Social Security is, too, a Ponzi scheme

The people of the United States have no problem believing a Ponzi scheme when initiated by an individual (Bernard Madoff), but can’t believe their government is doing the same thing. Two recent letters (12/31) about Social Security to The Star confirm my theory.

The first writer states “from the beginning, it has been a pay-as-you-go government system.” The first recipient of monthly Social Security benefits, Ida May Fuller, paid in $24.74. She received benefits for 35 years. So much for that theory. He then challenges non-believers to keep their tax money in exchange for letting his mom and dad live at their house. Isn’t that his responsibility?

The second writer states he is entitled to what he paid in, plus interest. Please see my first example. Most, if not all, recipients receive significantly more money than they ever put in. Where does this money come from? Ask Madoff.

Mark S. Damon
Blue Springs

You may be among the relatively few people who benefit or will continue to benefit greatly from the legal Ponzi/pyramid scheme known as Social Security. But that doesn’t mean you should disregard the complaints made by people near the bottom of the pyramid, like me (22 years old), who will likely never see the money I’ve been paying in since I was 14 years old and will continue to pay in until the government is forced to admit the truth.

Ben Auld
Olathe

What Social Security started out to be and what it is now are two different things.

When it was first instated, it was meant to be like an insurance policy, where what is paid in draws interest until it is needed. That would mean keeping it in a separate investment account. As there were many more people paying in back in the early days than those collecting, the fund would have grown rapidly and would have covered payouts for a long time.

That’s not what happened. The money was just dumped into the general fund, not generating interest and leaving the government to pay with current receipts. That means that as the number of retirees grows, the burden on the current workers grows heavier and heavier.

As an 81-year-old widow, I’m glad it’s there, but I paid into it almost all my adult life. So did my husband, but he died just before he could collect anything. So what he paid in just disappeared into a black hole, as has happened with many others.

So don’t blame the current retirees for the current debacle. Blame the greedy, irresponsible people who run Washington.

Esther Miller
Liberty

Comments

[Social Security Disability]

I disagree, I don't think Social Security is a ponzi scheme.

The difference is, the government intends to give the funds to people in need (retired and disabled). Not saying there aren't disability claims that are fraudulently approved, but the intent is to help those in need.

We all saw what happened when we did not have a Social safety net in place...The Great Depression.

[devin]

Um, how is the fact some people pay in and don't collect evidence of stealing? Isn't that how many annuities work? You buy a stream of income for the rest of your life. Some people die before they get it all back. Others collect far more than they paid in before they die. That's just the nature of investing...sometimes you win, sometimes you lose. Sometimes you buy a stock and the company goes bankrupt. Same idea. It doesn't mean stealing was involved.

As for why it isn't voluntary, isn't the recent financial crisis ample evidence of that? Everybody thought they were smarter than average and could get better returns than average, and so we all got caught up in a massive bubble and nearly everybody who's invested in the last ten years is now poorer for having done so. That's not to say saving and investing is bad...in the long run things will work themselves out. But a couple of quotes come to mind: "In the long run, we are all dead" and "Markets can stay irrational far longer than you can stay solvent." Without the safety net of SS, a significant portion of the elderly would wind up running out of money after they reach the point they're no longer able to work. Maybe you can justify making marginally better returns at the price of letting millions of the elderly and disabled literally starve to death (and, of course, you might not be as smart as you think you are and you'll be one of those starving to death). Fortunately, most Americans are willing to accept slightly worse returns on their money in order to allow all Americans to live out their lives with at least an adequate income.

[NoMoreMrNiceGuy]

Actually Sol I am Onlywonson.

[solomon]

Good New Year to you little p,

On this we agree 100%. I have always seen this as the largest of the ways they can "legally" steal from us and our employers. numba won son made a good point earlier too, about how they profit from the funds they never pay out if you die young with no heirs.

Too bad it will go bk long before it will be reformed effectively.

[NoMoreMrNiceGuy]

Social Security should be 100% voluntary, scheme or not. Those that are force to pay into it then never receive a benefit due to death or it simply not being in the cookie jar any longer, are being ripped off.

[pmcw]

It's great to see so many people are interested in learning the truth about Social Security. Please visit the following link to learn exactly how the system works and how the government has stolen over $2.7T (trillion) of our retirement savings.

http://www.nextinning.com/socialsecurity2.php

[T. Hanson]

While this letter is meant to slam SS, it falls short in telling what a Ponzi scheme is.

I hate to quote teh wiki on this, but it does have a matter of truth:

"Although non-fraudulent in intent, a pension fund can share some of the characteristics of a Ponzi scheme in that, except during the final period of the fund's life-span, the outgoing cash used in any month to pay pensions is usually taken from the incoming contributions of the active members of the pension scheme. In a year of poor equity returns such as 2008, a pension fund can often perform worse for its members than a Ponzi scheme. "

Same goes for SS, there is no grand feeling of earning more than you invested when you get the SS check when you grow older. A Ponzi Scheme works when you trick the intial investor into saying you give me $100 now, and by next week I will give you $200. That of course depends on you getting 2 other people to join in therefore you will get your $200.

[NoMoreMrNiceGuy]

While the program started out with good intentions, it was quickly turned into a full blown cookie jar for government. The bottomline is that we are FORCED to pay into something that gives us the taxpayers ZERO control over where or how that money goes. Why does Congress continue to not modify the scheme so that people and their families are guaranteed at a minimum what they have contributed up until their death? If I die at 50 and my child is over 18, why should the government get to keep the tens of thousands I've paid in/y faimly gets a one time $255 disburment, how generous.