Social Security is a Ponzi scheme

[BBSA]

Texas Governor Rick Perry has been criticized for saying that Social Security is a Ponzi scheme. But he’s absolutely right, and he is hardly the first guy to notice. I figured that out 30 years ago.

A Ponzi scheme is an investment program where there are no real dividends. It is able to make payouts to early investors only as long as there are enough new investors to pump money into it. Once the new investments decline, the payouts decrease, and eventually there are no more payouts.

When a private party sets up something like this and gets caught, we put him in prison (Bernie Madoff, for example).

But when the federal government does it, it’s different. It’s not a crime at all. It’s a “contract” and a sacred obligation. Even so, when the money runs out, “investors” in it should expect to get exactly what the Madoff investors got: screwed.

Rick Perry has simply pointed out the obvious.

Mark Steyn has expended a good deal of time and energy explaining why European socialism is bound to collapse. It’s all about the decrease in babies. The European socialist Ponzi schemes are running out of babies. Likewise, our birthrate is declining and our ratio of retirees to workers is increasing. Moreover, the number of economically productive working-age adults has declined as a result of the recession, which means millions of working-age people aren’t paying FICA or income taxes. Soon, we will be unable to keep our promises to support the elderly, the disabled and the lazy. Ponzi schemes collapse when the number of people paying into them drops.

http://dailycaller.com/2011/09/03/rick-perry-is-right-social-security-is-a-ponzi-scheme

 

[Hard Rain]

How it's worked in America is that contributions are paid to a SS trust. Any surpluses (i.e. contributions not needed to be paid out immediately), by law, have to be invested in... government debt! Unfortunately for the Americans they've raided their SS fund for decades and have left behind an IOU basically saying that the government will pay up the obligations in future. However, they will base the annual increases for inflation on their own biased calculations, thus defrauding the contributors as well as the taxpayers as SS no longer has a surplus and, has to be paid for with more government debt.

Oh, and by the way, this type of forced savings and retirement Ponzi scheme is being proposed for South Africa...

 

[Nerfherder]

The American economy will collapse before the European one does.

 

[BBSA]

Oh, and by the way, this is type of forced savings and retirement Ponzi scheme is being proposed for South Africa...

Yes that is my concern, will we learn from the mistakes?

Is the NHI any different?

 

[TheMightyQuin]

Yes that is my concern, will we learn from the mistakes?

Is the NHI any different?

The main and most important difference is that the NHI will be paid for by the people that don't need it...i.e. the current milking cow taxbase of 6 million that supports the rest....at least everybody contributes to SS as far as I know.

 

[reactor_sa]

Texas Governor Rick Perry has been criticized for saying that Social Security is a Ponzi scheme. But he’s absolutely right, and he is hardly the first guy to notice. I figured that out 30 years ago.

A Ponzi scheme is an investment program where there are no real dividends. It is able to make payouts to early investors only as long as there are enough new investors to pump money into it. Once the new investments decline, the payouts decrease, and eventually there are no more payouts.

When a private party sets up something like this and gets caught, we put him in prison (Bernie Madoff, for example).

But when the federal government does it, it’s different. It’s not a crime at all. It’s a “contract” and a sacred obligation. Even so, when the money runs out, “investors” in it should expect to get exactly what the Madoff investors got: screwed.

Rick Perry has simply pointed out the obvious.

Mark Steyn has expended a good deal of time and energy explaining why European socialism is bound to collapse. It’s all about the decrease in babies. The European socialist Ponzi schemes are running out of babies. Likewise, our birthrate is declining and our ratio of retirees to workers is increasing. Moreover, the number of economically productive working-age adults has declined as a result of the recession, which means millions of working-age people aren’t paying FICA or income taxes. Soon, we will be unable to keep our promises to support the elderly, the disabled and the lazy. Ponzi schemes collapse when the number of people paying into them drops.

http://dailycaller.com/2011/09/03/rick-perry-is-right-social-security-is-a-ponzi-scheme

The logic should be oviuuuss!
The baffoon that puts a chicken in the oven and expects to find two when he opens it again, is either really a baffoon or one of these anc cadres. Because the only way you can get more than you put in, is if someone else put in some and you take that out as well.

Social security like policies in first-world countries maybe be like ponzi schemes, but in south africa they're some sort of freak between ponzi scheme and charity, because here the ones paying in dont actually expect anything out, only the poor and the coffer liners will be walking away with what they never put in.

 

[AstroTurf]

The American economy will collapse before the European one does.

That is how dominoes work... (start at the beginning).

 

[OzzieCapie]

Social security like policies in first-world countries maybe be like ponzi schemes,

Hang on...Australia is first world..I think. So lets see if its a Ponzi scheme there.

Medicare: Makes sure that everybody gets a minimum health care, gets people back to work (and paying taxes) quicker
HECS: (Higher Education Contribution): The poorest person can defer their uni fees until they work, i.e generating a more educated and qualified nation to keep paying taxes
Unemployment benefits: Only paid on evidence of ability to work and active job search, diminishes long term unemployed
etc etc

The only people who think its a Ponzi scheme are the ones that earn a lot and are trying to pay less taxes. The more you earn, the more tax you pay...that's how it works , live with it.

 

[Hard Rain]

The social welfare programs you mentioned are not Ponzi schemes like forced retirement/savings because they are not based on the government promising to pay back your own contributions. That said, they do have problems:

Medicare: Makes sure that everybody gets a minimum health care, gets people back to work (and paying taxes) quicker

This is government-subsidized health care provision. It has numerous problems, notably escalating cost. Also, it's funded by robbery.

HECS: (Higher Education Contribution): The poorest person can defer their uni fees until they work, i.e generating a more educated and qualified nation to keep paying taxes

And what happens if they fail/still can't get a job. Oh, it's fine, the money's been stolen from other people so who cares?

Unemployment benefits: Only paid on evidence of ability to work and active job search, diminishes long term unemployed

No, this subsidizes unemployment. And again, it's paid for with stolen money.

The only people who think its a Ponzi scheme are the ones that earn a lot and are trying to pay less taxes. The more you earn, the more tax you pay...that's how it works , live with it.

So robbery is justified, provided it's done on a progressive scale of income? Good to know that's what you think...

 

[Rkootknir]

Oh, and by the way, this type of forced savings and retirement Ponzi scheme is being proposed for South Africa...

As far as I know most (90%+) of the proposed methods for social security reform in SA are based on a funded approach and not PAYG (unfunded) as in the US or most of Europe. Although I'm against it in principle (the State being involved) it's not quite as severe a problem as the state schemes of some other countries (US, UK, Japan, etc) where the current working generation pays for current pensioners.

You will effectively build up your own "pot" of money, similar to other defined contribution retirement arrangements (both personal & employer sponsored).

 

[Hard Rain]

You will effectively build up your own "pot" of money, similar to other defined contribution retirement arrangements (both personal & employer sponsored).

Nonsense, you'll be forced to contribute to a fund or trust of some sort that will guarantee your money in future on its own terms. Ten bucks says this trust or fund will be required to purchase government bonds.

 

[Rkootknir]

Nonsense, you'll be forced to contribute to a fund or trust of some sort that will guarantee your money in future on its own terms. Ten bucks says this trust or fund will be required to purchase government bonds.

That is certainly a risk, but is not currently in any of the proposals being discussed.

So far most of the stakeholders in the discussions are quite happy with the fund (or funds - there's no clarity on number of schemes) being a defined contribution type arrangement, so it's not nonsense (unless you have information contrary to what I have). As far as investments go, government bonds are already about 15-20% of most balanced type investment funds. There is a risk that the State sees it as an opportunity to raise cheap finance, but at the moment the only requirements on investment will be to be compliant with Reg 28 of the Pension Funds Act. Some of the proposals also allow for complete investment freedom within the confines of Reg 28.

There will most probably be a defined benefit section as well, but this will most probably just be a continuation of the current State Old Age Pension which is run on a PAYG basis at the moment.

 

[noxibox]

Sounds no different to insurance or medical aid.

 

[WilD_CaT]

Government: Private citizens are too stupid to make decisions about their future for themselves. Thus we'll do it for you. But you are allowed to have a say in who runs the entire country, you are not too stupid to decide some that has that enourmous impact on the lives of everyone else.

I find that concept absolutely absurd.

I also Rkootknir's argument wrong. If this was a good idea it would be voluntary. It isn't, this means government can screw. The whole point of making it not voluntary is to screw us.

Think about, if I can decide not to contribute and bear the consequences, the government should allow me to do so. And if I screw up, it should allow me to bear the consequences.

The whole point of this is to redistribute wealth, the contributors will be paying for the leaches. And the state, rather than a private instution will be managing your finances. I don't know about anyone here, but the very last instution that should be managing anything is the state. You stuff up, you hurt yourself.

The government stuffs up, EVERYONE suffers.

Redistribution doesn't just redistribute wealth, it redistributes suffering.

 

[Rkootknir]

Government: Private citizens are too stupid to make decisions about their future for themselves. Thus we'll do it for you. But you are allowed to have a say in who runs the entire country, you are not too stupid to decide some that has that enourmous impact on the lives of everyone else.

I find that concept absolutely absurd.

I also Rkootknir's argument wrong. If this was a good idea it would be voluntary. It isn't, this means government can screw. The whole point of making it not voluntary is to screw us.

Think about, if I can decide not to contribute and bear the consequences, the government should allow me to do so. And if I screw up, it should allow me to bear the consequences.

The whole point of this is to redistribute wealth, the contributors will be paying for the leaches. And the state, rather than a private instution will be managing your finances. I don't know about anyone here, but the very last instution that should be managing anything is the state. You stuff up, you hurt yourself.

The government stuffs up, EVERYONE suffers.

Redistribution doesn't just redistribute wealth, it redistributes suffering.

Uhm, I never said it was a good idea and it's not my argument. I'm just stating the facts around the ongoing discussion on social security reform in SA.

Personally, I'm against the State being involved in personal retirement matters (and everything else as well). I think any type of redistributive social security is morally reprehensible.

 

[OzzieCapie]

This is government-subsidized health care provision. It has numerous problems, notably escalating cost. Also, it's funded by robbery.

Costs are actually kept down, eg a doctor that charges the 'medicare rate' gets more loyal patients because they have nothing 'out of pocket'. Similarly drug prices and competition of generics. It is not an isolated system.

And what happens if they fail/still can't get a job. Oh, it's fine, the money's been stolen from other people so who cares?

Education is an investment in the future and in fact a counter action against the so called 'ponzi effect'

No, this subsidizes unemployment. And again, it's paid for with stolen money.

But apparently the unemployment is 5%. Again it is not isolated. You don't look for job or re-train you don't get benefits.

So robbery is justified, provided it's done on a progressive scale of income? Good to know that's what you think...

It's not what I think it is just my description of what works here and the type of people that are against it , because "there is nothing in it for them".
If society does not care about the weakest then it will not collectively move forward. We long ago left the jungle where it was survival of the fittest and we killed the weak....or would you prefer that.

Many people claim they are where they are because "they work hard". The reality is that they just manipulate the system better than others.

 

[WilD_CaT]

Costs are actually kept down, eg a doctor that charges the 'medicare rate' gets more loyal patients because they have nothing 'out of pocket'. Similarly drug prices and competition of generics. It is not an isolated system.

Prices are determined by supply and demand. Demand increases due to the perception that healthcare is free or cheap as the consumer doesn't pay directly.

If demand increase prices rise.

So please demonstrate why you feel the opposite will happen.

Education is an investment in the future and in fact a counter action against the so called 'ponzi effect'

You haven't addressed the issue. You are spending now because you argue in future they will be able to "repay" the costs back to the state.

Ok. If I come to you and put a gun to your head and take the money away from you directly, and I use it to pay for my education and eventually I get a job and start paying taxes.

Does that justify me sticking a gun to your head and mugging you?

How do you measure this? How do you know the person will pay their contribution. Do you posses pre-cognitive abilities.

But apparently the unemployment is 5%. Again it is not isolated. You don't look for job or re-train you don't get benefits.

It will still subsidize unemployement and it would be less if no subsidisation took place. Remember if you are paying someone R600 a month to look for a job, and he finds an offer worth R1000 a month, to that person is the actual offer is R400, and "looking" for a job and earning R600 doing so might be a lot better to them than working for R1000 (Marginal benefit of doing so is R400)

It's not what I think it is just my description of what works here and the type of people that are against it , because "there is nothing in it for them".

Sure. We are thinking in terms of what we perceive is to how benefit. How is that different from anyone else. Even if you contribute more money and are happy to pay for someone else, you could be doing that right now. But instead generally that doesn't happen, and people only contribute when others are forced to do so. This action proves they are not charitable, they just want to appear to be.

More over even if you do it for altruistic reasons, your actions are still based on your subjective preferences.

The difference is we are not using force and coercion to get our way. You are.

If society does not care about the weakest then it will not collectively move forward. We long ago left the jungle where it was survival of the fittest and we killed the weak....or would you prefer that.

Misrepresentation, we want rules, just rules that don't favour special interests.

Capitalists hate the poor. They wish no one was poor. Socialists love the poor. They wish everyone was poor.

Many people claim they are where they are because "they work hard". The reality is that they just manipulate the system better than others.

And it aint there fault if you guys are the ones designing the system.