The point is IF there is no lying involved, it is not a crime to pay older clients with newer client money. If for example, I take payments from customers and then I promise to pay them back a certain amount if a certain event happens (e.g., retirement, or an earthquake), that is perfectly legal as long as I disclose how I am using the customer payments in the mean time and show periodically that I can afford to pay those promised amounts. If at some point, I show that I cannot afford to pay out the promised amounts, then I would have to amend the contract so that people pay in more when they join, or I would have to reduce the promised amount. This is how insurance also works. Insurance companies use other customer's premiums to pay out claims. Is that a ponzi scheme? Is that illegal? Same with SS -- since there was no promise or lying involved. It is perfectly legal to pool the customer payments if that is stated upfront. Whether you would like to join in that endeavor is a whole other story. So the SS ponzi scheme falls flat on its face.
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Newt Gingrich should have been a comedian
- Thread starter Free Thinker
- Start date
The point is IF there is no lying involved, it is not a crime to pay older clients with newer client money. If for example, I take payments from customers and then I promise to pay them back a certain amount if a certain event happens (e.g., retirement, or an earthquake), that is perfectly legal as long as I disclose how I am using the customer payments in the mean time and show periodically that I can afford to pay those promised amounts. If at some point, I show that I cannot afford to pay out the promised amounts, then I would have to amend the contract so that people pay in more when they join, or I would have to reduce the promised amount. This is how insurance also works. Insurance companies use other customer's premiums to pay out claims. Is that a ponzi scheme? Is that illegal? Same with SS -- since there was no promise or lying involved. It is perfectly legal to pool the customer payments if that is stated upfront. Whether you would like to join in that endeavor is a whole other story. So the SS ponzi scheme falls flat on its face.
Quote from Free Thinker:
on top of all your other problems you have a reading comprehension problem too? i said IF ss is a ponzi so are mutual funds. neither are.
dont tell me that you dont know that mutual funds are "pooled investments".
more b.s. from the king of trolls.
Money is fungible... Mutual funds are not really taking from the new investors and giving to the old.
You are just a leftist cheap shot artist.
Quote from ssrrkk:
The point is IF there is no lying involved, it is not a crime to pay older clients with newer client money. If for example, I take payments from customers and then I promise to pay them back a certain amount if a certain event happens (e.g., retirement, or an earthquake), that is perfectly legal as long as I disclose how I am using the customer payments in the mean time and show periodically that I can afford to pay those promised amounts. If at some point, I show that I cannot afford to pay out the promised amounts, then I would have to amend the contract so that people pay in more when they join, or I would have to reduce the promised amount. This is how insurance also works. Insurance companies use other customer's premiums to pay out claims. Is that a ponzi scheme? Is that illegal? Same with SS -- since there was no promise or lying involved. It is perfectly legal to pool the customer payments if that is stated upfront. Whether you would like to join in that endeavor is a whole other story. So the SS ponzi scheme falls flat on its face.
an irrelevant distinction.
What is a Ponzi scheme?
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.
http://www.sec.gov/answers/ponzi.htm
Quote from jem:
an irrelevant distinction.
What is a Ponzi scheme?
A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity.
http://www.sec.gov/answers/ponzi.htm
Okay if you say so.
By the way, there are two important phrases in that sec definition that you might want to re-read. Those are: "investment fraud", and "purported returns".
Quote from ssrrkk:
Okay if you say so.
By the way, there are two important phrases in that sec definition that you might want to re-read. Those are: "investment fraud", and "purported returns".
exactly...
purported returns...
where are the returns on the social security lockbox...
how does that work going forward with the pyramid being upside down.
Quote from jem: in response to a post by FreeThinker
are you being a leftist troll or are you that ignorant of the difference between a ponzi and a mutual fund?
Actually, neither S.S. nor mutual funds, assuming they are not fraudulent, are Ponzi schemes.
Social Security does not even meet the most basic requirement of a Ponzi Scheme, and on that point the article linked to above is incorrect and all those who refer to Social Security as a Ponzi scheme are incorrect.
The amount one draws out of social security contributions IS linked to the amount paid in, but by formula and not directly. Current workers do not pay the pensions of retired workers.
What does happen is that pensions of those who live longer than their actuarial lifespan are subsidized by contributions from those who live less long than their actuarial lifespan.
Also, those who contribute at the high end (at the income cut-off point) subsidize to some extent the pensions of low wage earners. This feature and the one mentioned in the paragraph above are the two most important features of social security that make it vastly superior to private defined contribution plans for all but the wealthy. These features combined make it possible for a low wage earner to receive at least a subsistence pension that they can not out live by making a very modest and affordable monthly contribution.. For that same low-wage worker to obtain the same pension funded through a private, defined contribution plan like a 401K, for example, that worker would have to contribute far more per month into the plan during their working years. An amount that would be completely beyond the means of low wage workers!
Social Security also includes survivor benefit options and a disability insurance feature -- all based on actuarial calculations.
Social Security is an extremely efficient and well run government program -- an fine example of government doing something right!
And even for the wealthy, social security is not a bad deal no matter how you look at it. Everyone should support the social security system and want to see it protected, strengthened and kept sound. Do not make the mistake of trying to figure out a way of avoiding participation in social security. If you are smart you will want to contribute the maximum possible.
Social Security has three problems going forward, one is trivial, one serious, and the third critical.
First the trivial problem. Changing demographics require that the contribution rate be increased by two cents per each dollar of earned income up to the cut-off. One cent per employee, and one cent per employer. This will increase the total contribution rate from 12.5% to 14.5%.
Next the more serious problem. The U.S. Treasury has sold the Trust Fund special Treasury bonds that pay interest (about 5% on average I think). While the Trust currently has a surplus of about three trillion dollars, starting about now the Trust will need to begin redeeming some of those bonds to meet its pension obligation. Because of large deficits in the discretionary budget there is, of course, no money at Treasury for paying the Trust what is owed, and therefore the money will have to be borrowed. Furthermore, in the past (since the 1980's) the Trust served as a built in customer for Treasuries, but that customer is no longer there. It would seem almost inevitable that there will be increased monetizing of federal debt going forward. This will lead to further inflation. (The U.S. is already experiencing double-digit, real inflation in food and energy -- two items important in the budgets of S.S. pensioners.) Thus it is essential that deficits in the discretionary budget be brought down significantly if future Social Security recipients are to receive a pension with sufficient buying power that they can actually live on it. (COLA adjustments don't fully compensate for real inflation experienced by pensioners because of the way they are computed.) Excessive deficits are in effect robbing from future S.S. beneficiaries.
Finally, the most serious and critical problem faced by social security is Wall Street. For years now Wall Street has wanted to kill Social Security hoping to get their hands on money that is now going into the Trust and thus extract fees. Wall Street is the source of the false rumors, such as "Social Security is a Ponzi scheme, etc. Many different proposals have been floated all with the intent of driving social security into insolvency. These include endless delays in adjusting the contribution rate. Proposals to partly privatize, which would weaken the system because it depends on very wide participation. Currently those lobbying, with the intent of ultimately killing S.S. altogether, are proposing to reduce benefits of future retirees rather than increase the contribution rate. Many of the schemes involve changes that will slow the rate at which the Trust will need to redeem its bonds. Treasury will obviously favor these schemes.
A lie repeated often and endlessly can become accepted as the truth. Repeated and incessant Wall Street lies have become a critical problem for Social Security.
Quote from jem:
1. 1st of all, I am not against social security... it is a ponzi scheme so it should at the very least be means tested.
It isn't a Ponzi scheme, and it is in effect already means tested in two ways:
Social Security benefits are taxed according to ones AGI. (Those below a threshold pay no tax on benefits.)
The benefits of high wage earners are reduced somewhat relative to their contributions and those of low wage earners are increased somewhat relative to their contributions. This is another form of de facto means testing built in to the system..
Thus you should be happy with Social Security as it meets nicely your requirements. (We all should be happy with it, as a matter of fact. It's a very well planned and thought out government program!)
Quote from piezoe:
It isn't a Ponzi scheme, and it is in effect already means tested in two ways:
Social Security benefits are taxed according to ones AGI. (Those below a threshold pay no tax on benefits.)
The benefits of high wage earners are reduced somewhat relative to their contributions and those of low wage earners are increased somewhat relative to their contributions. This is another form of de facto means testing built in to the system..
Thus you should be happy with Social Security as it meets nicely your requirements. (We all should be happy with it, as a matter of fact. It's a very well planned and thought out government program!)
someone pointed out on another thread this well run govt ponzi scheme is running out of money even faster.
http://www.usnews.com/news/articles/2012/04/23/social-security-time-to-panic-no-time-to-act-yes
Social Security's trustees today delivered altogether unsurprising news: the program's trust funds are moving toward exhaustion at an accelerating pace. But the trustees also delivered a two-pronged message alongside this news: Americans don't need to panic just yet, but lawmakers do need to act now....
...
according to the trustees' report, Social Security's Old-Age and Survivors Insurance and Disability Insurance trust funds combined are now expected to be exhausted in 2033, three years earlier than last year's projection. The disability fund is of more immediate concern, as it is now projected to be exhausted in 2016, two years earlier than last year's estimate.
----
Wait to we see the real numbers..