Disgraced investment guru Bernard Madoff recently defrauded thousands upon thousands of people and companies out of a reported $50 billion dollars thanks to one of the oldest cons in the book:  the Ponzi scheme.  Among those snookered were Hollywood heavyweights Steven Spielberg and “Forrest Gump” screenwriter Eric Roth, huge banks like BNP Paribas and The Royal Bank of Scotland, and a large number of Jewish charitable organizations.  But what is a Ponzi scheme?  Here’s the story on Charles Ponzi and his money-making schemes.

One of the reasons why I wish I had the ability to opt out of paying into Social Security is because in the US, Social Security is a giant Ponzi scheme.  Those who pay in first get paid by those who pay in second, and so on.  You may get back what you put in before you die, or you may not.  Ida May Fuller, the first person to receive a Social Security check, got $22,888.92 in benefits, but paid in only $22.75!

To sustain the escalating level of benefits given out takes up a significant portion of the federal government’s budget (SSI and related expenses compose the largest chunk of the federal budget), you need to take more from the next generation or have more people paying in.  Given the upcoming Baby Boom baby bust, as Boomers retire in droves, the system is unsustainable.

Stop the pyramid, I want to get off.  Given that there might be no money in the coffers by the time I get old, I’d rather take what I’m paying in now and put it into a CD, so that way I’m guaranteed SOMETHING for when I’m old and gray.  Assuming I don’t have to blow my savings on a casket before retiring.

Tags: Bernard Madoff, Madoff Fund, Ponzi, Charles Ponzi, Ponzi scheme, Social Security, pyramid schemes, confidence scams, cons, con artists

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She left […]

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