"You're thinking of this place all wrong. As if I had the money back in a safe. The money's not here. Your money's in Joe's house . . .(to one of the men) . . . right next to yours. And in the Kennedy house, and Mrs. Macklin's house, and a hundred others. Why, you're lending them the money to build, and then, they're going to pay it back to you as best they can."
Christmas season is "It's a Wonderful Life" season, and anyone who has seen that movie -- which ought to be pretty much everyone by now -- will remember Jimmy Stewart's plain-spoken explanation of banking, delivered to angry customers who have begun a run on the bank where he works.
Today it's the Bush administration that's started a run on the institution of Social Security. And so far no one in Washington has had the gumption or the forthrightness to get up, like Jimmy Stewart's George Bailey, and tell the American people what's really going on.
— Scott Rosenberg (source)
Here's the deal about social security reform. Suppose in any year the workers put $X into social security and the beneficiaries (grandma) take out that same $X. This is approximately how it works now.
Now, instead, through "GWB Social Security reform", the workers pay $(X-Y) to SocSec and $Y to their personal retirement savings account. Now the gov sill owes $X to the beneficiaries. So the Treasury borrows $Y. This should help the economy because it spurs investment, right? We have $Y more investment in the economy, right? Wrong. Because the government is borrowing $Y, there is $Y less money available for businesses to borrow. It's a zero-sum game.
Then the stock market crashes. Sorry, you get to go to debtor's prison when you die!