Social Security and Medicare Crack-Up Dead Ahead!

Protect your future with gold & silver!

Now we know a little about how it felt to be on the bridge of the Titanic.  We are racing to a major financial crack-up and we can’t change course in time to avoid a calamity!

As we wrote recently, “The CBO now projects that the Old-Age and Survivors Insurance Trust Fund would be exhausted in 2033 and the Disability Insurance Trust Fund would be exhausted in 2048. If the two trust funds were combined, the exhaustion date would come in 2033.”  (See our recent post “Senior Citizen Poverty Could Double in the Next 10 Years.”)

The Medicare Hospital Insurance Trust Fund will run out in 2026.

We are not suggesting that Washington will default overtly on Social Security payments.  We believe that they will be paid in “nominal” terms as long as possible… but not in “real” terms.  In other words, recipients will likely get their checks bearing the same face value, but in terms of purchasing power, they will be inadequate.  That is at least the most likely near-term expedient to expect from Washington.

That is something like a slow-motion default.  Printing press money is used to meet expectations of payments, but the printing press money has progressively less and less value.  

The chart on the right illustrates the decline in the purchasing power of the dollar (in green) since the US abandoned the gold standard in 1971, versus the rising price of gold over the intervening years.

That is why we urge our friends and clients to prepare for their future, their retirement, and old age with gold and silver, long-term tools of wealth preservation par excellence. 

It is often said that the United States has never defaulted on its debt.  Treasury Secretary repeated it as a talking point about the debt ceiling debate just the other day.  But it is not true.

For those that would like to learn something about the US government’s past debt defaults, we refer you to this article by Ryan McMaken of the Mises Institute.  It is called “Yes, the US Government Has Defaulted Before.”