Gary North’s Remnant Review (Jan. 7, 2013)
I want to discuss an article. I may be exaggerating, but I regard this article as the most sophisticated exercise in terminal naiveté that I have ever read. It is an intelligent article with respect to the problems that it lays out. It is dealing with the Ponzi scheme economics of the modern world. Certainly, I am in favor of articles that discuss modern government economic policies as Ponzi schemes. I have been doing this for over 45 years, and I see no reason to stop now, especially since we are 45 years closer to the end of the Ponzi schemes.
Yet at the same time, I am always dismayed to see an article written about the inevitable Ponzi scheme collapse of the modern economic world that begins with some version of this assurance: if we act now, we can solve this. It is not too late. The article begins as follows:
Fortunately, there is still time to act. But leaders from all social sectors–government, business, organized labor, environmental and other stakeholder groups–need to act decisively and quickly in order to secure future economic prosperity, social cohesion, and political stability. It is in the nature of Ponzi schemes to collapse suddenly, without warning. No one knows what event may send the developed world and the global economy as a whole back into crisis.
I have heard some variation of this assurance for over 45 years. In fact, if a book on Social Security, Medicare, and the unfunded liabilities of the U.S. government is published by a major publisher, or if an article appears in a journal aimed at establishment intellectuals, it will have the obligatory disclaimer. It will not be published unless there is this assurance somewhere in the article. There are no articles published by respectable scholars or respectable columnists on the Ponzi scheme economics of the modern world that do not include such an assurance. Anyone who insists on the fact that there is going to be a collapse, that these schemes will end in default, and that there is no possible statistically way of avoiding this, will not get his article published in a respectable magazine, newspaper, or book.
This is why I always look for the disclaimer. If there is the disclaimer, I know that I am about to read utter poppycock. It may be highly footnoted poppycock. It may have lots of charts. If it is written by somebody trying to get tenure, it will be filled with arcane mathematical formulas. But it does not matter what the content is, or what the structure is, the article is total poppycock.
WHAT YOU MEAN “WE,” PALEFACE?
The key poppycock indicator is the word “we.” Readers are assured that if we take immediate steps, courageously, systematically, and if we continue to implement the writer’s recommended program of reform, there is still hope to avoid the chaos and devastation that is the inevitable result of every Ponzi scheme in history.
Why is this poppycock? First, because of the nature of every Ponzi scheme. The scheme that Charles Ponzi invented was doomed from the beginning. There was no way statistically that that scheme would not collapse, leaving devastation in its wake. Whether we are talking Charles Ponzi or Bernie Madoff, from the day the deception began, there was no possible way that the scheme would not run aground on the shoals of statistical reality.
The scheme could not have been stopped at any time. The participants in the scheme, from the day they got into it, would not consider the possibility that they had been completely conned by someone who sold them a story that was based on a statistical impossibility. This is a true Ponzi scheme. A Ponzi scheme must end with losses for all but the participants who got in early and got out early. The only people to win in a Ponzi scheme are the people who recognize it as fake, who get in early, get out early, take the money and run. They spot it as a fraud from day one; therefore, they have an exit strategy.
The astounding thing about Ponzi schemes is not that there is an endless supply of suckers, including sophisticated investors, who believe in it. The astounding thing about Ponzi schemes is that their originators seldom disappear with the money, never to be seen again. Charles Ponzi is the classic example. If he had taken the money, which was in the tens of millions in an era in which the dollar was worth 20 times as much as it is today, and if he returned to Italy, from which he had arrived, he would have made out like the bandit that he was. But he stayed in the game until the bitter end. So did Bernard Madoff. The originators know that the thing cannot possibly end well, and yet they are unwilling to take the money and run. They believe their own impossible promises. This, I do not understand.
(For the rest on my article, click the link.)
Yes, it may and is a Ponzi scheme,, but we who work for a living have no choice..That portion is taken before we ever see a single penny of our paychecks..
Bill,
It's NOT a Ponzi scheme; you have "no choice" about S.S., Medicare etc. The Ponzi scheme was VOLUNTARY! No on forces you to "play the game" unlike the U.S. government's social programs.
Tout au contraire, you still have "a choice," as to whether you belong to the collective's slave programs. At age 45, I left the U.S. 36-years ago, renounced citizenship and started life anew! It can be done if you possess a fierce desire for bona fide freedom, liberty, privacy etc. I've met numerous individuals throughout the years from many countries that have done the same – left there collectives! These are the rara avis' of the world. Best to you.
Capt. A.
A PT Always
Principauté de Monaco
I’m not sure where you get the idea that participation must be voluntary in a Ponzi scheme to make it a Ponzi scheme. Forced victimhood just makes it a bigger crime. You also contradict yourself, in that you note that you voluntarily left the Ponzi scheme by leaving the country.
Just because a government forces you into a losing proposition, doesn’t make it not a crime. In the libertarian point of view, it’s the force that makes it a crime, whether or not it’s a losing proposition.
@ Chris – Here's something for you to consider; you are a "slave" and I am not! I'm am a PT, as free as one can be in this world. That's all you need to know, Chris. Capisce?
Capt. A.
A PT Always
Principauté de Monaco
SSI is clearly a Ponzi scheme. Forced participation doesn't make it less so. The system depends on ever increased participation of contributors (SSI's words, not mine) for the system to continue. When this increase ends, so does the scheme.
We are past that end. Only the guns and jails of government keep the system afloat, and that not forever.
Maybe so, but you must have had plenty of money to do this with. A lot of us are not world travelers and especially when you get to an older age. I was naive enough to think I would be ok with S.S. and maybe a side job somewhere. It did not work out that way. My son said "Dad S.S. won't be there when I get your age!" I said "I know that!". Actually its not here now, its all borrowed money. This is what happens when you have to much faith in our government. My love for this country was and is above question, I will stick it out to the end!
Let's see…..I pay into a 401K and that's ok….I pay into Social Security, then get an income from it when I retire and that is a terrible government program. As usual, Mr. North, you are out in left field again. Let's talk about UNFUNDED government programs for a change and get off of your rant against Medicare and Social Security.
Thumbs up Mr. Lewis! I am pretty sick of writers and politicians alike harping on Social Security misdirecting the anger that rightly belongs to the politicians. SS is entirely self funded unlike WELFARE programs. People may have opinions as to whether it was Constitutional but we live with what is the law of the land. Instead of continual whining about SS they should be addressing the politicians spending and REAL welfare programs. That unfunded liabilities talk is based on a one sided hypothetical prediction 75 years into the future anyway.
Thumbs up Mr. Lewis! I am pretty sick of writers and politicians alike harping on Social Security misdirecting the anger that rightly belongs to the politicians. SS is entirely self funded unlike WELFARE programs. People may have opinions as to whether it was Constitutional but we live with what is the law of the land. Instead of continual whining about SS they should be addressing the politicians spending and REAL welfare programs. That unfunded liabilities talk is based on a one sided hypothetical prediction 75 years into the future anyway.
Social Security Does Not Add To the Deficit Nor Is It A Welfare Program – Setting The Record Straight On Social Security
http://www.allvoices.com/contributed-news/1368127…
SSI stopped being "self funded" in 2010. In FY 2011, SS Admin had to sell treasuries to pay benefits, and it will continue to do so until the program collapses the government. That will happen no later than 2022, and probably much, much sooner.
It became the way you put it when the monies from SS were placed in the general fund (by LBJ) and taken from the ones who were paying into it. Then the whole of the administrations and congress started using it for everything including give aways to people who never paid into it. I worked for my SS to even reach the low amount I get in comparison to some who worked a whole lot longer than I for theirs and I don't know that they get much more than I.
It was never intended for the purposes they use now.
Your reply just made the author's point.
Who says those schemes are FUNDED ? They sit on piles of treasury IOUs. Gary never said the 401k was alright either.
If I pay into them, they are funded! They may not be 100% funded, but I contribute to them the same as a 401K.
Thumbs up Mr. Lewis! I am pretty sick of writers and politicians alike harping on Social Security misdirecting the anger that rightly belongs to the politicians. SS is entirely self funded unlike WELFARE programs. People may have opinions as to whether it was Constitutional but we live with what is the law of the land. Instead of continual whining about SS they should be addressing the politicians spending and REAL welfare programs. That unfunded liabilities talk is based on a one sided hypothetical prediction 75 years into the future anyway. SS is OWED $2.7 Trillion dollars.and is backed by the full faith and credit of the U.S.
Social Security Does Not Add To the Deficit Nor Is It A Welfare Program – Setting The Record Straight On Social Security
http://www.allvoices.com/contributed-news/1368127…
Then why does the president use social security checks for leverage in getting what he wants in a budget dispute? If its self funded which it is, but is used to buy bonds and then put in the general fund. The government then say they cant even pay the interest due. Is he fibbing to us or what? Now I don't know about the military pay as he mentions that at the same time. Now welfare and other programs that are not paid into, I can see where that would be a problem.
The rates were raised in the 1980's to build up a surplus for the inevitable retirement of the Boomer generation, and for a time the "trust funds" (and the term "trust" is used very loosely) were funded. However, Social Security was raided during the Clinton years when he and the Gingrich-led Congress brokered the "balance budget" of 1996. The only surplus was the Boomer retirement stolen from SS.
So now Social Security is not funded 100%, 50% or even 1%. The vault is empty. That is the "fiscal cliff" that is coming for the Boomers: you're going to get stiffed on all YOUR money that has been paid into SS all your working life.
Exactly correct. There is no giant pile of dollars out there waiting to be sent to SSI recipients. That money was spent, and long ago, and every dollar that comes in now (plus a little more) goes right back out in benefit payments.
SSI be broke, just like the rest of government.
If you're getting it now, you better be preparing for the day when you don't. If you're not getting it now, you better be prepared to never get it.
And just how does someone living on Social Security only, prepare for not getting it? A lot of people do not have 401K, stocks, etc. to fall back on! They need to go through the general fund and cut other pork programs to the bone so to speak, and put all they can back into the supposedly trust fund. Like that would ever happen!
H William Lewis – If you pay into them, they are funded? Maybe ‘were’ funded, but definitely are not currently funded. SS is a pay-as-you go system, and always was. You own your 401K, you have NO ownership rights to SS, per the Supreme Court. You do NOT contribute to the SS in the same manner as a 401K. FICA is a tax, not a savings, again per the Supreme Court.
You have been thoroughly bamboozled.
You won't have any rights to your 401K either when Obama puts it all together in a National Account that they will be raiding too. We will be penniless. No Social Security and no 401k either. That is his plan to leave Americans dirt poor.
401k is at least accessible now, penalty or no. Try tapping into your Social Security "savings"… Yeah, right.
Isn't this some kind of slur against the Irish? Mocking the Leprechaun?
Strange use of labels like leprechaun, ponzi, and paleface. You are commended on avoiding slurs on other groups, but you indulge too much in them with Italian Americans (ponzi), Irish Americans (leprechaun), and all the diverse white Americans (paleface). You need to clean up your use of slurs and labels.
Bo Sears for http://www.ResistingDefamation.org
Ponzi happens to be the surname of the first, and most infamous, one to put together the type of scheme bearing his name. Leprechaun is a mythical creation, legendary in his ability to trick, beguile, deceive, for gain. Yes, a characature, but a valid one. Paleface… try WASP as an alternate…. though "paleface" could easily include catholics, aryans, nordics…. sure, they are all stereotypes, but valid ones. these terms have specific meanings, implications…. get over it, language works. No "defamation" involved…..
Captain A, what is a PT?
OK, found it. It means perpetual traveller.
I've known about the Ponzi nature of SS for decades. If anyone asked me, I would have said I'd forego benefits if I could opt out now (in my 40's and 50's). I turned 62 last year. I "got out" the only way I could–by taking what money they'd give me and run. In other words, I took early retirement. I'm still working, and regard my SS checks as "found" money. I am taking it in the knowledge that one or both of 2 things will probably happen: the gov't will default by inflating the currency to zero or close to it; or the gov't will outright default and renege on its promises to pay benefits. Or some creative combination of the two, like setting early retirement age at 82 while euthanizing the old codgers at 80…
BTW, you can tell this one really pushed Gary's hot button. I really can't blame him. I'm getting old enough now to be really annoyed by the gov't's mendacity, and am starting to understand lifelong idealogues. Until I was 50 or so, I didn't. I guess it comes under the heading of "getting cranky in my old age".
Ignorance is bliss. A leprechaun is a denigrating term to an Irishman, especially coming from the Tea Party ignoramuses.