Until the next crash wipes out your investment.

Which, incidentally, is the reason Social Security was created in the first place.

I thought Social Security was created to buy votes and to enable politicians to create a dependent class of old f*rts, who would sheepishly say "how high" when ordered to jump. If they had actually wanted to avoid Stock Market crashes wouldn't they have set up privatised accounts so that there would be steady investment in capital goods via the stock market so that Americans wouldn't be dependent on the government for a measly check at an age after they were expected to be dead.

Since life expectancy was eligibility age it wasn't intended to establish any class.

The surprise is that the ten worst did so well

Remember, the trick to making money in the stock market is not picking companies that will do well, but picking companies that will do better than expected.

Chris: You've said that a couple times, but it's not in any way true.

Wonderful true comments, both by Mike Earl and the h-man (with OJ's minor correction).

That the ten-worst did so well is regression to the mean, isn't it? I've seen stock systems before that were based on this, and have done well.

Mr. Durnell - even if the market crashes by a large amount near the payoff point, it will usually outperform Social Security. Of course, many people's psychology couldn't withstand the loss, even if it could be shown that the total payout is larger.

Dave: As long as OJ keeps posting it, I'll keep repeating it.

People had their money invested in the stock market or saved in a bank. The 1929 Crash comes and people who have their investment in the stock market now have nothing. The people with money in the banks are equally screwed, as the banks are now undercapitalized and go belly up. In both cases people now do not have money.

Some of these same people are now either too old to work, or even if vigorous enough they can't find jobs anyway in an economy of 25% unemployment.

So into this mess comes Dr Francis Townsend and the Kingfish himself, Huey Long. Townsend wants an old age pension while Huey Long wants to "Share the Wealth."

In response, FDR gets Congress to pass the Social Security Act.

One follows the other. No stock market crash, and there'd be no Social Security. If people weren't desperate to have money to survive, than they wouldn't have asked for it. It was not something FDR created to make a class of dependent voters. It was a need created by the dire economic conditions of the Depression.

Social Security was created so that old people could eat and have a roof over their heads, and that this security would be there even if they had lost everything in the Crash. No one in 1935 ever said that they wanted a system which, if it had been in place prior to 1929 would leave the eldery equally at a loss as they were now.

There are many problems with Social Security and it needs to be reformed. Instituting a national retirement savings system will be one part of it. But a defined benefits pension has a purpose too.

The New Deal had flaws and many experiments did not work. But the political reality was that alternative was not some libertarian Federalist Utopia. It was Fascism or Communism.

Chris: Nobody owned stocks in those days, except for the small capitalist class, and some of the slightly larger middle class. No one, let alone Huey Long, wanted to establish a new government program to succor those who lost money in the market. Basically, people worked until they couldn't work any longer, and then died soon after. Social security was meant to fill that gap.

Chris,

You just gave a pretty fair summary of what really happened. Townsend, who I believe was a physician for middle income elderly folks in Long Beach Cal, who had watched the Crash wipe out his patients' savings, created an idea of transfer payments which essentially became the Wagner Act.

A few quibbles. I think it is unfair to say that the current elderly are in any serious jeopardy of not getting their benefits. People aged 40, like myself, are about as likely to see Social Security as we are to see a space alien drop by for beer and brats during the Super Bowl this year. Also, the main source of income for the old folks was bank interest from proceeds of the sale of their existing land.

I think it is hard to say that Long had any kind of serious 'program' on the national level. He was all about rhetoric, not substance when it came to Federal matters.

You are of course absolutely correct that without the New Deal and the Wagner Act, and at least the appearance that the government was trying to do something, anything to remedy the depression, we were in real danger of becoming fascist or Communist. One may quibble as to the logic of FDR's policies, but one needs only look at election results to understand that they were good politics.