There is no meaningful difference between the schemes adopted by Bernie Madoff and our Social Security system. Madoff did to his investors what the government has been doing to wage earners for over 60 years with Social Security.
Why did Bernie Madoff go to prison? He persuaded people to invest with him, but he didn’t invest their money. As Madoff built his portfolio over time, he simply took the money from the new investors to pay off the old investors. Eventually, there were too many old investors and not enough money from new investors coming in to keep the payments going. Madoff’s scam was finally debunked; he went to jail and became one of the most hated men in America.
Soooo…. there is fundamentally no difference between Social Security and Bernie Madoff’s scam – except that one was operated by a private individual who is now in jail and the other is operated by politicians who enjoy perks, privileges and status in spite of their actions. Here’s a nifty little chart with a side-by-side comparison.
|BERNIE MADOFF||SOCIAL SECURITY|
|Takes money from investors with promise money will be invested & made available to them later.||Takes money from wage earners with promise money will be invested in a “Trust Fund” & made available later.|
|Instead of investing money Madoff spends it on yachts & nice homes in the Hamptons.||Instead of depositing money in a Trust Fund, politicians use it for general spending & vote buying.|
|When the time comes to pay investors back, Madoff simply uses some of the new funds from newer investors to pay back the older investors.||When benefits for older investors become due the politicians pay them with money taken from younger & newer wage earners to pay the geezers.|
|When Madoff’s scheme is revealed, all hell breaks loose. New investors won’t give him more cash.||When Social Security runs out of money, they simply force taxpayers to send them some more.|
|Bernie Madoff is in jail.||Politicians remain in Washington.|
Disclosure: No Positions