After the trust fund has been credited with the IOUs, Social Security's extra tax revenue is then spent by the Treasury just as any other taxes are spent. If the federal budget is running a surplus, that amount could be used to repay federal Debt owned by the public. Otherwise, it is spent on any other type of federal program, ranging from aircraft carriers to education research.
Share this comparison:. If you read this far, you should follow us:. Diffen LLC, n. Ponzi Scheme vs. Social Security. Comparison chart Differences — Similarities —. How Ponzi schemes work A Ponzi scheme is a fraudulent investment operation in which investors get returns not from any actual profit earned by the organization by investing the money, but from their own money or money paid by subsequent investors.
Why Ponzi schemes are successful One reason that the scheme initially works so well is that early investors, those who actually got paid the large returns, commonly reinvest their money in the scheme it does, after all, pay out much better than any alternative investment. Expenses The Social Security program spends a little over half a cent in administrative expenses for every dollar managed by the fund. Follow Share Cite Authors. Comments: Ponzi Scheme vs Social Security.
Related Comparisons. Contribute to Diffen Edit or create new comparisons in your area of expertise. Log in ». Terms of use Privacy policy. Yes in government securities. Some critics have called this an accounting trick because these are, in essence, simply IOUs the government issues to itself.
Ponzi schemes may have some investments that are locked in for a period of time, and usually discourage redemptions via manipulative persuasion. However, taking money out is generally allowed. Social Security benefits can be availed as early as age 62 but full benefits are distributed only after full retirement age currently They encourage people to delay using benefits by paying higher amounts to those who wait until they are Find a complete list of his columns here.
We are determined to continue it until the queries stop or we run through the particular problems of all 78 million Baby Boomers, whichever comes first.
Let us know your Social Security questions. The Social Security system gives social insurance a bad name and needs to be replaced, root and branch. But Social Security, as currently constituted, is a disgrace. Detroit , in contrast, needs to cut pension benefits by roughly 16 percent on a system-wide basis.
Like Detroit, there are no reasonable scenarios under which its projected receipts cover its projected expenditures. Over 1, economists, including 16 Nobel Laureates, have endorsed infinite-horizon fiscal gap accounting not just for Social Security, but for the federal government as a whole. Instead, they are linguistic constructs reflecting how the government labels its receipts and payments.
Only the infinite-horizon fiscal gap is invariant to such economically irrelevant changes in fiscal language. Yes, valuing uncertain future flows is difficult. But economists are developing better risk-adjustment techniques for doing so. And risk adjusting means discounting as in making less of more heavily future payments and receipts that are less certain. Discounted offers are only available to new members. Stock Advisor will renew at the then current list price. Investing Best Accounts.
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