Retirement: Surely You Jest

It is clear where the United States is headed: the Great Default. The promises made by the government, beginning in 1935, will be broken. There will be winners and losers.

Today, workers who are still paying Social Security and Medicare taxes are the losers. The retirees are the winners.

This will change at some point. The Federal Reserve will inflate. The government will stop paying physicians what their medical services cost them. There will be rationing of health care.

There will be increases in the retirement age. Workers will figure out that it is in their self-interest to demand cuts in benefits for retirees.

There will be means-testing. People with above-average incomes will have their promised benefits cut off.

At some point, finally, the government will default on its debt. This will be either indirect (hyperinflation) or direct (open default/deflation). In either case, old people will be the big losers. So will holders of IOUs issued by the Treasury.

The Great Default will confirm my high school civics teacher’s warning.