This diagram clearly explains the difference between a Ponzi scheme and Social Security. Must see!

[Better Believe It]

A Venn Diagram for Rick Perry: Social Security Is Not a Ponzi Scheme
By Nick Baumann
August 29, 2011

On Saturday, Texas Gov. Rick Perry told a group of voters that Social Security is a "Ponzi scheme" and a "monstrous lie" to younger Americans. It's not the first time the GOP presidential candidate has made such claims. The Texas governor also described Social Security as a Ponzi scheme in his 2010 book, "Fed Up!," and has argued the program is unconstitutional and could be handed over to the states.

When politicians make clearly false claims, reporters have an obligation to explain to readers why those claims are false—or at least quote someone who can. I would suggest political scientist Jonathan Bernstein:

Very simple: anyone who says that Social Security is a Ponzi scheme either misunderstands Social Security, misunderstands Ponzi schemes, is deliberately lying, or some combination of those... After all, a Ponzi scheme is a deliberate fraud. Saying that Social Security is financed like a Ponzi scheme is factually wrong, but saying that Social Security is a Ponzi scheme or is like a Ponzi scheme is basically a false accusation of fraud against the US government and the politicians who have supported Social Security over the years.



http://motherjones.com/mojo/2011/08/social-security-not-ponzi-scheme-venn-diagram


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Reports & Studies
Special Studies by the Historian's Office

Research Note #25:
Ponzi Schemes vs. Social Security

Social Security is and always has been either a "pay-as-you-go" system or one that was partially advance-funded. Its structure, logic, and mode of operation have nothing in common with Ponzi schemes or chain letters or pyramid schemes.

The first modern social insurance program began in Germany in 1889 and has been in continuous operation for more than 100 years. The American Social Security system has been in continuous successful operation since 1935. Charles Ponzi's scheme lasted barely 200 days.

Larry DeWitt
Historian's Office
January 2009

Read the full study at:

http://www.ssa.gov/history/ponzi.htm

[Oceansaway]

1. K&R..n/t

[Richardo]

2. Mother Jones is too literal - it might as well say 'Social Security not run by Charles Ponzi'

What the GOP miscreants like Perry are saying is that Social Security is like a Ponzi scheme; in that it's unsustainable, and like Ponzi or multi-level marketing, the 'new' entrants are paying the benefits to the 'old' entrants and there will be nothing left for them. It's all bullshit of course, but a point-by-point comparison to an actual Ponzi scheme misses the point entirely.

The real rebuttal is demonstrating that the 'new' entrants are assured benefits as well as the old, and the source of the benefits is not solely the contributions of the new. (Like the SSA Report explains in the second link).

[Better Believe It]

5. "new entrants are assured benefits" until Congress decides to reduce or eliminate them.

And that's a real danger.

You didn't like the diagram because it's too simple?

Maybe.

For someone with an advanced degree .... someone really smart!

But, I think it does a pretty good job in refuting right-wing politicians who claim Social Security is nothing but a Ponzi scheme in terms most working people can understand.

It works for me.

[RaleighNCDUer]

3. k n r

There is one more comparison:

Ponzi scheme - attracts investors who are led to believe they are smarter than your average investor, and that is why they will earn great rewards. They are delusional.

SS - is attacked by people who think they are smarter than the average investor, and would make much more money by investing their SS money themselves, by which they will earn great rewards. They are delusional.

[dkf]

4. Can be tweaked, expanded, cut or ended by elected representatives...

There you go.

[jtrockville]

6. Isn't the Federal Reserve (not part of the gov't) the folks who print $$?

I know the Treasury (gov't) does the actual printing, but they can only print more than they take out of circulation on the say-so of the Federal Reserve, no?
:shrug: