The biggest Ponzi scheme of them all is social security:
- Thread starter Stok
- Start date
Sure I can, I just did.
It is the STRUCTURE of the system, that determines its Ponzi-ness.
Another example is Amway. They have actually been sued several times for being a Ponzi, and they are because of their structure.. The only difference is that there is actual product involved, thus the court ruled in their favour. Nevertheless it is a pyramid system based on its base's continuous growth.
Another Ponzi scheme can be "churches" that need constant influx of new converts (with their money) to keep them afloat. Just because they have a product (belief, solvation, whatever) that doesn't mean they are not a Ponzi....
But let's go back to SS, several books already exposed its built in problems:
http://www.americanthinker.com/2005/03/the_social_security_ponzi_sche.html
"Much as in the original Ponzi scheme, Social Security also paid huge returns to its first investors who, whether intentionally or not, led Americans to believe the plan worked marvelously, thereby engendering the support of an exceedingly grateful nation.
For instance, the first American to ever receive a check from this new national savings plan was Ernest Ackerman, a streetcar motorman from Cleveland, Ohio who retired exactly one day after the program went into effect. For the five cents that was deducted from Mr. Ackerman's check the sole day he was a 'participant', he received a lumpâsum payment of 17 cents. This was a 240% return, which annualizes out to 87,600%. Nice investing, Ernie."
Remember, in a Ponzi, early birds get all the goods:
" according to Social Security Online, after cost of living increases and 35 years of receipts until her death in 1975, totaled a startling $22,888.92 in payments from a system to which Mrs. Fuller contributed $24.75."
More explanations and examples:
http://www.isil.org/resources/lit/time-to-end-ss.html
You seem to be confusing pyramid schemes and Ponzi scheme which are not the same thing. Amway is a pyramid ("multi-level marketing") scheme
http://www.mlmwatch.org/11Legal/sec.html
A Ponzi scheme requires fraud not just the structure of the payment flow you described.
You guys are a bit confused about MLM companyâs. I am no fan of them as Iâve been involved in a few and was dissapointed by all of the hype, but theyâre no scam if they offer a legitimate product like Amway.
Here is how MLM companyâs work. You get reruited, youâre then told to go sell products and recruit people to sell products under you and you get an override. Those people then go recruit people to go sell products and you make overrides on those recruits 2 levels below you.
Now take a typical normal company. You are âhired.â You go out and sell, of which some of your sales commissions go to the people above you. After awhile, you get promoted to manager. You then hire people to sell for you and you get commissions off of their sales. After awhile those people below you become managers and they hire people to sell and manage, and you make money off of everybody below you. Whatâs the difference between the 2 structures? Not much. Every company is a pyramid in one way or another.
MLM companyâs just get a bad rap because often their products are crap and they promise you the world, while in reality they offer very little in the way of support, marketing etc. They often emphasize recruiting over selling products, so you have a million recruits and hardly anybody is selling and therefore making no money. Itâs sad really because they offer a lot more incentive than a typical business model, but not that much in actual opportunity to immediately work it as a full time job. Imagine how much better run the typical grocery store or restaurant would be if everybody had this kind of incentive. Just my opinion.
Here is how MLM companyâs work. You get reruited, youâre then told to go sell products and recruit people to sell products under you and you get an override. Those people then go recruit people to go sell products and you make overrides on those recruits 2 levels below you.
Now take a typical normal company. You are âhired.â You go out and sell, of which some of your sales commissions go to the people above you. After awhile, you get promoted to manager. You then hire people to sell for you and you get commissions off of their sales. After awhile those people below you become managers and they hire people to sell and manage, and you make money off of everybody below you. Whatâs the difference between the 2 structures? Not much. Every company is a pyramid in one way or another.
MLM companyâs just get a bad rap because often their products are crap and they promise you the world, while in reality they offer very little in the way of support, marketing etc. They often emphasize recruiting over selling products, so you have a million recruits and hardly anybody is selling and therefore making no money. Itâs sad really because they offer a lot more incentive than a typical business model, but not that much in actual opportunity to immediately work it as a full time job. Imagine how much better run the typical grocery store or restaurant would be if everybody had this kind of incentive. Just my opinion.
yes and no
to be truely a Ponzie Scheme, the sucker has to believe that there is something more to it, and the truth concealed (perhaps the truth can be suspected, but not easily proven)
in the case of social security, there is some deception
'there are treasury's backiing it up'
'well, who has to pay the treasury's back?'
'OH'
but a person can ask the right questions and get to the truth.
in the case of SS, the truth is out there, but the Ponzie-'paid' has more political clout and awareness than the ponzie-'sorry, fresh out'
I've called SS a ponzie scheme myself, many times, because capital structure wise, it is
but the full deception component isnt there
but the generational theft level, is epic
Well said. I swear, half of the jobs and businesses in the US are based on bullshit, in one way or another.
Sure they are.
The only difference is that a product does exist. In the case of Amway, if you get high enough in the pyramid, you don't have to do anything because the recruits' profits below you pays you too. If there are no new recruits, people's below you have to keep working/selling, they will never achieve your status...
When I was a child we get similar stuff about postcards. Send 10 postcards to the people on the top of the list bullshit. Just because there were postcards involved, it didn't make it a less Ponzi...
Discussing Amway or MLM is kind of offtopic here, so I don't want to dwelve on it too long, believ what you wish.
Going back to SS, another problem is that the government has been raiding the fund, thus the amount promised isn't there. Just like in Madoff's case...
"However, since 1967 Congress has been raiding up to $70 billion each year from the Social Security fund to hide part of their massive deficit spending. Thus the Social Security trust fund is filled with IOUs in the form of Treasury Bonds. The interest on these bonds must be paid by you, the taxpayer."
Unfortunately just you saying something does not make is so.
I can provide a wealth of references to back my position, such as:
http://en.wikipedia.org/wiki/Pyramid_scheme
If you don't like wiki just google "ponzi pyramid" and you will find plenty of articles that agree with me.
You are clearly wrong, I'm sorry if you are having trouble coming to grips with that but I'm not going to waste my time with someone that likes to argue just for arguments sake.
Let's make a deal! I will give you pyramid not being a Ponzi if you give me SS being a Ponzi. (which is the topic by the way)
Deal or no deal?
P.S.: Either way the bottomline is that once you run out of new members/investors the system collapses...Calling it ponzi or pyramid schemes is just semantics...