The Phaserl


Social Security: The Most Successful PONZI SCHEME in History

by Gary Galles, Mises:

“We paid our Social Security and Medicare taxes; we earned our benefits.” It is that belief among senior citizens that President Obama was pandering to when, in his second inaugural address, he claimed that those programs “strengthen us. They do not make us a nation of takers.”

If Social Security and Medicare both involved people voluntarily financing their own benefits, an argument could be made for seniors’ “earned benefits” view. But they have not. They have redistributed tens of trillions of dollars of wealth to themselves from those younger.

Social Security and Medicare have transferred those trillions because they have been partial Ponzi schemes.

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3 comments to Social Security: The Most Successful PONZI SCHEME in History

  • Part of this argument seems fallacious. Everyone thinks that ‘income tax’ actually goes to pay benefits. According to Karen Hudes, who is a whistle blower for the World Bank, 40 % of American income tax goes to Britain and 60 % goes to the Jesuits in the Vatican. She says many interesting things in her interviews and can be easily Googled. I wish SGT would interview her.

  • Arnold Ziffel

    Social Security is not a Ponzi Scheme because it is not voluntary. I am so tired of these articles using incorrect metaphors. If anything it is confiscation of wealth.

  • solar toad

    The math in this article does not take into account all factors. For instance, starting with the male that puts into the system 61,000 dollars for medicare and supposedly receives 181,000 in return, it looks a lot different when you take into account that a 65 year old male has NOT received one dime of interest for anything he put into the system.

    I am 32 years old and my girlfriend and I purchased a house a few years ago, with a good down payment. We originally owed 62,000 mortgage. Our interest rate is somewhere in the 5% range (can’t remember off hand exact). Our paperwork shows that after 30 years we will have paid about 180,000 into this house (if we make only the current payment), which amounts to 3 X the original loan amount. I really like this example because it shows how the 65 year old man who has paid his 61,000 into medicare would actually be getting back a Bankers rate….just for living longer. But the math on this does not take into account that many of these men will not live long past “retirement”, nor the many more that die before they collect.

    And what exactly do you get for your Federal taxes, SS, and Medicare taxes? I’m still trying to figure that out. I work for myself and so I pay the full SS and Medicare (about 15.3%) as well as all the Fed tax. I am taxed about 50% to 52% total of my income. But what do I get for that?

    There’s an increasing attack on the elderly with the same argument every time. It’s rather misleading arguments. A Banker from one of the main banking cartel organizations can give you a “loan” they basically created from nothing, since chances are they do not have the money in their vault that they say they are loaning you. They then make the entry into their “books” as an asset to themselves.

    Why aren’t these same people talking about the compounding interest that is eating up the productive classes wealth? I have friends who have student loans they pay on monthly and their loans are actually GOING UP every month even though they continue to pay on them…it’s called compounding interest which ends up being usury at rates over 100%….BUT these people are not talking about THAT TRAVESTY to the young.

    They are pitting young against old. The main reason our economy is in threads is the same class of people removed our manufacturing base, and turned America into a Service Economy (FIRE: Finance, Insurance, Real Estate), which has nothing to do with creating real wealth…It simply EXTRACTS THE WEALTH.

    It really IS NOT grandma and grandpa that are doing this to you folks. This reminds me of how the insurance companies talked the masses into going along with their new bankruptcy laws. A lady I know told me her insurance would go down. Of course she bought the B.S. and did her insurance go down? I asked her recently…and she said it has skyrocketed.

    Continued at

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