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From: tw8023@pyuxii.UUCP (T Wheeler)
Newsgroups: net.politics
Subject: Re: Social Security,Pyramids, Banks and Insurance
Message-ID: <281@pyuxii.UUCP>
Date: Tue, 19-Nov-85 08:37:16 EST
Article-I.D.: pyuxii.281
Posted: Tue Nov 19 08:37:16 1985
Date-Received: Tue, 26-Nov-85 20:04:34 EST
References: <591@drutx.UUCP>, <826@whuxl.UUCP>
Organization: Bell Communications Research, Piscataway N.J.
Lines: 28

Sevener obviously does not know the difference between
a Ponzi scheme and a pyramid scheme.  They are NOT the
same thing Sevener.  The Ponzi scheme depends on only
taking in money with a promise to pay out more than was
paid in.  The first group of "investors" are paid a
wildly inflated return.  This payout generates more
interested "investors" until the person running the
scheme sees he has made a killing and skips out with
everyone's money.  In a pyramid scheme, the main ingrediant
is getting others to sell shares with a promise that
they will collect from the people lower down on the
scale as they sell shares (or whatever).  A pyramid
scheme will eventually run out of steam at the lower
levels of sales.  The Ponzi scheme will run hot and
heavy until the perpetrator absconds with the funds.

I'm not saying that SS is going to run off with the
money.  It is just that the Ponzi principle of paying
out more than is taken in applies to SS.  Now, with
congress looking hungrily at the SS trust fund once
more, the fate of future payments from SS is shakey.
We can all thank John Kennedy for dipping into the
trust fund 20 years ago and setting off the problems
that have plagued the system since.  So, when Olsen
pointed out that the SS system is being run as a
giant Ponzi scheme, he is right.
T. C. Wheeler