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.
If you have any doubts about whether the Trump/Musk comedy team is honest and knows what it is doing, let’s disabuse you of those doubts. They aren’t and they don’t. Read the following article written by Carl Gibson in AlterNet:
But aside from the Coast Goard contract completed in 2005, the billionaire’s group has also committed several other glaring errors, casting doubt on the veracity of its claims of eliminating waste, fraud and abuse.
“These are not savings,” government spending tracker Lisa Shea Mundt told the Times.
“The money’s been spent. Period. Point blank.
”
Out of all the budget cuts DOGE (which is not yet an official federal agency authorized by Congress) has taken credit for, Musk has said five particular cuts saved taxpayers $10 billion.
One contract for U.S. Immigration and Customs Enforcement (ICE) that DOGE claimed was for $8 billionwas actually just for $8 million.
DOGE also erroneously counted a $655 million contract three times.
And the group also claimed to have cancelled a $232 million contract at the Social Security Administration, when in reality just one individual project was cancelled to the tune of $560 thousand.
Out of the $10 billion in purported cuts Musk claimed for these five line items, the actual savings was just $19 million,which is 99.8% smaller than the initial number DOGE proffered.
That’s a similar error to the Coast Guard contract, which was 99.7% less than what Musk claimed.
“It’s obvious that they don’t understand,” said Eric Franklin, who runs a firm that consults with the U.S. government on contracting procedures.
A $14 million contract with Franklin’s firm was actually on DOGE’s wall of receipts, even though it had been completed in 2021.
In just the first few minutes of the speech, Trump proclaimed that he won the 2024 election with “a mandate like has not been seen in many decades.”
New York Times reporter Kenneth Vogel pointed out that Trump won the popular voteby just a 1.48% margin, while Presidents Joe Biden and Barack Obama each had margins of victory of 4.45% and 7.27%, respectively.
This led Rep. Al Green (D-Texas) to stand up and shout that he has “no mandate to cut Medicaid.” House Speaker Mike Johnson (R-La.) then ordered the House sergeant-at-arms to remove the longtime lawmaker from the chamber. Aaron Fritschner, who is the deputy chief of staff for Rep. Don Beyer (D-Va.) posted the viral photoof Reps. Lauren Boebert (R-Colo.) and Marjorie Taylor Greene (R-Ga.) shouting during Biden’s State of the Union address with the text: “They weren’t removed.”
Trump also used a significant portion of his speech to falsely assert there was widespread fraud in the Social Security Administration (SSA), arguing that people well over 100 years old were receiving benefits. On Bluesky, Washington Post columnist Philip Bumpcalled that claim “total horses—“ and posted a link showing that
Trump was misreading data from the SSA. The agency has a database of every American who has been issued a Social Security number, but many of them don’t have a date of death listed, as they passed away before electronic records were put in place.Kansas University law professor Corey Rayburn Yung described the president’s remarksabout Social Security as “a lengthy diatribe that is all false.”
LUTNICK, magically GDP changes to the numbers we want. We simply change the definition
When a Trump appointee realizes the facts contradict his boss, he either misrepresents the facts or hides them.
The facts are the facts. They never change, but for a Trumper, it’s the perception, not any fact, that matters.
Thus, when Trump claims Ukraine invaded Russia, the lie doesn’t change the facts. But Trump and his MAGAs care only about public perception.
The economy is measured by a statistic known as Gross Domestic Product (GDP), calculated using the formula: Federal Spending + Non-federal Spending + Net Exports.
In the U.S., the National Bureau of Economic Research (NBER)—a nonprofit, nonpartisan organization dedicated to economic research—determines when we are in a recession by examining indicators of prolonged economic decline across various sectors.
It analyzes data points including real income, which reflects individuals’ purchasing power after adjusting for inflation; employment levels; industrial production output; wholesale and retail sales; and gross domestic product (GDP).
Mathematically, imposing high tariffs on imports, while deporting millions of workers and consumers, must raise prices and decrease GDP. Neither of these is a hypothesis or a prediction. It is a statistical certainty.
When GDP declines over several months, it is referred to as a “recession.” Conversely, when GDP decreases significantly and/or extensively, it is known as a “depression.”
Trump’s advisors must have realized that Trump’s plan to levy import duties and cut federal spending must result in inflation and recession or depression.
Rather than trying to correct Trump’s flawed policies, and actually prevent the depression, MAGAs prefer to change the measure.
Imagine selling a 2,000-square-foot house and wanting to tell the buyer it’s bigger than 2,000 square feet. Instead of physically enlarging the house, you simply change the measurement and decide that from now on, a foot will be eight inches long.
So your 2,000 foot house suddenly would be listed as 4,500 square feet. The house didn’t change, but by arbitrarily changing the measure, you could claim it was bigger.
Sounds ridiculous, even fraudulent, doesn’t it? But that is exactly what the Trump administration wants to do with GDP, in a futile effort to hide the inevitable recession and depression.
“A more accurate measure of GDP would exclude government spending,” Musk wrote on his social media platform. “Otherwise, you can scale GDP artificially high by spending money on things that don’t make people’s lives better.”
Is Musk asserting that federal spending on bridges, roads, dams, flight control, disaster recovery, anti-poverty efforts, medical research and development, Social Security, Medicare, Medicaid, and countless other initiatives the government undertakes to enhance our lives “doesn’t create value for the economy”?
That’s such nonsense.
Due to Musk’s budget cuts, GDP will decline. This presents a significant issue that Musk is well aware of. He is scared silly that when people see the decrease in GDP, they will accurately conclude that he is responsible for causing a recession.
The argument as articulated so far by Trump administration officials appears to play down the economic benefits created by Social Security payments, infrastructure spending, scientific research and other forms of government spending that can shape an economy’s trajectory.
“If the government buys a tank, that’s GDP,” Lutnick said Sunday. “But paying 1,000 people to think about buying a tank is not GDP. That is wasted — inefficiency, wasted money. And cutting that, while it shows in GDP, we’re going to get rid of that.”
Is Lutnick paid to come up with such a nonsense objection? His salary could be considered a waste of money. Thinking about war strategy is as important as building tanks.
The Commerce Department’s Bureau of Economic Analysis published its most recent GDP report on Thursday, showing that the economy grew at an annual rate of 2.3% in the final three months of last year.
The economy will drop like a stone under Trump, no matter how hard he tries to fake the numbers. While he remains in office, we will fall deeper and deeper into a depression.
The report makes it possible to measure the forces driving the economy, showing that the gains at the end of last year were largely driven by greater consumer spending and an upward revision to federal government spending related to defense.
Still, the federal government’s component of the GDP report for all of 2024 increased at 2.6%, slightly lower than overall economic growth last year of 2.8%.
Thus, even eliminating Federal Spending from the GDP equation won’t save Trump. His economy is doomed and everyone will know it. Fudging the figures won’t save him.
Lutnick’s false claim that federal spending doesn’t “make people’s lives better” is evident. Cutting federal spending will reduce personal income.
The government is not always a contributor to GDP and can subtract from it, which is what happened in 2022 as pandemic-related aid expired.
Lutnick said that the Trump administration would balance the federal budget with spending cuts, saying that would help growth and reduce the interest rates paid by consumers.
Historically, balancing the federal budget has led to depressions.
“When we balance the budget of the United States of America, interest rates are going to come smashing down,” Lutnick said. “This is going to be the best economy anybody’s ever seen. And to bet against it is foolish.”
Under Biden, the economy grew massively. Under Depression Don Trump it will sink. My advice: Do what I have done. While Depression Don remains in office, convert a significant part of your asset portfolio to Treasuries.
#Monetary Sovereignty - Mitchell 