Much has been said about the key aspect of the Ponzi scheme behind America’s welfare state (if not enough where it matters as the three living Fed Chairmen currently joke around during the Fed’s shindig on the central bank’s 100th anniversary), namely that all those who have paid in money to entitlements, are entitled to benefit from entitlement distributions in the future. On paper this is absolutely correct, and in an efficient market, without capital allocation distortions this would work (ignoring that a Ponzi scheme, is, by definition, a Ponzi scheme and is reliant on ever greater inflows of money and participants or, as some may call them, suckers). More importantly, this is also fair. Sadly, as recent experiments within the Obama administration and elsewhere, most notably France, when the entire developed world has hit “peak debt” levels, the fairness doctrine no longer works, especially if and when it is enforced upon a destitute population.
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