Maggie's Farm

While I agree, and it's true, that legitimate business investments can become Ponzi schemes, no legitimate investment starts out as one and none eventually indicates that it will go broke over time. If it did, nobody would invest.

The problem with SocSec is, from the start, nobody did the accounting. Instead, the assumption was that the many could provide for the few (producers pay for retirees). This proved so lucrative, more payment recipients kept being added to the list, and payouts increased. The mismanagement has proven to be ripe for fraud (the number of dead people still receiving checks is pretty significant, my step father kept receiving his long after he died and we had to keep sending them back).

The original program had upwards of 41 workers paying for one recipient. This was a relatively stable structure, and could be maintained. It's possible that SocSec could even remain solvent if as few as 3 workers paid for one. But today it's about 2.7 workers per recipient.
Many factors have come into play to yield this result. I mentioned fraud, but that's small potatoes.
The growth of retirees is the main one - the Baby Boom really altered generational economics significantly. But even this wouldn't have been as big a problem if the ongoing expansion of recipients hadn't occurred.

The issue people point to is that the money is "stolen" by the government and used for other purposes. This is incorrect. All that happens is an accounting trick - moneys held in SocSec trust are said to have a value proposition of 'assets' and are balanced off against spending to hide the real size of the deficit. But no money is really shifted. All that money keeps going to SocSec.

It's as if I had $1,000,000 in a trust fund earning $100,000 a year that was deposited back into trust, and I had an income of $20,000 a year but spent $60,000 a year. I'd say I still have a 'surplus income' of $40,000 and go out and borrow $40,000 additional dollars each year.

Eventually, that arrangement would get me into a massive hole as loans and accumulated interest pile up.

If the original plan of SocSec had been adhered to, it wouldn't have been a Ponzi scheme. Like some formerly legitimate investments, changing circumstances have forced it into a difficult, and technically illegal, space.

As Bird Dog says, however, it's not illegal if the government does it.

Someone who I refuse to acknowledge has predicated his belief, which is misguided, that SocSec is not a Ponzi scheme because even after the trust fund is expended it will pay 79% back in perpetuity.

That, of course, is assuming all things being equal the rate of payout doesn't change, and the number of workers supporting those getting payments doesn't change.

But we know that won't be the case. So at its core, his premise is incorrect.

Even if it were correct, a Ponzi scheme could go on indefinitely if all its contributors were willing to take a haircut, as this comment provider seems to think is all they'd have to do. You just keep reducing the payout over time, and even a Ponzi scheme can go on in perpetuity.......until it eventually runs out of money (and even SocSec would reach that point).

This same comment provider also differentiates on the basis that a Ponzi Scheme is predicated on attracting new investors. Well, yes, that's true, unless you DON'T NEED to attract new investors because you've forced them all into the scheme. Then the scheme is predicated on increasing the amounts of their 'investment' over time (a critical and key point this comment provider is too vapid to pick up on).

Since this comment provider added nothing of use or value to the discussion I broke from my usual position of never deleting comments and decided that misinformation and disinformation are not good for society. I oppose censorship, but I know this comment provider has, on occasion shown his support for censorship of certain kinds, so I was inclined to show him what it feels like when groups like Facebook, Google and other news organizations start deciding what is newsworthy and what is not.

I happen to support the right of private organizations to engage in their own private censorship. I usually don't engage in it myself, but I made a special exception for this particular fool since his comments were utterly useless.

I agree, which is why I normally don't do it. I'm just fed up with trolls who live in basements.

I think I may have mentioned this before, but if your name has anything to do with the Poconos in PA, that's where I grew up.

And, to be fair, I gave a good recap of what was posted, so while XRay is correct that if I do 'censor', I shouldn't comment without context.

Socialism, of every stripe, is a Ponzi scheme because it does not encourage growth and incentivize risk or opportunity. It is why I am, at heart, an AnCap Libertarian. Practically, I recognize the role of government, but I want it scaled back. Keep it out of our wallets, businesses, and bedrooms. The comment provider in question has long promoted extensive expansion of government into our lives without proper substantiation or justification of his position.