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Social Security at least in Poland, also is a Ponzi-like scheme. The difference is that to crypto you arent forced to participate in in opposit to govt backed s

by przeor 4y ago

Social Security at least in Poland, also is a Ponzi-like scheme. The difference is that to crypto you arent forced to participate in in opposit to govt backed schemes.

loup-vaillant 4y ago
Err… can you explain in more detail how social security works in Poland, and how it is pyramidal, or at least multi-level?
- G3rn0ti 4y ago
  Well, all redistributive social security systems have a strong pyramid like scheme inherent to them. Take the German retirement funds which - AFAIK — works similarly to „social security“ in the US: Every employee in Germany is required to pay a share of about 20% of their income (1) into the retirement „fund“ — which isn’t one really as the money is not invested to gain interest but instead is immediately payed out to the current generation of retirees. On the other hand, employees are promised to receive a future pension based on the payments by the next generation of employees (i.e. their kids). In Germany, this is called „Generationenvertrag“ („contract between generations“). This is almost like a Ponzi/pyramid scheme where obscene „profits“ are payed out purely based on the exponentially growing number of payees until the day the growth stops and the system collapses like a house of cards. This breakdown has been happening for decades already albeit at a glacial rate in the German public pension system as the population has been shrinking and therefore the number of payees. It is artificially kept alive as the German federal government pumps 100 billions of tax money every year into it which is 30% of the whole federal budget … Of course, a redistributive pension system can sustain itself as long as the population age distribution looks like a literal pyramid. But that’s not the case for most Western countries. (1) Formally, the employee pays only 10% and the other 10% are taken from the employer. But, of course, the employer could as well pay his 10% share as salary instead. So, either way, it’s the employee paying everything.
  - loup-vaillant 4y ago
    OK, so redistributive pension systems are pyramid schemes… I’ll just note that this is a highly debatable interpretation of such systems. Now if we think about it for a moment: social security need money for 3 major things: unemployment, retirement, and health care. At any given point in time, you can divide the population in 2 categories: those who are currently working, and those who are not. And those who are currently working pay those who are not (gross oversimplification). The question is whether the workers pay enough money to sustain the idle. Now health care and unemployment ought to be fairly constant (barring some major crisis), and you can have rules so people don’t abuse the system too much. So no pyramid there: we adjust how much workers pay for health and unemployment and that’s the end of it. Retirement however is subject to longer term variation because of that age pyramid. And at a time where we have boomers retiring, we have less working people to sustain them all. And it’s made quite worse when the salaries of the working people don’t even keep up with inflation. We could have solved this by having an exponentially growing population, but that is bound to crash at one point. So okay, I understand the pyramid analogy there. There’s a problem though: the boomers will die. Population will eventually get over that hump, and we’ll have a more reasonable proportion of working & retired people again. So the temporary deficit is just that: temporary. And if that’s not enough, there’s something simple we can do to solve the problem. It’s so obvious that (at least in France) people don’t even dare utter it on national television: just raise contributions a little bit. But no, doing this is so unthinkable that our rulers would rather have people retire later. Which won’t work, because of structural unemployment. So what we’ll have instead is lower pensions, and an increased reliance on pension funds. There’s a snag however: pension funds are actually a form of redistributive system. Because redistributive systems are the only system there can ever be. See, even though you’re ostensibly investing money so you can retire later, what happens in practice is that your money is being injected in parts of the economy to fuel your investment. And ultimately, part of that money will be used to pay currently retired people. And when you retire, and the time comes to get your money back, you won’t get your money from a frozen value store. You’ll get it from the current economy, be it interest rates from your investments or currently paying people. However you cut it, your pension has to be taken from the current economy, and the only way you get paid is if your pension fund (and by extension the whole economy), can support it. I’d rather have an explicitly redistributive system, it’s more honest that way.
- przeor 4y ago
  A friend with nickname "G3rn0ti" from Germany explained in the longer comment what I had on mind. I am not sure how it works in USA, but in Poland it's similar scheme as in Germany. Pure Ponzi-like scheme, but if you decline to participate in it, then you go to fail for avoiding it. Anyway, there are many more people who can join the crypto trend than polish Social Security system. Growth trajectory is downward, and only printing more many can save it from collapsing.

by przeor 4y ago

Social Security at least in Poland, also is a Ponzi-like scheme. The difference is that to crypto you arent forced to participate in in opposit to govt backed schemes.

loup-vaillant 4y ago

Err… can you explain in more detail how social security works in Poland, and how it is pyramidal, or at least multi-level?

G3rn0ti 4y ago
Well, all redistributive social security systems have a strong pyramid like scheme inherent to them. Take the German retirement funds which - AFAIK — works similarly to „social security“ in the US: Every employee in Germany is required to pay a share of about 20% of their income (1) into the retirement „fund“ — which isn’t one really as the money is not invested to gain interest but instead is immediately payed out to the current generation of retirees. On the other hand, employees are promised to receive a future pension based on the payments by the next generation of employees (i.e. their kids). In Germany, this is called „Generationenvertrag“ („contract between generations“). This is almost like a Ponzi/pyramid scheme where obscene „profits“ are payed out purely based on the exponentially growing number of payees until the day the growth stops and the system collapses like a house of cards. This breakdown has been happening for decades already albeit at a glacial rate in the German public pension system as the population has been shrinking and therefore the number of payees. It is artificially kept alive as the German federal government pumps 100 billions of tax money every year into it which is 30% of the whole federal budget … Of course, a redistributive pension system can sustain itself as long as the population age distribution looks like a literal pyramid. But that’s not the case for most Western countries. (1) Formally, the employee pays only 10% and the other 10% are taken from the employer. But, of course, the employer could as well pay his 10% share as salary instead. So, either way, it’s the employee paying everything.
- loup-vaillant 4y ago
  OK, so redistributive pension systems are pyramid schemes… I’ll just note that this is a highly debatable interpretation of such systems. Now if we think about it for a moment: social security need money for 3 major things: unemployment, retirement, and health care. At any given point in time, you can divide the population in 2 categories: those who are currently working, and those who are not. And those who are currently working pay those who are not (gross oversimplification). The question is whether the workers pay enough money to sustain the idle. Now health care and unemployment ought to be fairly constant (barring some major crisis), and you can have rules so people don’t abuse the system too much. So no pyramid there: we adjust how much workers pay for health and unemployment and that’s the end of it. Retirement however is subject to longer term variation because of that age pyramid. And at a time where we have boomers retiring, we have less working people to sustain them all. And it’s made quite worse when the salaries of the working people don’t even keep up with inflation. We could have solved this by having an exponentially growing population, but that is bound to crash at one point. So okay, I understand the pyramid analogy there. There’s a problem though: the boomers will die. Population will eventually get over that hump, and we’ll have a more reasonable proportion of working & retired people again. So the temporary deficit is just that: temporary. And if that’s not enough, there’s something simple we can do to solve the problem. It’s so obvious that (at least in France) people don’t even dare utter it on national television: just raise contributions a little bit. But no, doing this is so unthinkable that our rulers would rather have people retire later. Which won’t work, because of structural unemployment. So what we’ll have instead is lower pensions, and an increased reliance on pension funds. There’s a snag however: pension funds are actually a form of redistributive system. Because redistributive systems are the only system there can ever be. See, even though you’re ostensibly investing money so you can retire later, what happens in practice is that your money is being injected in parts of the economy to fuel your investment. And ultimately, part of that money will be used to pay currently retired people. And when you retire, and the time comes to get your money back, you won’t get your money from a frozen value store. You’ll get it from the current economy, be it interest rates from your investments or currently paying people. However you cut it, your pension has to be taken from the current economy, and the only way you get paid is if your pension fund (and by extension the whole economy), can support it. I’d rather have an explicitly redistributive system, it’s more honest that way.
przeor 4y ago
A friend with nickname "G3rn0ti" from Germany explained in the longer comment what I had on mind. I am not sure how it works in USA, but in Poland it's similar scheme as in Germany. Pure Ponzi-like scheme, but if you decline to participate in it, then you go to fail for avoiding it. Anyway, there are many more people who can join the crypto trend than polish Social Security system. Growth trajectory is downward, and only printing more many can save it from collapsing.