Is social security a ponzi scheme

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Is social security a ponzi scheme

Social Security Trust Fund: Payroll taxes and revenues add to the fund, while expenses payouts reduce it. Non-employee contractors are responsible for the entire Social Security accounts are not the property of their beneficiary and are used solely to determine benefit levels.

Social Security funds are not invested on behalf of beneficiaries. Instead, current tax receipts are used to pay current benefits the system known as " pay-as-you-go "as is typical of some insurance and defined-benefit plans. However, without further legislation, or change in benefits, this annual surplus will change to a deficit around[15] when payments begin to exceed receipts and interest thereafter.

The fiscal pressures are due to demographic trends, where the number of workers paying into the program continues declining relative to those receiving benefits. Demographics[ edit ] The number of workers paying into the program was 5. Federal Reserve Chairman Bernanke has indicated that the aging of the population is a long-term trend, rather than a proverbial "pig moving through the python ".

The number receiving retirement benefits rose by 1. Social Security Trust Fund Social Security payroll taxes and interest received are added to the Fund, while expenses payments to recipients are deducted from the Fund.

Expenses exceeded tax Is social security a ponzi scheme in The Trust Fund is projected to continue to grow for several years thereafter because of interest income from loans made to the US Treasury. However, the funds from loans made have been spent along with other revenues in the general funds in satisfying annual budgets.

At some point, however, absent any change in the law, the Social Security Administration will finance payment of benefits through the net redemption of the assets in the Trust Fund.

Because those assets consist solely of U. To finance such a projected call on the general fund, some combination of increasing taxes, cutting other government spending or programs, selling government assets, or borrowing would be required.

Payroll tax rates were cut during and as a stimulus measure; these cuts expired at the end of Transfers of other government funds made the program "whole" as if these tax cuts had not occurred.

Is social security a ponzi scheme

In other words, this amount would have to be set aside today such that the principal and interest would cover the shortfall over the next 75 years. Members of Congress cannot simultaneously claim that the tax cuts for people at the top are affordable while the Social Security shortfall constitutes a dire fiscal threat.

This latter figure is the one commonly reported in the media. Key points of philosophical debate include, among others: Indeed, Social Security has been called "the third rail of American politics" [36] — meaning that any politician sparking fears about cuts in benefits by touching the program endangers his or her political career.

The New York Times wrote in January that Social Security and Medicare "have proved almost sacrosanct in political terms, even as they threaten to grow so large as to be unsustainable in the long run".

Social Security taxes paid into the system cannot be passed to future generations, as private accounts can, thereby preventing the accumulation of wealth to some degree.

Conservatives also argue that the U. Constitution does not permit the Congress to set up a savings plan for retirees leaving this authority to the statesalthough the U.

Supreme Court ruled in Helvering v.

A few nuggets of Social Security info I picked up:

Davis that Congress had this authority. Liberal ideological arguments[ edit ] Liberals argue that government has the obligation to provide social insurance, through mandatory participation and broad program coverage.

DuringSocial Security constituted more than half of the income of nearly two-thirds of retired Americans. For one in six, it is their only income. More generous Social Security would likely reduce the saving rate, thereby raising the neutral interest rate [the rate required to achieve full employment] with no change in budget deficits.

From the Blog

There are countries other than the U. The experiences of these countries are being debated as part of the current Social Security controversy. In the United States in the late s, privatization found advocates who complained that U. But in the meantime, several conservative and libertarian organizations that considered it a crucial issue, such as the Heritage Foundation and Cato Institutecontinued to lobby for some form of Social Security privatization.

Anti-privatization arguments[ edit ] The liberal position is typically anti-privatization. Those who have taken an anti-privatization position argue several points among othersincluding: The program is "pay as you go", meaning current payroll taxes pay for current retirees.

Diverting payroll taxes or other sources of government funds to fund private accounts would drive enormous deficits and borrowing "transition costs". Privatization converts the program from a "defined benefits" plan to a "defined contribution" plan, subjecting the ultimate payouts to stock or bond market fluctuations; Social Security payouts are indexed to wages, which historically have exceeded inflation.I’d like to take the “Will Social Security Be Around When I Retire?” section and paste it into the definition of “Ponzi Scheme” in Wikipedia.

Total: 16 Few Americans realize that the U.S. economy is being propped up by the Shale Oil Industry. However, the shale oil industry is nothing more than a Ponzi Scheme, so when it collapses, it will take down the U.S.

economy with it. Unfortunately, the reason few Americans understand how lousy the economics are. The foregoing comments represent the general investment analysis and economic views of the Advisor, and are provided solely for the purpose of information, instruction and discourse.

The report also projects that the Social Security trust fund will be exhausted in if Congress doesn't act to shore up the system -- this is the same year as shown the report. The Social-Engineer Podcast is a monthly discussion hosted by a panel of security experts that make up the SEORG Crew.

We include guests from diverse backgrounds to discuss human behavior and its implications for information security. I couldn’t agree more with you. Yes all those cryptocurrencies are only a fad just like it was those Fidget Spinners last year.

Soon lack of demand will bring BitCoin and others to crash since there is no real value behind, like currency is backed by trust in the government.

Is Social Security a Ponzi Scheme? - CBS News