Social security a ponzi scheme? the righties are at it again

Discussion in 'Social Security' started by LiberalActivist, Sep 2, 2011.

  1. hiimjered

    hiimjered New Member Past Donor

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    Your first three links seem to be irrelevant, I'm not sure why you posted them.

    The fourth is pretty useful, but notice it assumes that no portion of the Social Security money would go toward a disability insurance. Only a tiny portion would be needed to fund disability insurance, leaving the rest for personal retirement funds.

    Regardless, it is the last link that I found most interesting. It admits that people born before 1965 can only expect an average return of 2.7%. It doesn't even mention the expected returns of people born later - which falls under 2%. Still, the average, balanced retirement account sees a far greater rate of return. The average mutual fund sees between a 6% and 9% average rate of return. Even the bottom side is more than double what older people can expect from Social Security and more than triple what younger people can expect.
     
  2. Nemo

    Nemo New Member

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    Ronald Reagan - who many revere more than George Washington - once said that Social Security was a Ponzi scheme; and the way he ran it, it was.
     
  3. waltky

    waltky Well-Known Member

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    Dat's why Granny wants dat 2nd stimulus check - to make up the shortfall...
    :whisper:
    Social Security Faces Unfunded Liability of $8.6T, or $73,167.83 Per Household
    April 24, 2012 - Social Security faces an unfunded liability of $8.6 trillion, according to the 2012 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance and Federal Disability Insurance Trust Funds.
    See also:

    Social Security’s financial forecast gets darker; Medicare’s outlook unchanged
    Surging energy prices and a slower-than-expected economic recovery have worsened the financial outlook for Social Security compared with last year, while the picture for Medicare remains grim but essentially unchanged, according to annual forecasts released by the government Monday.
     
  4. Octagon

    Octagon New Member

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    Another liberal idiot that doesn't know what he's talking about or isn't qualified for SS and probably didn't finish grade school. SS is paid into by working over the years and is withdrawn monthly after your retired which I don't think you know anything about. My Pappy always said " if you don't know what your talking about keep your mouth shut that way you won't look so stupid " STUPID.
     
  5. Octagon

    Octagon New Member

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    I really don't know where you left wing idiots come from but to say SS is free then your really a joke, you have to pay into SS to get it but that means working. Please go to another Forum that will listen to your idiodic fan fare and let other people discuss issues that know what their talking about.
     
  6. waltky

    waltky Well-Known Member

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    Granny says get it whilst ya can...
    :nod:
    Should You Delay Taking Social Security?
    8/06/12 --- Worried about their financial futures, baby boomers are working longer and postponing the day when they claim Social Security. Although most people are eligible to start receiving checks at age 62, a growing number are waiting until they are older than 65.
     
  7. Old Man Fred

    Old Man Fred Well-Known Member

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    You might have made the best argument in support of Social Security I've ever heard.

    As a full coverage disability, survivor ship, and annuity, it does alright, but I'm not a big fan of safety nets hung 10 feet high. If from the get go it had been private, individual accounts passed on to heirs, could you imagine what America would look like?
     
  8. Mr_Truth

    Mr_Truth Well-Known Member

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  9. Kode

    Kode Well-Known Member

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    For those who would argue for investing SS funds in stocks or balanced funds, I offer the following:
    https://www.pbs.org/wgbh/frontline/film/the-pension-gamble/

    Pensions were doing fine. Then we had the dot-com bubble burst and Pension assets did what the market did: they crashed. But the month-to-month need to pay out monthly benefits to millions of retirees remained, so that at the bottom one dollar in the pension fund was a fraction of what it had been worth prior to the crash. Yet it had to be paid. That meant paying out the equivalent of a far greater portion of the Fund than it had been, thus depleting the fund further and faster than prior to the crash. And any attempt to restore the Fund was thwarted by the need for payouts. Money in/money out. Big losses resulted for the pension plans and recovery was difficult.

    Then we had the 2008 crash which did it again. By now the pension plans were seeing lots of red ink on the horizon, and they decided to take desperate steps with high risk investments. They turned to hedge funds. And the hedge funds took huge commissions and fees, but they didn't provide the needed returns. And that resulted in a repetition of pension funds going bankrupt or terminating operation.

    That is what you are asking for with your SS funds if you call for its investment in equities. And that is why SS was designed to invest in fixed, secure assets. The problem it created was one of congress being able and willing to spend the proceeds of sale for Treasury securities to the SS Trust Fund. THAT, and that alone.... spending by congress,..... is the only reason it is said (falsely) that SS is a cause of increasing national debt. It is not. The spending of the proceeds of sale is the cause.
     
  10. squidward

    squidward Well-Known Member

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    One cannot sell its treasuries to oneself, and refer to it as an investment.
     
  11. Robert Urbanek

    Robert Urbanek Active Member

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    Life is a Ponzi scheme. No matter how much you invest in it, in the end you lose everything. As long as Social Security outlives me, I am fine with this "scheme."
     
  12. Kode

    Kode Well-Known Member

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    I was just thinking about lacking confidence in S.S.

    Veterans have not, in my lifetime, had the healthcare promises delivered. There is a continuing monologue be candidates about their "respect" for veterans and their intention to deliver benefits, but it ends there. And yet the right remains quite willing to put their lives on the line and to hope for the elusive promised benefits.

    But Social Security is actually running and operating. When I was 35 (40 years ago) I griped about paying into S.S. because I was sure I would never see any benefits. Well, surprise! My wife and I are both collecting on it. But the right wing youth today continue to gripe about the payments and they parrot all sorts of sane-sounding reasons, which are not sane, as to why S.S. should be converted to individual accounts, or provide an opt-out feature, etc. etc.

    So we have one thing that hasn't been delivered but people still put their lives on the line for it, and OTOH we have an existing, functioning system that delivers, with the same people wanting out.

    Isn't it amazing what persistent propaganda can do?
     
  13. Mircea

    Mircea Well-Known Member

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    Social Security is a Ponzi-scheme.

    There's one and only one Element of Proof for a Ponzi-scheme. I need only prove the underlying scheme requires new entrants to remain viable. That's it.

    What about the rate of return on investment? Totally irrelevant and immaterial. Anyone with half a brain could figure that out.

    People confuse the Characteristics of a Ponzi-scheme with the Elements of Proof for a Ponzi-scheme.

    The Characteristics of a Ponzi-scheme are many, but there is one and only one Element of Proof for a Ponzi-scheme. One of the Characteristics is that some -- but not all -- Ponzi-schemes offer high rates of return. So, your second Element of Proof is going to be: "Promised high rate of return on investment." Every court in the US will strike that down, because it's wholly subjective.

    So, now what? "Promised rate of return of 18% or higher." That's wholly objective, but you would never, ever, get a conviction. Why?

    Because Ponzi-scheme operators would offer 17.9% and since 17.9% is not equal to or greater than 18%, you cannot prove the 2nd Element of Proof and get a conviction. If you reduced it to 12%, then Ponzi-scheme operators would offer 11.75% and you'd never, ever, get a conviction. That's why the rate of return is totally irrelevant, but that's not the only reason.

    Not all Ponzi-schemes offer high rates of return on investment. A guy was convicted of running a Ponzi-scheme and the promised rate of return was 5%-6%. Is that high? No, and that's why you should not pay attention to nonsense on the Internet. That guy hooked a whole bunch of grandmas, because they were stupid enough to believe what the Internet says, and the Internet says that if the rate of return promised is 5%-6% then there's no way in Hell it could ever possibly be a Ponzi-scheme.

    Ponzi-scheme operators come in two flavors: those that try to hook a few dozen to maybe 100 unsophisticated ├╝ber-wealthy investors who have $500,000 to a few $Million sitting around in banks, and those that try to attract tens of thousands of Middle Class investors, those with $20,000 to $200,000 sitting around. You know, people like your grandma, your uncle, your brother, your sister, the cat, the dog, the rat, the frog and all the others.

    Which is more: 50 investors who kick in an average $1 Million or 10,000 who kick in an average $60,000? Do the math.

    Another guy was convicted and do you know what rate of return he offered?

    That, in fact, is a trick question, because he never offered a rate of return.

    As his web-site, brochures he mailed, sales pitch as surreptitiously recorded by an investor-victim and victim testimony in court revealed, he never once promised any rate of return. He only said "your money will make money." He's another who hooked a whole bunch of grandmas and a whole bunch of Middle Class people nearing retirement and took all their retirement money. Those people are all sucking pond-water through their arse.

    Some schemes are very, very clever and sophisticated and they look absolutely nothing like a Ponzi-scheme, but they are. He got convicted, because there's one and only one Element of Proof, and that is the underlying financial scheme requires new entrants to sustain it.

    To sustain a conviction the government must prove the existence of a scheme; it is not required, however, to prove all details or all instances of allegedly illicit conduct. See, e.g., United States v. Stull, 743 F.2d 439, 442 n. 2 (6th Circuit 1984)

    It's the scheme itself, not the characteristics of it. How many investors have to lose money to get a conviction for a Ponzi-scheme?

    That, in fact, is a trick question, too.

    The answer is.....drum-roll please....ZERO.

    Why? Because there's one and only one Element of Proof, and that is the underlying financial scheme requires new entrants to sustain it.

    No particular type of victim is required . . . nor need the scheme have succeeded. United States v. Coachman, 727 F.2d 1293, 1302-03 n. 43 (DC Circuit 1984).

    No actual loss to the victims is required. See United States v. Pollack, 534 F.2d 964, 971 (DC Circuit)

    In those cases, and dozens of others, none of the investors lost any money at all, but the operators were still convicted of running Ponzi-schemes.

    The rate of return, the amount of money you have to initially invest, the total amount of money you have to invest, the number of investors, whether the money is actually invested in real estate, stocks bonds, annuities, business ventures or other legitimate investments or never invested at all, whether the scheme succeeded or failed, whether the investors were sophisticated or unsophisticated country bumpkins, whether investors lost money or never lost a dime is totally irrelevant in the criminal prosecution of a Ponzi-scheme. The only thing that matters is the underlying financial scheme.

    How would Bill Clinton put it? Oh, yeah, "It's the scheme, stupid!"
     
  14. Chrizton

    Chrizton Well-Known Member

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    The social security trust fund is an accounting fiction. The money has already been spent. The government just has to cover the chips when they get thrown into a pot. They have been doing this out of new contributions into the system. As the money going out of the SS system is not expected to be covered by the money coming into the SS for much longer, then the government is going to have to take money out of the general budget to cover the shortfalls in the name of servicing debt. Pyramid schemes will always fall apart when they become top heavy.
     
  15. Mircea

    Mircea Well-Known Member

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    The inability of people to comprehend 6th Grade Math is disturbing.

    The funding formula for Social Security is simple 6th Grade Math:

    Revenues = # of Workers * Wages * FICA Tax Rate

    See how simple that is? From our 6th Grade Math we know that if we increase/decrease any one of the factors we change the product.

    Can we increase the # of Workers? No. You are short 11 Million workers. That means you need to employ all currently unemployed persons and then add 11 Million more workers. You would need to invade a foreign country and capture 11 Million workers, and their families -- about 60 Million people -- bring them back to the US and put them to work pronto and your UE Rate could never be more than 0% for the next 600 years.

    That's not gonna happen.

    Can you increase wages? No. Benefits are based on wages earned and not the amount of FICA tax paid. Increasing wages would accomplish nothing.

    Can you increase the FICA Tax Rate? Yes, and the good news is you only need to increase it once to 8.2%-8.4% for employer and employee and it will be funded for the next 600 years and it will no longer be a Ponz-scheme and you will never need another FICA increase ever.

    Why?

    Because the FICA rate of 1.0% was levied at a time when there were 154 workers for each Social Security beneficiary.

    That quickly dwindled to 46 workers per beneficiary all the way to the present 2.8 workers per beneficiary.

    From about 2040 and for the next 600 years, the ratio will always be 2.0 to 2.3 workers per beneficiary and because that's true, you need only to set the FICA tax rate at 8.2%-8.4% to fund Social Security in perpetuity with no additional FICA tax increases. That means in the year 2425 the FICA Tax Rate will still be 8.2%-8.4%.

    What about the wage cap? Only liars, propaganda artists and disinformation nutters mention the wage cap.

    I'm not saying the wage cap should or should not be eliminated, I'm simply saying it will fund one month of benefits only and even only through about 2027-2028 at which time it won't even cover one month of benefits. You still have to find money for the other 11 months.

    My proposal is this:

    1) Keep the wage cap and float it as it is currently done.

    2) Create a "donut-hole" set at $400,000 to float just like the cap floats. Tax everything over $400,000.

    3) Step increase the FICA tax rate (while you still have time) to 8.0%

    4) Use the money from the excess over the donut-hole to restore the retirement age to 65 years for everyone.

    Then you'll never have to worry about it again.
     
  16. JakeJ

    JakeJ Well-Known Member Past Donor

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    What an absurd claim. The current FICA tax rate is 15.3%.

    Increasing it to 17.3% will not save social security. Social security is most definitely a ponzi-scheme - other than ponzi-schemes at least promise a profit return on your money.

    A fella I know, age 83, has paid FICA taxes since age 16. Paid in for 67 years. He gets $1,400 a month. What would those 67 years of payments into blue chip stocks or even just T-notes be worth? Medicare is essentially worthless if you don't have the co-pay.
     
  17. Mircea

    Mircea Well-Known Member

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    Is there some part of "for employer and employee" that you do not understand?

    And, you're just plain wrong.

    The current FICA tax rate is the same as it has been since 1990 and that 12.4% which is 6.2% for employer and employee.

    Get it? 12.4% divided by 2 equals 6.2% which is paid each by the employer and employee.

    You only need to increase it to 16.4% or 8.2% each for employer and employee.

    They would be worth less than $200/month.

    That fella is too damn stupid to invest and he'd end up with nothing.

    Also, explain why anyone in America is morally or ethically obligated to fund publicly-traded corporations.
     

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