Is social security a ponzi scheme

social security ponzi reddit

In reality, he followed Ponzi's example of paying early investors with the money from later investors — pocketing billions for himself. But they were only possible in small amounts, there was absolutely no possibility at all of it being able to handle the flood of money that came into the scheme.

Provided the long end of the yield curve is higher than the short-end, the government isn't making a killing on the program.

how does social security work

Social Security's problems lead to rampant misconceptions According to the newest annual report from the Social Security Board of Trustees, America's most important social program is set to undergo an unwelcome transformation in that'll see it expend more than it collects in revenue for the first time since The label offers no solution, and generates a bottomless rabbit hole of pointless bickering.

Finally, Social Security is a mandatory program.

welfare ponzi scheme

This means their contribution to the payroll tax is vital to the health of Social Security. Palpably impossible promises were not. The interest rate earned on bonds held by Social Security is based on the yield of longer-term maturities traded in the public markets.

Will social security run out

But Social Security, as currently constituted, is a disgrace. But they were only possible in small amounts, there was absolutely no possibility at all of it being able to handle the flood of money that came into the scheme. As a result, the government has lost nearly half a trillion dollars on the program. Well, no, it wasn't even speculation in foreign postage stamps it was in international reply paid coupons, not stamps. The interest rate earned on bonds held by Social Security is based on the yield of longer-term maturities traded in the public markets. Benefits were tied to a measure that effectively double-counted inflation and even now, benefits are over-indexed to inflation, raising real benefit levels over time. This Ponzi scheme is an ongoing moral outrage. Does that make agriculture subsidies a Ponzi scheme?

The first difference is that Social Security is run by government and, whatever its constitutionality and its questionable ethics, is legal. Let's answer this question once and for all. Seater wrote: Medicare is neither a chain letter nor a Ponzi scheme.

How is social security dispersed

Ponzi was, however, caught in his own trap of clearly false promises. Old investors are paid out by the contributions of new investors in--that's our definition of a Ponzi Scheme and it fits SS so therefore Social Security is a Ponzi Scheme. Another common misconception is that immigration is responsible for draining Social Security's coffers. What they claim is that the lockbox is a fraud, an accounting trick. But there is a way to reform the system from scratch to let it fulfill its real mission. Social Security is funded by a How is it possible? That was bad luck as far as financing Medicare and Social Security was concerned, but it was in no way a necessary outcome of either program. This week, John Seater, an economist whom I respect a great deal, wrote that it is not a Ponzi scheme. Social Security is an investment in our elderly labor force who can no longer provide for themselves financially, but it's not an investment vehicle, an entity that seeks to profit, or defrauding the American public in any way. As for future retirees, a survey from Gallup in April found that more than 4 out of 5 will rely on Social Security as either a major or minor source of income when retired.
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Is Social Security a Ponzi Scheme?