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PostPosted: Tue Oct 11, 2011 7:28 am 
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http://news.yahoo.com/dont-caught-holdi ... 53227.html

Greece can’t solve a problem of too much debt by taking on even more. We will note, however, that by some measures, the United States is even more deeply in hock than Greece.

Greece’s debt-to-GDP ratio is 143%. America’s is officially 97%. But the $14.3 trillion national debt, stacked up against a $14.7 trillion economy, doesn’t tell the whole story. Look at these numbers:

• $14.3 trillion: “official” national debt

• $5 trillion: Amount Uncle Sam is on the hook for Fannie Mae and Freddie Mac

• $62 trillion: Total liabilities and unfunded obligations for Social Security and Medicare

That doesn’t count the black box of bailouts.

We know how much the Federal Reserve doled out in emergency loans: $16.1 trillion between Dec. 1, 2007, and July 21, 2010. We know that because yesterday the Government Accountability Office completed its first-ever audit of the Fed, made possible largely through the persistence of Rep. Ron Paul (R.-Tex.) making that audit, however incomplete, the law.

What we don’t know is how much of that has been paid back. “We have literally injected about $5.3 trillion,” said Dr. Paul earlier this month during his questioning of Fed chief Ben Bernanke, “and I don't think we got very much for it. The national debt went up $5.1 trillion.”

Bernanke did not challenge those figures.

“To get our overall fiscal gap under control,” writes Boston University professor Laurence Kotlikoff in Bloomberg, “the U.S. must cut spending or raise tax revenue by $20 trillion over the next decade, far more than either the president wants or the House Republicans seek.”

Yep: The latest number we see bruited in Washington is $3 trillion. Whatever the final number -- and there will be a last-minute deal; there always is -- it will be substantially less than $20 trillion over 10 years. The can will be kicked as it keeps getting kicked in Greece.

We note here that the total of outstanding credit default swaps on U.S. Treasuries crested $4.8 billion this week. Uncle Sam has now surpassed Greece in this category.

Measured in year-over-year change, America is number one: Net notional CDS outstanding grew 109%. That means there’s double the bets out there on a U.S. default compared with a year ago.

“You may not know this, but the U.S. has actually defaulted a number of times already,” writes Chris Mayer this morning. He cites five instances:

• 1779: The government was unable to redeem the continental currency issued during the Revolutionary War

• 1782: The colonies defaulted on the debt they took out to pay for the war

• 1862: During the Civil War, the Union failed to redeem dollars for gold at terms stated by the debt contracts

• 1934: FDR defaults on the debt issued to finance World War I, refusing to redeem it in gold. The dollar is devalued 40% against gold

• 1979: A bureaucratic snafu results in interest going unpaid on some small bills.

“With the exception of 1979,” Chris says, “which was mostly due to administrative confusion -- the U.S. simply ran out of money each time. The end result was the dollar had to be devalued. Meaning it lost significant purchasing power.

“My guess is that the U.S. will default again. It may not technically be called that, but the only way for the U.S. to meet its financial obligations is to print a lot of money.”

What does that mean in practical terms? In Greece, professor Savas Robolis at Panteion University in Athens reckons that by 2015, the average Greek employee and pensioner’s standard of living will have fallen 40% compared with 2008.

Even now, Americans are turning to their credit cards to pay for groceries and gas. According to First Data Corp., the volume of gasoline purchases put on credit cards jumped 39% over the last 12 months.

You don’t want to be the average American in a default scenario, whenever it arrives. Ray Dalio, the head of Bridgewater Associates, the world’s biggest hedge fund, puts that day in “late 2012 or early 2013.”

The Path to Debt in America by Addison Wiggin originally appeared in the Daily Reckoning.

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PostPosted: Tue Oct 11, 2011 8:08 am 
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I've been reasonably convinced for some time that monetizing the debt is the only real way out for America. It's actually not a bad solution, so long as government policy afterward prevents it from reoccurring. If it's used as a permanent, one-time only solution, well, it may be the most painless way out. If it's used in perpetuity to subsidize bad government spending habits, it will be a disaster.

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PostPosted: Tue Oct 11, 2011 8:52 am 
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Its always been used by every government in history. We monetize our debt all the time via the Fed's planned inflation rate. This isn't a way out. This is a way to destroy all savings in America.

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PostPosted: Tue Oct 11, 2011 11:19 am 
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Federal Bankrupcy will also destroy all savings in America. No amount of fiscal sense will at this point fix your problem. You're under far more water than you can ever hope to swim up from.

I don't mean the current method of constant monetization to offset a growing deficit. I mean a massive monetization to get out of debt all at once, and stop spending so much freakin' money afterward.

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PostPosted: Tue Oct 11, 2011 1:29 pm 
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I've said this once and I'll say it again, the Social Security and Medicare obligations are not "debt" in any sense of the word. Social Security is "unfunded" pretty much 100% because people are living longer. On top of that, Social Security itself already claims that it will not pay out its "obligations" when the trust fund runs out. The government has never had to borrow one dollar to deal with SS and it never will.

Medicare is different as the government actually has to borrow money to deal with that, but there's nothing preventing the government from just dropping it, there's no obligation. Personally I think it's going to be rolled into the inevitable public health care in a decade or two.

People like to criticize me when I "make problems appear unsolvable," what about this? You're basically claiming the US isn't allowed to cut its spending/debt down.


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PostPosted: Tue Oct 11, 2011 2:00 pm 
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Xequecal wrote:
Social Security is "unfunded" pretty much 100% because people are living longer.

Social Security is unfunded because is it, was, and always has been fraud on a massive scale. It is the world's largest Ponzi scheme. It was never funded. No real investments were ever made. Indeed, no money has ever gone into the social security system. It was used from the very beginning to build tanks and bombs and bridges to nowhere, to hand out welfare checks and billion dollar bailouts, etc. It isn't failing because people are living longer. It has always been failing. It just hasn't always been blatantly obvious that the whole system was a fraud because, like all Ponzi schemes, as long as the size of the sucker pool keeps getting bigger, you can hide the truth. Now that population growth is approaching zero, the Ponzi scheme is inevitably collapsing.

Xequecal wrote:
People like to criticize me when I "make problems appear unsolvable," what about this? You're basically claiming the US isn't allowed to cut its spending/debt down.

Not at all. If you want to say that we're all **** and the problem is unsolvable, I'll be the first to concur. More precisely, there are no longer any practical, ethical solutions to the problem. They've **** us over so severely that there is no real solution to the problem. They only way through this is going to necessarily involve defrauding a whole lot of people out of a whole lot of money and it's going to hurt like hell. It doesn't much matter whether they do this by reneging on social security liabilities or by cranking up the printing press federal reserve, paying out out on the liabilities with worthless currency. We're **** either way. Sandpaper condom. No lube. Bus fare if you smile.

What really pisses people off is when (general) you act like there's nothing really wrong with defaulting on its promises. No, that's not okay. This is not okay. This is what happens when you stop demanding that your government behaves ethically and:

1) Keeps the promises it makes
2) Only makes the promises that it can keep

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PostPosted: Tue Oct 11, 2011 2:58 pm 
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I feel like a standing ovation is in order. I'm going to get some funny looks from my colleagues in the office.

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PostPosted: Tue Oct 11, 2011 3:48 pm 
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Kaffis Mark V wrote:
I feel like a standing ovation is in order. I'm going to get some funny looks from my colleagues in the office.


The funny looks aren't from your standing ovation. But I will concur with your props to Stathol's post.


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PostPosted: Tue Oct 11, 2011 5:37 pm 
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Stathol wrote:
Social Security is unfunded because is it, was, and always has been fraud on a massive scale. It is the world's largest Ponzi scheme. It was never funded. No real investments were ever made. Indeed, no money has ever gone into the social security system. It was used from the very beginning to build tanks and bombs and bridges to nowhere, to hand out welfare checks and billion dollar bailouts, etc. It isn't failing because people are living longer. It has always been failing. It just hasn't always been blatantly obvious that the whole system was a fraud because, like all Ponzi schemes, as long as the size of the sucker pool keeps getting bigger, you can hide the truth. Now that population growth is approaching zero, the Ponzi scheme is inevitably collapsing.


This is absurd. A Ponzi scheme first of all does not invest the money in the first place, and second it will hide the fact that money is not being invested and that eventually the promised returns can't be paid. Social Security does neither. How does SS commit fraud? It takes the taxes you pay in and invests them in US government bonds, then when you turn 65 you get what you invested plus interest back in monthly installments. The only problem is they've underestimated how long people will live and thus are paying out too much every month. When the trust fund runs out, well then they'll just pay out less. You're still not getting screwed out of any money, though. You get back what you paid in.

If you're referring to the fact that the "trust fund" actually consists of all Treasury securities, well what do you expect? If Social Security were private there would be no "trust fund" either. It would also all be invested in various things. It is the height of dishonesty to claim that Treasuries are "not a real investment." You personally may not think Treasuries are worth anything, but quite frankly the market disagrees with you, considering the government can sell them for under 2% these days. Seriously, if the government is going to borrow money, why exactly is it a horrible ethical violation for them to borrow from Social Security? Under the logic you are using, the retirement plans that invested in AAA-rated mortgage securities in 2005 were also "not real investments."

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Not at all. If you want to say that we're all **** and the problem is unsolvable, I'll be the first to concur. More precisely, there are no longer any practical, ethical solutions to the problem. They've **** us over so severely that there is no real solution to the problem. They only way through this is going to necessarily involve defrauding a whole lot of people out of a whole lot of money and it's going to hurt like hell. It doesn't much matter whether they do this by reneging on social security liabilities or by cranking up the printing press federal reserve, paying out out on the liabilities with worthless currency. We're **** either way. Sandpaper condom. No lube. Bus fare if you smile.


There is no fraud, at least not with SS. You get out what you paid in plus interest. If you live long enough that this amount does not cover the X amount per month that people get now, then you get less. SS is a government welfare program, it's not a "liability." You have no right to collect SS money. They could abolish it tomorrow and not pay anything. SS is only "screwing" you in the sense that the people collecting SS right *now* are getting too much and depleting the trust fund.

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What really pisses people off is when (general) you act like there's nothing really wrong with defaulting on its promises. No, that's not okay. This is not okay. This is what happens when you stop demanding that your government behaves ethically and:

1) Keeps the promises it makes
2) Only makes the promises that it can keep


The only "promise" that the government can be considered to be defaulting on with regards to SS is the "promise" that you will be paid X amount per month adjusted for inflation until you die. I have my doubts that the SSA ever actually made such a promise in the first place, but even if they did, SS is not screwing anyone out of their money.


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PostPosted: Tue Oct 11, 2011 6:12 pm 
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You get out what you paid in plus interest.


No you don't. Where are you getting this from?

SS payouts have very little to do with how much you pay in. Most importantly, if you die, your estate is not entitled to the remaining money.

SS is not a Ponzi scheme; that's an exaggeration, but it certainly does lead people to believe they've been promised a lot more than they're actually getting.

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PostPosted: Tue Oct 11, 2011 6:24 pm 
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Xeq you should get a statement every year from social security spelling out exactly what you will get, and when you are eligible to receive it. I've gotten these statements for a long time, and I've paid a lot of money into this BS system. To suddenly say "oops sorry we're closed" s not going to receive a peaceful response from people.

And that's why it really IS a ponzi scheme. I believe the ratio is down to 3 taxpayers fund each recipient. How is that's different from what Madoff did? He used a pyramid scheme, took a cut himself, and as long as he had new money flowing in, all was well. Social security is no different except we are forced into the scheme and hope it doesn't collapse before we get "ours".

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PostPosted: Tue Oct 11, 2011 6:29 pm 
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When I said you get out what you pay in, I was also going for the general "you." While some wealth redistribution does occur with the SS payouts the fact that there is a both a cap on the payroll tax you pay in and a restriction that you don't get money if you don't work rather limits that.

Also, Madoff didn't invest the money, SS actually does invest it. SS doesn't "take a cut for itself," either. All the money collected was invested in Treasuries as they promised and collected interest as promised. Their only mistake was to overestimate the monthly payouts to distribute this money based on wrong assumptions of lifespan.


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PostPosted: Tue Oct 11, 2011 6:34 pm 
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Xequecal wrote:
It takes the taxes you pay in and invests them in US government bonds, then when you turn 65 you get what you invested plus interest back in monthly installments.


Really, what are the investments? Maturation dates? Interest rate? What is the total amount invested, or held?


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There is no fraud, at least not with SS. You get out what you paid in plus interest. If you live long enough that this amount does not cover the X amount per month that people get now, then you get less.

What is the interest rate? Who pays for the people who have already spent what they've put in?


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SS is a government welfare program, it's not a "liability." You have no right to collect SS money. They could abolish it tomorrow and not pay anything. SS is only "screwing" you in the sense that the people collecting SS right *now* are getting too much and depleting the trust fund.

What "trust fund"? If there were a "trust fund", you'd be able to answer the questions I initially posed. There is no "trust fund" any more. The money people are getting now is being paid by people putting money in... now.

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The only "promise" that the government can be considered to be defaulting on with regards to SS is the "promise" that you will be paid X amount per month adjusted for inflation until you die. I have my doubts that the SSA ever actually made such a promise in the first place, but even if they did, SS is not screwing anyone out of their money.

The "promises" made to the citizens of the United States under TITLE 42; CHAPTER 7; SUBCHAPTER II; § 401 of the USC have been and are repeatedly violated.

Diamondeye wrote:
SS is not a Ponzi scheme; that's an exaggeration, but it certainly does lead people to believe they've been promised a lot more than they're actually getting.


SS is a classic Ponzi Scheme.

SEC.gov wrote:
What is a Ponzi scheme?

A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.

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PostPosted: Tue Oct 11, 2011 6:38 pm 
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Vindicarre wrote:
Diamondeye wrote:
SS is not a Ponzi scheme; that's an exaggeration, but it certainly does lead people to believe they've been promised a lot more than they're actually getting.


SS is a classic Ponzi Scheme.

SEC.gov wrote:
What is a Ponzi scheme?

A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.


That's the entirity of the definition?

SS is A) not fraudulent and B) actually does pay returns. The consequences of the way it does so may eventually come home to roost but it is not a Ponzi Scheme. Period.

Why people can't just discuss the problems without making it all about slapping some label on it that implies someone was being intentionally dishonest to enrich themselves rather than it just being a matter of poor policy is beyond me.

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PostPosted: Tue Oct 11, 2011 6:46 pm 
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Diamondeye wrote:
Vindicarre wrote:
Diamondeye wrote:
SS is not a Ponzi scheme; that's an exaggeration, but it certainly does lead people to believe they've been promised a lot more than they're actually getting.


SS is a classic Ponzi Scheme.

SEC.gov wrote:
What is a Ponzi scheme?

A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors.


That's the entirity of the definition?


Yes, the remainder of the paragraph uses terms like "many" and "often".
Quote:
Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity

The only absolute is what I quoted above.

Diamondeye wrote:
SS is A) not fraudulent

The fact that it's paying old money off with new money makes it a Ponzi Scheme, which, to quote the SEC, "is an investment fraud", not to mention the violations of TITLE 42; CHAPTER 7; SUBCHAPTER II; § 401 of the USC.

Diamondeye wrote:
B) actually does pay returns.

So do other Ponzi Schemes, and just like SS, those "returns" are actually just new money.

Diamondeye wrote:
The consequences of the way it does so may eventually come home to roost...

Just like in any Ponzi Scheme.

Diamondeye wrote:
... but it is not a Ponzi Scheme. Period.

Fiat declarations are worthless. Period.

Diamondeye wrote:
Why people can't just discuss the problems without making it all about slapping some label on it that implies someone was being intentionally dishonest to enrich themselves rather than it just being a matter of poor policy is beyond me.

Just calling it like I see it.

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PostPosted: Tue Oct 11, 2011 7:04 pm 
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Vindicarre wrote:
What "trust fund"? If there were a "trust fund", you'd be able to answer the questions I initially posed. There is no "trust fund" any more. The money people are getting now is being paid by people putting money in... now.


Yes there is. The fact that it's entirely Treasury securities doesn't mean that it doesn't exist. Those securities have value. The interest rate is whatever the interest rate on all those individual Treasury securities are. Under your logic, ANY investment operation that pays out more than it takes in, for whatever reason, automatically qualifies as a Ponzi scheme.


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So, assuming we take your understanding of the system as valid -- who's paying the interest? If the SS funds are "invested" in T-bills, then really, taxpayers are paying the interest to fund the Treasury, no?

That's even worse.

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X:
Please provide some evidence of this "trust fund". Please at least make an effort to show what treasuries are in the "trust fund", and what their value is. Please stop making fiat declarations as if they are absolute proof.
Please explain how my logic leads to you stating, "ANY investment operation that pays out more than it takes in, for whatever reason, automatically qualifies as a Ponzi scheme." I've been very clear as to what defines a Ponzi Scheme - here's a hint: I posted the definition above.
No, under my logic a Ponzi Scheme is a Ponzi Scheme.

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PostPosted: Tue Oct 11, 2011 7:15 pm 
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Vindicarre wrote:
Yes, the remainder of the paragraph uses terms like "many" and "often".
Quote:
Ponzi scheme organizers often solicit new investors by promising to invest funds in opportunities claimed to generate high returns with little or no risk. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity

The only absolute is what I quoted above.

Diamondeye wrote:
SS is A) not fraudulent

The fact that it's paying old money off with new money makes it a Ponzi Scheme, which, to quote the SEC, "is an investment fraud", not to mention the violations of TITLE 42; CHAPTER 7; SUBCHAPTER II; § 401 of the USC.


Then any and all investments are Ponzi schemes. Money to pay the investor has to come from somewhere.

Quote:
Diamondeye wrote:
B) actually does pay returns.

So do other Ponzi Schemes, and just like SS, those "returns" are actually just new money.


Again, if it were simply a question of "new money", all investment would be a Ponzi scheme. A Ponzi scheme implies that an ever-increasing supply of new money is needed to fuel an ever-increasing supply of money investors because no other meaningful source of income to the scheme exists. Aside from the fact that the interest on Treasuries precludes this, the important difference is that the ratio of investors to those receiving payments is entirely a product of national demographics and lifespan changes - not fraudulent behavior on anyone's part.

Diamondeye wrote:
Quote:
The consequences of the way it does so may eventually come home to roost...

Just like in any Ponzi Scheme.
[/quote]

So? Any poorly-thought-out polciy is automatically a Ponzi scheme now? It's interesting to see you make no distiction between ineptitude and malice.

Diamondeye wrote:
Quote:
... but it is not a Ponzi Scheme. Period.

Fiat declarations are worthless. Period.


Since I'm not making a fiat declaration at all, that's a relatively pointless reply. The entire assertion that it's a Ponzi scheme is a fiat declaration and based entirely on ignoring the difference between a scheme set up to be a pyramid on purpose and one that ends up appearing similar only because of population demographics.

Quote:
Diamondeye wrote:
Why people can't just discuss the problems without making it all about slapping some label on it that implies someone was being intentionally dishonest to enrich themselves rather than it just being a matter of poor policy is beyond me.

Just calling it like I see it.


Well, I'm calling it like I see it too.

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Kaffis Mark V wrote:
So, assuming we take your understanding of the system as valid -- who's paying the interest? If the SS funds are "invested" in T-bills, then really, taxpayers are paying the interest to fund the Treasury, no?

That's even worse.


Why is that "even worse?" If the government is going to borrow money, why is it such a huge ethical violation for them to borrow money from Social Security? The taxpayers have to pay it back regardless of whom they borrow from.


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Vindicarre wrote:
X:
Please provide some evidence of this "trust fund". Please at least make an effort to show what treasuries are in the "trust fund", and what their value is. Please stop making fiat declarations as if they are absolute proof.
Please explain how my logic leads to you stating, "ANY investment operation that pays out more than it takes in, for whatever reason, automatically qualifies as a Ponzi scheme." I've been very clear as to what defines a Ponzi Scheme - here's a hint: I posted the definition above.
No, under my logic a Ponzi Scheme is a Ponzi Scheme.


If an investment operation is paying out more than they take in, then they must be paying off old money with new money. Where else is the money going to come from?

As for evidence of the trust fund, this qualifies. Note that it's listed as "assets" and not claiming they have actual dollars available.


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PostPosted: Tue Oct 11, 2011 8:40 pm 
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DE and X:

I think I see what is missing from the equation. I've used terms you're not familiar with regarding an arena, and the regulations governing it, you aren't familiar with. Let me explain.

1) New money is new investment money. It's not money made on the investment.
2) Old money is the money invested by prior investors.
3) Strict accounting practices are required (by the SEC) to keep investors' money compartmentalized. If I paid "old" investors with money put in by "new" investors (or any investor other than the originator), I'd at a minimum, be stripped of my licenses by the SEC, fined and possibly jailed.
4) SS does not pay according to what is "invested" by the investor, the retiree, they pay with new money paid by taxpayers.

Here is an example: If you invest in a mutual fund, your money doesn't just add to a big pile of every investors' money, your money goes into an strictly defined account. If you remove funds from the mutual fund, someone doesn't just reach into the big pile of money and take some out, that money must be removed from the account that has been set up as yours, and no one else's.
Diamondeye wrote:
Then any and all investments are Ponzi schemes. Money to pay the investor has to come from somewhere.

No, see above.

Diamondeye wrote:
Again, if it were simply a question of "new money", all investment would be a Ponzi scheme. A Ponzi scheme implies that an ever-increasing supply of new money is needed to fuel an ever-increasing supply of money investors because no other meaningful source of income to the scheme exists. Aside from the fact that the interest on Treasuries precludes this, the important difference is that the ratio of investors to those receiving payments is entirely a product of national demographics and lifespan changes - not fraudulent behavior on anyone's part.

See above, in addition, the rules regarding "fraudulent investment" have noting to do with how much, or how little money is actually invested. If you're paying off investors with new investors money, that's fraud. If you're paying off retirees with taxpayer money...

Diamondeye wrote:
So? Any poorly-thought-out polciy is automatically a Ponzi scheme now? It's interesting to see you make no distiction between ineptitude and malice.

Nope, just an investment scheme that pays off old investors with new investors' money, as I've stated repeatedly, is a Ponzi Scheme.

Diamondeye wrote:
Since I'm not making a fiat declaration at all, that's a relatively pointless reply. The entire assertion that it's a Ponzi scheme is a fiat declaration and based entirely on ignoring the difference between a scheme set up to be a pyramid on purpose and one that ends up appearing similar only because of population demographics.

Stating what something is, or isn't, without evidence is a fiat declaration. The entire assertion that it is a Ponzi Scheme is based on SS fitting the definition of a Ponzi Scheme, to a "T".

Xequecal wrote:
Vindicarre wrote:
X:
Please provide some evidence of this "trust fund". Please at least make an effort to show what treasuries are in the "trust fund", and what their value is. Please stop making fiat declarations as if they are absolute proof.
Please explain how my logic leads to you stating, "ANY investment operation that pays out more than it takes in, for whatever reason, automatically qualifies as a Ponzi scheme." I've been very clear as to what defines a Ponzi Scheme - here's a hint: I posted the definition above.
No, under my logic a Ponzi Scheme is a Ponzi Scheme.


If an investment operation is paying out more than they take in, then they must be paying off old money with new money. Where else is the money going to come from?


See above. It comes from investment income, not new investor income.

Xequecal wrote:
As for evidence of the trust fund, this qualifies. Note that it's listed as "assets" and not claiming they have actual dollars available.

No, that doesn't qualify, that's just more evidence that it's a Ponzi Scheme, paying off retirees, not with their "investment", but with new taxpayer money.

Examples:
Quote:
The $49 billion deficit last year (excluding interest income) and $46 billion projected deficit in 2011 are in large part due to the weakened economy and to downward income adjustments that correct for excess payroll tax revenue credited to the trust funds in earlier years.


Quote:
After 2014, cash deficits are expected to grow rapidly as the number of beneficiaries continues to grow at a substantially faster rate than the number of covered workers.


Quote:
After 2022, trust fund assets will be redeemed in amounts that exceed interest earnings until trust fund reserves are exhausted in 2036, one year earlier than was projected last year. Thereafter, tax income would be sufficient to pay only about three-quarters of scheduled benefits through 2085.

Those statements are clear evidence that the "trust fund" doesn't exist. Unless you call a balance of -$49,000,000,000 a "trust fund". Further, it is clear that SS uses taxpayer money (new investors) to pay retirees' (old investors') disbursals.

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PostPosted: Tue Oct 11, 2011 9:32 pm 
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People who retired the first year that SS was instituted did so with full benefits, having paid essentially nothing into the system. The money paid in by new investors was used to pay out benefits by "old" investors, and the money used to pay out their benefits was paid in by the people who came after them, etc. There's no exaggeration in calling it a Ponzi scheme. That's precisely what it is and always has been.

As for the notion that SS revenues are invested: I don't know whether to laugh or to cry. It hardly qualifies as an "investment" for the government to immediately turn around and spend the money. That's all that buying a T-Bill really means -- that the government immediately raids every dollar put into SS. Do I need to remind you people that the federal government has never generated a profit in all of the time that SS has been around? Whatever benefits it pays out can come from only one of two sources: money forcibly extracted by taxation from the very people who are supposed to be "investors" in SS, or money borrowed from new investors buying treasury bills. Again, this is the definition of a Ponzi scheme.

Diamondeye wrote:
Why people can't just discuss the problems without making it all about slapping some label on it that implies someone was being intentionally dishonest to enrich themselves rather than it just being a matter of poor policy is beyond me.

Simply put, I believe that social security is an intentionally dishonest system designed to enrich the politicians in Washington and the lobbyists who own them. I am completely serious. Our federal government is not merely inept/incompetent; it is completely corrupt.

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PostPosted: Tue Oct 11, 2011 9:40 pm 
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A Ponzi scheme doesn't tell you up front how it is structured though, they have the common decency to give you a false sense of security.

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PostPosted: Tue Oct 11, 2011 10:39 pm 
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Stathol wrote:
As for the notion that SS revenues are invested: I don't know whether to laugh or to cry. It hardly qualifies as an "investment" for the government to immediately turn around and spend the money. That's all that buying a T-Bill really means -- that the government immediately raids every dollar put into SS. Do I need to remind you people that the federal government has never generated a profit in all of the time that SS has been around? Whatever benefits it pays out can come from only one of two sources: money forcibly extracted by taxation from the very people who are supposed to be "investors" in SS, or money borrowed from new investors buying treasury bills. Again, this is the definition of a Ponzi scheme.


This is basically true, but it still doesn't make SS an investment any less than any other holder of T-bills. When an American citizen buys Treasury securities, he will eventually be repaid with his own tax money. That still doesn't mean it's not an investment. I fail to see how SS itself becomes morally problematic because the government borrows against it, if the government is going to borrow money I see no reason why they can't borrow from SS. SS is not the problem here, the government borrowing is. It wouldn't be somehow better if they borrowed from something else instead.


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