View Poll Results: Is Social Security a Ponzi Scheme?

Voters
96. You may not vote on this poll
  • Yes - absolutely

    41 42.71%
  • Yes - it's more-or-less the same as

    35 36.46%
  • No - but it's pretty close

    5 5.21%
  • No - not even close

    24 25.00%
  • Social Security is safe and secure, please stop scaring people.

    14 14.58%
  • This is a crummy question with no relevance.

    1 1.04%
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Thread: Is Social Security a Ponzi Scheme?

  1. #121
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by Aunt Spiker View Post
    In order for SS not to be like Ponzi scheme in my view it would have to function just like a savings account - without the government profitting and without giving stipulations which limit how you can use *your* money and *when* you can access it.
    Here is the problem. You are thinking like many people do about SS as an investment. It is not. It is an insurance program. The money you pay is a premium. You will be paid if you reach retirement age. If you do not you get nothing. If you die after 1 payment, that's it. If you live to be 100 you will get more. It is essentially an aleatory contract. We can calculate with pretty good certainty the amount of people that will retire, die, etc, each year and be eligible for the program based on its current age restrictions and how much it will cost based on the current payment rules. Just like we can calculate how many houses will be destroyed for property and casualty and how much to pay based on the amount insured. Using this information we can decide how much to tax ourselves. Sadly, we have chosen not to tax enough for the program. Actually we have, but the rest of the government has not saved money. The idea of a government sponsored "saving account" always makes me laugh. Does anybody think the government is going to actually save money, spend less than it takes in? I want to know. How the hell does anyone actually think a government private "saving" account will actually work?
    Last edited by drz-400; 09-14-11 at 05:06 AM.

  2. #122
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by drz-400 View Post
    Here is the problem. You are thinking like many people do about SS as an investment. It is not. It is an insurance program. The money you pay is a premium. You will be paid if you reach retirement age. If you do not you get nothing. If you die after 1 payment, that's it. If you live to be 100 you will get more. It is essentially an aleatory contract. We can calculate with pretty good certainty the amount of people that will retire, die, etc, each year and be eligible for the program based on its current age restrictions and how much it will cost based on the current payment rules. Just like we can calculate how many houses will be destroyed for property and casualty and how much to pay based on the amount insured. Using this information we can decide how much to tax ourselves. Sadly, we have chosen not to tax enough for the program. Actually we have, but the rest of the government has not saved money. The idea of a government sponsored "saving account" always makes me laugh. Does anybody think the government is going to actually save money, spend less than it takes in? I want to know. How the hell does anyone actually think a government private "saving" account will actually work?
    Thats one of the better descriptions of SS that ive read Dr...yes it is more an insurance policy and it would be viable and continued working well if it werent for the extraneous drains placed on the program...Dems and GOP alike robbing the fund and the addition of all kinds of deadbeats being eligible to collect it way before retirement age.
    If SS remained as you aptly described it as an insurance program for retirement age individuals only it would be fine financially.
    I still have never recieve an answer to the question...if you abolish social secuirty and medicare like Ron Paul supporters and some teapartiers want....in the end who pays for the very poor that couldnt save for their retirement and senior healthcare...or the people that just didnt....that question begs an answer because there WILL BE MILLIONS of these people...

  3. #123
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by scourge99 View Post
    .... ok for all you petty nit pickers: we will concede that its not EXACTLY 100% a ponzi scheme.
    1) its not fraudulent
    2) its not illegal.
    3) its not tricking investors (because there are no "investors". Its a tax, not an investment)

    But its SIMILAR in SOME respects to a ponzi scheme.
    1) its not sustainable - contrary to its original intention the excess SS funds were supposed to be used to buy bonds (or something else) to actually MAKE money to be paid out later. But the government doesn't actually make money because it loans the money to itself. So when it it comes time to pay out the US will just increase US debt and/or print more money... AND that is what has got the government worried because it may break the system when it has to start paying more than it takes in.
    2) its a pay as you go system - it pays out current SS with funds received now. Similar--but not exactly--to how a Ponzi scheme pays older investors with the funds from new investors.
    Well stated. Even the Social Security Administration admits there are some "superficial" similarities between Social Security and a Ponzi Scheme. Although, they say the reason it's different is because "There is no unsustainable progression driving the mechanism of a pay-as-you-go pension system and so it is not a pyramid or Ponzi scheme." The problem is that the population change is beginning to make it unsustainable.

    I think it's interesting the Social Security Admin. made this comparison in 2009 on their own website.
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  4. #124
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by scourge99 View Post
    .... ok for all you petty nit pickers: we will concede that its not EXACTLY 100% a ponzi scheme.
    1) its not fraudulent
    2) its not illegal.
    3) its not tricking investors (because there are no "investors". Its a tax, not an investment)

    But its SIMILAR in SOME respects to a ponzi scheme.
    1) its not sustainable - contrary to its original intention the excess SS funds were supposed to be used to buy bonds (or something else) to actually MAKE money to be paid out later. But the government doesn't actually make money because it loans the money to itself. So when it it comes time to pay out the US will just increase US debt and/or print more money... AND that is what has got the government worried because it may break the system when it has to start paying more than it takes in.
    2) its a pay as you go system - it pays out current SS with funds received now. Similar--but not exactly--to how a Ponzi scheme pays older investors with the funds from new investors.
    But Social Security is sustainable by the mere fact it is a pay as you go system. By definition, it can never run out of money because there is a constant supply of payroll taxes. When the trust fund of approximately $2.5 trillion runs out it will still be able pay benefits of about 80%.


  5. #125
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by pbrauer View Post
    But Social Security is sustainable by the mere fact it is a pay as you go system. By definition, it can never run out of money because there is a constant supply of payroll taxes. When the trust fund of approximately $2.5 trillion runs out it will still be able pay benefits of about 80%.
    Can you cite your source for those numbers you posted?
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  6. #126
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by scourge99 View Post
    Can you cite your source for those numbers you posted?
    The $2.5 trillion surplus, however, has been borrowed over the years by the federal government and spent on other programs. In return, the Treasury Department has issued bonds to Social Security, guaranteeing repayment with interest.

    Social Security on Pace to be Drained by 2037 - CBS News


  7. #127
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by scourge99 View Post
    Can you cite your source for those numbers you posted?
    CBS might not cut it for you, I believe he is citing the trustees report. The 2009 report says that it will fall short of outlays in 2016 and will be able to finance 76% of annual benefits by 2037. I think more recent reports have gotten slightly worse because of the recession. I have also read similar numbers in multiple textbooks on insurance.
    Last edited by drz-400; 09-14-11 at 01:24 PM.

  8. #128
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by Harry Guerrilla View Post
    It's a terrible insurance program.
    If SS were a private business, investors would be fleeing from the corporation because of the massive unfunded liabilities.

    I don't have a problem with disability insurance, unemployment (on a state level) and SSI but SS retirement is a boondoggle.
    Social insurance programs do not need to be fully funded. This is for several reasons,

    1. They operate indefinitely
    2. They are compulsory
    3. The government can tax and borrow

    IMO, it would be almost cost prohibitive if they were as it would require substantially higher taxes.

  9. #129
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by drz-400 View Post
    Social insurance programs do not need to be fully funded. This is for several reasons,

    1. They operate indefinitely
    2. They are compulsory
    3. The government can tax and borrow

    IMO, it would be almost cost prohibitive if they were as it would require substantially higher taxes.
    Agreed.

    It pisses me off when people attempt to redefine S.S. as a structured investment.
    It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.
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  10. #130
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    Re: Is Social Security a Ponzi Scheme?

    Quote Originally Posted by drz-400 View Post
    CBS might not cut it for you, I believe he is citing the trustees report. The 2009 report says that it will fall short of outlays in 2016 and will be able to finance 76% of annual benefits by 2037. I think more recent reports have gotten slightly worse because of the recession. I have also read similar numbers in multiple textbooks on insurance.
    1) whats the "return rate" of SS now? I.E., adjusted for inflation, if i paid X amount of dollars into the system, when will i break even once i start to receive benefits (assume i dont start taking benefits early).
    2) With only 76% of those payments, how far does that move out the break even point?
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