Social Security is not a Ponzi scheme. My firm represents victims of four Ponzi schemes, totaling nearly a billion dollars in losses. We know something about Ponzi schemes. All such schemes begin with a bogus investment vehicle and the promise of a significant return on that investment. In Madoff, it was a portfolio of stocks and other securities that didn’t really exist. The schemes my clients have fallen for include the purchase of phony certificates of deposit, participations in phantom bridge loans, and the sale of nonexistent commodities.
At the outset the scheme pays what appears to be a hefty return on investment, but that return is merely funded by the proceeds of investments from new entrants joining the scheme. There are no real returns. There is no investment. It is all just hot air. And eventually, it runs out of new investments and crumbles.
I suppose Governor Perry finds it politically expedient to claim the Social Security system is a Ponzi scheme. Best I can figure, his conclusion about Social Security is based on the fact that today’s contributors are not putting their dollars toward their own retirement, but rather funding the pensions of current retirees. And when baby boomers retire they are going to need to rely on tomorrow’s workforce to fund their retirement and so on and so on.
Clever, Governor, but not a Ponzi scheme; just a system that is underfunded and needs reform. I’m not a politician, but what’s the benefit of using the moniker of “Ponzi scheme”? Why not simply address the issue with thoughtful analysis and intellectual rigor. Seems to me we need a President with real ideas and concrete solutions and not phony slogans that in the end only consist of hot Texas air.