Author Topic: Sobering reality!  (Read 23647 times)

steveo

  • Handlebar Stache
  • *****
  • Posts: 1944
Re: Sobering reality!
« Reply #50 on: February 25, 2014, 01:11:48 AM »
I would call all SS systems ponzi schemes (I could be wrong and I'm happy to be shown to be incorrect). The people paying for it are paying for the people that are spending it now. As soon as the people buying into the scheme currently don't have the money the whole thing falls over.

In saying that I do believe in some level of support.

matchewed

  • Magnum Stache
  • ******
  • Posts: 4335
  • Location: CT
Re: Sobering reality!
« Reply #51 on: February 25, 2014, 06:27:57 AM »
I would call all SS systems ponzi schemes (I could be wrong and I'm happy to be shown to be incorrect). The people paying for it are paying for the people that are spending it now. As soon as the people buying into the scheme currently don't have the money the whole thing falls over.

In saying that I do believe in some level of support.

Just because a system for social support has flaws does not make it a ponzi scheme. There is no one making a profit off of this and politicians will do something to make sure the system continues or they will all get ousted, it might not be perfect but unsurprisingly Senators don't like the idea of losing their jobs by pissing off old people with time and political clout.

matchewed

  • Magnum Stache
  • ******
  • Posts: 4335
  • Location: CT
Re: Sobering reality!
« Reply #52 on: February 25, 2014, 08:02:46 AM »
I would call all SS systems ponzi schemes (I could be wrong and I'm happy to be shown to be incorrect). The people paying for it are paying for the people that are spending it now. As soon as the people buying into the scheme currently don't have the money the whole thing falls over.

In saying that I do believe in some level of support.

Just because a system for social support has flaws does not make it a ponzi scheme. There is no one making a profit off of this and politicians will do something to make sure the system continues or they will all get ousted, it might not be perfect but unsurprisingly Senators don't like the idea of losing their jobs by pissing off old people with time and political clout.

But people *are* making a profit off it. The first recipient of Social Security (Ida Fuller) put in $25 and got almost $23,000 in benefits. That's an extreme example, obviously, but some SS recipients, depending on family size, composition and work history, receive substantially more than they pay in. What's that, if not profit?

http://www.politifact.com/truth-o-meter/article/2013/feb/01/medicare-and-social-security-what-you-paid-what-yo/

Some but not all and definitely not the architects of the system. So why is it a ponzi scheme again? Because some people benefit a bit more than others? So then everything is a ponzi scheme with that definition.

matchewed

  • Magnum Stache
  • ******
  • Posts: 4335
  • Location: CT
Re: Sobering reality!
« Reply #53 on: February 25, 2014, 08:13:46 AM »
I would call all SS systems ponzi schemes (I could be wrong and I'm happy to be shown to be incorrect). The people paying for it are paying for the people that are spending it now. As soon as the people buying into the scheme currently don't have the money the whole thing falls over.

In saying that I do believe in some level of support.

Just because a system for social support has flaws does not make it a ponzi scheme. There is no one making a profit off of this and politicians will do something to make sure the system continues or they will all get ousted, it might not be perfect but unsurprisingly Senators don't like the idea of losing their jobs by pissing off old people with time and political clout.

But people *are* making a profit off it. The first recipient of Social Security (Ida Fuller) put in $25 and got almost $23,000 in benefits. That's an extreme example, obviously, but some SS recipients, depending on family size, composition and work history, receive substantially more than they pay in. What's that, if not profit?

http://www.politifact.com/truth-o-meter/article/2013/feb/01/medicare-and-social-security-what-you-paid-what-yo/

Some but not all and definitely not the architects of the system. So why is it a ponzi scheme again? Because some people benefit a bit more than others? So then everything is a ponzi scheme with that definition.

I'm not arguing it's a ponzi scheme. I'm taking issue with your saying nobody profits from it. Some people demonstrably do.

That's a bit out of context don't you think?

Vjklander

  • 5 O'Clock Shadow
  • *
  • Posts: 50
Re: Sobering reality!
« Reply #54 on: February 25, 2014, 08:24:32 AM »
I would call all SS systems ponzi schemes (I could be wrong and I'm happy to be shown to be incorrect). The people paying for it are paying for the people that are spending it now. As soon as the people buying into the scheme currently don't have the money the whole thing falls over.

In saying that I do believe in some level of support.

Just because a system for social support has flaws does not make it a ponzi scheme. There is no one making a profit off of this and politicians will do something to make sure the system continues or they will all get ousted, it might not be perfect but unsurprisingly Senators don't like the idea of losing their jobs by pissing off old people with time and political clout.

Political Power is a benefit every bit as useful Money.

matchewed

  • Magnum Stache
  • ******
  • Posts: 4335
  • Location: CT
Re: Sobering reality!
« Reply #55 on: February 25, 2014, 08:28:27 AM »
/snip
Just because a system for social support has flaws does not make it a ponzi scheme. There is no one making a profit off of this and politicians will do something to make sure the system continues or they will all get ousted, it might not be perfect but unsurprisingly Senators don't like the idea of losing their jobs by pissing off old people with time and political clout.

But people *are* making a profit off it. The first recipient of Social Security (Ida Fuller) put in $25 and got almost $23,000 in benefits. That's an extreme example, obviously, but some SS recipients, depending on family size, composition and work history, receive substantially more than they pay in. What's that, if not profit?

http://www.politifact.com/truth-o-meter/article/2013/feb/01/medicare-and-social-security-what-you-paid-what-yo/

Some but not all and definitely not the architects of the system. So why is it a ponzi scheme again? Because some people benefit a bit more than others? So then everything is a ponzi scheme with that definition.

I'm not arguing it's a ponzi scheme. I'm taking issue with your saying nobody profits from it. Some people demonstrably do.

That's a bit out of context don't you think?

You tell me. You're the one that originally contended nobody was profiting from the system. Seems relevant to me.

Yes it is out of context because you're just picking one thing that I've said and then backed off on the rest of the statement. Fair enough some people "profit" from it. It doesn't change the context of what I've written in the context of whether it is a ponzi scheme or not. It is only relevant within the original context.

matchewed

  • Magnum Stache
  • ******
  • Posts: 4335
  • Location: CT
Re: Sobering reality!
« Reply #56 on: February 25, 2014, 08:34:22 AM »
Well I'm not going to change your guys minds. Social Security is a "scheme" to you and I'm sure you won't see it any differently regardless of what I say.

So meh.

arebelspy

  • Administrator
  • Senior Mustachian
  • *****
  • Posts: 28062
  • Age: -999
  • Location: Seattle, WA
Re: Sobering reality!
« Reply #57 on: February 25, 2014, 08:59:21 AM »
Well I'm not going to change your guys minds. Social Security is a "scheme" to you and I'm sure you won't see it any differently regardless of what I say.

So meh.

Good call.
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

Vjklander

  • 5 O'Clock Shadow
  • *
  • Posts: 50
Re: Sobering reality!
« Reply #58 on: February 25, 2014, 09:50:16 AM »
Well I'm not going to change your guys minds. Social Security is a "scheme" to you and I'm sure you won't see it any differently regardless of what I say.

So meh.

The US should adopt the Chilean system immediately:
http://www.thenewamerican.com/world-news/south-america/item/10521-chile-s-privatized-social-security-program-is-30-years-old-and-prospering

Eric

  • Magnum Stache
  • ******
  • Posts: 4061
  • Location: On my bike
Re: Sobering reality!
« Reply #59 on: February 25, 2014, 10:26:26 AM »

matchewed

  • Magnum Stache
  • ******
  • Posts: 4335
  • Location: CT
Re: Sobering reality!
« Reply #60 on: February 25, 2014, 10:57:23 AM »
Well I'm not going to change your guys minds. Social Security is a "scheme" to you and I'm sure you won't see it any differently regardless of what I say.

So meh.

The US should adopt the Chilean system immediately:
http://www.thenewamerican.com/world-news/south-america/item/10521-chile-s-privatized-social-security-program-is-30-years-old-and-prospering

Just like any other system there are downsides. You can choose which ones you want. :)
https://en.wikipedia.org/wiki/Pensions_in_Chile#Pension_reform_of_1980.2F81
http://www.ssa.gov/policy/docs/ssb/v68n2/v68n2p69.html

Namely that it drives administrative fees which eats into workers profits, participation rates have been dismal, in 2008 the government had to include a social security program for those who couldn't fully participate in the new privatized system, returns have been lower due to the fees...etc.

It's easy to cast a villain of the current system and point somewhere else to claim the greenness of their grass. It's harder to realize that the world is not so black and white. I've tossed in far too many idioms and metaphors and those two sentences look like garbage. ;)

steveo

  • Handlebar Stache
  • *****
  • Posts: 1944
Re: Sobering reality!
« Reply #61 on: February 25, 2014, 12:47:01 PM »
I'll explain why it is a Ponzi scheme in my opinion and I don't see the argument about not making a profit out of it as being the issue at all.

In a Ponzi scheme the people who are receiving payouts are not receiving the payout based on what they have earnt but based on the next bunch of people paying into the scheme. As soon as there isn't enough new money coming in to pay out the people that are leaving the scheme it falls over.

So it works fine if there are more people currently paying in then leaving but it falls apart as soon as there are more people leaving than paying in.

Undecided

  • Handlebar Stache
  • *****
  • Posts: 1088
Re: Sobering reality!
« Reply #62 on: February 25, 2014, 01:01:17 PM »
I'll explain why it is a Ponzi scheme in my opinion and I don't see the argument about not making a profit out of it as being the issue at all.

In a Ponzi scheme the people who are receiving payouts are not receiving the payout based on what they have earnt but based on the next bunch of people paying into the scheme. As soon as there isn't enough new money coming in to pay out the people that are leaving the scheme it falls over.

So it works fine if there are more people currently paying in then leaving but it falls apart as soon as there are more people leaving than paying in.

Except that the tax rate can be changed. And the participation is mandatory. Those are major differences from a Ponzi scheme.

bacchi

  • Magnum Stache
  • ******
  • Posts: 4036
Re: Sobering reality!
« Reply #63 on: February 25, 2014, 01:04:17 PM »
Quote
So it works fine if there are more people currently paying in then leaving but it falls apart as soon as there are more people leaving than paying in.

This sounds like the stock market. Is the stock market a Ponzi scheme too?

foobar

  • Pencil Stache
  • ****
  • Posts: 731
Re: Sobering reality!
« Reply #64 on: February 25, 2014, 02:04:02 PM »
Yes. And so is any type of business. They take money from people (customers), pool it together, and give it other people (employees). Once people stop buying the scheme falls apart.:):):)

Quote
So it works fine if there are more people currently paying in then leaving but it falls apart as soon as there are more people leaving than paying in.

This sounds like the stock market. Is the stock market a Ponzi scheme too?

Capsu78

  • Pencil Stache
  • ****
  • Posts: 704
  • Location: Chicagoland
Re: Sobering reality!
« Reply #65 on: February 25, 2014, 02:10:04 PM »
If there are only going to be 3 people funding my SS in 10 years, I am cool with that-
Just so long as my 3 are Tiger Woods and those 2 Olsen chicks...

steveo

  • Handlebar Stache
  • *****
  • Posts: 1944
Re: Sobering reality!
« Reply #66 on: February 25, 2014, 02:14:14 PM »
This sounds like the stock market. Is the stock market a Ponzi scheme too?

Definitely not. When you buy a stock you are buying a part of a company which makes a profit and you should gain or lose via how much profit that company makes. I get that if more people are buying in the price goes up and vice versa however there is an underlying value based upon how profitable the company is.

FIPurpose

  • Handlebar Stache
  • *****
  • Posts: 1115
  • Location: WA
    • FI With Purpose
Re: Sobering reality!
« Reply #67 on: February 25, 2014, 02:16:23 PM »
I would call all SS systems ponzi schemes (I could be wrong and I'm happy to be shown to be incorrect). The people paying for it are paying for the people that are spending it now. As soon as the people buying into the scheme currently don't have the money the whole thing falls over.

In saying that I do believe in some level of support.

Just because a system for social support has flaws does not make it a ponzi scheme. There is no one making a profit off of this and politicians will do something to make sure the system continues or they will all get ousted, it might not be perfect but unsurprisingly Senators don't like the idea of losing their jobs by pissing off old people with time and political clout.

But people *are* making a profit off it. The first recipient of Social Security (Ida Fuller) put in $25 and got almost $23,000 in benefits. That's an extreme example, obviously, but some SS recipients, depending on family size, composition and work history, receive substantially more than they pay in. What's that, if not profit?

http://www.politifact.com/truth-o-meter/article/2013/feb/01/medicare-and-social-security-what-you-paid-what-yo/

Some but not all and definitely not the architects of the system. So why is it a ponzi scheme again? Because some people benefit a bit more than others? So then everything is a ponzi scheme with that definition.

Life is a Ponzi Scheme man.

steveo

  • Handlebar Stache
  • *****
  • Posts: 1944
Re: Sobering reality!
« Reply #68 on: February 25, 2014, 02:16:56 PM »
Yes. And so is any type of business. They take money from people (customers), pool it together, and give it other people (employees). Once people stop buying the scheme falls apart.:):):)

Huge difference - the business provides a good or a service to people. People choose if they want to buy that good or service. The stock price should basically reflect how profitable that company is. In a Ponzi scheme there is not profitability - its all a scam.

senecando

  • Bristles
  • ***
  • Posts: 486
  • Age: 30
  • Location: Madison, Wi
Re: Sobering reality!
« Reply #69 on: February 25, 2014, 02:24:45 PM »
This thread is like a ponzi scheme. I put in my comment early, and I'm getting comment notifications from all the suckers down the line! :P

bacchi

  • Magnum Stache
  • ******
  • Posts: 4036
Re: Sobering reality!
« Reply #70 on: February 25, 2014, 02:41:56 PM »
Definitely not. When you buy a stock you are buying a part of a company which makes a profit and you should gain or lose via how much profit that company makes. I get that if more people are buying in the price goes up and vice versa however there is an underlying value based upon how profitable the company is.

If I buy FB shares, I can only make money if there's a greater fool who will pay more down the road. If that greater fool never shows up, I'll never make a profit. In other words, it doesn't matter how much a stock should be worth, it only matters what others will pay for it. Mr. Market has the final say on what is worth what.

While a company has value, much of that value is also based on pyramid schemes. For example, buildings and land. It's only profitable if others will pay more than the buying price. If a bankrupt company doesn't need it, and no one else will buy it, what value is it? Also, intangibles like goodwill. Goodwill can often become useless overnight.

This leads me to believe that much of life is a Ponzi scheme. We try to maximize profit and get off the carousel before we die and go to the giant pyramid in the sky.

Capsu78

  • Pencil Stache
  • ****
  • Posts: 704
  • Location: Chicagoland
Re: Sobering reality!
« Reply #71 on: February 25, 2014, 02:42:48 PM »
If you are old enough to know about Fonzi,
You are likely near the top of the Ponzi!

Enjoy your retirement!

foobar

  • Pencil Stache
  • ****
  • Posts: 731
Re: Sobering reality!
« Reply #72 on: February 25, 2014, 07:31:50 PM »
:):):) implies that it isn't too serious. When you say SS (or insurance) is like a ponzi scheme you are looking at one thing that looks similar and ignoring all the differences. As I said business have a lot in common with Ponzi schemes (after all people free choose to buyin). Don't let that minor difference convince your otherwise.

Yes. And so is any type of business. They take money from people (customers), pool it together, and give it other people (employees). Once people stop buying the scheme falls apart.:):):)

Huge difference - the business provides a good or a service to people. People choose if they want to buy that good or service. The stock price should basically reflect how profitable that company is. In a Ponzi scheme there is not profitability - its all a scam.