There is a trillion dollar scam happening in the US and its spelt like P-O-N-Z-I.
Except that the perpetrator is no Bernard Madoff type investment fraudist, it is the US government itself. The Social security system wroks like a very large Ponzi scheme according to this Mises Inst article, and its hitting deep deep trouble.
The Social Security program is much like a mass pension scheme akin to the one we have here in Sri Lanka. except for the fact that workers across all industries and sectors contribute to it. As such, it nets massive revenues. But the ratio of workers to non workers is decreasing due to various reasons, and new measures are needed for the system to sustain itself.
This will either involve a reduction in SS benefits or an increase in SS taxation, or a combination of both.
There is little reason why SS schemes shouldn’t succeed IMO. As long as the revenue of the funds outstrips its outflow. But how fair are these on the people they tax?And there they really making as much return on their investements as they could be doing investing the money elsewhere? And is the government taking undue advantage of the existence of such a massive source of idling funds?
Most Ponzi schemes falter due to being unable to meet bulk withdrawals, this factor does not exist in a Social Security system, but it is also subject to the laws of the time value of money and relies on a share of its potential recipients never being able to claim their pension, prompting the writer’s sarcastic suggestion that perhaps the government should rethink its tobbaco policy.