Ponzi Schemes Like Social Security

Speaking of Ponzi Schemes
12/29/08 - BusinessAndMedia by Donald J. Boudreaux, Chairman, Dept. of Economics at George Mason University

[edited] Social Security is like the "investment" Ponzi scheme of Bernard Madoff, so Americans should stop being duped.

Many pols and pundits assure us that this program is a great financial deal for ordinary Americans. But in principle, Social Security is identical to Mr. Madoff's fraudulent scheme.

Neither scheme generates wealth through productive investments. They only transfer wealth from newer 'investors' to older 'investors.' Such schemes appear brilliant as long as enough new 'investors' come on board – either by being duped by Mr. Madoff or by being coerced by Social Security. This is a dangerous illusion.

You may not believe this warning. You may think that 435 congressmen and 100 senators would surely not continue to support a program that will end in pain for millions of individuals.

Government policy led to sub-prime loans, a bubble in housing prices, and a damaged economy and recession, despite many warnings along the way. Those same politicians vote for borrowing and spending far beyond any ability to tax. Their policy was and is "so far, so good" as they gain re-election through whatever promises they feel like making.

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Investing with Bernie Madoff

CBO:  What Are US Treasury Trust Funds?
The bonds in the Social Security Trust Fund, and all Treasury trust funds, are promises, not assets. They are as good as other government bonds, which are also promises but not assets.
  The taxing power of the government is in doubt. The promises of the government are so large that all of its bonds may lose some or all of their value, including the bonds in the Social Security and other "funds". The bonds are a promise, but they don't help to pay for themselves.

The Biggest Promises Win
They promise anything to get elected.

Seduction and Politics
Politics is like a romantic first date.

We Guarantee It
A government guarantee is a blank check on your personal account. They will make good on the promise with your resources, and the next even bigger recession.