Know Your Metaphors

“No Ponzi scheme in the history of the world has ever lasted 75 years. Ponzi schemes depend on garnering an ever-increasing pool of new investors to pay out returns to prior investors. When the potential pool of new investors runs dry, they collapse. This will occur when the scheme runs up against the natural limits of its recruitment strategy; in the ultimate case, it can’t keep going past the point where the entire population is already subscribed.” [The Economist, via Daring Fireball]


Social security taxes aren’t an investment in anything. They are a direct wealth transfer from current workers to current eligible recipients, mostly retirees, who have worked enough covered quarters to qualify. When everyone is working for starvation wages at WalMart, retirees will be SOL.

The defining characterstic of a Ponzi scheme is the necessity of a geometrical increase new investors to pay out promised returns to earlier investors. If the world consisted of an infinite number of people you could, in theory, run a Ponzi scheme forever and no one would get hurt.

But perhaps what’s most important to remember in all this, and what will make it difficult for Rick Perry to try and walk back his words when his position on SS starts to cost him support is that Ponzi schemes cannot be “reformed.” They cannot be “rescued.” They cannot be “fixed” or “mended.” The only way to deal with a Ponzi scheme is to shut it down as soon as it’s discovered and try and recover as much money as possible for the scheme’s victims.

So when Perry starts equivocating and insisting that all he wants to do is “reform” Social Security, I hope that Obama asks him how he would have “reformed” Bernard Madoff’s Ponzi scheme so that people got the money they were promised. And I hope that Obama reminds people that when a Ponzi scheme falls apart, the courts require people who took out more money than they invested to return part of that money so that later victims can be partially repaid. And I hope Obama does a good job of insinuating that if Rick Perry has his way and “reforms” Social Security out of existence, today’s seniors may end up having to pay back some of the money they got from SS to younger victims of the “Ponzi scheme” that allowed them to retire with dignity.

Is that playing dirty pool? I don’t now. All I know is that Rick Perry set the rules for the game, and Obama would merely be playing by them.

Funny that the economist would use the word Ponzi considering that they loved the financial deregulation around the world as well as touting Wall St’s various real Ponzi Schemes.

I say this as someone who subscribed to the Economist for 8 years.

Nachos for dinner seemed like such a good idea an hour ago.

ADD: Unclear what if anything that observation has to do with Gov. Good Hair or Social Security, maybe it could be the Dodgers being a little too close for comfort against Los Gigantes at the top of the 6th inning.

who the hell is congressman allen west, and why does he have a high top fade?

Whoa. What’s this about Fullerton police beating and tasing a homeless schizophrenic guy, now dead?

@JNOV: Umm, yeah. The OC Clusterfuck. Horrific shit. Happened a few weeks ago. The guy’s dad is a retired deputy sheriff or something like that, and about 25 people witnessed (and filmed and tried to stop) the cops from killing the homeless dude. So unlike beating some random homeless dude that nobody knows or notices or seems to care about, it’s kind of now become a big deal. Oh and the Fullerton PD Chief sez the stress has made him have to go on sick leave for a couple months so he doesn’t have to answer questions.


Teabagger moron from Florida; has the questionable “honor” of being one of the few teahadis to have actually served in combat, tho he got kicked out for “interrogating” an Iraqi national by firing a pistol next to his head.

Re: the Ponzi scheme business – I just realized why the Repukes are convinced it’s a scam. It’s because they know what their long-range plan is: turn the giant trust fund over to their bankster buddies.

@JNOV: Yep. Apparently there was a protest today about the guy being beat to death by the cops, and the Fullerton Po-Po proceeded to issue citations to passing motorists for having the temerity to honk their horns in support of the anti-police protesters.

First Amendment, we don’t have it in the O.C.

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