Social Security Is a Classic Ponzi Scheme

Mitt Romney thinks he really got ol' Rick Perry, the three-term Texas governor who could be a shoo-in as the Republican nominee to unseat President Barack Obama next year. Romney, the former Massachusetts governor who crafted a horrible government health care program, indulged the predictable tactic of trying to scare senior citizens by suggesting that Perry would abolish Social Security and leave them to eat cat food. Romney has sharply criticized Perry for calling Social Security a Ponzi scheme that cannot be sustained.

Perry is 100 percent correct. Social Security is the essence of a Ponzi scheme — possibly history's most exploitative Ponzi scheme — and it cannot be sustained.

Some may remember the Boulder, Colo.-based Greater Ministries International Ponzi scheme of the 1990s. It was a half-billion-dollar fraud that financially ruined thousands. Investors paid into the fund on a promise that more money would be paid out to them. Checks were sent out to early investors for years until Colorado banking regulators shut down Best Bank in Boulder in 1998, where the Ponzi funds resided in uninsured accounts. Instead of checks, investors received certificates supposedly backed by the scheme's investments. But there were no investments. It was a redistribution game.

Here is Wikipedia's definition of a Ponzi scheme: "A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors."

This is exactly how Social Security works, except that the victim investors are forced to invest.

In most Ponzi schemes, the victims chose to invest after charlatans paid upon their greed.

Today, millions are forced to pay Social Security. The fund has been fleeced by those who control it: Washington politicians, who have used the funds to finance decades of reckless spending in order to buy votes. Congress has "repaid" the fund with trust fund promises that seem a lot like the Greater Ministries investment certificates.

Today's young workers are "subsequent investors" who are rewarding previous investors. Today's workers have been told that future generations of investors will pay them back. Problem is, economists and demographers all see the pyramid failing — as Ponzi schemes always do. The funds have been raided and a massive generation of baby boomers, who are retiring in droves, are owed far more than the fund can afford. They had so few children that we haven't enough new victims of the scheme to adequately fund it.

That's what Perry was talking about. He was keeping it real. He was speaking honestly to Americans and urging us to discuss this dilemma. We should thank him. It is only fair that today's young workers understand, in no uncertain terms, that they are victims of a Ponzi scheme. They will fund the retirements of an older generation, and they will probably never get repaid.

We hope Perry's honest approach catches on. Our country is on the brink of even more financial chaos. The days of smiling-Jack politicians, who deceive us with feel-good sound bites, need to end.

REPRINTED FROM THE COLORADO SPRINGS GAZETTE

DISTRIBUTED BY CREATORS.COM