Snippet: Social Security is an Example of Ponzi Scheme


Michael Tanner (Cato Institute) wrote about the Ponzi Scheme and Social Security, much of what I have thought and wrote about over the years
Clearly Social Security has many structural characteristics that resemble those of the classic Ponzi or pyramid scheme. For example, like a Ponzi scheme, Social Security does not actually save or invest any of a participant’s payments. When a worker pays taxes into the system, that money is used to pay current beneficiaries. Therefore, participants receive payments, not from returns on their own investments, but directly from inflows from subsequent participants. iInstead of just making a bad deal worse, that reform should fundamentally restructure Social Security. It should remove the Ponzi-like aspects of the program and allow younger workers to save a portion of their payroll taxes through privately invested personal accounts.
i This is because Congress has been stealing from the Social Security “Trust” fund for decades. Of course, to avert suspicious eyes upon that legislative body and its checkered history, it is blamed on the “baby boomer” generation.
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