Re: Social Security

> Is this the the same guy that started SSI?
> Looks like it fits pretty good!

> Maxie

Some similarities in the Social Security seem to fit the definition, but there are exceptions.

High interest payments.

While many early participants who paid in small rates for less than 30 years enjoyed a good return on their investment, for those who will be eligible in the next ten years, it's a different story.

For those who have contributed from age 20 to 65 and will begin drawing in 2015, they have paid in at much higher rates than the first participants who only contributed 1/2 to 1% of wages for most of their life. (The first participants eligible earned most of their income before Social Security began, so they worked 2 to 3 decades without contributing.)

Current mortality tables indicate the average man won't live long enough as a recipient to collect back $1 for every dollar withheld in their lifetime. That's before adjusting for inflation. If your first dollar paid in would buy you four to five gallons of gas for your car, and your first SS benefit dollar will only buy you one to two quarts, you are losing the true value of your dollar.

One further difference is that the first investors had to get high returns in order to encourage others to participate. Hmm! Maybe my first point of difference just proved this one to be valid.

And if current projections continue without the problems being resolved, then it could be that Social Security could collapse as too few dollars are available from future investors to continue paying the current liabilities.

Oh yeah. In a typical Ponzi, as the incoming dollars are harder to come by, the operator makes it more difficult for the current investors to get their money out. That's another similarity between Social Security and an illegal Ponzi scheme.

There's bound to be some other difference.

In a typical illegal Ponzi, the operator isn't really investing on behalf of the individual investor's, so they have no guaranteed account with their name on it. With Social Security, their is such an account for every participant - They just don't have any actual funds in them. See, there's another difference.

I know. In a typical illegal Ponzi, the operator takes the investors' money and skims off some to provide themself a better than average lifestyle. The government isn't doing that is it?

I've got it. In an illegal Ponzi, the operator can be shut down by the Fed. I doubt that is possible in the case of the SSA!

It doesn't pay for me to focus on Social Security too long. It only makes me want to look for the nearest exit.

Dennis Bevers

P.S. Lesley, I hope this post doesn't cross the line against political discourse on FIB. I haven't mentioned Congress, any past, future, or current President or political party. However, I recognize your right to decide and zap this post at your discretion. (In fact, if it creates too much discussion and seems to be headed into the political arena, I'll zap it myself.)