Let us begin with a small Ponzi scheme. Bernie Madoff put one together — we all know he bilked sophisticated investors out of fifty billion dollars. He is going to jail for forever and day.
Everyone knows how a Ponzi scheme works. Essentially you persuade people to let you invest their money and then you put it in your pocket. You pay the people who invested a nice return —
These early investors with nice returns tell their friends. Their friends give you all their money and as long as more and more people give you money you can make everyone happy.
Of course there comes a day when the investors want their money back. In Bernie’s case he had spent most of the money — either on himself or to pay the interest to a very long line of suckers.
The bigger the Ponzi scheme, the bigger the swindle. I said Bernie’s was a small Ponzi scheme.
Want to know the biggest Ponzi scheme in the history of the world?
U.S. Social Security.
It’s the Federal Reserve in cahoots with the Government of the United States. The government takes your social security money and promises to invest it wisely and then when you get old, pays you back.
Surprise — the government has spent all the money and more in the Social Security money chest. There is no money left in the government.
So who will pay old people social security money? The Federal Reserve, under orders from the government, will print more money. Or create it out of thin air. This money will not be worth anything — that’s why a twenty five cent ice cream cone now costs $3.00. Soon it will cost $20.00. Then $50.00.
I thought I was pretty smart when I came up with the theory that Social Security is a Ponzi scheme. I googled the two.
There were 290,000 hits.
Which proves I’m not nearly as original as I thought I was and that my wife and I will end up as greeters at Wal-Mart.
We could do the following dance for the customers — please turn up your sound and click on: