Is Social Security a Ponzi Scheme?

3 01 2009

From BusinessWeek

So let me explain why I think that Social Security has most of the characteristics of a Ponzi scheme—let’s call it a “Ponzi-like” scheme. Nevertheless, the system of intergenerational transfers—the young supporting the old—is sustainable as long as productivity is rising.

A “Ponzi-like” scheme has three characteristics—transfers, obscurity, and unsustainability.

1) Transfer: Early participants are paid off by the investments of later participants

2) Obscurity: The true nature of the scheme is obscured. so that it looks like early participants are receiving a return on their investments, rather than payments from later participants

3) Unsustainability: The scheme is guaranteed to eventually break down, once the number of participatns rises high enough.

Check the rest out here.

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One response

3 01 2009
scientificleader

Yes, Social Insecurity, like fiat currency’s Federal Reserve are as misnamed as they are dishonest.

What’s so social about fiscal grandchild abuse – stealing from me and my kids to give to today’s elderly. And how does that make me more secure?

Similarly, the Federal Reserve’s fraud is the paper money – legalized counterfeit – that no longer is backed by gold. It too is neither Federal (owned by private bankers) nor does it reserve anything (other than pieces of paper).

Both make Ponzie schemes look small in comparison – Madoff’s crimes were a mere $50B; wheras Social Security and the Fed’s are in the trillions. And Social Security and the Fed hurt every American, and non-americans who are forced at the threat of jail time- to pay into the scheme. As bad as Ponzie and Madoff were, their fraud had no violence that compelled people to participate against their will

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