Swampyville's - Ponzi Scheme and Social Security!
November 6, 2011
Is there any real difference between a Ponzi Scheme and Social Security?
A Ponzi Scheme:
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation. The Ponzi scheme usually entices new investors by offering higher returns than other investments, in the form of short-term returns that are either abnormally high or unusually consistent. Perpetuation of the high returns requires an ever-increasing flow of money from new investors to keep the scheme going. (Wikipedia) Eventually this scheme will fail due the lack of new investors!
Social Security is a government investment operation that pays returns to its investors (retired employees) from their own money they paid in and the money by subsequent investors (the currently employed), rather than from any real profit earned by the retired employees or from the organization (the government). Social Security differs from a Ponzi Scheme by paying Long Term returns rather than Short Term returns. There is a Social Security Trust Fund; however, this fund has been pilfered by the government and it contains mainly I.O.U.'s, placed there by the government. This scheme will also fail due to dwindling investors (the currently employed). More so, now that the "Baby Boomers" are applying for their Social Security dividends. With the investment money being spent over the years by the government, thru the sale of government bonds (using the Social Security Trust Fund as collateral) to private investors and using that money for other purposes, the only alternative left is to borrow the money; thus, putting this Nation deeper into debt! The current debt of the Social Security system is between two to three trillion dollars, in that these government bonds have to be paid back with interest!
A Ponzi scheme is a private operation for voluntary investors who want to get rich quick and the Social Security System is a government operation for involuntary investors who know they will never get rich!
Since it was passed into law, Social Security has become the Congress's and the Administration's private "Slush Fund" to do with, whatever; they desire to do with it!