Bernard Madoff, who stands accused of bilking sophisticated investors out of $50 billion, is reported to have told two of his executives that his business was "a giant Ponzi scheme."
Perpetrators of Ponzi schemes (//tinyurl.com/fyez3) lead clients to believe their money is invested and that their profits are the fruits of the money manager's savvy. But in fact, the "profits" are merely revenue provided by the next group of dupes. Eventually, when no more new dupes can be found, the scheme crashes.
Political leaders say Madoff's alleged crimes show what's wrong with the country. President-elect Obama said the "massive fraud that was made possible in part because the regulators who were assigned to oversee Wall Street dropped the ball" (http://tinyurl.com/49tw4h). Senator Majority Leader Harry Reid added, "[R]egulators have been asleep at the wheel" (http://tinyurl.com/78973e).
Politicians go on and on about Wall Street "greed" and "irresponsibility."
But Madoff's scam was small compared to Ponzi schemes the government itself runs: Social Security and Medicare.
By now we all know the government does not invest our payroll taxes and pay our benefits with the profits our money earns. In the beginning, writes economic historian Charlotte Twight in "Dependent on D.C." (http://tinyurl.com/8cm5op), Americans were told Social Security was an insurance program. But the government was unable to sustain that bald lie.
In reality, our money, rather than being invested and kept in an actual "trust fund," is immediately given to current retirees in Social Security benefits or to their healthcare providers in Medicare benefits. The government's promise to pay for your retirement pension and medical care is just a promise. And a lie.
In theory, the promise could be kept by raising taxes on future workers, but there won't be enough of them. Changing demographics are destroying the programs. A large working class can support a relatively small retired class, especially when life expectancy is 61 years and benefits don't begin until 65. That's how things were in the early years of Social Security.
But when life expectancy grows to 80 and a large generational group — the baby boomers — retires expecting to be supported by a far smaller working class, that's trouble.
Ten years after Social Security passed in 1935, there were almost 42 workers for each retiree. Five years later, the ratio slipped to about 17 to 1. Now it's about 3.4 to 1. Thirty years from now, the ratio is projected to be 2 to 1 (http://tinyurl.com/7zpktt).
Think of the burden on those two to three workers who'll have to support one retiree for 15 to 20 years.
The money just won't be there. In the next 75 years Social Security (http://tinyurl.com/9z24q5) and Medicare (http://tinyurl.com/72bm5h) have a combined unfunded liability of $40.3 trillion. Social Security's problems get most of the attention, but Medicare will be the killer. At present it accounts for all but $4.3 trillion of the unfunded liability, and as we aging boomers keep demanding new, improved and more expensive medical care, the deficit will only get worse
Soon government will have to say what Madoff said: Sorry! The money's gone.
The government has no legal obligation to make good on its promises. Twice the U.S. Supreme Court ruled that Americans have no contractual rights regarding Social Security benefits. In 1960 (Flemming v. Nestor), the court said, "To engraft upon the Social Security system a concept of accrued property rights would deprive it of the flexibility and boldness in adjustment to ever changing conditions which it demands" (http://tinyurl.com/8nu46p).
Get that? You have no "accrued property rights" under Social Security. It's a welfare program that exists at the politicians' pleasure.
The government will either stiff us outright or, more likely, cowardly politicians will pretend to honor their promises by printing so much extra money to write the checks that the dollar will be worth pennies.
If Bernie Madoff tried to foist Social Security and Medicare on us, he'd be arrested, prosecuted and thrown in the hoosegow.
There's one thing I can say on behalf of Madoff: He never forced anyone to participate in his scheme. That's more than I can say for the government. Through taxation and inflation, it forces us to pay for all its schemes.
John Stossel is co-anchor of ABC News' "20/20" and the author of "Myth, Lies, and Downright Stupidity." To find out more about John Stossel and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate Web page at www.creators.com.
COPYRIGHT 2008 BY JFS PRODUCTIONS, INC.
DISTRIBUTED BY CREATORS SYNDICATE, INC.
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MY DEFINITION OF THE 'INAUGURATION'! - A HUGE HOLLYWOOD PARTY, PAID FOR BY TAXPAYERS, MIXING THE SLUGS WITH THE OTHER SLUGS!'
Come January 20th, there'll be no accounting for Taxpayers money! Bernard Madoff, Freddie, Fannie, AIG, the Big 3, and the rest of the criminal 'SLUG' politicians, should be hung in the middle of the streets so Taxpayers they've ripped off can throw darts at them - and this is good for them!
If Politicians want to stimulate our economy and stop ‘Discriminating against hard-working Taxpayers', here's the best and only list that can and should be used!'Fair Tax-to include property tax', Public Schools, Welfare and Social Programs, period! This way, hard-working Taxpayers can spend their own money and educate their children in a good, safe, Christian School! After all, these children are our future! “Heartbeat of America” is a thing of the past! Don't tell me it's cheaper to send goods back and forth, especially steel and autos, across the water! Common sense and plain economics will tell you this is just another untruth smoothed over by the politicians' words of “I'll stop Nafta and Cafta and your jobs from going overseas!” This Stimulus Package is another form of untruth as something's going on! Printing presses going strong at the mints. Guess where this money is going? The folks getting a rebate check won't be ‘stimulating America's economy' only helping to ‘stimulate' foreign countries, as for instance; a] Wal-Mart - Money goes to support China. b] Gas - Money goes to Foreign countries that America already owes several trillion dollars. c] Computers - Money goes to India and when connected online, Taxpayers thinking their service is local - wrong - you guessed it “outsourcing” to India. d] Fruits and Vegetables - Money goes to Mexico, Honduras and Guatemala. e] Automobiles - Money goes to Japan. f] Drugs - Taxpayers no longer can afford good medicines and are forced to purchase Generic (made with who knows what) and, you guessed it, this Money goes to India and China. Watching the news about the trillions of dollars America owes Bank of Kuwait, and several more trillions due other foreign countries, makes Taxpayers wonder “when” and “why” the government decided to sell America out? Are politicians so ignorant they don't understand ‘everything is a trickle down effect?' It looks as though the only way to keep money in America is to buy beer, wine and Kentucky whiskey. Could this be why politicians want to build more jails and rehabilitation centers? It's time to bring back ‘honesty', ‘common sense',‘respect', ‘morals', and ‘principles'!
Comment: #1
Posted by: Shirley deLong
Sun Jan 11, 2009 4:27 PM
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Comments regarding "Madoof is a Piker" article as read in the Daily Mining Gazette, Houghton, MI 49931 on 1-10-09.
I totally agree with you about the US Social Security and Medicare government programs being examples of federal Ponzi schemes. For many years, I have come to good common sense to realize that our Social Security federal program is probably the most horrific example of "white collar crime" committed at the expense of the US taxpayer by our federal government under forceful threat of criminal violation against US companies and taxparers for non-compliance for paying into a social welfare system that is failing and will be paying out more than it is taking in by around 2018 approximately if it is not reformed. I am in favor of reforming our current Social Security system and our Medicare and Medicaid systems now with common sense planning and regulated oversight to implement and monitor the everyday operations of both systems rather than waiting 5 - 15 years down the road when it too will need a bailout similar to our current financial sector ( Wall Street and Main Street as well which up to now as not had any oversight or common sense planning for how the bailout monies are to be invested according to objective and regulated criteria). I am 57 years old and I do not want my children or grandchildren going bankrupt or being economically stressed to finance the current flawed contribution system of these two social welfare programs that will be soon experiencing the " law of diminishing returns" by having their budgets depleted with outgoing payables ( for our huge baby boomer generationi) being greater than incoming receivables by a declining working population ratio as compared to those receiving payments within the next 10 years of so.
If the current Social Security and Medicare system cannot be reformed ( since I envision the current congress having gridlock and no threatening interest to do any reform for either program within the next 2-8 years), I propose that the American people start a "Reform Revolution" and organize a way to make Social Security and Medicare a guaranteed accrued property legal right under Federal Legislative Law or as an amendment to our US Constitution. Accomplishing this for the American taxpayer paying into both systems would in my opinion hasten the needed reform and put positive pressure on Congress to "get it right" and restructure the program to allow for it to be a guaranteed insurance program like it was originally defined and enacted back in the 1940's.
I am asking you, Mr John Stossel if you can assist with this cause in order to "carry the torch" and be an active advocate to make our current Social Security and Medicare programs a federal guaranteed right for all paying taxpayers that pay into both systems with their hard working "blood, sweat and tears" contributions into both programs throughout their productive working years. This is 2009 and it is unfathomable that our federal government can fearfully force our employers and their working employees to continue to contribute to both programs that have been schemed in their definition and operations as the years have gone by since the 1940's ( the last legal reform was legislated around 1957 as I recall for the disability act qualifications for Social Security recipients). It is even worse to consider that both programs could be either further minimized or eliminated at the whim of unregulated powers of Congress at their choosing and not that of the American people. Remember, Congress is not on the same program as the average American when it comes to Social Security and Medicare. US congress representatives and Senators receive and maintain their life long pension benefits and health care for ever until the day they die, so they really have no vested interest in reforming or improving both Social Security and Medicare since it does not directly affect them. Put both US Congress representative and Senators on the same Social Security and Medicare program as you and I and every other hard working American and then you will see some constructive and progressive reform for both programs within a quick time frame no doubt.
Her is my question to you, Mr. John Stossel - what can the American people do to empower themselves to make Social Security and Medicare a federal guaranteed right either under our federal Constitution or as an amendment to our Bill of Rights or as a non-revokeable legislative law that can guarantee that both programs are contractual accrued property rights between all US taxpayers paying into both programs and the US federal government? If you have a plan of action, sign me up as your first "Reform Revolution Enlistee" since I would join this army to fight for this right for all of the hard working employers and employees in American that continually are making their personal "blood, sweat and tears" contributions as an investment for a portion of their secured retirement working benefits and retirement health care benefits with the non-revokeable guarantee of knowing that the US government through blatant acts of fear, deception and scheming would never be able to take these hard earned and rightfully legal benefits away from any US taxpayer that has paid their fair share into both programs during their committed working lives.
Please keep me informed of your ideas and if through some miracle with the guidance of a higher power other than ourselves that some sort of "Reform Revolution" can carry the torch and undying spirit to make this happen and guarantee that both programs are legal accrued property rights for all taxpayers paying into both programs and that common sense reform can occur before both programs either face bankruptcy or follow suit as of late and go down the road of no return for another panic bailout decision by Congress due to inept preparation, planning, incompetency or down right white collar scheming and injustices by some of our boneheaded elected officials.
My mother who has since passed along to "the highest of heavenly grounds" instilled in me to "waste my time wisely" and in sending you my thoughts today, I know that I am truly doing this and also knowing that carrying the torch for this type of reform and taxpayer guarantee is indeed a much higher worthwhile cause for anyone that would spend their short lived days on earth "wasting their time wisely" on other matters and trivial concerns of everyday life.
Thank you for your valuable time, open mindedness and consideration for some of my ideas for implementation and action and may you continue to crusade for this important and rightful cause.
With respect and best regards,
Jack Eberhard
302 Vivian Street
Hancock, MI 49930
Phone: (work) 906-482-1250
(cell) 906-370-1252
Comment: #2
Posted by: Jack Eberhard
Sun Jan 11, 2009 7:53 PM
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Hi John Stossel,
Taxpayers need your assistance in putting into law the "cutting of
politician salaries, freebies,retirements to $12,000.00 year" to prevent
total Bankruptcy in America! This is a small price to pay considering
Americans have been sold out to foreign countries and there's not enough
money to pay the interest on this debt! Guess what, doesn't take a rocket
scientist to figure out what's going to happen to America!
After all, you have to start somewhere and this is the best way!
Cutting Salaries, retirements, freebies "NOW - 2009"- IT'LL STILL BE 2025
(to say the least) before America will get it's affairs in order. People
like Barney Frank, Pelosi, Waters, Rangel, Kennedys, Clintons, Reid,
Paulson, Freedie, Fannie, AIG, Big 3 (just to name a few) have caused
serious disasters to happen in America that should have never happened, but
due to their GREED, America's failing and WON'T get up until the salaries
and tax & spenders are put in their place! If politicians don't want to take
a cut in pay, take their keys, padlock their offices (everywhere), then
'sell them a one-way ticket across the ocean with just the clothes on their
back" as everything of material value INCLUDING bank accounts, worldwide,
belong to Taxpayers and must be returned to Taxpayers!
America must be run like a business. It doesn't take all these fat cats,
running wild, passing bad laws, creating a debt that can't be repaid at the
rate they're going now, to run EVEN THE UNITED STATES OF AMERICA!
As for the 'INAUGURATIONS' (STATE AND FEDERAL), ISN'T IT ABOUT TIME TO STOP
THE HOLLYWOOD PARTIES, AS THIS IS MORE OF THE SAME OLD PROBLEMS BEING
CREATED BY THE TAX AND SPEND!
IF YOU CARE ABOUT OUR CHILDREN AND GRANDCHILDREN, YOU'LL ASSIST IN GETTING
THIS 'SMALL JOB' DONE FOR THEM, AS IT'S THE RIGHT THING TO DO!
KEEP IN MIND WHAT THOMAS JEFFERSON SAID ---I QUOTE "A GOVERNMENT BIG ENOUGH
TO GIVE YOU EVERYTHING YOU WANT, IS BIG ENOUGH TO TAKE AWAY EVERYTHING YOU
HAVE!!!"
Looking forward to hearing from you.
Comment: #3
Posted by: Shirley deLong
Tue Jan 13, 2009 11:40 AM
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