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Popularity: 64% [?]

Social Security a Ponzi Scam???

Jan 8th, 2009 by Kenny

Today, Bloomderg mentioned something very interesting in his interview with CNN.  He stated that the Social Security System is the biggest Ponzi scam ever.  The correspondent that come one after he said this also agreed with his statement.  He also stated this is were Madoff got his idea from in forming his business.  Madoff studies the social security system and created a business that works on the same type of model.  If this is the case then why is Madoff getting punished????

For those that don’t know what a Ponzi Scam is let me refer you to SEC website.  The SEC website states a ponzi scheme as, “Ponzi schemes are a type of illegal pyramid scheme named for Charles Ponzi, who duped thousands of New England residents into investing in a postage stamp speculation scheme back in the 1920s. Ponzi thought he could take advantage of differences between U.S. and foreign currencies used to buy and sell international mail coupons. Ponzi told investors that he could provide a 40% return in just 90 days compared with 5% for bank savings accounts. Ponzi was deluged with funds from investors, taking in $1 million during one three-hour period—and this was 1921! Though a few early investors were paid off to make the scheme look legitimate, an investigation found that Ponzi had only purchased about $30 worth of the international mail coupons.

Decades later, the Ponzi scheme continues to work on the “rob-Peter-to-pay-Paul” principle, as money from new investors is used to pay off earlier investors until the whole scheme collapses.”.

But isn’t this the same thing that the social security system is doing.  We as taxpayers pay the social security and that money goes to pay this generation of retired individuals as a return on what they payed into the system during their working ages.  But not only that the social security money is moved all the time to take care of other bills that may come up in congress.  Some people would say that this is not the same as what Madoff was doing.  But it sound the same to me..

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