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Huh? Social Security, for example, is definitely a Ponzi scheme in the sense benefits paid out far exceed amounts previously collected, saved, and invested. Num

Huh? Social Security, for example, is definitely a Ponzi scheme in the sense benefits paid out far exceed amounts previously collected, saved, and invested. Numerous government programs rely on this logic, which only works if the population of working age people is expanding. Social Security isn't a Ponzi scheme in the sense that there was fraudulent intent. Nevertheless, a lack of political will to finance current benefits does burden future generations. "Adjusting benefits downwards" won't sit too well with people who worked 30 or 40 years and expect to enjoy a certain standard of living. Why Was Social Security Designed Like A Ponzi Scheme? https://www.forbes.com/sites/johngoodman/2015/08/13/why-was-social-security-designed-like-a-ponzi-scheme/#2474944c76c5 https://www.forbes.com/sites/johngoodman/2015/08/13/why-was-... Is Social Security a Ponzi scheme? "Social Security has a funding gap equal to 0.7 percent of GDP over the next 75 years. We could wipe that gap out by lifting the payroll tax cap (right now, payroll taxes only apply to the first $107,000 of income) or by adjusting benefits downwards." https://www.washingtonpost.com/blogs/ezra-klein/post/is-social-security-a-ponzi-scheme/2011/08/25/gIQA2t0dcL_blog.html?noredirect=on&utm_term=.15de160e7094 https://www.washingtonpost.com/blogs/ezra-klein/post/is-soci...

Gibbon1 8y ago
> Social Security, for example, is definitely a Ponzi scheme Social Security is an insurance program. That you don't understand how insurance programs work is your problem.
chrisbrandow 8y ago
The other difference is that a true Ponzi scheme is fundamentally unsustainable, whereas social security is not. It may need adjustments, it’s not like you have exponentially growing divergence.
- Gibbon1 8y ago
  If one looks here, https://www.ssa.gov/oact/tr/2015/tr2015.pdf https://www.ssa.gov/oact/tr/2015/tr2015.pdf > Total expenditures in 2014 were $859 billion. Total income was $884 billion, which consisted of $786 billion in non-interest income and $98 billion in interest earnings. Asset reserves held in special issue U.S. Treasury securities grew from $2,764 billion at the beginning of the year to $2,789 billion at the end of the year. This is not in any shape or form a ponzi scheme.
  - toasterlovin 8y ago
    You’re looking at inflows and outflows, which in the early stages of a ponzi scheme can also be similar. The way that social security in the US is a ponzi scheme is that the benefits paid out are not interest or earnings on the amounts paid in by the people receiving the benefits. They are paid for by new people paying in to the system. That is almost the definition of a Ponzi scheme.
    - Gibbon1 8y ago
      > You’re looking at inflows and outflows, Which the generally accepted way of analyzing insurance programs is by looking at the inflow and outflows plus interest on reserves. > which in the early stages of a ponzi scheme can also be similar The Social Security Act passed in 1935. > The way that social security in the US is a ponzi scheme is that the benefits paid out are not interest or earnings on the amounts paid in by the people receiving the benefits. They are paid for by new people paying in to the system. That is almost the definition of a Ponzi scheme. That is almost the definition of a Ponzi scheme. No that is the exact definition of an insurance program. Insurance programs are not investments they are about spreading risk. Which the Social Security Program in the US does a perfectly fine job of.
      - toasterlovin 8y ago
        No, insurance is categorically different. It protects you against a loss of some kind, and only provides that protection while you are paying for it. As such, only a difference between the predicted and actual risk covered by the insurance policy can cause an insurance program to become insolvent. A change in the number of people buying insurance from year to year will have no effect on the solvency of the insurance program, as long as the actuaries predict the risk covered by the insurance correctly. Social security is a pension. It guarantees a future stream of income in return for payments now. It is subject to the same actuarial risk as insurance (so, predicted payout period ends up being longer than expected, or returns on payments are lower than expected), but it is subject to an additional risk if it is unfunded (which Social Security is). That risk being that inflows become insufficient in the future to cover the outflows promised 40 years prior.
addicted 8y ago
For one thing Social security’s structure is transparent, so no it’s not a Ponzi scheme at all in that a Ponzi scheme is by definition a subset of fraud and requires investors to be unaware of the fact the money coming to them is from new investors and not profits from investing in a product or portfolio of companies. For another, it’s still not a Ponzi scheme. It makes no promises for returns, and simply requires working age people to set aside money for retired people. If the ratio changes, there is no requirement for the retired people to be paid the same money they were a year ago. It’s not a Ponzi scheme in any fashion. It’s pretty much a direct, transparent transfer of wealth from the young to the elderly.
- jplayer01 8y ago
  You pretty much ignored everything he said and meant. Congratulations.
  - Gibbon1 8y ago
    Not really; a ponzi scheme has a very specific definition. A form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors. Social Security isn't a ponzi scheme for a number of reasons, first it's not a security. Second there is no nonexistent enterprise. Instead it's structure is entirely that of an government mandated insurance program.
    - deleted 8y ago
      [deleted]

Gibbon1 8y ago

> Social Security, for example, is definitely a Ponzi scheme Social Security is an insurance program. That you don't understand how insurance programs work is your problem.

chrisbrandow 8y ago

The other difference is that a true Ponzi scheme is fundamentally unsustainable, whereas social security is not. It may need adjustments, it’s not like you have exponentially growing divergence.

Gibbon1 8y ago
If one looks here, https://www.ssa.gov/oact/tr/2015/tr2015.pdf https://www.ssa.gov/oact/tr/2015/tr2015.pdf > Total expenditures in 2014 were $859 billion. Total income was $884 billion, which consisted of $786 billion in non-interest income and $98 billion in interest earnings. Asset reserves held in special issue U.S. Treasury securities grew from $2,764 billion at the beginning of the year to $2,789 billion at the end of the year. This is not in any shape or form a ponzi scheme.
- toasterlovin 8y ago
  You’re looking at inflows and outflows, which in the early stages of a ponzi scheme can also be similar. The way that social security in the US is a ponzi scheme is that the benefits paid out are not interest or earnings on the amounts paid in by the people receiving the benefits. They are paid for by new people paying in to the system. That is almost the definition of a Ponzi scheme.
  - Gibbon1 8y ago
    > You’re looking at inflows and outflows, Which the generally accepted way of analyzing insurance programs is by looking at the inflow and outflows plus interest on reserves. > which in the early stages of a ponzi scheme can also be similar The Social Security Act passed in 1935. > The way that social security in the US is a ponzi scheme is that the benefits paid out are not interest or earnings on the amounts paid in by the people receiving the benefits. They are paid for by new people paying in to the system. That is almost the definition of a Ponzi scheme. That is almost the definition of a Ponzi scheme. No that is the exact definition of an insurance program. Insurance programs are not investments they are about spreading risk. Which the Social Security Program in the US does a perfectly fine job of.
    - toasterlovin 8y ago
      No, insurance is categorically different. It protects you against a loss of some kind, and only provides that protection while you are paying for it. As such, only a difference between the predicted and actual risk covered by the insurance policy can cause an insurance program to become insolvent. A change in the number of people buying insurance from year to year will have no effect on the solvency of the insurance program, as long as the actuaries predict the risk covered by the insurance correctly. Social security is a pension. It guarantees a future stream of income in return for payments now. It is subject to the same actuarial risk as insurance (so, predicted payout period ends up being longer than expected, or returns on payments are lower than expected), but it is subject to an additional risk if it is unfunded (which Social Security is). That risk being that inflows become insufficient in the future to cover the outflows promised 40 years prior.

addicted 8y ago

For one thing Social security’s structure is transparent, so no it’s not a Ponzi scheme at all in that a Ponzi scheme is by definition a subset of fraud and requires investors to be unaware of the fact the money coming to them is from new investors and not profits from investing in a product or portfolio of companies. For another, it’s still not a Ponzi scheme. It makes no promises for returns, and simply requires working age people to set aside money for retired people. If the ratio changes, there is no requirement for the retired people to be paid the same money they were a year ago. It’s not a Ponzi scheme in any fashion. It’s pretty much a direct, transparent transfer of wealth from the young to the elderly.

jplayer01 8y ago
You pretty much ignored everything he said and meant. Congratulations.
- Gibbon1 8y ago
  Not really; a ponzi scheme has a very specific definition. A form of fraud in which belief in the success of a nonexistent enterprise is fostered by the payment of quick returns to the first investors from money invested by later investors. Social Security isn't a ponzi scheme for a number of reasons, first it's not a security. Second there is no nonexistent enterprise. Instead it's structure is entirely that of an government mandated insurance program.
  - deleted 8y ago
    [deleted]