We’ve heard a lot in the last few weeks about Bernie Madoff and how he scammed millions from investors through his Ponzi scheme. He stole people’s money, and now is sitting in jail. His family is under investigation, his belongings have all been seized, and we have been witness to the parade of government officials and private citizens tell us how awful the scheme and how wrong Bernie acted.
For clarification, Investopedia defines a Ponzi scheme as: “A fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates returns for older investors by acquiring new investors. This scam actually yields the promised returns to earlier investors, as long as there are more new investors. These schemes usually collapse on themselves when the new investments stop.”
By definition, our social security system is a Ponzi scheme. By comparison, the federal government makes Bernie Madoff look like a small time thief, yet no one is seizing the government’s assets and no government officials are sitting in jail, happy to avoid being burned at the stake.
This year, for the first time since 1983 the Social Security system paid out more in benefits than it took in by way of taxes. The system has run out of new investors, yet the older investors, who were promised great rates of return with no risk to their initial contributions, are being paid benefits.
This classic Ponzi scheme is ready to collapse, as they all do when the number of new investors aren’t sufficient enough to sustain the level of return for the earlier investors, but somehow the Bernie Madoff’s of the Social Security system are still running their scam.
We need to fix this. If it’s illegal to run a Ponzi scheme, it should also be illegal for our government to fleece the population in the same way. The right thing to do, aside from arrest the congress and seize all their assets in an attempt to pay off the investors who have been cheated (us), is to stop running the scam.
Unfortunately, many people have made life decisions based the promise that the Social Security system would provide all or some of their retirement needs. So, we owe it to those investors to follow through as best we can within the original framework of the system.
We need to designate a cut-off age, somewhere between 35 and 40–since by then life’s decisions have already been made–and let those young enough to recover their long term financial situation make decisions based on the truth–that the system will not be there when they retire.
We need to calculate a sunset clause for paying into the social security scam. So the coming generations can have their money to invest and plan for their retirements. We should scale back benefits to a package comparable to what the original package of benefits was designed to be, perhaps the mix needs to be a bit different than originally intended, but the overall amount of benefits needs to be scaled back to what was originally designed and no more for those who will be collecting.
We need to get spending, taxes, and our ability to be self-sufficient back under control. We need to do it now, before we lose any more of our Constitution, our republic, or our uniquely American identity.
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