Social Security/Ponzi Scheme.

[StageLeft]

Ponzi Scheme, which is like an advanced pyramid scheme. They are undoubtedly illegal, except that is precisely what social security is.

From this

The main difference here is that everybody is forced to contribute, so it didn?t fall apart a long time ago because the government, by force of law, makes everybody participate.

We all know that for the amount we pay into social security (12%/person) we get back a platry return. We know with time that SS taxes are higher and higher. The talk now to hold off what we all know as inevitable is to simply increase the ceiling of SS contributions, so as this boat has more holes shot into its hull we simply buy a bigger water pump.

I just find it incredible that it was ever allowed to get to this point.

And that?s why I think they are looking at this now because if the trust fund was to be sound until the year 2040 ? or whatever stupid year they came up with ? when have you ever known a politician who only cares about next year?s election to worry about something that occurs 30 years from now.

Hehe, so true!

 

[GTKeeper]

It is and it isn't a ponzi scheme....




Usually a Ponzi scheme (and I have had personal experience with a hedge fund on this) relies on an ever greater number of participants to pay off the early participants. ALSO a ponzi scheme usually involves the certain knowledge that you are cheating people out of money.

SS is a little different in that it wasn't set up with the intention that its a scam to begin with, but it does rely on future generations to pay into it.


How SS IS getting scammed is a little different. The gov't uses SS money as a slush fund which they borrow against. If all the SS contributions were not borrowed there would be a lot more money in there now at this point.

 

[Mursilis]

Originally posted by: GTKeeper
It is and it isn't a ponzi scheme....




Usually a Ponzi scheme (and I have had personal experience with a hedge fund on this) relies on an ever greater number of participants to pay off the early participants. ALSO a ponzi scheme usually involves the certain knowledge that you are cheating people out of money.

SS is a little different in that it wasn't set up with the intention that its a scam to begin with, but it does rely on future generations to pay into it.


How SS IS getting scammed is a little different. The gov't uses SS money as a slush fund which they borrow against. If all the SS contributions were not borrowed there would be a lot more money in there now at this point.

Legally, the money belongs to the gov't, not you. Why shouldn't they spend it?

 

[IronWing]

You will get your benefits. They will be worth less than you'd like The systemic problem is simply being inflated away.

The real issues are 1) demographics, 2) worker incomes (and therefore taxable wages) are not keeping up with increases in productivity, and 3) the wage ceiling coupled w/ the low tax rate on capital gains leads higher compensated folks to shelter their income from SS taxes by taking their income as capital gains instead of wages.

 

[IronWing]

Originally posted by: GTKeeper

How SS IS getting scammed is a little different. The gov't uses SS money as a slush fund which they borrow against. If all the SS contributions were not borrowed there would be a lot more money in there now at this point.

The only way to earn interest on the trust fund is to invest it somewhere, be it T-bills, private savings accounts, stock market, or pork belly futures. Loaning it to the government is not the highest yielding investment choice but it is likely the lowest risk (except for inflation risk, as I mentioned above).

 

[Rainsford]

God am I getting sick of people who have just discovered the phrase "Ponzi scheme" and now try to apply it to everything relating to money in an attempt to sound like they know what they are talking about. Social Security isn't even remotely close to a Ponzi or pyramid scheme, and every time someone tries to make the analogy, I feel like hitting them in the head with an econ 101 textbook.

There is NOTHING fundamentally wrong with the idea of social security, it's the way it's been implemented that's flawed. A Ponzi scheme is inherently unsustainable, while Social Security should in theory work forever. The reason it's not is because politicians have deviated from the basic idea and used the Social Security money for other things.

 

[Dufusyte]

Social Security worked great when you had a huge number of baby boomers paying into it, and a less numerous population of elderly collecting from it.

Now that the boomers are retiring, there will be lots of elderly collecting, and less people paying into it. Ergo, no workie.

The first generation which received benefits at the beginning of the program (during Roosevelt's New Deal) had not paid into it. On the flip side, the final generation to pay into it will not receive anything back from it (because it will be broke). We find ourselves on the flip side of it.

It was all a matter of demographics, and now we are at the inflection point where the demographics say "bust". It was nice while it lasted.

Thanks for playing, er, paying.

 

[Corn]

Judging by the verbiage in Skoorb's last 2 thread topic summaries, looks like he might not be getting any at home.

 

[Rainsford]

Originally posted by: Dufusyte
Social Security worked great when you had a huge number of baby boomers paying into it, and a less numerous population of elderly collecting from it.

Now that the boomers are retiring, there will be lots of elderly collecting, and less people paying into it. Ergo, no workie.

The first generation which received benefits at the beginning of the program (during Roosevelt's New Deal) had not paid into it. On the flip side, the final generation to pay into it will not receive anything back from it (because it will be broke). We find ourselves on the flip side of it.

It was all a matter of demographics, and now we are at the inflection point where the demographics say "bust". It was nice while it lasted.

Thanks for playing, er, paying.

I see no reason some adjustments can't be made to make the system work with new demographics. It's true that people are living longer and there are more people retiring than there used to be, but that doesn't mean the system is fundamentally broken, it means it won't work in exactly the same way now that it did when it was first proposed.

 

[heyheybooboo]

Social Security's original retirement age of 65 was set in 1935 when life expectancy was 63. Today, life expectancy is 77.

 

[andy04]

Its royally fvcked.

 

[andy04]

Originally posted by: heyheybooboo
Social Security's original retirement age of 65 was set in 1935 when life expectancy was 63. Today, life expectancy is 77.

Thats the least of our worries :laugh:

 

[StageLeft]

Originally posted by: Rainsford

Originally posted by: Dufusyte
Social Security worked great when you had a huge number of baby boomers paying into it, and a less numerous population of elderly collecting from it.

Now that the boomers are retiring, there will be lots of elderly collecting, and less people paying into it. Ergo, no workie.

The first generation which received benefits at the beginning of the program (during Roosevelt's New Deal) had not paid into it. On the flip side, the final generation to pay into it will not receive anything back from it (because it will be broke). We find ourselves on the flip side of it.

It was all a matter of demographics, and now we are at the inflection point where the demographics say "bust". It was nice while it lasted.

Thanks for playing, er, paying.

I see no reason some adjustments can't be made to make the system work with new demographics. It's true that people are living longer and there are more people retiring than there used to be, but that doesn't mean the system is fundamentally broken, it means it won't work in exactly the same way now that it did when it was first proposed.

Of course it is fundamentally broken. Find me any other investment vehicle in which 12% of my wages over the course of my life would give me so little when I retire. I think under a mattress is a close approximation.

 

[heyheybooboo]

Originally posted by: Skoorb

Originally posted by: Rainsford

Originally posted by: Dufusyte
Social Security worked great when you had a huge number of baby boomers paying into it, and a less numerous population of elderly collecting from it.

Now that the boomers are retiring, there will be lots of elderly collecting, and less people paying into it. Ergo, no workie.

The first generation which received benefits at the beginning of the program (during Roosevelt's New Deal) had not paid into it. On the flip side, the final generation to pay into it will not receive anything back from it (because it will be broke). We find ourselves on the flip side of it.

It was all a matter of demographics, and now we are at the inflection point where the demographics say "bust". It was nice while it lasted.

Thanks for playing, er, paying.

I see no reason some adjustments can't be made to make the system work with new demographics. It's true that people are living longer and there are more people retiring than there used to be, but that doesn't mean the system is fundamentally broken, it means it won't work in exactly the same way now that it did when it was first proposed.

Of course it is fundamentally broken. Find me any other investment vehicle in which 12% of my wages over the course of my life would give me so little when I retire. I think under a mattress is a close approximation.

Stop whining. Feel free to go live in Iraq or Afghanistan if you don't like it.

Instead of spewing "fundamentally broken" ad hom BS, try a statement of fact.

Like, "The actuarial cost of fully funding Social Security and Medicare for the next 75 years is less than 2% of GDP". Probably lower with benefit adjustments, a raise in retirement age, fixing the broken Part D Big Pharma Give-A-Way, and actually doing something to rein in health care costs ....

 

[CycloWizard]

Originally posted by: Rainsford
God am I getting sick of people who have just discovered the phrase "Ponzi scheme" and now try to apply it to everything relating to money in an attempt to sound like they know what they are talking about. Social Security isn't even remotely close to a Ponzi or pyramid scheme, and every time someone tries to make the analogy, I feel like hitting them in the head with an econ 101 textbook.

There is NOTHING fundamentally wrong with the idea of social security, it's the way it's been implemented that's flawed. A Ponzi scheme is inherently unsustainable, while Social Security should in theory work forever. The reason it's not is because politicians have deviated from the basic idea and used the Social Security money for other things.

SS can only work even in theory given some stringent assumptions about population growth and economic health. For all of human history, the population has grown at a rate about linearly proportional to the current population. At least, for all of human history until the latter half of the 20th century, when the advent of birth control and other factors lead to a significant decline and even negative growth in many places. If the number of workers approaches the number of SS recipients, then the model has completely broken down. Thus, given current trends in population growth, SS could be considered a Ponzi scheme, since the current recipients rely on the influx of money from many others, while the current contributors will likely receive nothing.

I'll also point out that SS isn't a 12% tax: it's 6.2%.

 

[StageLeft]

Originally posted by: heyheybooboo
Stop whining. Feel free to go live in Iraq or Afghanistan if you don't like it.

Instead of spewing "fundamentally broken" ad hom BS, try a statement of fact.

Like, "The actuarial cost of fully funding Social Security and Medicare for the next 75 years is less than 2% of GDP". Probably lower with benefit adjustments, a raise in retirement age, fixing the broken Part D Big Pharma Give-A-Way, and actually doing something to rein in health care costs ....

Haha, are you really a fvcktard or do you just play one on P&N?

I'll also point out that SS isn't a 12% tax: it's 6.2%.

Company match.

 

[GTKeeper]

Originally posted by: Skoorb

Originally posted by: heyheybooboo
Stop whining. Feel free to go live in Iraq or Afghanistan if you don't like it.

Instead of spewing "fundamentally broken" ad hom BS, try a statement of fact.

Like, "The actuarial cost of fully funding Social Security and Medicare for the next 75 years is less than 2% of GDP". Probably lower with benefit adjustments, a raise in retirement age, fixing the broken Part D Big Pharma Give-A-Way, and actually doing something to rein in health care costs ....

Haha, are you really a fvcktard or do you just play one on P&N?

I'll also point out that SS isn't a 12% tax: it's 6.2%.

Company match.

So you calculate company match as part of your wages? Thats a lofty assumption that if there was no SS, companies would just GIVE OUT A 6% raise... to everyone automatically.... right.............

 

[winnar111]

Originally posted by: GTKeeper

Originally posted by: Skoorb

Originally posted by: heyheybooboo
Stop whining. Feel free to go live in Iraq or Afghanistan if you don't like it.

Instead of spewing "fundamentally broken" ad hom BS, try a statement of fact.

Like, "The actuarial cost of fully funding Social Security and Medicare for the next 75 years is less than 2% of GDP". Probably lower with benefit adjustments, a raise in retirement age, fixing the broken Part D Big Pharma Give-A-Way, and actually doing something to rein in health care costs ....

Haha, are you really a fvcktard or do you just play one on P&N?

I'll also point out that SS isn't a 12% tax: it's 6.2%.

Company match.

So you calculate company match as part of your wages? Thats a lofty assumption that if there was no SS, companies would just GIVE OUT A 6% raise... to everyone automatically.... right.............

Compensation is compensation, whether its money, health care, insurance benefits, stock, or skittles.

 

[StageLeft]

Originally posted by: GTKeeper

Originally posted by: Skoorb

Originally posted by: heyheybooboo
Stop whining. Feel free to go live in Iraq or Afghanistan if you don't like it.

Instead of spewing "fundamentally broken" ad hom BS, try a statement of fact.

Like, "The actuarial cost of fully funding Social Security and Medicare for the next 75 years is less than 2% of GDP". Probably lower with benefit adjustments, a raise in retirement age, fixing the broken Part D Big Pharma Give-A-Way, and actually doing something to rein in health care costs ....

Haha, are you really a fvcktard or do you just play one on P&N?

I'll also point out that SS isn't a 12% tax: it's 6.2%.

Company match.

So you calculate company match as part of your wages? Thats a lofty assumption that if there was no SS, companies would just GIVE OUT A 6% raise... to everyone automatically.... right.............

It is overhead. You don't think companies would appreciate a 6% reduction in wages if SS wasn't pulling that away? It is part of one's wages, regardless of how it's packaged. Wages/benefits are defined as what a company pays for a person. If that person makes $100k/year and the company is paying $6k/year into SS of course it goes into their calculations. If I'm wrong, why don't we just make SS 0% for the person and 12% for the company, then nobody suffers, right?

 

[Xavier434]

Originally posted by: Skoorb
Of course it is fundamentally broken. Find me any other investment vehicle in which 12% of my wages over the course of my life would give me so little when I retire. I think under a mattress is a close approximation.

Well, isn't the idea that SS is supposed to be ridiculously low risk? Such things yield small returns, but at least they are more of a guarantee which is something we need as a last resort. I am not saying that we cannot do something better, but whatever we do it needs to be extremely low risk. It needs to almost be a guarantee.

 

[StageLeft]

Originally posted by: Xavier434

Originally posted by: Skoorb
Of course it is fundamentally broken. Find me any other investment vehicle in which 12% of my wages over the course of my life would give me so little when I retire. I think under a mattress is a close approximation.

Well, isn't the idea that SS is supposed to be ridiculously low risk? Such things yield small returns, but at least they are more of a guarantee which is something we need as a last resort. I am not saying that we cannot do something better, but whatever we do it needs to be extremely low risk. It needs to almost be a guarantee.

It's low risk because really it's paid out as it comes in. But because of that, it has no real money to grow anywhere.

As long as the gov and do its best to promise that in a few decades the poorest, most destitute will not have to spend retirement in soup lines, then I have no problem with a higher risk (not extreme, but something reasonable) for better return. SS now doesn't equate even to a person investing the money into a money market fund (up until the current castastrophe that was almost as safe as a savings account).

 

[manowar821]

Originally posted by: heyheybooboo
Stop whining. Feel free to go live in Iraq or Afghanistan if you don't like it....

All respect *SWOOSH!* down the drain. Thanks for nothing, fuck off, stop posting. Please.

 

[bamacre]

Originally posted by: heyheybooboo
Stop whining. Feel free to go live in Iraq or Afghanistan if you don't like it.

:roll:

 

[heyheybooboo]

Way to ignore facts and ~~snip~~ posts. If the facts don't fit your proaganda, just ignore them, eh? Goebbels would be so proud of you ....

Social Security's original retirement age of 65 was set in 1935 when life expectancy was 63. Today, life expectancy is 77.

"The actuarial cost of fully funding Social Security and Medicare for the next 75 years is less than 2% of GDP". Probably lower with benefit adjustments, a raise in retirement age, fixing the broken Part D Big Pharma Give-A-Way, and actually doing something to rein in health care costs ....

 

[Xavier434]

Originally posted by: Skoorb
It's low risk because really it's paid out as it comes in. But because of that, it has no real money to grow anywhere.

As long as the gov and do its best to promise that in a few decades the poorest, most destitute will not have to spend retirement in soup lines, then I have no problem with a higher risk (not extreme, but something reasonable) for better return. SS now doesn't equate even to a person investing the money into a money market fund (up until the current castastrophe that was almost as safe as a savings account).

See, I differ there. I like the idea of having a last resort with little to no risk. It is always a great thing to have fail safe option especially considering that all of the other higher risk options which can potentially yield more are still very much available. If I want to make more then I will use my money to make more my way. I like that I don't have to worry about other people making bad decisions when it comes to retirement. I like knowing that they will be ok and the effects it has on me are not very much at all. I like knowing that my parents and the parents of whoever I marry will not have to be completely bailed out by me because they screwed up in their life or are disabled or whatever.

The problem with SS imo is not the amount it is intended to return. The problem is maintaining its integrity so that its intention is maintained with the same low risks.