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Is Social Security a Ponzi Scheme?

Is Social Security a Ponzi Scheme?

  • Yes - absolutely

    Votes: 8 14.5%

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

    Votes: 15 27.3%

  • No - but it's pretty close

    Votes: 4 7.3%

  • No - not even close

    Votes: 21 38.2%

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

    Votes: 12 21.8%

  • This is a crummy question with no relevance.

    Votes: 0 0.0%
  • Total voters
    55
The income (interest) it generates is no where close to what it pays out. It basically takes from one investor to pay an earlier investor (with their knowledge). Here's a breakdown.

Here's where it's headed.

Basically, they'll have to fund it out of the treasury or default.
 
1Perry said:
With my position being, until it is, it's currently being run like a Ponzi scheme.
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Except that it isn't. It is nothing different than any other program that pays from government coffers. By your argument, government employee pay is a ponzi scheme, which is obviously ridiculous.
 
Redress said:
Except that it isn't. It is nothing different than any other program that pays from government coffers. By your argument, government employee pay is a ponzi scheme, which is obviously ridiculous.
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The ponzi scheme part of it is that they tell you you're going to get your money back, when in all likelihood, you're never going to see it again. A program where they just gave a small stipend to seniors who couldn't afford their retirement would be better, since it would be honest.
 
Redress said:
Except that it isn't. It is nothing different than any other program that pays from government coffers.
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The government has no coffers.

By your argument, government employee pay is a ponzi scheme, which is obviously ridiculous.
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Well now that you bring it up......but no, it wouldn't be the same. In a government job you are told that if you work 40 hours, this is what you will get. It's what you get.
With S.S. the arguement is that if you pay in, you will get this at this age. Many are not going to get that.
 
I see it as a ponzi scheme because it relies on present-incoming monies from working individuals to pay back the 'I - O - U' and payouts to recipients who are drawing from social security right now.
 
atrasicarius said:
The ponzi scheme part of it is that they tell you you're going to get your money back, when in all likelihood, you're never going to see it again. A program where they just gave a small stipend to seniors who couldn't afford their retirement would be better, since it would be honest.
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Just what is most likely a technicality. You aren't told that you will get your money back. Everyone knows they may pay in for 30 years and then kick off at a day afterwards.

You are told that you can draw X amount at X age. That's not going to be true for many.
 
atrasicarius said:
The ponzi scheme part of it is that they tell you you're going to get your money back, when in all likelihood, you're never going to see it again. A program where they just gave a small stipend to seniors who couldn't afford their retirement would be better, since it would be honest.
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"They" do not tell you you will get your money back. When I gt my SS letter, it tells me I will get a certain amount of money each month if I retire at different ages. This is a large, unsubtle difference.
 
1Perry said:
The government has no coffers.



Well now that you bring it up......but no, it wouldn't be the same. In a government job you are told that if you work 40 hours, this is what you will get. It's what you get.
With S.S. the arguement is that if you pay in, you will get this at this age. Many are not going to get that.
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It is entirely possible they will get that. SS programs have run far longer than the US SS program has. What might happen is that the retirement age gets changed, or FICA gets increased, or the FICA cap gets raised. Further, it is entirely possible that people working could get fired, laid off, reduced wages, even working for the government, so again, either SS is not a ponzi scheme, or government employee pay is.
 
Not only is it a ponzi scheme in which the government profits - it's also withholding your rightfully earned income from you.
 
Aunt Spiker said:
They knew - from the very beginning - that it was unsustainable . . . but they chose to not care and to ignore that and save that worry for later generations.

Well - it's later.

We're shafted.

Government profited greatly from it and not so many seem to rely on it so heavily we have to be indebted to it to limp it along.
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It could be sustainable but in America, when politicians want to spend money... instead of taxing, they take it out of SS. SS was not destined to go bankrupt by itself. It should be illegal for the government to bankrupt it though.
 
Redress said:
It is entirely possible they will get that. SS programs have run far longer than the US SS program has. What might happen is that the retirement age gets changed, or FICA gets increased, or the FICA cap gets raised. Further, it is entirely possible that people working could get fired, laid off, reduced wages, even working for the government, so again, either SS is not a ponzi scheme, or government employee pay is.
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I explained the differences. Those who buy in a Ponzi scheme may very well get something also. Just not what they were told when they started paying in.
 
Aunt Spiker said:
I see it as a ponzi scheme because it relies on present-incoming monies from working individuals to pay back the 'I - O - U' and payouts to recipients who are drawing from social security right now.
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But that's not what a ponzi scheme is. A ponzi scheme isn't paying back IOU's.
 
1Perry said:
I explained the differences. Those who buy in a Ponzi scheme may very well get something also. Just not what they were told when they started paying in.
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Still not a ponzi scheme. A ponzi scheme is designed to fail with those above a certain plateau on the pyramid being the only ones to make a profit, that profit being off the investments of those underneath them. SS was not designed to fail and if it does fail because it can't support the large influx of baby boomers, which was not envisioned at the time it was incepted, in large part, that could be explained by all of the years the SS surplus' were spent for non-SS items. It would not be failing for the reason a ponzi scheme is destined to fail -- exhausting the pool of investors.
 
Sheik Yerbuti said:
But that's not what a ponzi scheme is. A ponzi scheme isn't paying back IOU's.
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A stack of endless IOU's is all that a ponzi scheme is.

In a Ponzi scheme people pay into a pretend pool of money (usually 'investment' into stocks or something) and in order to keep the scheme going the monies coming in need to be sufficient enough to turn around and pay out to those who are expecting some type of dividend or return. This divided - to the ponzi-operator - is an "IOU"

The moment the monies in/out at current tap out - the scheme falls apart.

With SS the moment people aren't paying in at the rate that people are taking out - it'll cave in on itself and go belly up.

It is a ponzi scheme with a few extra tiers and the backing and full support of the US government to maintain it.
 
Sheik Yerbuti said:
Still not a ponzi scheme. A ponzi scheme is designed to fail with those above a certain plateau on the pyramid being the only ones to make a profit, that profit being off the investments of those underneath them. SS was not designed to fail and if it does fail because it can't support the large influx of baby boomers, which was not envisioned at the time it was incepted, in large part, that could be explained by all of the years the SS surplus' were spent for non-SS items. It would not be failing for the reason a ponzi scheme is destined to fail -- exhausting the pool of investors.
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What was my arguement? Not that it was, but that it is currently being run like one. Unless changed, S.S. is destined to fail.
 
Aunt Spiker said:
A stack of endless IOU's is all that a ponzi scheme is.

In a Ponzi scheme people pay into a pretend pool of money (usually 'investment' into stocks or something) and in order to keep the scheme going the monies coming in need to be sufficient enough to turn around and pay out to those who are expecting some type of dividend or return. This divided - to the ponzi-operator - is an "IOU"
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It's not a pretend pool of money. It's an actual pool of money. Unlike SS, there is no surplus to spend on other budgetary items.

Aunt Spiker said:
A stack of endless IOU's is all that a ponzi scheme is.

The moment the monies in/out at current tap out - the scheme falls apart.

With SS the moment people aren't paying in at the rate that people are taking out - it'll cave in on itself and go belly up.

It is a ponzi scheme with a few extra tiers and the backing and full support of the US government to maintain it.
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Which make SS not a ponzi scheme. A ponzi scheme fails when it exhausts its supply of investors. SS's investor pool is not exhausting if it can't support the baby boobers. And unlike a ponzi scheme which fails when the investor supply runs dry, the federal government has other options to support the influx of baby boomers.
 
The only reason why SS's pool doesn't fail is because the government has leverage to just TAKE to fund it - a ponzi scheme in the traditional sense must have people DRAWN to it.

That doesn't change the fact that it - at present - functions like a ponzi scheme.
 
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if we don't raise the contribution ceiling, alternative forms of funding are eventually going to be necessary. might be a national sales tax. i'd prefer to see the ceiling raised, though.
 
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.
 
Aunt Spiker said:
The only reason why SS's pool doesn't fail is because the government has leverage to just TAKE to fund it - a ponzi scheme in the traditional sense must have people DRAWN to it.

That doesn't change the fact that it - at present - functions like a ponzi scheme.
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So in other words it's just like a ponzi scheme except that it isn't like a ponzi scheme.
 
Aunt Spiker said:
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.
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Did you know there are lots of things not like savings accounts that are not ponzi schemes?
 
1Perry said:
What was my arguement? Not that it was, but that it is currently being run like one. Unless changed, S.S. is destined to fail.
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Which also differentiates SS from a ponzi scheme. A ponzi shceme cannot be saved from failure.
 
Social Security needs a bit of adjustment, but, unless one is referencing the size of generations from the baby boom and later, I fail to see how it could be classified as a ponzi scheme. And honestly, the different generation size issue is an actuarial problem more than anything else.
 
GreenvilleGrows said:
Yes? No? Why?
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I say yes because I do not expect any person under 45 years old putting money into social security to get anything out of it because it will be bankrupt by the time they are old enough to collect.
 
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