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U.S. Social Security - Largest Ponzi Scheme - EVER

Demigorgon

Critical Thinker
Demigorgon
Joined
Aug 20, 2003
Messages
261
As I read the following quote:

Madoff is accused of running a giant Ponzi scheme, where he paid off early investors with money from later investors. He faces a criminal fraud charge filed by the U.S. Justice Department and a civil lawsuit filed by the SEC.
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Source: http://news.yahoo.com/s/nm/20081229/bs_nm/us_madoff_congress

I wonder if during the hearings it will be brought up that the US's SS program is by far the largest running Ponzi scheme of them all. How is THAT not illeagal. After all, weren't they originally not supposed to be able to touch it? Before long, much like Madoff, there will be more coming out than going in. Of course, all those people are long dead or out of office.
 
Demigorgon said:
I wonder if during the hearings it will be brought up that the US's SS program is by far the largest running Ponzi scheme of them all.
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Almost certainly not, and for the same reason that it will not be brought up that Tinker Bell is the governor of Indiana.

First, it's irrelevant. Second, it's untrue. Third, not only is it untrue, but only a completely lunatic headjob would go on record announcing that he believed it to be true --- and whichever side mentioned this would go on to lose the case because the jury wouldn't believe anything at all that they claimed about the evidence from that point on.
 
Ponzi - early investors get out much more than they put in. Later investors get the shaft.

Did early Madoff investors do well? I have my doubts about that, so I don't think Madoff's schemes were really Ponzi, more like out and out fraud.
 
drkitten said:
11% return per year, like clockwork. The "like clockwork" is the odd part. In fact, it was the unbelievably GOOD and unbelievably consistent results that the early investors got that caused the early whistleblowers to make their calls -- which were of course ignored.
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Wow, I never knew his returns were so good. As you can tell, I'm not a big ticket investor with Made-Off.

As far as Social Security is concerned, it's accurate to say that early recipients got out far more than they paid in, and later contributors returns are going down and down and down. It's really an insurance scheme not a retirement plan but generations of sleazy politicians have oversold it to the gullible, and it's fair for us now to ask - how much will we get out. I don't know if it is technically a Ponzi, but it smells like one.
 
kallsop said:
generations of sleazy politicians have oversold it to the gullible, and it's fair for us now to ask - how much will we get out.
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Why is it only fair "now" for us to ask that? That's been a question that the SSA has been asking -- and answering -- on a regular basis more or less since inception.

That you don't like the answers you've been getting are hardly their fault. I suppose you could try to mount a massive campaign to encourage smoking, high-fat foods, and a lack of exercise, but I doubt you'll get much traction.

I don't know if it is technically a Ponzi, but it smells like one.
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Well, since it's not at all fraudulent, I think your smeller is broken. As you said, it's run like an insurance plan, not a Ponzi scheme, but it's rather badly run because they've not been able to raise the policy premium costs as much as the bureaucrats would like.
 
I think Social Security became an unintentional Ponzi scheme. It was not set up to deal with folks living to 90-100 and could not anticipate either the Baby Boom or the decline in the American birth rate begining in the 1970s.
 
Alt+F4 said:
I think Social Security became an unintentional Ponzi scheme.
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What's your definition of "Ponzi scheme," then?

From where I sit, since Ponzi schemes are by definition fraudulent, and it's literally impossible to commit fraud "unintentionally," the idea of an "unintentional Ponzi scheme" is about as nonsensical as that of a spherical cube. A Ponzi scheme by definition offers unreasonably and unsustainably high returns to persuade people to invest.

Are you suggesting that any badly-run pension fund or insurance company is a Ponzi scheme?
 
drkitten said:
What's your definition of "Ponzi scheme," then?
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"A fraudulent investment operation that pays returns to investors out of the money paid by subsequent investors rather than from profit."

It's my belief that Social Security did not set out to be fradulent but due to unforseen demographic changes, it became fraudulent over time.
 
Alt+F4 said:
"A fraudulent investment operation that pays returns to investors out of the money paid by subsequent investors rather than from profit."

It's my belief that Social Security did not set out to be fradulent but due to unforseen demographic changes, it became fraudulent over time.
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Fraud: "an intentional misrepresentation of material existing fact made by one person to another with knowledge of its falsity and for the purpose of inducing the other person to act."

Who was defrauded? What misrepresentation was made, to whom, and to what purpose?

The "unforeseen demographic changes" were public knowledge; it's not "fraud" if GM sells me a car without knowing if it will still be in business two years from now to honor its warranty. It's not "fraud" if I sell you a house and two years later it turns out that the levees have not been maintained properly and it's in a flood plain.

It's not even fraud if you sell me a house that has not yet been constructed, and there turn out to be unforeseen construction delays that prevent my moving it. You may still be in breach of contract --- but that's a civil matter, and the worst it will cost you is money when you have to pay for my temporary housing. If you sold me that house knowing that it wouldn't be completed on time, and you lied to me to make the sale, you'd be looking at jail time.

As I said, the idea of a "unintentional Ponzi scheme" is almost ridiculous, since fraud includes "intentional" in the very definition.
 
drkitten said:
As I said, the idea of a "unintentional Ponzi scheme" is almost ridiculous, since fraud includes "intentional" in the very definition.
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Do you believe that young people, just now starting to contribute to Social Security will themselves be able to collect it when they retire around 2050?

I don't, that's the fraud part.
 
Something gets adjusted.

Contributions go up, payments go down, technology allows more production from less. It's the way Social Security has always been. As it needs to tighten, it tightens. As it can provide more, it provides more.
 
Alt+F4 said:
I don't, that's the fraud part.
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So who is being lied to?

Without a lie, there is no fraud. It may be mismanagement (if the government sells bonds to build a water treatment plant and then manages to totally screw up the bidding process so that no plant gets built, that's not fraud).

And it's very easy for the 20 year olds to make sure they get money from SSA. They can simply vote for higher taxes and a higher retirement age. Of course, they're not going to do that. But no one -- especially not the government -- is making any promises to them that the money will be there.

Quite the opposite, in fact.
 
mr rosewater said:
In a ponzi scheme you choose to invest, with SS you have no choice.
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Wrong. While I currently pay into SSA, my sweetie does not, and neither do/did either of my parents.

And yes, all persons involved are US citizens, working legally in the US.

If social security bothers you that much, change jobs....
 
Alt+F4 said:
True, but how will Social Security continue to function over time as the Baby Boomers drain it and there are not enough new workers to sustain it?
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Just off the top of my head:
  • Raise the retirement age (life expectancy has increased by more than 16% since the 1930s)
  • Raise the amount of contributions to SS
  • Lower payments from SS, either selectively (means-testing) or across the board
  • Allow increased immigration to bring more younger workers into the US work force
  • Print more money to inflate the 'benefits due' out of existence
  • Globalize SSA to provide benefits to other countries/continents where the demographics work in our favor
  • Set old people (esp. Baby boomers) adrift on ice floes (hey, it worked for the Inuit)
 
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drkitten said:
Wrong. While I currently pay into SSA, my sweetie does not, and neither do/did either of my parents.

And yes, all persons involved are US citizens, working legally in the US.

If social security bothers you that much, change jobs....
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Not everyone wants to be a teacher, or a US Senator, or one of the few careers that avoided social security. If people had a choice, how many would choose social security over a private plan? You could do a whole lot with 12.4% of your gross income (up to the earnings limit). It would take me less than one heartbeat to move my money elsewhere.
 
kallsop said:
Not everyone wants to be a teacher, or a US Senator, or one of the few careers that avoided social security.
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I guess avoiding social security isn't that high on people's lists of concerns, then.

Personally, if I thought I was putting 12% of my money into a Ponzi scheme, you can bet that I would find a way to avoid it.

If people had a choice, how many would choose social security over a private plan?
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Demonstrably, very few. Because they have that choice and don't avail themselves of it.

It would take me less than one heartbeat to move my money elsewhere.
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Less than a heartbeat, but longer than it takes you to get a teaching certificate. Does your doctor know about this pulse rate of yours? Colour me unimpressed.
 
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