Re: Re: [Pen-l] PK on the Madoff Nation

[raghu <mraghu01@xxxxxxxxx>]

On Fri, Dec 19, 2008 at 12:26 PM, David B. Shemano <dshemano@xxxxxxxxxx> wrote:
> A real Ponzi scheme has three fundamental elements (1)  a talented con man to convince fooliish/greedy/etc. people to give him money in exchange for unrealistic returns, (2) the nominal business activity is a sham and the real business activity is simply convincing more people to give money, and (3) the scheme continues to exist until the promised distributions exceed the amount of money the con man is able to raise.
>
> As for social security, element (2) is met, because contributors misleadingly believe that the money they pay belongs to them and misleadingly believe that the funds are invested and appreciating, when in fact social security is simply an additional tax paid to the general treasury and there is no legal requirement the government pay a penny back to them.

In other words, Soc Sec is a Ponzi because many people have a mistaken
idea of what it is?? I am not sure I follow your reasoning here. And
in what way is the "nominal business activity" of Soc Sec a sham? Are
people not getting their benefit checks?



> Element (3) is arguably met, because the scheme can only work to the extent that the government can collect enough money from new contributors into the system and that will end soon enough based upon existing levels of taxes and benefits.  The only way to argue that element (3) is not met is for the government to admit that social security is not an independent fund and payments are made from general tax revenues (but there is no legal requirement), but then the program loses all of its aura.

Why does the program "lose all of its aura" if it is based on tax
revenue? And what exactly do you mean by "no legal requirement".
Unless the Ayn Rand faction of the Republican party succeeds in its
program of reducing Soc Sec, I don't see why the benefits will stop
being paid.
-raghu.



-- 
"I used to do drugs. I still do drugs. But I used to, too." - Mitch Hedberg
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