.

Even though gold and silver are in relative short supply and little used as money, the U.S. paper dollar is the wrong barometer of economic stability. Assets and commodities should not be valued in terms of US dollars, but in terms of fixed quantity commodities like gold and silver. The unstable item (dollar) fluctuates in terms of the stable (gold), not vice versa. Reporting it backwards does not make it valid. Worldwide currencies should be exchanged by valuing them to gold and silver, not to the U.S. dollar, or any other currency for that matter.

In the past there have been many government attempts to peg a monetary ratio between gold and silver. It has been ten-to-one, twenty-to-one and even thirty-four-to-one during the depression. Teddy Roosevelt ran for President promising to fix the ratio at sixteen ounces of silver to one ounce of gold. These ratios not only show a historical variance, they also are all showing ratios of silver to gold that are greater than the real amounts of these metals mined and refined. The reason that these metals are not valued in direct relationship with the amounts mined is principally the hoarding of gold by governments, central banks, international banks, and some international corporations. This hoarding of gold is the same as it having never been mined, as far as the markets are concerned. This hoarding of gold tends to skew the ratio of gold available to consumers and investors as compared to the silver available. And it is a valid factor in arriving at a proper price for gold with respect to silver, provided that this hoarded gold remains unavailable for investment or payment in trade. If this hoarded gold came back into the markets as a monetary unit it would un-skew a gold-silver relationship that goes back to the late 1800’s. However, if governments decide by law to remove even more gold from private ownership to government ownership, they will do so at their price, similar to the US government action in 1934; and whatever is left in private hands will be too small of a quantity to serve as money. In either case silver would increase in value as compared to gold.

I am not asserting that gold and silver are improperly valued today. But I am asserting that investors who own gold to protect themselves from the calamity of a failed economy and inflating paper currency are investing in the wrong metal, by a factor of at least eight. Our current industrial and jewelry use of these metals would have no relationship to the value they would become as barter-money in a failing US economy. So one cannot compare these metals today and make an investment in holding either of them, based on their current uses and values in our social economy. When gold and silver are re-monetized to act as money in our economies it will not be by government decree, but by the actions of citizens acting to create opportunity and build a new economy.

If a well-to-do person were going to set aside food and other necessities for future consumption in case of economic depression, should they be advised to purchase champagne, caviar, and frozen pastries (gold); or should they perhaps purchase apple juice, sardines, and crackers (silver)? Quantity is more important than show when one is trying to survive. People who invest in gold as insurance against economic depression are not acting in their own best interest; they are simply following their investment counselor’s bad advice.

If investors and their counselors really understood gold and silver they would never purchase or recommend the purchase of gold at its current inflated price. If silver is mined at ten ounces for each ounce of gold and is priced correctly at $10.00 per ounce then gold should only be $100.00 per ounce, when we consider their monetary barter value. But if gold is priced correctly at $750.00 per ounce then silver should be $75.00 per ounce. Whichever way the market moves in a panic, silver will appreciate by a larger factor in relationship to gold. Actually, both metals would appreciate with respect to the US dollar, but silver would outpace gold in percentage growth at the point where producers and consumers started preferring gold and silver in exchange for goods and services. Giving investment in silver today considerable value over investment in gold, because of this growth potential.

Besides the ratio of gold to silver issue there is another important aspect of gold usage in tough economic times that must be considered; and that is the usage of gold to purchase food, toiletries, medicines, clothes; etc. If we were to do the Zimbabwe thing and have the US dollar inflating 100 % per week while very few goods are available to purchase; anyone going to a store with a shiny 1-oz gold coin would find that their purchases may only use up 10 to 20 percent of the value of their gold coin and that the store cashier would not give them change in gold or silver (even if the store had gold and silver to make change); the cashier would give them change in paper dollars that would rapidly inflate to nothing if they could not be quickly spent. This problem would not occur with silver to any great extent because silver is still available from 100 oz bars down to 1 oz coins, and also available as old US coins, right down to silver dimes, permitting shoppers to pay with exact change for the goods they require. In the late 1970’s an elderly Dutch gentleman told me how he experienced this very problem when he was sent to Germany in the early 1920’s to go to university. The gold coins he received from home, for living expenses, were greatly sought by the shopkeepers, but they had little to sell and he always received change in German Marks (paper) that lost more than half their value in a week. He seldom got full value for his money, because of daily inflation. The same situation could occur here; it certainly has hit many nations in the last few decades, and for some it lasted many years. Silver is by far a superior investment to gold when it is being held as insurance against inflationary times and economic panics.

The companies that mine gold and silver for our industrial and personal consumption should be aware of the potential re-monitization of these metals by consumers and retailers; and what this could mean for their businesses in tough economic times. Recovery from a bout of depression caused by hyperinflation will depend a great deal on having a good supply of gold and silver and a vibrant mining industry to supply the money necessary to grow and expand a new economy and support international trade.


The above material is an excerpt from the book SOCIAL BENCHMARKS which can be purchased from Amazon.com by clicking the above link.

CLICK ON THE PHOTO BELOW TO VIEW A LARGER VERSION

Comments to the author can be sent to the following e-mail address.
craigdhanks@aol.com

To view another blog site by Mr. Hanks, with articles of a scientific nature, please click the following link; http://fundamentalscience.blogspot.com/