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The Government Will Collapse

Updated on July 30, 2011
The United States government will collapse under the pressure of social security obligations.
The United States government will collapse under the pressure of social security obligations.
The Canadian government will collapse due to CPP burdens.
The Canadian government will collapse due to CPP burdens.
Italy: The worse case of an upcoming boomer tital wave. Projected to have 1.2 workers per retiree within a generation.
Italy: The worse case of an upcoming boomer tital wave. Projected to have 1.2 workers per retiree within a generation.

There's A Tidal Wave Incoming. . .


And it isn't the degree of nasty perpetuated by movies like Al Gore's An Inconvenient Truth. There's a tidal wave coming that threatens the very solvency of all governments in the Westernized world. Believe me, once we've experienced the blunt of this incoming tsunami, we'll be wishing it was but a case of some bad weather. This incoming title wave, explained in my Hub: Death Culture, is in demographics. Simply put, we have too many old people and not enough resources to adequately take care of them all. This will leave us with some rather difficult decisions, but I suspect rather than making the hard decisions, we'll continue down the path of destruction that will ultimately lead to the insolvency of governments in Canada, the United States, Australia, and much of Europe. Governmental collapse is the 4th stage of complete and total economic collapse.

With economies collapsing and spending power on the way down, along with a lowered tax base, Washington is already going through the process of seriously looking at reducing spending. So much so, that the government could soon experience a temporary shut down. However, such a temporary shut down would only be a prelude of the mammoth to come that's in social security entitlements.

Nearly 80 million Baby Boomers phasing into retirement will set in motion a dynamic that, if not addressed by Congress, could result in the next generation getting fewer benefits or no benefits.

By 2017, Social Security is expected to start paying out more than it collects in payroll taxes, according to the 2009 Annual Report from the Social Security and Medicare Board of Trustees. There is currently a large surplus, but it will be drained by the year 2037. At that point, Social Security will only be able to pay out 75 percent of its benefits. A separate report, done by the nonpartisan Congressional Budget Office, concludes much the same thing, but gives the system another 10 years before it begins to fall apart.

The population wave began in 1946, the year after WWII, nostalgically referred to as "the baby boom." A 15-year stretch of bad times that had begun with the great Depression was finally over. People responded by having more babies than ever before, more than 78 million of them by 1964. This essentially not only ballooned the population of the United States, but the entire world, creating unique challenges in how to economically provide for a population that more than doubled in a span of no more than thirty years.

As Boomers begin to retire, the huge group of people putting money into the system will begin taking it out of the system, which then will be funded by a generation of workers, whose numbers are some 15 million fewer. The surplus of money paid into the system by Boomers will allow it to run into the late 2030s, even though it will begin paying out more than it takes in by 2017. The effects of such numbers are already becoming apparent. Generation Y, the children of the boomers, are paying up to an average of 12.4 percent of their earned income on that first job toward social security. By contrast, their boomer parents who entered the work force in say 1965 paid only 6.5 percent of their income toward social security. Boomers only started paying high social security costs during the 1990's, well into their mid-careers, making a lot of the reports coming from the Medicare Board of Trustees look suspect. This is worrisome, considering the fact their reports are not painted optimistically in the first place. In addition, adjusted for inflation, a 20 something Generation Y American male is earning approximately 30% less than his boomer father did around the same age bracket. Only women have managed to stay within the wage power of their mothers, at 2% less. Further compounding on the problem is that Generation Y was required to spend up to 400% more into tuition fees and subsequent debt than their boomer counterparts, in part because it was required to remain competitive in a workforce with so many experienced baby boomer candidates.

Younger and poorer renters paying taxes to support elder excess.
Younger and poorer renters paying taxes to support elder excess.

There are also certain ethical issues prevailing in young people havng to pay social security (and CPP here in Canada). In Canada, over 80% people ages 50+ own a home. In contrast, only 30% of people under the age of 35 own a home. CPP essentially taxes the young poor renter (whom most landlords happen to be baby boomers) to subsidize the rich old home owner. Basically, this is a tax the poor to feed the rich policy.

Projections across the United States already show that the ratio of workers paying retirees’ benefits would plunge from 16 to 1 to 2 to 1 when the last boomers retire decades in the decades to come. Italy is perhaps the worse case dealing with the incoming baby boomer tidal wave. 30 years from today, Italy will have 1.2 workers per retiree. To put this issue into perspective, every single American that's a part of the Generation Y demographic, regardless of income 25 years from today, would have to pay up to $10,000 in social security taxes alone per year. This doesn't include other income taxes the generation Y-er would have to pay. If we include other taxes, our generation Y sample would have to earn over $21,000 a year just avoid going into debt over excessive taxation. A rather robust comparison is for example a boomer, who earns $50,000 a year today, versus his son who earns (adjusted or inflation) the same $50,000 twenty five years from today. That son would have to earn approximately $110,000 per year, more than double, to have the same living standards as his father, when we plug in the new taxation numbers that would be required to maintain social security.

In the next coming decades, a lot of blame will be tossed around when the governments of the Westernized world inevitably collapse. Many will blame our imperial military policies, and as much would like to agree with this assessment, that wouldn't be the primary reason for the bankrupting of our governments and subsequent chaos that ensues. I'm as anti-colonial as they come, and I do believe we would be better off just scraping the military and selling off all the valuable excess metal. Regardless, this economic collapse caused by government fall out was inevitable even if our leaders had a head on their shoulders. Why? Because the socialist programs such as social security are a pyramid scheme. The voting demographics won't allow our politicians to simply do away with the pyramid scheme.

Government Collapse: Social Security - Ponzi Scheme

Social security is no different than a pyramid scheme built by Bernie Madoff.
Social security is no different than a pyramid scheme built by Bernie Madoff.
Old age security will bankrupt the United Kingdom as well. Expect government collapse.
Old age security will bankrupt the United Kingdom as well. Expect government collapse.
Australia will truly go down under from the pressure of an aging population. Expect government collapse.
Australia will truly go down under from the pressure of an aging population. Expect government collapse.

What is a pyramid scheme? A pyramid scheme is a non-sustainable business model that involves promising participants’ payment, services or ideals, primarily for enrolling other people into the scheme or training them to take part, rather than supplying any real investment or sale of products or services to the public. Pyramid schemes are a form of fraud. Pyramid schemes are highly illegal in many countries (unless the government commits to the scheme), because they have the ability to destroy entire economies if left unchecked. The consequences and destruction of life and liberty caused from a pyramid scheme can at times make the most brutal of dictators seem benign by comparison.

Social security is a pyramid scheme. Understand that it's not an insurance company ran by the government as many of its promoters would have you believe. A financially solvent insurance company involves weighing in risk. I'm not a heartless individual, I do believe there can be a place for social security, CPP, etc. for people with disabilities, but old age isn't a disability. What makes an insurance company become a pyramid scheme is when everyone inevitably collects the benefits at the same promised price. Insurance is designed to protect the individual against catastrophic loss. Often the prospect of loss is so great, that most individuals hope they never have to make due on collecting the benefits. Clearly this isn't the case for social security. Because everyone gets old, it's a guarantee everyone will collect social security. Therefore it's not an insurance policy, but an entitlement. And it’s an entitlement we can no longer afford. People who arrive later paying into the social security scheme are essentially investing into nothingness, while with insurance you're investing into risk alleviation, no matter when you decide to purchase or what year you're born. The only exception to this rule is life insurance, but the payment numbers in this type of insurance are flexible (unlike social security that's static) based on how old you are and your likelihood of dying. I agree there's a place of debate for public insurance companies, as the larger the pool of buyers, the more affordable the insurance. However, social security isn't a public insurance policy.

There's no way to solve a pyramid scheme, it's a mathematical improbability. Pyramid schemes are infinite, thus they cause infinite damage. Therefore, offering solution from within social security will prove futile. With a healthy economy we may have been given the time and resources to come up with an alternative system to stop this governmental collapse and subsequent economic collapse from coming, but I feel we lost that opportunity back in the 1990's. The failures coming out of the private sector from the financial collapse, the commercial real estate bubble, and the college bubble has destroyed any possibility of a tax base that could be used to make the hard decisions and sacrifices to alter the social security tidal wave.

Global Old Age Security Scheme - Entitlements

No point in voting for or against insignificant issues, when I can't vote the elephant out of the room that will ultimately destroy my future.
No point in voting for or against insignificant issues, when I can't vote the elephant out of the room that will ultimately destroy my future.

The entire concept of "old age welfare system" will have to be scrapped completely for our mere survival, although that won't happen, because demographics won't allow that to happen. Call it the "tyranny of democracy" if you will, but there's a reason why this upcoming Canadian Federal election will be the first I won't vote, despite being incredibly politically active and informed. My generation will never get any beneficial policies on the table because we simply don't have the numbers. As I go through brochure after brochure, I often find myself scratching my head, searching in vain for one beneficial policy for a male in his late 20's to mid 30's coming from any political candidate. I always find nothing. Face it, no matter what I do; I'm just hitching a ride to the bus that's cruising its way off a cliff. I would go on to say, that if you're educated enough to feel the democratic process has no hope of serving your interests and perhaps even has the potential to harm you, then it's your democratic duty not to vote in the name of protest. . .

In conclusion, I'll state that old age security schemes will cause the government to collapse for many nations. Once that happens, you can expect a disgruntled and underpaid military to come knocking at your doors, because martial law will be put in place.

-Donovan D. Westhaver


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    • DonDWest profile imageAUTHOR


      7 years ago from Halifax, Nova Scotia, Canada

      Well, cheaptrick, if I'll be brutally blunt, I don't feel I owe the people older than me much of anything. Perhaps my perspective would change, if I thought those older than me brought me into an environment that’s a little more positive than what I see now. . .

      I'm currently growing up in a horrific housing bubble that doesn't show any signs of stopping. Housing in Canada costs so much, that being able to get a job that can afford a mortgage, family, retirement (stuff that my parents had, minus perhaps the retirement part) seems like a pipe dream. In a world where it costs 500K for a bungalow, what are you to do? There certainly isn't much incentive to work hard due to the futility of it all, but I truck along anyways, mainly in the name of honour. And what generation do you suppose is asking 500K for that bungalow? I don't see why I should have to fund an older person's luxury retirement through a hidden tax on the young that I'll call “equity”.

      I understand many boomers got burned on the stock market, but it's hard to feel much sympathy when the generation before me had better opportunities, affordable housing, affordable education, less competition from globalization, higher paying jobs (when adjusted for inflation), etc. I warned many boomers what was coming in the stock market before it arrived, I was simply met with disrespect, laughter, and scorn because I was younger than them. Even in spite of the losses in the stock market, I'm much poorer than most 60+ year olds; so no doubt there's some bitterness involved in having to pay taxes to support people better off than myself.

      I suppose on paper I'm wealthier than most 60+ year olds, but my digital fiat doesn't buy much anymore. It can't even pay the mortgage of an old torn up bungalow in Canada. Assets are real wealth; and I don't have many assets at all, but those over age 60 certainly do.

      I'm not naive enough to believe I'll be "young forever," already I feel old as dirt having to work, work, work and dole out 50% of my income on grasshopper landlords, but I'm also not naive enough to believe I'll ever be able to retire. I hold no illusions I'll ever be able to retire. I have already accepted the fact that I won’t retire; which is why I have no money shoved in a retirement account even though I could contribute.

      So if I can't retire; why should I support the retirement of someone else? Anyways, I don't even expect to live until age 60+ due to chronic health problems, so I admit my perspective is a little different on this retirement issue due to my shortened life expectancy.

      So from my perspective, I'm understandably a little disgruntled. Not only will I have to pay taxes to support people wealthier than me, but I'm also being asked to pay for an extended life expectancy that I'll most likely never experience.

      Ask yourself, is it moral for a younger person (who works with a disability) to support an older person without a disability? It's not as simple as "the young have an obligation to take care of the old; because one day they will be old too."

      Nowhere did I call out eugenics, I’m a person with a disability, Adolf killed more of us than Jews. In some articles I insinuated that eugenics industries may arise in the future if pro-euthanasia laws are passed. I’ve stated more than enough times I don’t support this movement, but I can certainly see it coming like an incoming hurricane when I hear many elderly say, “I would rather die than live in a nursing home.”

      Now I have some ideas to make housing more affordable, and thus nursing homes more liveable. This could appease both camps; the baby boomers get humane nursing homes, while I don’t have to pay 500K for a bungalow. Mind you, the politics and economics suck right now preventing me from doing so. We don’t believe in using houses for shelter and keeping costs down, they’re “an investment,” or so I’m told. Currently, our government in Canada is doing whatever they can to keep housing costs up, up, and up so “people don’t lose on their investment.” The fascist government literally forces me, and you, to play into the real estate casino game. For example, we’re not truly permitted to establish colonies outside of the real estate game if we, heaven forbid, feel that just because a bungalow is thirty minutes from the downtown of a city it should be worth 500K+. Until we lose the “housing is a commodity investment” attitude; I’m afraid there isn’t much that can be done. Treating a house like a stock, gold, silver, bond, business, retirement account, etc. is perhaps the only thing preventing me from going to a capitalist sceptic, to a feverous capitalist supporter. If it were not for the “housing market,” I would probably love capitalism.

      Honestly I don't have a solution to the coming demographic storm front, because there is none. We simply ran out of time. Had this issue been addressed just ten years ago, when we KNEW it was coming, I would be singing a different tune.

      If there is some genius who can come up with an economic formula who wishes to respond to this article with a solution; all the power to them, but when I did the math, we could cut everything (all government services) and it still wouldn't be enough for all the Westernized nations I mentioned to fulfill their pension obligations to the elderly.

      Yes, the said nations squandered a lot of money on wasteful projects, but that's a spilt milk argument.

      In conclusion, thanks for disagreeing with me in a respectful manner. A lot of people have forgotten how to respond to an article they disagree with, while keeping their civility.

    • cheaptrick profile image


      7 years ago from the bridge of sighs

      I think we should just cut social security Right now and kill everyone over 61...I'm sixty...I'll update this next year to 62...

      Seriously though,I understand what you've written[have read almost All of your hubs],but no where have I read your solution of What to do with old folks who are to frail to work and paid all there lives thinking IT was for THIER retirement!

      Yes,the Govt screwed Up and spent our money[checkout all the Govt I O U's held by S S]and the problem Will bankrupt America,I agree.But the solution of eugenics and throwing the elderly under the bus is NOT any better than the Corrupt Government's obese spending.Your own video above asked Do we really need nuclear submarines to fight El Qaeda?The military budget consumes at least Half of our taxes for the sole purpose of making some rich ass holes richer.Why not get real with Military spending,reform social security and de bloat the Government as you would a computer so it works faster and more efficiently?This growing trend of thought among the young that old folks are the problem shows in every conversation I have with generation X Y and ?.Do you not understand the value of WISDOM which can only be gained through life experience and therefore LONGEVITY?

      Despite my opinion that your work is rather neglectful of the Old Folks point of view I voted up and interesting.I would like to suggest you take a look at our end of this government produced disaster that's approaching at plank time speed.One day[if your lucky]you to will be old.It's inevitable just as death is inevitable.

      Just an opinion from an old guy who spent two years in a horrendous war[thanks to the draft]and payed his fair share for forty years in hopes of just a BIT of peace during old age.Do you really think eliminating the old folks is the solution?Really?

      Dean F SSGT Marine Corps-South East Asia 1968-71

    • DonDWest profile imageAUTHOR


      7 years ago from Halifax, Nova Scotia, Canada

      India is a caste system. Meaning the poor essentially work for a den and a bowl of rice. Canada could very well be heading towards that system because our real estate bubble is defying all logic and doesn't want to pop. Soon only the rich will be able to buy a modest condo at this rate.

      I'm not a fan of Indian business models. I personally worked for two companies in Canada that were bought by Indian employers. Both cases were real nightmares. They follow the "burn and churn" philosophy of business. That means hiring young energetic employees, burning them out, and then quickly replacing them by another young energetic employee. Rinse and repeat. There's a lot of talk of India being the next trendy place for savvy young people, culturally I just don't see it.

      I don't think a caste system would happen in the USA. Because the USA has so much cheap real estate and foreclosed homes, I believe we'll see a rise in "gang wars" and a prosperous black market. People will fight for territory and the abandoned ghost cities. A smart politician may come to the realization that America "needs" a black market in order to survive, and maybe cut a few deals, such as no child labour, slavery, or violent porn, but I doubt the government will be that smart. . .

      They'll most likely unleash the military upon the gangs. The military will be mostly unpaid. The gangs will be carrying the same equipment that we're seeing in Iraq. It won't be pretty; the military will most likely get pissed off and coup the government. I have an article explaining step by step the USA economic collapse as I see it. It's a seven step process.

      So far it’s been fairly accurate. We’re currently on stage three (college system collapse) with cracks on stage four (this article here) showing signs. If the U.S.A defaults by Tuesday; that won’t be a government collapse. There’s a difference between a collapse on paper and a real collapse (such as getting coup d’etat by your own military).

      As for the other nations mentioned, keep in mind the sheer number of baby boomers. If the boomers keep voting in favour of social security payments (which I suspect they will), then the only way the governments can survive is to install a dictatorship, forcing the entitlement payments to stop. This represents a collapse in democracy. The governments could try printing their way out of it, but that would lead to Germany 1939, same result.

    • Storytellersrus profile image


      7 years ago from Stepping past clutter

      Considering only the employed pay social security, I imagine the problems described above will change. Would you agree?

      Have you done a study of India and how they cope with their poor? I am curious. I believe we are headed toward increased homelessness and increased poverty. I think Social Security will become irrelevant and it will be everyone for themselves. That is my base belief. Not my preferred belief. I can do the everything's peachy keen bit, if you prefer.


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