The U.S. federal government is unlike state and local governments. It uniquely is Monetarily Sovereign. That means it has the infinite ability to create dollars simply by passing laws and pressing computer keys.
While state and local government can run short of dollars, the federal government cannot unintentionally run short.Not now. Not ever.
Federal Reserve Chairman Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency. There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The United States can pay any debt it has because we can always print the money to do that.”
Federal Reserve Chairman Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. It’s not tax money… We simply use the computer to mark up the size of the account.”
Federal Reserve Chairman Jerome Powell stated, “As a central bank, we have the ability to create money digitally.”
Statement from the St. Louis Fed: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”
Social Security is a federal agency. Like all federal agencies, including Congress, the Supreme Court, theWhite House, the military, et al, Social Security cannot run short of dollars unless Congress and the President will it.
Congress has the infinite power to create laws, and some of these laws create dollars from thin air. So long as Congress can create laws, the U.S. always will have enough dollars for any expenditure.
In June, 2001, Paul O’Neill, Secretary of the Treasury said, “I come to you as a managing trustee of Social Security. Today we have no assets in the trust fund. We have promises of the good faith and credit of the United States government that benefits will flow.”
The so-called Social Security “trust fund” (which is not a real trust fund) never has assets other than “promises of the good faith and credit of the United States government.”
Those promises are what we call “dollars.”< /br>< /br>
Look at a dollar “bill.” At the very top it says, “FEDERAL RESERVE NOTE.” Bills and notes are promises of payment.
All dollars are promises by the federal government that it will accept dollars as payment, and so will everyone else in America. In fact, that is stated on the dollar bill: “This note is legal tender for all debts, public and private.”
The federal government has the infinite ability to create legal tender to pay all debts.
If I were the federal government, some people would tell you I could run short of oranges. Those are the people who tell you Social Security, Medicare, and Medicaid can run short of dollars.
Because the federal government cannot unintentionally run short of dollars, how can we explain the following article from MSN?
As Social Security teeters on the brink of insolvency, the government is exploring various proposals to ensure its sustainability.
While the program is not expected to disappear, the amount future retirees will receive is uncertain.
Have you ever heard that the White House, Congress, or the Supreme Court are “teetering on the brink of insolvency“?
No?
For the fiscal year 2024, the United States Supreme Court had a discretionary budget request of $161.3 million. Where did it get the money? There is nothing like a FICA tax to supposedly support this federal agency.
For the fiscal year 2025, the U.S. Congress has an approximately $5.9 billion budget. This budget covers the operational expenses of the House of Representatives and the Senate, including salaries, office expenses, and other administrative costs. Where did it get the money? There is nothing like a FICA tax to supposedly support this federal agency.
The White House’s annual operating budget is part of the overall budget of the Executive Office of the President (EOP). For the fiscal year 2025, the EOP has a budget request of approximately $714 million. Where did it get the money? There is nothing like a FICA tax to supposedly support this federal agency.
The answer to the questions: All federal agencies get their spending money the same way. Congress votes; the President approves; and magically, the dollars are created from thin air.
Social Security is a federal agency. Like all other federal agencies, Social Security gets its money from Congress’s votes and the President’s approval.
Contrary to popular wisdom, Social Security does not get its spending money from the FICA tax or any other source. Those FICA dollars ripped from your paycheck are destroyed the moment they reach the U.S. Treasury.
The dollars originate in checking accounts as part of the “M2 money supply measure.” When they reach the Treasury, they instantly cease to be part of any money supply measure. Effectively, they are destroyed.
Among the proposed changes, some have sparked significant controversy and resistance among the American public. A survey by the National Academy of Social Insurance (NASI) highlights six proposals that have met with strong opposition.
One of the most debated proposals involves the taxable earnings cap. This cap determines the portion of a person’s income subject to Social Security payroll taxes.
In 2025, the cap is set at $176,100. Most Americans earn below this threshold, paying taxes on their entire income, while wealthier individuals do not.
Many advocate for raising or eliminating this cap to increase contributions from the wealthiest, though this alone won’t resolve the funding crisis. The NASI survey indicates that maintaining the current cap, with only minor inflation adjustments, is unpopular.
The taxable earnings cap is an invention of the rich, to widen the income/wealth/power Gap between the rich and the rest.
Another contentious proposal is gradually raising the full retirement age (FRA) to 69. The FRA, which determines eligibility for full benefits, was previously increased from 65 to 67.
Raising it further would effectively reduce benefits for younger workers by increasing penalties for early claims and decreasing delayed retirement credits. This change is seen as a benefit cut, particularly affecting those who claim benefits in their early-to-mid-60s.
This is the “work-’til-you-die” provision that Republicans love. It penalizes those who are not rich, because they are the ones who rely on SS to survive.
Reducing cost-of-living adjustments (COLAs) is also on the table. COLAs are annual adjustments to help benefits keep pace with inflation but also increase program costs. Many seniors oppose reducing COLAs, as Social Security’s buying power has already declined.
The Senior Citizens League reports a 20% loss in buying power since 2010. There’s a push to calculate COLAs based on the Consumer Price Index for the Elderly (CPI-E), which would likely result in higher adjustments but also increase expenses.
If you are hoping to receive SS, and are not rich, but you voted for Trump, you’re getting what you voted for: Delayed SS benefits.
Increasing benefits by $250 per month for all new beneficiaries is another proposal that hasn’t gained much support. This increase wouldn’t benefit current recipients or address the issue of COLAs not keeping up with inflation.
The NASI survey found this proposal less popular than others, such as raising COLAs.
It’s not clear how this would address the phony Social Security Trust Funds so-called “insolvency.” But handing out money is a good idea.
Raising the taxable earnings cap to $ 350,000, while paying wealthier beneficiaries more, is another controversial idea. Although many support raising the cap, they oppose larger checks for high earners.
The current benefit formula replaces a smaller portion of pre-retirement income for high earners. Altering the formula to prevent larger checks for those paying more into the program would require congressional action.
The real problem is with the words, “taxable earnings.” Currently, FICA is calculated against salaries but not other taxable earnings, such as capital gains. Most of the rich do not receive significant salaries. They are too smart for that. Their income is from capital gains, stock swaps, etc. — stuff you middle-class workers seldom enjoy.
Lastly, a bridge benefit for retired workers with declining health has been proposed. Thiswould reduce early claiming penalties for those in physically demanding jobs.
While there’s demand for this change, details on its implementation and criteria are lacking.
Ultimately, the solution to Social Security’s challengesmay involve some or none of these proposals, as Congress decides the best course of action.
The solutions to “Social Security’s challenges” are:
Learn the facts about federal finance and acknowledge the federal government’s infinite ability to create dollars and to determine their value (i.e. control inflation).
Eliminate FICA. Fund Social Security by Congressional vote, like nearly all federal agencies are funded. Get rid of the fake Social Security “trust fund.” It’s not a source of dollars but rather a limit on dollars and an excuse for cutting benefits to those who are not wealthy. It’s as illogical as the current debt-limit laws.
Pay everyone of all ages a Social Security benefit, regardless of income. Elon Musk would receive the same benefits as the poorest, homeless adult. It would mean nothing to Musk but be a life saver to the poor person. (My current suggestion is about $3,000 per month for each adult and $1,500 per month for each child, with subsequent additions for inflation.)
Here is an article that almostgets it right. Should I be grateful about “almost” if it debunks a common myth?
The actual ‘biggest Ponzi scheme of all time’
Robert Reich I remain optimistic about the longer term, but I still awaken each morning with a sense of dread. I’m sure some of you do, too.
Start with Elon Musk’s bonkers comment that Social Security is “the biggest Ponzi scheme of all time.”
In a Ponzi scheme, a con artist lures investors into a fake investment project, pockets the cash, and then gets new “investors” to funnel their cash to the earlier investors — until there are no new recruits and the whole thing collapses.
The last ones in are suckers left holding worthless bags.
Social Security is not a Ponzi scheme. It’s a high-functioning, universal, and exceptionally efficient part of the American social safety net — the opposite of a Ponzi scheme. Which is why the overwhelming majority of Americans oppose cutting it.
Social Security is a simple “pay as you go” program. Current workers, via the payroll tax, fund payouts for retirees and disabled people. In 2024, about 1 in 5 U.S. residents received Social Security.
I used to be a trustee of the Social Security trust fund. I know what I’m talking about.
It is sad that even a trustee has no idea how his so-called “Trust Fund” works.
Contrary to popular wisdom, Social Security (and Medicare) is not a “pay as you go, program, and its “trust fund” isn’t a trust fund.
This is how the federal government creates dollars. It can do it indefinitely.
A federal trust fund is an accounting mechanism used by the federal government to track earmarked receipts (money designated for a specific purpose or program) and corresponding expenditures.
The largest and best-known trust funds finance Social Security, portions of Medicare, highways and mass transit, and pensions for government employees.
Federal trust funds bear little resemblance to their private-sector counterparts, and therefore the name can be misleading.
A “trust fund” implies a secure source of funding. However, a federal trust fund is simply an accounting mechanism used to track inflows and outflows for specific programs.
In private-sector trust funds, receipts are deposited and assets are held and invested by trustees on behalf of the stated beneficiaries.
In federal trust funds, the federal government does not set aside the receipts or invest them in private assets.
Rather, the receipts are recorded as accounting credits in the “trust funds,” and then combined with other receipts that the Treasury collects and spends.
Further, the federal government owns the accounts and can, by changing the law, unilaterally alter the purposes of the accounts and raise or lower collections and expenditures.
Here is an article that almostgets it right, or should I be grateful about “almost” if it debunks a common myth?
I remain optimistic about the longer term, but I still awaken each morning with a sense of dread. I’m sure some of you do, too.
Start with Elon Musk’s bonkers comment that Social Security is “the biggest Ponzi scheme of all time.”
In a Ponzi scheme, a con artist lures investors into a fake investment project, pockets the cash, and then gets new “investors” to funnel their cash to the earlier investors — until there are no new recruits and the whole thing collapses.
The last ones in are suckers left holding worthless bags.
Social Security is not a Ponzi scheme. It’s a high-functioning, universal, and exceptionally efficient part of the American social safety net — the opposite of a Ponzi scheme. Which is why the overwhelming majority of Americans oppose cutting it.
Social Security is a simple “pay as you go” program. Current workers, via the payroll tax, fund payouts for retirees and disabled people. In 2024, about 1 in 5 U.S. residents received Social Security.
I used to be a trustee of the Social Security trust fund. I know what I’m talking about.
It is sad that even a trustee has no idea how his so-called “Trust Fund” works.
Contrary to popular wisdom, Social Security (and Medicare) is not a “pay as you go, program, and its “trust fund” isn’t a trust fund.
This is how the federal government creates dollars. It can do it indefinitely.
A federal trust fund is an accounting mechanism used by the federal government to track earmarked receipts (money designated for a specific purpose or program) and corresponding expenditures.
The largest and best-known trust funds finance Social Security, portions of Medicare, highways and mass transit, and pensions for government employees.
Federal trust funds bear little resemblance to their private-sector counterparts, and therefore the name can be misleading.
A “trust fund” implies a secure source of funding. However, a federal trust fund is simply an accounting mechanism used to track inflows and outflows for specific programs.
In private-sector trust funds, receipts are deposited and assets are held and invested by trustees on behalf of the stated beneficiaries.
In federal trust funds, the federal government does not set aside the receipts or invest them in private assets.
Rather, the receipts are recorded as accounting credits in the “trust funds,” and then combined with other receipts that the Treasury collects and spends.
Further, the federal government owns the accounts and can, by changing the law, unilaterally alter the purposes of the accounts and raise or lower collections and expenditures.
The federal government can do whatever it wishes with the “trust funds.”
It can add to them, subtract from them, or change them from the wrongly presumed mission of supporting federal expenditures.
At the click of a computer key or the passage of a law, the balance in the federal “trust funds” could be changed to $100 trillion or $0, and neither would affect taxpayers.
The dollars would simply appear on the “trust fund’s” books.
Thus, the notion that any federal “trust funds” are “in trouble,” is false, unless “trouble” comes from those who don’t wish you to understand the differences between the private sector’s realtrust funds vs. the federal government’s fake “trust funds.”
(The scare-mongers always “forget” to tell you that Medicare Part B doesn’t even pretend to be funded via a trust fund. The federal government simply pays for it. The same could be done with Part A, Social Security, and Medicaid.)
So why do they broadcast the Big Lie, that federal taxes fund federal spending, and trust funds are going broke, when in fact, federal taxes fund nothing, and the trust fund balances are whatever Congress and the President want them to be?
“Rich” is a comparative term. You are rich if you have $1,000 and everyone else has $10. But you are poor if you have $1,000 and everyone else has $100,000.
to become richer, you must widen the “Gap” below you and narrow the “Gap” above.
Cutting Social Security and Medicare, by falsely claiming they are running short of money, widens the “Gap,” making the rich richer.
The rich run the government, the media, and the schools, so those sources of information make false claims to enrich the rich.
Now, back to the article:
As the Social Security Administration explains, “In 2025, when you work, about 85 cents of every Social Security tax dollar you pay goes to a trust fund.
No, it doesn’t. Tax dollars that go to the federal government come f checking accounts, which are part of the M2 money supply measure.
When those dollars reach the Treasury, they cease to be part of anymoney supply measure. They effectively are destroyed.
The federal government has infinite dollars. Add any number of dollars to infinite dollars, and you will still have infinite dollars. Federal tax collections do not affect the government’s dollar holdings.
This fund pays monthly benefits to current retirees and their families and to surviving spouses and children of workers who have died. About 15 cents goes to a trust fund that pays benefits to people with disabilities and their families.”
Again, there is no trust fund. It is just a bookkeeping line that the government can set at any level it wishes.
The only reason that the Social Security trust fund is slowly running out of money is the trustees never anticipated that so much of the nation’s total income would be in the hands of so few people (such as Elon Musk).
No, it is “running out of money” because that is what the government wants. Otherwise, the government simply would raise the balance of that bookkeeping line.
The simple way to fix this is to lift the cap on income subject to Social Security payroll taxes, now $176,100.
No, the simple way to fix it is for the government to increase the balance by a few trillion dollars, which it could do by pressing a few computer keys. It has the infinite ability to pass laws and to press keys.
Elon Musk, Jeff Bezos, and Mark Zuckerberg fulfilled their 2025 Social Security payroll tax obligations a few minutes past midnight on January 1. Most Americans continue paying payroll taxes all year.
That is by intent. It is how the rich widen the “Gap” and thereby become richer.
If you want to see a real Ponzi scheme, look no further than the crypto investments Musk and Trump have hyped.
Trump’s new cryptocurrency, “$Trump,” soared and then crashed, just like every other Ponzi scheme.
It generated enormous profits for insiders like Trump, but a cumulative $2 billion in losses for more than 800,000 other investors.
Trump claims ignorance. “I don’t know if it benefited” me, he said.
“I don’t know much about it.”
(The Trump family and its business partners earned nearly $100 million in trading fees alone on the coin.)
Ever notice that any time Trump is questioned about something bad, he never has knowledge. “I hardly know him,” I never met her,” and “I didn’t see it,” are his favorite lines.
Donald Trump is like Sgt. Schultz from the old TV show, Hogan’s Heroes. He too repeatedly said, “I see nothing! I hear nothing! I know nothing!” when he wanted to avoid trouble.
“I see nothing! I hear nothing! I know nothing!” Donald Trump impersonates Sgt. Schultz.
Musk has been promoting “dogecoin” since 2019.
In the days following Trump’s announcement of the launch of Musk’s so-called Department of Government Efficiency (DOGE), the value of dogecoin soared over 70 percent.
Since then, it’s dropped like a rock. Another classic Ponzi scheme.
With Trump now in office, crypto is back to its Ponzi ways.
It’s emerging from a four-year federal crackdown on crypto fraud, market manipulation, and other scams following the collapse of Sam Bankman-Fried’s crypto exchange FTX in 2022 — one of the biggest Ponzi schemes in recent memory.
Tomorrow, Trump is even holding a “crypto summit” at which he’ll promote the idea of a federal crypto reserve that will give crypto schemes a temporary boost by increasing demand for them.
But why should American taxpayers foot the bill for a crypto reserve?
The most obvious winner will be Trump, whose own crypto venture carries millions of dollars in tokens that are to be included in the reserve.
Ask anyone why the U.S. should spend money to create crypto (i.e. trade safe dollars for wildly speculative crypto), and they will not know. The answer: To enrich Trump.
Other winners will be crypto executives, many of whom donated extensively to Trump’s reelection effort.
One example: Ripple, whose XRP token is one of the five that Trump said would be included in the reserve — and which donated $45 million to an industrywide PAC that sought to help elect Trump and other Republicans.
Trump’s crypto efforts are ways to curry his favor by paying him off.
Consider Justin Sun, a Chinese cryptocurrency entrepreneur whom the Securities and Exchange Commission charged with securities fraud in March 2023.
After Trump was elected in 2024, Sun bought $30 million worth of Trump’s World Liberty Financial crypto tokens, putting $18 million directly into Trump’s pockets. Since then, Sun has invested another $45 million in WLF.
Altogether, Sun’s investments have netted Trump more than $50 million.
Trump’s Securities and Exchange Commission just dropped its prosecution of Sun.
If you think it is curious that Trump would be involved with fraud, and make sure his SEC dropped charges against an accused fraudster, then you don’t know Trump.
The SEC also dropped its case against the crypto trading platform Coinbase after the platform donated $75 million to a political action committee associated with Trump and $1 million to Trump’s inauguration.
To top it off, the SEC just ruled that “memecoins” aren’t securities, meaning that Trump’s novelty crypto tokens won’t be subject to any regulatory oversight. An open invitation to more Trump Ponzi schemes.
My real dread has to do with the much bigger Ponzi scheme that Trump and Musk are peddling.
They’re promising huge “savings” from destroying the federal government — including programs like Social Security and Medicaid — savings that will go to America’s wealthy and big corporations in the form of tax cuts.
At Musk’s urging, the Social Security Administration recently announced it will consolidate the current 10 regional offices it maintains into four and cut at least 7,000 jobsfrom an agency already at a 50-year staffing low.
Those are the people who investigate the rich tax dodgers.
The Republican budget recently pushed through the House cuts over $880 billion out of Medicaid.
Who will get left holding the bag? Most Americans.
I told you I would cut taxes on Social Security, not touch Medicare or Medicaid, China and Mexico would pay my tariffs, Ukraine started the war, Russia is our friend; Ukraine is our enemy, I won the election in a landslide, Jan 6 was a normal tourist day, those who invaded the Capitol were innocent, I never touched the women who accused me — and you suckers still believe my lies!
Zoom out and you’ll see the biggest Ponzi scheme of them all — the entire Trump regime.
Trump is promising to “make America great again” by raising tariffs, deporting more than 11 million people, taking a wrecking ball to the federal government, pulverizing democracy, and joining Putinand other global dictators.
Trump is the con artist behind this giant Ponzi scheme.
He lured voters into this fake MAGA project, pocketed some of the cash and rewarded his billionaire backers and friends (including Musk) with more, and will leave most Americans with a corrupt and decimated society.
I’m still optimistic about our power to overcome this and our resilience in bouncing back from it. But the dread I feel when I open my eyes in the morning concerns the sheer magnitude of the largest and most cynical Ponzi scheme in history.
Robert Reich is a professor of public policy at Berkeley and former secretary of labor. His writings can be found at https://robertreich.substack.com/
QUICK SUMMARY
I suspect Professor Reich is well aware that the federal government cannot run short of dollars, and that the so-called “Trust Funds” are not real trust funds.
I suspect he also is aware that FICA does not fund Social Security or anything else. I do not know why he promulgates the Big Lie that federal taxes fund federal spending. But he is correct that Social Security is not a Ponzi scheme.
The Republicans want to cut Social Security, not because it is unaffordable but rather to widen the income/wealth/power Gap between the rich and the rest.
Social Security, Medicare, and Medicaid are not in financial trouble. They are in political trouble.
Republicans have been the party of the rich for many years, and they remain so.
#Monetary Sovereignty - Mitchell 