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If we really want to use the term "Ponzi scheme" this way, shouldn't we declare: - national debt is Ponzi scheme - social security is Ponzi scheme - everythi

If we really want to use the term "Ponzi scheme" this way, shouldn't we declare: - national debt is Ponzi scheme - social security is Ponzi scheme - everything involve complex finial instruments is Ponzi scheme So basically claiming something is Ponzi scheme means almost nothing.

lotsofpulp 5y ago
Ponzi scheme is being used as another term for a system that needs exponential growth to keep working.
- quickthrower2 5y ago
  The mentioned scheme is kind of acquiring negative value assets with short term positive cash flow … without it actually being debt. Akin to the programmers “technical debt”
ivalm 5y ago
But that’s not the case: 1. National debt is USD denominated thus only requires repayment in nominal terms (eg you can always print, you can set arbitrary interest rates, etc). In fact, there is a lot of precedent for negative real returns on sovereign debt (see current US treasuries and multiple years in EU). 2. Social security is a pay as you go system. Current workers pay for current retirees. Future workers will pay for future retirees. Benefits can/will be scaled to cash flow. Just because there was surplus and that surplus was used for other purposes doesn’t really mean much. All government has to do is raise retirement age and the system will remain solvent. 3. That makes no sense
- rufus_foreman 5y ago
  >> All government has to do is raise retirement age and the system will remain solvent. So the difference between a Ponzi scheme and SSI is that in a Ponzi scheme, the person who sets up the scheme is required to keep his promises to investors, but SSI is not? To the young people out there in their 20s, what ivalm is saying is that for people like me who are nearing retirement age, the money is going to start coming out of your pocket and going into my pocket, but when you get to be my age, the government will just raise the retirement age and keep taking the money out of your pocket. But it is totally, totally, totally not a Ponzi scheme. Part of my income will soon depend on you believing that. Godspeed, ivalm!
  - temp8964 5y ago
    Also remember with the improved health care, retirement age can always be pushed further. My kids may retire at age 120. Wonderful!
  - ivalm 5y ago
    I mean that’s literally in the charter of SSI. It is a pay as you go system, that’s how it was setup. In the law, there is no promise of current money paying for future obligations and there are no “broken promises.” It’s not a piggy bank or a retirement account. Heck, I am a millennial many decades from retirement so I am one of the people who will be impacted. At the same time, expected lifespan in retirement has been steadily increasing since introduction of SSI so it’s not unreasonable for retirement age to increase. The problem of Ponzi scheme is that it advertises itself as an investment instrument where return on investment generates the cash flow. SSI never advertised itself like that, it is a non-discretionary program where SSI taxes are used to pay current obligations. If you ever believed something else then that on you not familiarizing yourself with the law that governs this program.
    - rufus_foreman 5y ago
      "there is no promise of current money paying for future obligations and there are no broken promises" Tell them, not me. I get my money, the 20 somethings lose their money, I spend their money. I'm 100% OK with that. And it's still a Ponzi scheme. As long as we are all on the same page as to what the kids are funding here. You get 0 and no broken promises, OK kids?
      - ivalm 5y ago
        But we don’t get 0? In the future there will be people working and paying social security taxes and those taxes will be used to fund social security payments. If the percentage of retirees is too large then that will lead to increase in retirement age until the percentage of retirees is balanced by the number of workers. With productivity gains due to automation hopefully we can increase number of retirees per worker. It is a very transparent system. Again, when you pay social security taxes you aren’t “saving for your retirement”, you are paying for current social security outflows. It’s how most government obligations work.

lotsofpulp 5y ago

Ponzi scheme is being used as another term for a system that needs exponential growth to keep working.

quickthrower2 5y ago
The mentioned scheme is kind of acquiring negative value assets with short term positive cash flow … without it actually being debt. Akin to the programmers “technical debt”

ivalm 5y ago

But that’s not the case: 1. National debt is USD denominated thus only requires repayment in nominal terms (eg you can always print, you can set arbitrary interest rates, etc). In fact, there is a lot of precedent for negative real returns on sovereign debt (see current US treasuries and multiple years in EU). 2. Social security is a pay as you go system. Current workers pay for current retirees. Future workers will pay for future retirees. Benefits can/will be scaled to cash flow. Just because there was surplus and that surplus was used for other purposes doesn’t really mean much. All government has to do is raise retirement age and the system will remain solvent. 3. That makes no sense

rufus_foreman 5y ago
>> All government has to do is raise retirement age and the system will remain solvent. So the difference between a Ponzi scheme and SSI is that in a Ponzi scheme, the person who sets up the scheme is required to keep his promises to investors, but SSI is not? To the young people out there in their 20s, what ivalm is saying is that for people like me who are nearing retirement age, the money is going to start coming out of your pocket and going into my pocket, but when you get to be my age, the government will just raise the retirement age and keep taking the money out of your pocket. But it is totally, totally, totally not a Ponzi scheme. Part of my income will soon depend on you believing that. Godspeed, ivalm!
- temp8964 5y ago
  Also remember with the improved health care, retirement age can always be pushed further. My kids may retire at age 120. Wonderful!
- ivalm 5y ago
  I mean that’s literally in the charter of SSI. It is a pay as you go system, that’s how it was setup. In the law, there is no promise of current money paying for future obligations and there are no “broken promises.” It’s not a piggy bank or a retirement account. Heck, I am a millennial many decades from retirement so I am one of the people who will be impacted. At the same time, expected lifespan in retirement has been steadily increasing since introduction of SSI so it’s not unreasonable for retirement age to increase. The problem of Ponzi scheme is that it advertises itself as an investment instrument where return on investment generates the cash flow. SSI never advertised itself like that, it is a non-discretionary program where SSI taxes are used to pay current obligations. If you ever believed something else then that on you not familiarizing yourself with the law that governs this program.
  - rufus_foreman 5y ago
    "there is no promise of current money paying for future obligations and there are no broken promises" Tell them, not me. I get my money, the 20 somethings lose their money, I spend their money. I'm 100% OK with that. And it's still a Ponzi scheme. As long as we are all on the same page as to what the kids are funding here. You get 0 and no broken promises, OK kids?
    - ivalm 5y ago
      But we don’t get 0? In the future there will be people working and paying social security taxes and those taxes will be used to fund social security payments. If the percentage of retirees is too large then that will lead to increase in retirement age until the percentage of retirees is balanced by the number of workers. With productivity gains due to automation hopefully we can increase number of retirees per worker. It is a very transparent system. Again, when you pay social security taxes you aren’t “saving for your retirement”, you are paying for current social security outflows. It’s how most government obligations work.