Tuesday, January 18, 2005

PONZI SCHEME: What is Social Security?

A few thoughts for those of you who don't know what a Ponzi scheme is. Also called a Pyramid scheme, the dictionary definition is: "an investment swindle in which some early investors are paid off with money put up by later ones in order to encourage more and bigger risks". I use this phrase "Ponzi scheme" because it accurately describes how Social Security has always run. The money paid in is not invested or even noted as a debt owed to any taxpayer anywhere. Don't even ask how such a tax payment could generate a "surplus" when it all gets spent every year. There may be a statistic somewhere saying how much has been stolen over the years, but nobody in government will actually tell you this "magic number", much less say it's anything more than a "complex accounting method", or some other meaningless or deceptive phrase. The new phrases to watch out for are "there is no Social Security crisis", and "it will pay full benefits until 2042", often followed by "75 percent benefits after 2042". Don't believe this hype. While it's true that this is not going to hit the fan this year, it is a future crisis that only gets worse the longer it is ignored. For Americans over 40 but under retirement age, this is a crisis. I need to invest in something other than Soc Sec as soon as possible. Those of us without access to IRA's or 401K accounts could surely use what President Bush is proposing. It was a large part of the reason I voted for him again.

A further warning against the AARP (American Association of Retired People, a liberal group) ads comparing investing retirement funds in the stock market with gambling, from Alan Reynolds' column on 01/13: "When AARP recruits employees... it does not describe its own unusually generous 401k plan as 'gambling.'" http://www.townhall.com/columnists/alanreynolds/ar20050113.shtml (link in the title)

What's good for the AARP should be good enough for the rest of us. AARP's opposition to Soc Sec reform is hypocritical and absurd. Hopefully, when the people in their 40's and younger approach retirement age, we won't be suckered into this liberal group with the lures of cheap insurance, motel and travel rates. Remember that the AARP are spending MILLIONS of dollars to defeat Social Security reform! Why do they want to keep retirees dependent on the government?

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