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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 schem

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.
  - mturmon 8y ago
    There is a difference between term life insurance, which you’re referring to, and universal life insurance. Social Security is indeed similar to universal life insurance.
    - toasterlovin 8y ago
      Thank you for providing an actual example of insurance that works this way. I actually looked at the insurance article on wikipedia and it was describing what I was describing (unless I missed something about universal life insurance). And I actually had auto, property, and health insurance in mind more than life insurance. That being said, the important distinction still stands: Social Security is unfunded, which makes it subject to a kind of risk that funded insurance programs are not exposed to.
  - Gibbon1 8y ago
    > No, insurance is categorically different. No. > It protects you against a loss of some kind, Social security protects you against outliving your savings when you can no longer work. > and only provides that protection while you are paying for it. This is an argument from ignorance. And it's incorrect.
    - toasterlovin 8y ago
      You’re still not addressing the main reason that comparing social security to a Ponzi scheme makes sense: being unfunded means that people will get royally fucked if the number of people paying in starts shrinking.
      - Gibbon1 8y ago
        Social security is funded via FICA which is mandated by the Federal government. You aren't going to get a more sure source of funding than that.

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.
- mturmon 8y ago
  There is a difference between term life insurance, which you’re referring to, and universal life insurance. Social Security is indeed similar to universal life insurance.
  - toasterlovin 8y ago
    Thank you for providing an actual example of insurance that works this way. I actually looked at the insurance article on wikipedia and it was describing what I was describing (unless I missed something about universal life insurance). And I actually had auto, property, and health insurance in mind more than life insurance. That being said, the important distinction still stands: Social Security is unfunded, which makes it subject to a kind of risk that funded insurance programs are not exposed to.
- Gibbon1 8y ago
  > No, insurance is categorically different. No. > It protects you against a loss of some kind, Social security protects you against outliving your savings when you can no longer work. > and only provides that protection while you are paying for it. This is an argument from ignorance. And it's incorrect.
  - toasterlovin 8y ago
    You’re still not addressing the main reason that comparing social security to a Ponzi scheme makes sense: being unfunded means that people will get royally fucked if the number of people paying in starts shrinking.
    - Gibbon1 8y ago
      Social security is funded via FICA which is mandated by the Federal government. You aren't going to get a more sure source of funding than that.