Wednesday, December 31, 2008

Is social security a Ponzi scheme?

Here's an article discussing the merits of social security being a Ponzi scheme or not.

Ask yourself this question, if you go to the local social security office and ask how much money you have in your account what would they tell you?

I've been kicking in to social security for 30 years. I have yet to get an IRA like statement that says how much money I currently have in "my account".

Oh, for sure I get a statement every year telling me what my future retirement benefit will be. But what if I die tomorrow? How much of that money I kicked in over these 30 years do I get to pass on to my heirs? Prior to being married that answer was a big fat ZERO. As a result of getting married later in life, Mrs. Gekko will probably get none of my contributions.

Here's the wiki description of a Ponzi scheme......
A Ponzi scheme is a fraudulent investment operation that pays returns to investors out of the money paid by subsequent investors rather than from profit. The term "Ponzi scheme" is used primarily in the United States, while other English-speaking countries do not distinguish colloquially between this scheme and other pyramid schemes.[1]

So you tell me, where is our money? I don't call boxes of IOU's from the same people we gave the money to an investment.

Let's put it another way. If everyone in the US quit working tomorrow and demanded their money, where is it?

As far as I'm concerned, each and every politician who oversees this actuarial nightmare is a worse human being then Bernard Madoff. Yet he'll get prison time.

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