New York businessman, billionaire, and presidential hopeful Mike Bloomberg has unveiled his plan for the Social Security Administration. While not providing details, the plan calls for putting the forced retirement savings program on sound long-term footing. This could send Bitcoin’s price upward.
The businessman has suggested that the best policy for social security is a shift toward greater increases. These increases would be based on the Consumer Price Index. This suggestion is substantially against those of other Democratic hopefuls, who suggest fixed increases.
The issues facing social security are complex. At current payout rates, given stable inputs, the program will become insolvent by 2035. Economists and accountants have suggested that without reducing benefits or raising tax inputs, social security will perish by that date.
What’s more, current rates do not take into account the large number of baby boomers who are retiring. As greater numbers of Americans begin to cash in on their social security savings, failure could come sooner than thought.
Bloomberg’s plan for social security, which involves dramatic increases in payouts, does not indicate the source for those funds. Increasing payouts without increasing taxes would only hasten social security’s demise.
Millions of Americans are counting on retiring with social security benefits. The assumption that the Federal government will provide the needed funds regardless of economic impact is untenable.
However, were Bloomberg’s program to be enacted, the failure of the US Government economic system would be far more rapid than previously thought. The only potential options for government agencies would be to massively increase taxes or simply ‘print money’ to cover obligations.
Either of these options would effectively destroy the value of the dollar, leaving values in stocks, equities, and other investments virtually valueless. Additionally, such a move would compound inflationary pressures.
The combination of dollar failure and inflation would send investors scurrying into non-governmental investments including Bitcoin. Since Bitcoin is not connected to any economy directly, it functions as an external hedge investment against such impacts.
Should Bloomberg’s plan be enacted, it could drive huge investment into Bitcoin. While the US economy would likely falter drastically, Bitcoin holders would likely see massive returns.