Design the perfect ponzi scheme

heisterI would say social security, but we all know how that is working out.

interesting... from http://www.thomas-purcell.com/2011/09/perfect-ponzi.html

Governor Rick Perry has been under a lot of criticism for his reference in his book to Social Security as a ‘ponzi’ scheme, despite the fact that it has been called a ponzi scheme by both the left and the right for over 50 years, as well as in most economics textbooks. Of course it makes good copy to suggest that Perry would do away with Social Security as a criminal enterprise, but it is pretty far fetched to think that he might do that as President, if not downright legislatively impossible.

However, the definition of a Ponzi scheme is exactly what Social Security is—a return that is unusually consistent relative to the investment, and pays out returns directly from new investors capital rather than from the return on an actual investment. Perry is 100% correct in his description, and if it was anyone else but the government handling the Social Security program, they would be locked up in prison.

Now, many people are questioning the premise of its criminality because as long as it continues to grow in size (in the form of new investors) and pays its benefactors, there is no swindle. Since everyone is required to pay Social Security taxes, a new pool of investors is virtually guaranteed. It's the perfect Ponzi scheme, since it assures a non stop flow of money into the fund.

Or is it?

More than 50% of the population now pays little to no income taxes and with almost 20% of the population either out of work or ‘under working’ (such a part time or low paying minimum wage jobs), the pool of new entrants to the Social Security system is waning. For the first time in history, Social Security may actually spend more than it takes in (via taxes) and essentially become insolvent unless change or reform comes and soon. Most want to alter benefits, some (like Newt Gingrich) suggest that simply altering our tax structure and increasing the profitability of the economy at large is a better plan since as the economy would grow, so would Social Security funding.