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At least 2 of those things are actually Ponzi schemes, sir. I'm not sure what an unknown lady or gentleman thinks is wrong with this, but I wish he or she woul

At least 2 of those things are actually Ponzi schemes, sir. I'm not sure what an unknown lady or gentleman thinks is wrong with this, but I wish he or she would tell me. These things (subprime MBS and Social Security) are Ponzi schemes in the sense that they are paying out more to participants than the participants put in, and not providing anything of value or performing any investment by which to make that process sustainable. In the case of subprime MBS this action is obscured by the fact that some participants have collected "promises" on the parts of borrowers who cannot possibly meet their obligations. Social Security is much more straightforward, however.

guelo 15y ago
Calling Social Security a ponzy scheme is just partisan propaganda. Since 1983 workers have been putting in way more than is being paid out in anticipation of the retiring baby boomers. The trust fund is invested in Treasury securities backed by the full faith and credit of United States, some of the safest investment in the world unless Republicans manage to raid the fund to finance more tax cuts for the rich.
- OstiaAntica 15y ago
  The SS surplus was spent by Congress, and replaced with non-marketable IOUs managed by Treasury (not securities!), literally kept in a file cabinet in West Virginia. There are no assets in the "trust fund" and there is no legal requirement for the government to pay anything on its Social Security promises.
  - chopsueyar 15y ago
    Do you have a link for the West Virginia portion of your comment?
- anonymoushn 15y ago
  Whether the trust fund contains anything of nonzero value or not (and I would say that it doesn't) is immaterial. The program is unsustainable in the long term as currently implemented because the ratio of people above the cutoff age to people contributing will be so high that the program is losing money indefinitely. There are many knobs we can turn to solve this problem, however. We could start killing old people, move the cutoff age to be later, limit the number of years benefits last, cut benefits, raise the payroll tax that partially funds the program, admit that the program has to be funded using other taxes and just accept that, implement a long-term policy of monetizing the program, lie about inflation so that the cost of living adjustment fails to retain value in real terms, or make a long-term commitment to explosive population growth. Right now I think our plan is a mix of lying about inflation and increasing the cutoff age. I am not a Republican and I consider the word somewhat insulting, much like the word Democrat.

guelo 15y ago

Calling Social Security a ponzy scheme is just partisan propaganda. Since 1983 workers have been putting in way more than is being paid out in anticipation of the retiring baby boomers. The trust fund is invested in Treasury securities backed by the full faith and credit of United States, some of the safest investment in the world unless Republicans manage to raid the fund to finance more tax cuts for the rich.

OstiaAntica 15y ago
The SS surplus was spent by Congress, and replaced with non-marketable IOUs managed by Treasury (not securities!), literally kept in a file cabinet in West Virginia. There are no assets in the "trust fund" and there is no legal requirement for the government to pay anything on its Social Security promises.
- chopsueyar 15y ago
  Do you have a link for the West Virginia portion of your comment?
anonymoushn 15y ago
Whether the trust fund contains anything of nonzero value or not (and I would say that it doesn't) is immaterial. The program is unsustainable in the long term as currently implemented because the ratio of people above the cutoff age to people contributing will be so high that the program is losing money indefinitely. There are many knobs we can turn to solve this problem, however. We could start killing old people, move the cutoff age to be later, limit the number of years benefits last, cut benefits, raise the payroll tax that partially funds the program, admit that the program has to be funded using other taxes and just accept that, implement a long-term policy of monetizing the program, lie about inflation so that the cost of living adjustment fails to retain value in real terms, or make a long-term commitment to explosive population growth. Right now I think our plan is a mix of lying about inflation and increasing the cutoff age. I am not a Republican and I consider the word somewhat insulting, much like the word Democrat.